Blueprint For a New American Industry

Last: Cutting Edge Transportation Technology and Environmental Regulation

Developing a 21st Century Transportation Industry

Monorail production can achieve a quantum leap in modernizing US manufacturing and transportation industry without the trappings or legacies of traditional smoke stack, low tech or environmentally damaging American industry. Regions and urban centers committed to significant monorail system development can rather easily become manufacturing centers, supplying local, as well as, regional and national monorail equipment and vital developmental support. Domestic, localized and comprehensive monorail manufacturing and system development capabilities of a new American monorail industry could define the state of the art, and state of engineering in global transportation industry, without the drawbacks and developmental impacts experienced by all other industrial processes and entities over the past century. Indeed, monorail technology, industry and services may bring about the scaling back, or retirement of the least efficient and most problematic of traditional American transportation systems and vehicles.

Ground transportation systems throughout the United States, whether long established, recently upgraded or of the newest and most advanced designs, are limited by the engineering and performance parameters of steel-wheeled, steel rail trains. Virtually all new domestic transportation system developments, as well as, planned future systems, amount to upgraded and very expensive versions of passenger trains that are essentially modernized 19th century railroad technology, yet are increasingly designed and manufactured by non-US companies. The most significant advances in steel rail train design and technology in recent decades has been in the development of high-speed trains, capable of speeds between 200 and 300 miles per hour. Traveling at a 135-mile per hour top speed, the French-built Helsinki to St. Petersburg train appears to be well suited to serving as the first high-speed train service between Europe and Russia. The new Allegro train makes the 250-mile, one-way trip in 3 ½ hours, with second-class round trip fares at $209, and $322 for first-class. Keeping round trip fares on California’s panned inter-city high-speed trains below $300 may prove to be a greater challenge than its planners and promoters have anticipated; significantly diminishing high-speed rail’s ability to compete with inter-city airline services.

As of 2011, no high-speed trains have been developed or manufactured in the United States, or by American corporations. The high-speed rail projects in various stages of design and environmental evaluation in several regions of the US are dependent entirely upon imported rolling stock and technology. Notwithstanding the technical and operational successes of high-speed trains in Europe and Asia, the general transportation environments and highly developed rail networks that have served as the core of virtually all modern industrial countries’ transportation systems have not been developed to any great extent in the United States. While high-speed trains have successfully enhanced and extended the capabilities and performance of modern rail networks, no such networks or manufacturing base have been developed in the US. The seamless expansion of established modern rail industries that development of high-speed trains represents is not a practical option in the present American railroad industry.

Massive outsourcing or importation of high-speed rail equipment may facilitate introduction of high-speed trains to the US transportation market, but at a high price to both transportation authorities and the fading US industrial economy. This would only serve to imitate and accelerate the outsourcing of advanced technology manufacturing that has resulted in the 70% foreign manufacturing content of the new Boeing 787; just fifteen years after its 777 was produced with 70% US domestic manufacturing content. A significant part of the three year delay in delivery of 787 Dreamliner aircraft has been attributed to “poor workmanship” by one of Boeing’s Italian partners on the plane’s horizontal tails. Prior to the 787-development campaign, Boeing designed and assembled the majority of its aircraft in its extensive Everett, Washington plant; but currently relies on a far-flung system of large and small, foreign and domestic component suppliers for complex subassemblies that are assembled into complete aircraft in the Everett plant.

Several of the first airlines to order the new 787 aircraft threatened cancellation, and replacement with European Airbus A330s, while the World Trade Organization has determined that $2.7 billion of federal government export-related tax subsidies granted Boeing to be impermissible; but found an equal amount of state and local government tax incentives granted to Boeing as plant relocation assistance were deemed permissible. Concurrently, the Chinese government has aggressively pursued development of a globally competitive commercial airline industry to directly challenge US and European aircraft industries. Recently unveiled, Commercial Aircraft Corporation of China’s Comac C919 passenger aircraft is clearly intended to compete head to head with Boeing’s 737 and Airbus’ A320 commercial jetliners by their projected 2016 service date, and will certainly be competing for advance orders in the near future.

Viewed from the perspective of international competition for a projected three trillion-dollar commercial aircraft market over the next decade, all factors, restrictions and advantages afforded Boeing Corporation’s state-sponsored and state-run competitors should be carefully scrutinized and weighed by US government regulators and Congress, to prevent any further undermining of Boeing’s competitive strength and viability as the only major private corporate manufacturer remaining in the international commercial aircraft manufacturing market.

As with high-speed train, wind turbine, green energy and a wide range of cutting edge, advanced engineering and manufacturing technologies, American and European companies have traded their proprietary advanced technology and manufacturing processes to Chinese government-controlled industry for access to joint venture and other short-term profitable opportunities in Chinese markets. Spanish wind turbine maker, Gamesa, controlled one third of the Chinese market as recently as 2005, but has been systematically edged out of the domestic business by Chinese government-backed companies benefiting from low-interest loans, inexpensive land and preferential contracts from state-owned power companies. The new government turbine companies now control 85% of Chinese wind turbine production, while Gamesa’s market share has dropped to 3%, and Spanish government domestic windmill subsidies are being reduced. Chinese wind turbine companies now control 45% of the international wind turbine market, and are taking aim at foreign markets like the United States, where General Electric Corporation has long been the market leader.

The global technology, markets and competitive conditions that have disrupted and distorted these and a wide variety of industries appear to have come into alignment at ill fated Solyndra, the newly-developed solar panel manufacturer forced to close its Fremont, California facilities less than two years after receiving a $535,000,000 loan guarantee from the US Department of Energy to construct and equip its state of the art manufacturing plant. Solyndra’s default on its Federal Financing Bank loan, and planned bankruptcy filing would necessarily be absorbed by the federal government, and US taxpayers, while less expensive Chinese imported solar equipment will dominate the US domestic market, but would not reinstate Solyndra’s 1,100 employees.

These practices, trends and market conditions, coupled with an erroneous, self-defeating assumption that the US economy could be transformed from a powerful technology-based, self-sustaining, export-oriented system to a predominantly consumer-driven service marketplace, has resulted in widespread contraction of US industry; highlighted by Solyndra’s failure, and a nearly 50% erosion of the once-preeminent US aerospace and aircraft manufacturing industry from 1,120,000 jobs in 1990, to fewer than 600,000 in 2004, while European governments continue to subsidize their Airbus competitors, and the Chinese government has gone into the business altogether. The remaining de-industrialized US economy is increasingly unable to compete with the multinational cooperative European Union, or monopolistic Chinese state capitalism.

Not to be outdone by Boeing’s international competitors, the US National Labor Relations Board has blocked the opening of the company’s $1 billion South Carolina aircraft production plant, that would be free to hire nonunion employees, in deference to the unions representing the workforce employed at its Everett, Washington home manufacturing base. The NLRB has gone so far as to suggest that the solution to Boeing’s dilemma would be to move all of its 787 Dreamliner assembly back to its existing Puget Sound plant, and put Boeing’s 5,000 South Carolina employees out of their jobs. Such heavy handed and contradictory policies and practices of federal government agencies and authorities should prompt state and local governments’ serious reconsideration of the costs and consequences of accepting US funds in limited, conditional support of high-speed rail, alternative energy, and any other technology or infrastructure development. Indeed, Solyndra Corporation’s acceptance of more than a half billion dollars in federal government loans to develop a California solar panel manufacturing plant could not prevent a Chapter 11 bankruptcy filing, or the firing of its entire work force less than two years after US Department of Energy and Federal Finance Bank endorsement and underwriting of the company.

With little fanfare, Boeing received its best news to date regarding the 787 Dreamliner program, with the August 27, 2011 Federal Aviation Administration’s approval of 787 commercial flight operations, accompanied by European regulators’ commercial flight certification; which opens the process for Boeing to begin delivery of more than 800 Dreamliner aircraft ordered by 55 airlines. Production and delivery of 800-1,000 Dreamliners at $185-218 million per airliner will project Boeing to the forefront of international aviation industry, while bringing a significant portion of its $200 billion in new business to the US industrial economy.

Notwithstanding Boeing’s recent success, US trade officials continue to fare poorly in representing the best interests of American domestic business and industry. In a blow to US government’s ability to redress or counter the impacts of Chinese industries’ dumping of low cost goods, and promotion of unfairly competitive government-subsidized manufactured products in domestic American markets, an appeals panel of the World Trade Organization has determined that countervailing duties levied on a variety of imported Chinese products illegally imposed both anti-dumping and anti-subsidy duties on them. Barring of up to 20% countervailing duties on what are clearly government-subsidized products of Chinese government-owned industries threatens to hobble both US and European Union industrial economies; and clears the way for China’s high-speed train manufactures to dominate the development of high-speed rail in US, as well as, European markets and venues.

China’s absorption of European high-speed rail manufacturing technology into the mainstream of their domestic manufacturing industry has facilitated China’s program to build a 16,000-mile high-speed rail network throughout the country by 2020; while Chinese high-speed rail manufacturers have announced their intentions to submit plans and bids for high speed-rail systems proposed in several urban areas of the United States. Whatever shape high-speed rail development takes in the US, local and state governments have yet to demonstrate capability to fund or manage any of the multi-billion dollar rail proposals, and federal transportation agencies appear to have underestimated the costs of promoting and implementing high-speed rail anywhere in the nation. The California High-Speed Rail Initiative, to develop an 800-mile high-speed rail network in the state, is grossly under funded, with little prospect of securing the $100 billion needed to complete the San Francisco to Los Angeles-Anaheim half of the project. In a state running a multi-billion dollar budget deficit, and burdened with $87 billion in long-term bonded indebtedness, the California High-Speed Rail Authority is not likely to receive sufficient government or public funding to complete the railway’s first isolated section.

Next: Strategic Transportation Planning

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