Siemens' light-rail plant bringing 200 new jobs to south Sacramento

Once viewed as an oddity, light rail has become an increasingly powerful force in urban mass transit – and is helping bring 200 new jobs to a little-known Sacramento factory.

Siemens Transportation Systems Inc.'s new $277 million contract to deliver light-rail cars to Salt Lake City will bring employment to 750 within two years at its assembly plant in south Sacramento, said the company's president and chief executive, Oliver Hauck.

The production increase reflects the growth of light rail across North America – and Siemens' increasing market share. Siemens said it's responsible for one-third of all light-rail cars operating in North America but in the last three years has snared 60 percent of the new business.

"There must be a reason we're winning six out of 10," said George Nolen, president and chief executive of Siemens Corp., the New York-based parent of the transportation unit.

Hauck said Siemens is feasting on repeat business. The latest contract marks the fourth time the Utah Transit Authority has ordered light-rail cars from Siemens.

Ridership "has just exploded," said Carrie Bohnsack-Ware, a spokeswoman for the Utah agency. The new order will more than double the agency's fleet and is the largest order in the 24-year history of the Sacramento plant.

The Utah order isn't the only reason for the hiring. With orders pending from Denver; Portland, Ore.; Charlotte, N.C., and Edmonton, Alberta, the plant is scrambling to keep up with a backlog that tops $1 billion, said spokeswoman Xanthi Pinkerton.

In addition, Siemens is consolidating more work in Sacramento. Construction of the "trucks" – the axles and other parts found underneath the cars – is moving to the French Road plant from an Austrian facility.

Edward Beimborn, a mass transit expert, said cities often struggle with the big upfront cost of building a light-rail system. But once they commit to the technology, they're hooked.

"Once they've built that first system, the argument changes from, 'Should we have light rail at all' to, 'Who gets the next piece,' " said Beimborn, director emeritus of the Center for Urban Transportation Systems at the University of Wisconsin, Milwaukee. "There are a lot of systems around the country that are adding to the service."

Ridership is on the rise as commuters cope with high gas prices and cities try to become more eco-friendly, experts say. Light-rail ridership in Sacramento jumped 43 percent in April compared with a year ago, according to Sacramento Regional Transit.

Last month, for the first time since light rail debuted in Sacramento in 1987, light-rail ridership exceeded bus ridership, said Mark Lonergan, RT's chief operating officer. Weekday ridership on rail averaged 62,000 vs. 55,000 on the bus.

Lonergan said light rail has become more popular because the cars generally run more frequently than buses, and the presence of the line gives customers a greater feeling of reliability.

"A bus route can be re-routed to a different street," he said. With light rail, "there's that sense of permanence."

Beimborn said light rail has another use: as a spur to development. Cities find that development will sometimes blossom along a rail line or around a station.

"Somehow the light rail seems to energize the community more than doing it by bus," Beimborn said.

Perhaps the most noteworthy example in Sacramento is the commercial development that's emerged by the light-rail station at 65th Street and Folsom Boulevard, Lonergan said.

The growth of the Sacramento factory is due in part to the federal government, which partly funds most light-rail systems and requires manufacturers to assemble most of the cars' contents in the United States. That means Siemens doesn't have to worry so much about cheap imports.

But Siemens could have built its U.S. light-rail cars anywhere, and chose Sacramento. Nolen said the choice is a tribute to the work force – and a rebuttal to those who say the state has become too expensive for manufacturers.

"California can absolutely compete," he said.

Most of the plant's jobs pay $16 to $25 an hour, Hauck said.

When Siemens opened its Sacramento plant in 1984, it had one customer: the fledgling Sacramento system. Over the years it's delivered vehicles to systems from Portland to Puerto Rico, quietly becoming one of the major manufacturers in Sacramento.

The plant suffered an embarrassing setback in 1999 when Sacramento RT chose a Spanish company, CAF, to supply cars for an expansion. Siemens was an unsuccessful bidder. But the plant quickly bounced back with new orders from Calgary, Alberta, and elsewhere.

Until 2006 Siemens built the exteriors, or "shells," at a plant near Los Angeles and shipped them to Sacramento for installation of brakes, electrical systems and so on. But Siemens closed the Southern California plant and consolidated the work in Sacramento, leading to a 30 percent jump in employment.

RT's Lonergan said Siemens has become a leader in standardizing the different types of light-rail cars – a trend he welcomes. Standardization brings construction costs down and makes it easier for transit agencies to maintain the vehicles, he said.

Although RT is happy with the cars it bought from CAF, the agency "would be much more likely" to order from Siemens the next time it's ready to expand, he said.

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