“Buy America” regulations put a stop to the first U.S. contract of an Alpharetta-based German producer of electrical systems for light rails, buses and streetcars, but have not deterred the company from seeking other projects in the U.S.
Vossloh Kiepe Inc., an American affiliate of Vossloh Kiepe GmbH based in Dusseldorf, Germany, originally had a contract to produce for the city of Houston electrical equipment for light rails, transit systems most frequently used in large cities, made by CAF USA Inc.
CAF USA, a subsidiary of the Spanish company, Construcciones y Auxiliar de Ferrocarriles (CAF), S.A., failed to comply with different “Buy America” regulations and the project was suspended in September by the Federal Transit Administration, said Klaus Roehmer, president and CEO of Vossloh Kiepe Inc.
The FTA found after a four-month investigation that CAF and the Metropolitan Transit Authority of Harris County, Texas, violated “Buy America” requirements by planning to build light rail vehicles in Spain.
While “Buy America” regulations ended Vossloh Kiepe’s first project at this facility, Mr. Roehmer told GlobalAtlanta that he is not worried about complying with requirements in the future.
“We as a company … have made a commitment to comply with the ‘Buy America’ requirements all the way. We understand that fully and we are in full support of it,” said Mr. Roehmer.
“Buy America” mandates that if federal funds are allocated for a transit system, then the cost of parts produced in the U.S. must be at least 60 percent of the total cost of production. Final assembly of the system must occur in the U.S. as well.
Mr. Roehmer said that Vossloh Kiepe’s commitment to its location in Alpharetta shows that the company is not deterred by any aspects of the act.
For this new location, the company is pursuing contracts in cities around the country, including projects in Boston, Seattle and Los Angeles, he said.
He added that he is confident that the facility will be up and running in six months to a year and will have 30 to 40 employees by that time.
The facility is Vossloh Kiepe’s first in Georgia. The company, which designs a number of different products including propulsion systems, warning bells and air-conditioning systems, decided to expand to metro Atlanta for its affordable labor force, tax advantages and ease of international travel via Hartsfield-Jackson Atlanta International Airport.
“The most important point for me is a quick access to customers or to engineering sources which are in Germany,” he added, saying the convenience of the airport was more important than Atlanta as a potential market.
Although the company decided to build a facility in Atlanta to provide electrical systems throughout North America, Mr. Roehmer said that the city is not the next market for the company because of the lack of concrete plans to build light rails, buses or other transit systems in addition to ones already built by the Metro Atlanta Rapid Transit Authority (MARTA).
Mr. Roehmer also said that there does not seem to be a consensus to install transit systems here and that there are more promising markets in cities more committed to public transportation such as San Diego or Portland, Ore.
He added that part of the problem of building public transportation in Atlanta is that MARTA has failed to be profitable and the city’s residents end up paying for the system. According to Mr. Roehmer, for Atlanta to have a self-sustaining system, it needs to be fast and efficient and have a high ridership.
“If the ridership is very high, then the system funds itself and the tax payer doesn’t have to foot the bill,” he said.
He also said that not every city needs an expansive transit system. Depending on the demographics of the region, there can be a mix of cars, buses, light rails and other forms of transportation to effectively serve the area.
Vossloh Kiepe’s parent company, Vossloh Group, produces everything from locomotives to railway systems and has experience providing these technologies in a variety of demographics.
Vossloh Group is made up of 70 companies with facilities in over 30 countries including France, Spain, Turkey, Australia and India and has over 4,000 employees around the world.
The group is also well established in cities throughout the U.S. including Chicago, where it produces rail fastening systems and Cleveland, where it manufactures railway tracks.
For more information on Vossloh Kiepe, visit www.vossloh-kiepe.com.