Business

Talgo in Race for Florida High-Speed Train

As global consortiums line up to bid, skeptics see financial black hole ahead
By: Kenric Ward | Posted: January 29, 2011 3:55 AM
Talgo 350

Talgo 350

Doubts and controversy over Florida's high-speed rail venture aren't deterring high-powered European and Asian companies from lining up to bid on the project. Talgo Inc. figures to be at the head of the queue.

Eight global consortiums have expressed interest in building and operating the proposed 84-mile line connecting Tampa and Orlando.

One of the leading contenders, Florida Mobility Partners, is headed by Talgo, a Spanish-headquartered train operator that is expanding operations in America.

CEO Antonio Perez

Antonio Perez

"This is a most important project for us. The number of trains involved is not very large, but it's significant because it's the first in the United States," Talgo America President Antonio Perez told Sunshine State News in an exclusive interview.

"The U.S. has large potential, and this is important from a strategic standpoint," he said.

Talgo's prospective competitors see the Florida project in much  the same way -- a beachhead for future business as the Obama administration pushes more high-speed rail ventures.

Like Talgo's team, the prospective bidders rely heavily on expertise from outside the United States. Among the consortiums expressing interest to the state:

  • Bechtel, Amtrak and France’s SNCF America.
  • Parsons and South Korea’s Samsung, Korail, KRTC, GRDC, KRRI, Korean Consortium and Korea Railway Association and Hyundai Rotem USA.
  • Florida High Speed Rail LLC; UK's Balfour Beatty Rail; United States’ HDR, Parsons Brinckerhoff, PCL Civil Constructors and Lane Construction; Japan’s Mitsubishi International, Central Japan Railway Co., Sumitomo Corp. and Japan Bank for International Cooperation.
  • Spain’s ACS Infrastructure Development and Dragados USA; United States’ T.Y. Lin International and GE Transportation; China’s TSDI, CSR SF China and CRCC China; and Brazil’s Odebrecht Infrastructure.
  • Florida Rail Ventures: Germany’s Siemens; France’s Veolia; Spain’s Global Via USA and FCC; United States’ Granite and Jacobs; and Sweden’s Skanska.
  • France’s Alstom and Vinci Concessions; Spain’s OHL USA; United States’ PBS&J, AECOM, Hubbard Construction and Archer Western Contractors; and UK's Virgin Group and Virgin Rail Group.
  • An incomplete consortium comprising United States’ Kiewit, Canada’s Bombardier and UK’s National Express.

Talgo's Perez believes that his Spain-centric team -- which includes contractors Ferrovial, Elecnor, Invensys Rail (UK), Prince (U.S.) and concessionaires Soares Da Costa and Cintra -- is best equipped to land the Florida job.

In America, Talgo trains have provided passenger service in the Pacific Northwest since 1994, and operate in other scattered regions around the country.

Prince, a lead contractor in the Talgo consortium, is headed by John D. Watson, a Florida State University graduate. The company has been involved in several transportation projects in the state, including I-595 expansions in Broward County.

As for high-speed rail, Talgo team partner Ferrovial Agroman has laid a quarter of Spain's high-speed track.

"Our group has lots of experience in transportation projects," Perez said. "We're used to taking risks in ridership that not all others are willing to take."

Risk will definitely be part of the package as Gov. Rick Scott has vowed to keep the state's taxpayers off the financial hook.

Though the Obama administration has allocated $2.4 billion for the project, a funding gap estimated somewhere between $280 million and $1.5 billion remains (depending on who's doing the estimating). That does not include expected operational deficits.

Perez acknowledges that Talgo, like other European train operators, has relied on government financing to cover expenses there.

But banking the financial clout of global concessionaire Cintra and leveraging Talgo's ongoing experience with the U.S. Passenger Rail Investment and Improvement Act, Perez says Florida Mobility Partners has the tools to do the job.

Still, Perez stopped short of guaranteeing to cover all costs.

"We will do our due diligence," he said.

When the Florida Department of Transportation puts out requests for qualifications in the coming weeks, Perez said he expects his group to be in the mix.

So do others.

The Florida High Speed Rail coalition is represented by Al Cardenas. a former state Republican Party chairman. For added juice, the Cardenas firm recently hired Lanny Wiles, who, along with wife, Susie, has close ties to the Scott administration.

For a bit of flash, the Siemens' coalition plans to bring its "Future of Florida High-Speed Rail Tour" to Tallahassee while the Legislature is meeting. The traveling exhibit, featuring a virtual 200-mph train ride, is scheduled to be at the capital March 10-13.

The Alstom consortium is considered a high-powered competitor from an engineering standpoint. Alstom makes more than 70 percent of the world's "very high-speed trains."

Skeptics, however, have questioned whether the Tampa-Orlando route is even a good fit for trains that can travel up to 200 mph. With four stops projected along the line, one pundit calls it "a glorified Disney shuttle."

Tea Party groups instrumental in Scott's election have roundly criticized the high-speed rail project as a government-engineered boondoggle that puts Florida taxpayers at risk.

Central Florida attorney Pat Christiansen, who chairs a state panel reviewing high-speed rail, told the Orlando Sentinel that bidders could pick up the state's tab for the train, scheduled to start running in 2015.

The contract, he said, is designed to reward the teams assuming the most financial risk.

"Who knows what these private companies will come in with?" Christiansen said.

Talgo's Perez says his company is committed to the U.S. market. Last year, the firm opened a plant in Milwaukee to manufacture trains sets, but when Wisconsin canceled its high-speed rail plans, Talgo announced it would likely close or move the plant by 2012. Perez said Florida could be the site for building America's new generation of high-speed trains.

"We haven't determined where the high-speed rail trains would be built. We're open to looking elsewhere for a new facility," he said.

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Contact Kenric Ward at kward@sunshinestatenews.com or at (772) 801-5341.


Comments (4)

PVWB
3:08PM JAN 29TH 2011
When gas gets up to $5 a gallon, we'll really need rail service.
Let's get started on building more passenger rail, high-speed
or conventional. Some subsidy may be required, but roads
and air facilities are subsidized, why is rail alone supposed to
not require subsidy?
BAP
10:54AM JAN 30TH 2011
It's nice to know that someone else out there shares the same rational, forward thinking viewpoint as the president. We need to plan for the future, not the present.
BM
4:29PM JAN 28TH 2011
I think this statement pretty much says it all. "Perez acknowledges that Talgo, like other European train operators, has relied on government financing to cover expenses there. "

So why would it be any different in Florida? It won't and the taxpayers not only in Florida but across the country will be on the hook.

This is a full court press by the big money special interests that want the government to pay their way.
ghostrideraz
2:36PM JAN 29TH 2011
Yep! It DOA the gov just axed project. City of Phx completed thier light rail and it has yet to have a return on investment and is losing money. What a surprize.
If it goes the management will have to apeal to the general public to keep thier cars in the drive way. In Orlando- Kissimme publiic trans is very unreialble. Never mind a link between Tampa/ Orlando. Better get those tourist who widh to visit Bush Gardens /theme park and WDW to even get some people to ride.

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