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6/2/12 LA.'s lost opportunity to create local jobs with light-rail contracts - latimes.com

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OP-ED

Boosting employment should be a decisive factor when the city awards contracts.

By Madeline Janis

May 29, 2012

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L.A.'s lost opportunity for job creation

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On April 30, the L.A. Metropolitan Transportation Authority

voted to award an $890-million contract for 235 light rail

cars to Kinkisharyo International, a Japanese firm that will

build a significant portion of the cars in Osaka, Japan, rather

than in California. Just a week later, on May 9, the Bay Area

Rapid Transit agency voted to award a $2.5-billion contract

for the manufacture of 775 rail cars to a Canadian firm that

will build many of the car components in Mexico. With the

awarding of these two contracts, California lost the

opportunity to create more than 2,000 good American jobs

building rail cars for our transit systems.

That argument was made clearly and repeatedly by a broad-

based coalition of labor, community and business leaders

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who supported the losing bidders. But not everyone agreed

that creating jobs should be a top priority in awarding a

contract. The transit agencies said that when giving out a

contract for rail cars, the most important thing is building the

best possible rail cars at the best possible price. Jobs are a

nice side benefit, they argued, but they are secondary in the

contracting process.

I disagree, and I think that in both of these cases, the transit

agencies made a mistake. In fact, I'd go further: It's critically

important that we build consensus among public officials

across the country in the years ahead that job creation

should be considered one of the primary criteria in the

purchase of equipment for public use. In Los Angeles,

taxpayers will be spending billions of dollars over the next

decade building and retooling their 21st century

transportation system; creating good middle-class jobs for

local workers should not be given second billing.

We are already part of the way there. The federal Buy

America law, in effect since 1983, requires that all transit-

related goods and equipment purchased with federal dollars

need to be substantially made in America. This means that at

least 60% of the rail car components must be made in

America, and final assembly must occur in the U.S. Last year,

the California Legislature went further and allowed local

transit agencies to give extra points to bidders that commit to

building more of their rail cars in the U.S. than their

competitors.

That's an important start. Now we need to create a process in

which the quality and number of U.S. jobs to be created can

be legally considered by public officials in a manner equal to

the consideration of things like cost and performance.

In the recent L.A. rail car procurement process, MTA

officials started out on the right path. They included language

in the request for proposals that required all bidders on the

rail car contract to create a "U.S. employment plan" that

emphasized the creation of permanent living-wage jobs and

training opportunities for unskilled people. And they

promised to conduct a "trade-off analysis" in which the value

of the jobs plan could be deducted from the proposed cost of

the rail cars.

But the MTA staff didn't follow its own criteria. It rejected a

proposal from Siemens Industry Inc. that would have created

1,100 direct full-time equivalent U.S. jobs in favor of Kinkisharyo's plan, which will create 438

direct FTE jobs, according to our analysis. While Siemens proposed to spend $5 million on

workforce training and to build a rail car factory in East Los Angeles, Kinkisharyo made vague

promises to work with local nonprofit groups and to build a temporary facility somewhere in the

U.S.

The MTA staff claimed to have chosen Kinkisharyo because of a 5% lower cost and "better expected

performance," but it failed to answer the fundamental question of why Kinkisharyo wasn't required

to fully comply with the sensible requirements of the U.S. employment plan language.

In 2008, L.A. County voters adopted Measure R — the primary source of funding for the purchase of

these rail cars — precisely because public officials promised that the tax revenue would be invested

in desperately needed job creation and traffic reduction. Measure R itself stated that one of the

purposes of the half-cent sales tax increase was to "stimulate the local economy [and] create jobs." A

2008 study by the L.A. County Economic Development Corp., commissioned by the MTA to

support the tax, projected that Measure R would create more than 500,000 jobs, including 33,000

manufacturing positions.

Even once everyone agrees on the importance of job creation in the procurement process, transit

agencies will still need to establish clear procedures on how to value jobs and job creation. Should a

part-time, temporary job be counted the same as a full-time job with extensive training

opportunities? Is the creation of a temporary facility as valuable as the construction of a permanent

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manufacturing facility in a poor neighborhood? These are questions that the MTA failed to address

in its procurement decision. Yet research shows that building permanent, environmentally sound

manufacturing facilities in poor neighborhoods can breathe life into those communities and into the

larger regional economy.

Public officials charged with expending precious tax dollars on equipment need to select companies

that manufacture their products in the United States.

Madeline Janis is an attorney and national policy director of the L.A. Alliance for a New Economy,

a nonprofit organization. From 2002 to 2012, she was a member of the Board of Commissioners of

the L.A. Community Redevelopment Agency.

Copy r ig h t © 2 01 2 , Los A n g eles Tim es

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Comments (24) Add / View comments | Discussion FAQ

astrobob1 at 3:47 PM May 30, 2012

The very best quality Cars at the best price is the best policy.Those cars will be around for fifkty years, long after those politicians and Union Bosses arelong gone. And the Public Riders will thank those who gave them the best rides!!!!

David in Fresno at 11:45 AM May 30, 2012

"The transit agencies said that when giving out a contract for rail cars, the most importantthing is building the best possible rail cars at the best possible price."I am truly astonished at the number of commenters who support this decision. In myopinion the "best possible pirce" is one that removes someone from the unemployment rollsand produces a taxpayer. I seriously doubt that the bid parameters considered these twoelements (and others I don't know about such as parts suppliers, etc) in the equation. This isanalagous to awarding the contract for waste disposal to the people who will, for the lowestdirect cost to homeowners, dump garbage into the nearest ravine which eventually becomestoxic, kills fish, and poisons the water supply. All that should have been included in the costof the original contract.Outsourcing is ruining America. The worst idea in the past 100 years is the idea that FreeTrade is somehow beneficial. The only time we have had full-employment and the ability toprovide 500,000 new jobs evey year to immigrants from Europe was the Golden Age of1875-1910, when we had extremely high tariffs and no income taxes. If we are ever to haveprosperity in this country again we must return to waht has been shown to have worked inthe past.

Tonatiuh at 6:09 AM May 30, 2012

The opinions expressed by most people on this post, tend to be racist, ignorant, and oftendownright un-American. Today, they have been mostly un-American, downrighttreasonous. These conservatives "thinkers" would rather see California go bankrupt, theunemployment level rise even more, services cut even more, than to see good jobs go tounionized American workers. They are fine with these good jobs going to Japan, or Canada,or even Mexico (a country they utterly hate for their own racist reasons), rather than tounionized American workers. Weakening America from the inside, by worsening oureconomic crisis is treason. These so called "conservatives" are engaging in treason, and theythink theirs, it's a defensible position. So, let them keep blaming all the problems on Liberals,unions, illegal aliens, government entities, and Democrats. We know who the real traitorsare, the ones actively working to make sure that California keeps sinking, by advocating theoutsourcing of good jobs, just to punish labor unions. Such hatred!!

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