And so it starts, Chinese involvement in tank car construction.

[Buslist]

The Chinese are helping to fund a startup tank car manufacturer here in the U.S. Inretesting that U.S. employees are being sent to China for training if I read this correctly. Wonder what components are being sourced from China and that the Chineese won't make a full investment until the sample cars pass AAR approval.

 

http://www.railwaygazette.com/news/business/single-view/view/chinese-manufacturer-invests-in-us-wagon-venture.html

[chutton01]

Ah, Vertex Rail, a topic of some discussion last year on rr.net because their press release had stated they were going to manufacture tank cars and other rolling stock in North Carolina AND Massachusetts - in the event, manufacturing seems only planned for the North Carolina facility.

I believe they were supposed to be up and running by the end of last quarter...oh well.

 

[Euclid]

Is this controversial?  If so, why?

[BaltACD]

Euclid

Is this controversial?  If so, why?

Say Chinese in this country and anything becomes controversial.

[Deggesty]

Chinese checkers, anyone?

I'm ducking.

[Euclid]

I don’t know what the implications of this are.  If China is just an investor, and the cars will be made in the U.S. with the U.S. manufacturing culture, the quality should be just fine.  But if tank cars were made in China and imported, there could be an entirely different result. 

[NKP guy]

I'll have a go at why this is "controversial" to some of us.

 First, let's understand that controversial doesn't mean wrong, it simply means there is a debate or controversey about something.  Second, as one who was born and raised in Cleveland, it offends my sensibilities that our steel mills and fabricating shops, to say nothing of all the ore boats, railroads, mines, etc. that steel requires, are thought to be uneconomical or unable to compete with China on contracts of this type.  The fact that some company thinks it more in their interest to import all or part of such cars isn't wrong, necessarily; I understand where the company is coming from.  However, it does offend me and therefore it's controversial, at least as far as I'm concerned.

I need not remind the rapidly-graying demographic that reads these forums that our manufacturing industries have significantly declined.  When these unionized companies went out of business they took down with them the lifestyles that we rust-belters grew up with and now miss.  Nothing similar has replaced them.

By itself, one company importing tank cars from China isn't much of a body blow to America any more.  However, when I ride The Lake Shore Limited through upstate New York cities and towns, or when I ride through Pittsburgh or Johnstown or Youngstown and see where the mills used to be, and see the unpainted houses, etc.; when I look into my newspaper and read about our youth unemployment rate, the college loan mess many must get into in order to leave the those towns to thrive elsewhere in our now paperless service economy, then I do feel resentful when I read about tank cars from China.

Let's remember two things about China.  Since 1948 they have not exactly been our friends; this shows no signs of changing.  Second, China's workers are paid a bare fraction of what ours are today, even the non-unionized US workers.  That's why they get this work and we don't.

Consequently, when I read about Chinese tank cars, yeah, to me it's controversial.   Like so much else in my life, I can't change it.  I can only go with the flow and adapt, like our companies are. 

But that doesn't mean I have to like it.

[Euclid]

But this is not about Chinese tank cars.  As I understand it, this is about new tank cars being manufactured in the U.S. by a company that is partially funded by China.  I only asked if it is controversial because I sensed a tiny indication of that in the original post. 

But, of course it would be controversial if China were to manufacture tank cars and sell them to U.S. fleet.  The controversy would be over whether the probability of inferior quality control defeats the mission of making safer tank cars. 

[Wizlish]

I think you are right; it's not really 'controversial' in the sense that an attempt by Chinese business to import large numbers of Chinese-built tank cars would be.  If I understand the situation correctly, Vertex essentially 'outsourced' much of the engineering and construction know-how "to a lowest bidder" and has further cut its development expenses by giving an equity stake (via JV) to the people providing the know-how (in this case, Chinese). 

Whether the training of the 'Chinese checkers/inspectors' (sorry, I could not resist!) is inadequate, or whether inferior parts coated in lead-bearing primer will be sent over to make rickety tank cars, I can't say -- but intentional fudging on 1232 construction standards or whatever doesn't seem to be an implicit part of the Vertex business model.

I did note with some interest that the Vertex 'engineering' company has recently filed for bankruptcy.  At the time I thought this was suspicious, but I now wonder if it's just similar to Apple getting rid of its entire advanced-products research lab when they first decided to become a consumer-products company...

[Northtowne]

The industrial decline you describe has occured mainly in the NE US, as you outlined (I say mainly). In the Southern US, industrial growth has increased significantly and is quite robust at this time. There are numerous steel plants (electric mills, mainly) and auto plants. And some railcar plants.

Northtowne

[wanswheel]

Excerpt from Vertex Railcar Corporation

http://www.vertexrail.com/joint-venture-announcement/

Vertex Rail Technologies, LLC is excited to announce that it has entered into a joint venture with China Southern Rail (CSR) and will now continue operating its business as Vertex Railcar Corporation.

While for decades American companies have invested in manufacturing facilities overseas in places such as Vietnam, India, and China, Vertex has reversed this trend by partnering with private equity investors and leading Chinese freight car manufacturer, CSR. The partnership allows Vertex to rapidly ramp up its business and to scale up its new production facility in Wilmington, NC.

 

Excerpt from WilmingtonBiz (Greater Wilmington Business Journal)

http://www.wilmingtonbiz.com/banking_and_finance/2015/06/11/vertex_in_joint_venture_with_private_investors_chinese_freight_car_firm/13420

The new company, announced in November by Gov. Pat McCrory and state and local officials, has experienced delays as it works to set up shop at 202 Raleigh St., Vertex Railcar Corp. CEO Don Croteau has said, because of a delay in the release of federal regulations regarding the manufacturing of rail cars…

The president of Vertex Railcar Corp. is Donghui Zhang and the secretary is Wei Cheng, according to documents filed with the N.C. Secretary of State's Corporations Division.

 

Excerpt from WECT (NBC channel 6) Wilmington, NC

http://www.wect.com/story/29389528/vertex-hiring-update-plenty-of-positions-to-fill

Be patient if you're hoping to get a job with the new railcar manufacturing company in Wilmington. Officials at Vertex Railcar Corporation say there are still plenty of positions to fill.

"We have hired about 25 people at this point, and are continuing to hire," said Foster Sayers, General Counsel for Vertex.

Sayers says the leaders of the first team of employees are in China now training at their staging facility there. They will be there for the next two weeks.

[NorthWest]

CSR has had quality control problems in the past, including asbestos problems in locomotives for Australia and New Zealand that were certified as asbestos-free. If it is simply investment in a company fully building cars here to standards it is fine, but anything more may be suspect.

[BOB WITHORN]

The CEO is American, the President and Sec. are Chinese? It looks to be more of a Chinese owned company, operating in the US. Not that unusual anymore. In Saginaw Michigan, Delphi, (former GM), sold its steering gear plant to the Chinese. It's called Nexteer, so all of us Chevy/GMC pickup drivers have 'Chinese' steering columns. Mine works fine.

[wanswheel]

The Jetsons and the Flintstones

https://www.youtube.com/watch?v=v95aJmhwH_k&t=11m19s

Excerpt from WilmingtonBiz, June 19

http://www.wilmingtonbiz.com/more_news/2015/06/19/vertex%C3%A2%E2%82%AC%CB%86signs_of_growth_or_trouble/13446

The joint venture creates a new partnership, with Vertex Rail Technologies owning 33 percent of Vertex Railcar Corp., China Southern Railway owning 22 percent, and private equity firm Majestic Legend Holdings Ltd. having a 45-percent stake, said Croteau and Foster Sayers III, general counsel, government liaison and public relations manager for Vertex.

Majestic’s initial investment was $6 million, according to a copy of the joint venture shareholder agreement that Vertex provided to the Greater Wilmington Business Journal. China Southern Railway is providing something money can’t buy, Sayers said.

“They haven’t contributed cash; they contribute engineers and technical manufacturing know-how,” he said.

In exchange, China Southern Railway, which merged in June with China Northern Railway to form CRRC Corporation Ltd., will eventually own half of Vertex Railcar Corp., Sayers said.

“Their investment mandates don’t allow them to invest physical capital into a company until it’s fully operating so after we complete the first several hundred cars, we’re then an operating company,” Sayers said. “They can then contribute tens of millions of dollars to buy down the equity partner, Majestic, and [Vertex Rail Technologies].”

[Wizlish]

Of course, Majestic Legend is a Hong Kong company, in existence less than two years.  And who controls Hong Kong now?

[schlimm]

Wizlish

Of course, Majestic Legend is a Hong Kong company, in existence less than two years.  And who controls Hong Kong now?

 

Financiers and bankers run HK, as always.  It's much the same as Macau, both being provincial-level Special Administrative Districts of the PRC, with a lot of autonomy (their own passports, taxing bodies, etc.), but Macau is controlled by casino operators such as Sheldon Adelson.