Nearly four years ago, a jubilant Roger Snoble, the Metro transit agency’s CEO, stood on the tarmac at LAX and gushed to television crews about how “neat” it was to watch as the first of 50 good-looking Italian-made stainless-steel light-railcars made to order for Los Angeles disembarked from the belly of a Russian-built cargo plane.
What really impressed Snoble was how the manufacturer, AnsaldoBreda S.p.A., paid extra to fly the 90-foot, 54-ton car to L.A. to meet a deadline it would have missed if the cars had been shipped by sea. As it turns out, that was about the last “happy” day involving the Italian firm that Snoble can recall.
The Italians missed key deadlines again and again, and Los Angeles was left with only 17 light-railcars in hand nearly two years after all 50 were to have been delivered. And coming in far too heavy, weighing 6,000 pounds over the promised weight, the railcars exceed Caltrans rules and could be unusable on the Green Line light rail, between Redondo Beach, Inglewood and Norwalk.
In an era of rising taxpayer ire, Metro leaders saw AnsaldoBreda’s poor track record as a good reason not to pursue the remaining “options” on its contract, which could hand the firm $300 million in taxpayer money to build 100 more cars.
Snoble, other Metro executives and Los Angeles County Supervisor Michael D. Antonovich urged Mayor Antonio Villaraigosa to back their view. Snoble sought a transparent approach that allowed even the snafu-riddled Italian firm to bid on the taxpayer-financed project, but now it would be forced to face healthy competition.
Instead, an eleventh-hour sweetener strengthened the Italian firm’s hand: It offered to try to build, in concert with billionaire Stephen Bing’s Shangri-La Construction, a “green” manufacturing plant downtown. Villaraigosa could then claim local jobs had been created, Bing could get construction contracts, and the Italian firm could get the inside track it’s been seeking with Metro ever since voters approved a new countywide sales-tax hike to fund billions in transit projects.
Villaraigosa, who is chairman of the politician-dominated Metro board, sided with powerful AFL-CIO union leaders. Together they pushed the Metro board several days ago to vote to give AnsaldoBreda two more months to address Snoble’s concerns and to provide “satisfactory performance” protections that could qualify it to pursue its option to build 100 more cars. Of the Metro board members, only Antonovich supported the outmaneuvered Snoble, who wanted to seek competitive bids on 119 new cars, as well as on the rebuilding of 69 older cars.
The case is a vivid example of how politicians, firms and unions are grabbing for tens of billions of dollars expected to flow from the new Measure R sales-tax increase. The Italians have hired Chris Lehane, a political spinmeister and former aide to President Bill Clinton, as the firm’s media handler. Lehane tells L.A. Weekly, “We indicated shortly after Measure R passed a strong interest in talking about manufacturing in Los Angeles. ... No other [light-rail] manufacturer has offered to put a plant in Los Angeles. It’s a unique offer.”
Then there’s the involvement of Bing, best known to many for asking English actress Elizabeth Hurley to submit to a paternity test to verify whether Bing was the father of her unborn child (he is), as well as for his weird role in another paternity test, in which Bing turned out to be the real father of the baby that billionaire Kirk Kerkorian assumed he had fathered with ex-wife Lisa Bonder.
A rich kid who inherited $600 million, Bing provides huge sums to underwrite Villaraigosa’s political desires and is a major donor to many California campaigns and political measures. According to campaign records, he poured $100,000 into Villaraigosa’s campaign to elect three Los Angeles Unified School Board members — none of whom has emerged as a school reformer. Bing then poured $50,000 into the solar deal L.A. voters rejected on March 3 because it largely froze out private solar firms and handed a blank check to the Department of Water and Power and its union, the IBEW.
Lehane may term AnsaldoBreda’s plan “unique,” but the deal is shaping up as strangely familiar — yet another Villaraigosa move to quell competition on a taxpayer-funded project, much like his failed effort to push through solar Measure B. In this case, it’s not the International Brotherhood of Electrical Workers but the County Federation of Labor that doesn’t want open bidding on a public project.
Barna Szabo, a lobbyist who has represented major railcar companies like Bombardier Transit Corp. of Canada and Siemens of Germany, says international firms are sitting on the sidelines, ready to bid on building the desired 119 light-railcars and rebuilding the 69 old ones — but unwilling to become involved in what is clearly becoming a “political procurement” where international firms could risk angering entrenched Los Angeles unions and politicians.
“Whenever you politicize a procurement, it’s hard to get cars that are affordable,” Szabo warns. In fact, he says, “this is a very good time to go to bid. Everyone is hungry.”
Szabo, who says he isn’t speaking officially for any company, doubts AnsaldoBreda will ever build a manufacturing plant in L.A. The firm has a small assembly plant in Pittsburg, Northern California, where it finishes Metro’s chronically late-arriving railcars — which the firm says are finally ready for delivery.
Szabo scoffs at Villaraigosa’s claim that an L.A. factory will materialize, creating many hundreds of local jobs. He says, “The idea of a manufacturing [plant] is more of a pipe dream. It is a humongous commitment, and you have to have multiple orders — hundreds and hundreds of railcars.”
The Weekly obtained a “white paper” prepared by Siemens for Metro, in which the German firm estimated that if it were awarded the job, it would need to hire only about 375 workers, total, in L.A. and other parts of California. In that paper, Siemens calls AnsaldoBreda’s very different claim that it would hire many hundreds of people and create hundreds of other outside jobs “grossly exaggerated.”
Hiring numbers hurriedly prepared for the Los Angeles County Federation of Labor, whose members packed the recent Metro vote meeting and are demanding AnsaldoBreda get every chance to exercise its original options, claim to show that the purported L.A. plant would employ 530 people in manufacturing, and 126 more when its “corporate headquarters” move here from Pittsburg — in addition to hundreds of unverifiable jobs it claims would be created in the broader economy.
Maria Elena Durazo, the County Federation leader, says, “We’re going to be vigilant as to how the conversation takes place and that AnsaldoBreda gets a fair shot.”
But, Metro offered the Italians a chance to open an L.A. plant in 2003, after it won its now-troubled contract. The firm instead chose to build the plant in Pittsburg, where it finishes the Italian-produced outer shells for L.A.’s railcars. “We hooked them up” with L.A. redevelopment officials, recalls Snoble. “But, they said, ‘We’re going to go to Pittsburg.’” Lehane defended that choice, saying AnsaldoBreda also did finishing work for San Francisco’s cars.
Up in Pittsburg, the Italian company also floated big ideas — which did not happen. Pittsburg officials offered the company a $1 million forgivable loan if the firm created at least 200 jobs. But, in part because federal spending on transit projects was dwindling, the company didn’t create 200 jobs. Recalls Brad Nail, Pittsburg’s director of economic development, “What started out to be a major company in our city did not turn out that way.”
Lehane says the company intends to keep its Pittsburg plant, but Nail said he was “surprised” to hear from L.A. Weekly that the company is thinking of moving its modest U.S. headquarters from Pittsburg to L.A.
The company also sought a major role in Miami transit projects. Miami officials took a different tack, rejecting the firm during competitive bidding to refurbish 136 light-railcars. Ivor Myers, manager for new-vehicle acquisition, says AnsaldoBreda “hinted that they would take the initiative to assemble the cars in Miami.” But Miami officials weren’t swayed.
Why? “They were not the lowest price,” says Myers — a winning issue in Miami, if not in Los Angeles.