The Chinese state-owned company severely underbid to nab a taxpayer-funded contract to build new rail cars for Boston’s subway system. It hasn’t gone great.
What’s the old saying? You get what you pay for?
A couple weeks ago, news broke that the Massachusetts Bay Transportation Authority (MBTA) had written a strongly worded letter to CRRC MA, the Chinese state-owned company charged with building hundreds of new rail cars for Boston’s subway system. MBTA had a laundry list of complaints about the significantly delayed project, ranging from big-time safety concerns like bad wiring and faulty mechanical assembly to CRRC’s failure to respond to MBTA’s other previously strongly worded letters.
Well, it looks like the Boston Globe decided to do a bit of old school shoe-leather reporting to try to figure out what exactly is happening at the CRRC facility in Springfield, Mass., which the company built as a condition of its contract.
While CRRC maintains workers at the plant are happy and everything is going just fine, Globe reporter Taylor Dolven found the opposite:
“…interviews with several former workers at the facility describe a very different scene on the factory floor, showing a chaotic and often harrowing environment prone to mishaps and delays long before the pandemic began. Cars with missing parts are advanced along the assembly line without the correct paperwork and thus no way to track errors; employees bored to tears pretend to work and watch movies for months while waiting on parts to arrive as suppliers go unpaid; and workers mostly stay silent, fearing retaliation for raising concerns.”
The Globe spoke with several former CRRC employees who “said they quit when their frustration with CRRC became unbearable. Others said they were let go after disagreements with other employees or supervisors.”
The stories they told the Globe are pretty astounding. A former production supervisor at the facility recounted how he “implored his superiors for two weeks not to advance along the assembly line a car that was missing a part that the factory was still waiting on.”
Then there’s this:
“After a day off last year, he said, he returned to the factory to find out that in his absence, a wall had been installed inside the car that he had told his superiors to hold back until work was done.The wall covered the place where a missing part was supposed to go. His team would have to disassemble the wall, causing delays and potential damage. In his 15 years of working in factory production, he’d never seen anything like it.”
But wait, there’s more!
- A former test engineer recalled that cars were often missing parts, but were tested anyway. “Everyone had to be a yes man no matter how ludicrous you thought something was,” the employee said.
- A former administrative worker cited major problems with the invoice and inventory systems, noting that CRRC “allowed these problems to fester and they’ve only gotten worse.”
- There were also labor complaints. The former supervisor noted “he had been hired in mid-2020 to work a 6 a.m. to 2 p.m. shift with occasional Saturdays and the promise of a yearly raise. On his first day, he remembers having to stay until 6 p.m. Most Saturdays, he was asked to work, he said, and the raises never came.”
Given these anecdotes, it shouldn’t really be much of a surprise that the project is now significantly behind schedule and the 90 out of 340 rail cars that have been built have been riddled with major safety problems. The Globe reports that a “battery explosion, derailment, loose brake bolts, and electrical arcing have forced the T to repeatedly pull the new cars out of service and rely on faulty old cars that were supposed to be retired decades ago.”
We went into the history of this project on the blog back on Jan. 5, so I won’t repeat it in full here. But it’s worth remembering that Massachusetts officials were gleeful back in 2014 when the contract with CRRC was first announced. CRRC’s bid for the project came in $154 million below other firms; one MBTA board member called it “a win for our financial bottom line.”
But there were red flags raised back then, especially concerning the human rights record of China’s government and its state-owned companies, which sadly have proven to have merit. And policymakers were so worried about the national security implications of allowing a company with ties to China’s military to build American rail cars (with taxpayer money!) that they passed the Transit Infrastructure Vehicle Security Act (TIVSA), which bans CRRC and other state-owned firms from federal taxpayer-funded contracts to build rail cars and buses.
Interestingly, CRRC in a statement given to the Boston Globe didn’t dispute any of the former employees’ accusations, but maintained it “remains committed to delivering the Orange and Red line project and continues to work cooperatively with the MBTA project team to move this project forward.”
MBTA, for its part, doesn’t have a lot of wiggle room here, “[s]hort of halting production or withholding payment to CRRC,” the Globe notes. Even a provision in its contract “for late delivery of vehicles of $500 per day could take a long time to sort out.”
Anyway, this boondoggle of a project should serve as a cautionary tale for other government agencies and private entities looking to strike a deal with a Chinese state-owned company offering a bid at a basement bargain price.
Because while CRRC technically reports to MBTA, it’s ultimate boss is China’s government. And the goal of the Xi Jinping and company isn’t to build high-quality, top notch rail cars. Rather, China’s government wants to dominate global industries, including in the United States. It heavily subsidizes its firms in order to outbid competitors who operate in a free market, with the ultimate goal of putting everyone else out of business.
Winning the contract is really all that matters; fulfilling it isn’t the main priority. And in this case, it’s subway riders and taxpayers who are paying the price.