Monday, April 1, 2013

In Job Poor State, Walker Derailed Wisconsin's Emerging Rail Industry

[updated, 12 a.m., April 1. Originally posted 12 a.m., March 30]
The veteran Wisconsin writer Marc Eisen eloquently described Scott "Walker's fateful decision to reject an $810 million federal grant to build a passenger rail line connecting Madison and Milwaukee....

"The I-94 corridor linking Dane County with Milwaukee and Waukesha will likely be the state's 21st-century economic engine. In turn, it will be a vital link in what technology booster Tom Still has called the "I-Q Corridor" — the 400-mile stretch of interstate connecting the heavyweight metropolises of Chicago and the Twin Cities.

"'That corridor contains some of the nation's leading research universities, well-educated tech workers and thriving tech-based companies at all stages of development," Still, who's president of the Wisconsin Technology Council, wrote a few years ago. 

"Now imagine an updated rail system carrying people from the Twin Cities to downtown Chicago in less than six hours — even faster than driving and on a par with a complicated airline connection. 

'Oops! Don't consider it. That scenario is precisely what Walker killed when he gave back the $810 million — federal funding that would have paid the full capital costs of connecting Madison to Milwaukee."

For the record, here is the timeline showing how new passenger rail construction and manufacturing jobs were taken out of a stalled, then failing Wisconsin employment picture by Scott Walker and his legislative allies:

* 3/29/09 - - shortly after Barack Obama's swearing-in

Doyle seeks full cost of fast rail link

* 2/6/2010, from The Journal Sentinel:
Talgo, a Spanish train manufacturer, is seeking a Wisconsin plant to assemble trains that could run on this route. The Talgo business could create 50 to 60 jobs building two trains that the state already has ordered for the existing Milwaukee-to-Chicago Hiawatha service, plus another 20 to 30 more building two more trains for high-speed service, says Jim Schmelzer, president of Super Steel Products Corp., which is seeking the work.

Counting "indirect" jobs at suppliers would add another 152 jobs this year, 479 next year, 647 in 2012, 202 in 2013, 54 in 2014 and 11 in 2015.
State and local government jobs, including planners, engineers and project managers, would total 67 this year, 212 next year, 291 in 2012, 109 in 2013, 47 in 2014 and 26 in 2015. Klein said personnel hired by the state Department of Transportation for this project would hold their jobs no more than four years.

Therefore, total employment specifically linked to the train line would be 1,100 this year, 3,483 next year, 4,732 in 2012, 1,542 in 2013, 483 in 2014 and 167 in 2015.

The remaining jobs that the state claims would be created - 181 this year, 577 next year, 803 in 2012, 305 in 2013, 138 in 2014 and 83 in 2015 - would be "induced" employment, or jobs at stores, restaurants and other businesses where the railroad workers would spend their wages.
2/23/2010: Republican candidate Scott Walker pledged to create 250,000 jobs and 10,000 businesses if elected Governor:
Madison – Scott Walker, Milwaukee County executive and candidate for governor, announced today at the Wisconsin Manufacturers and Commerce (WMC) Gubernatorial Candidate Forum his ambitious plan to bring 250,000 jobs and 10,000 new businesses to Wisconsin by 2015.
3/2/2010: Talgo is coming to Milwaukee to build trains:
MILWAUKEE - Governor Jim Doyle announced today that Talgo will locate its U.S. high-speed passenger rail manufacturing and assembly facility at the former Tower Automotive site in Milwaukee, creating 125 direct jobs in Wisconsin and about 450 indirect jobs through vendors throughout the Midwest.

The announcement strengthens Wisconsin's status as a national leader in high speed passenger rail manufacturing and builds on the Recovery Act's $823 million investment in the state's high speed rail network...

"Talgo has made a business decision to locate the manufacturing facilities in the Milwaukee Tower Automotive site after careful consideration of the sites presented to us in a quite open process," Talgo CEO and President Antonio Perez said...

"We believe that the Tower site will allow us not only to deliver the train sets on time and with our high standards of quality, but it will also allow for future growth...

Not only will Wisconsin's Talgo trains be built in Milwaukee, the Talgo rail car assembly plant will support the delivery of Talgo trains throughout the country and create hundreds of jobs through its supply chain vendors in the Midwest and U.S.

Last week, the state of Oregon announced it has purchased two Talgo train sets that will be assembled in Wisconsin - saving both states millions of dollars.
In January, Governor Doyle announced Wisconsin will receive $823 million in American Recovery and Reinvestment Act funds to build high-speed rail service to connect its centers of commerce and create thousands of jobs....

The project is estimated to create thousands of jobs in Wisconsin in fields like construction, engineering, design and supply.
July 29, 2010:

LaHood, Doyle say there's no derailing high-speed rail line

* About a month later, from the Scott Walker gubernatorial campaign "No Train" Website, Walker pledges to kill the initiative:
Dear President Obama:
Last month, U.S. Transportation Secretary Ray La Hood...declared that: "High-speed rail is coming to Wisconsin," and "there's no stopping it."
I am drawing a line in the sand Mr. President: No matter how much money you and Governor Doyle try to spend before the end of the year, I will put a stop to this boondoggle the day I take office.
*  Six days after the Nov. 2, 2010 gubernatorial election, won by Walker, from the AP:
Jim Doyle, Wisconsin's outgoing Democratic governor, told The Associated Press that although he thinks a high-speed rail line to connect Milwaukee with Madison is a good idea, he feels obligated to leave the project's future up to Republican Gov.-elect Scott Walker.

Minutes after Doyle made his comments, Walker said he remains opposed to the $810 million project.

"My position remains the same," Walker said. "I don't see anything that would change my mind."

U.S. Transportation Secretary Ray LaHood sent a letter to Walker dated Monday that said unless the governor-elect changed his position, "we plan to engage in an orderly transition to wind down Wisconsin's project so that we do not waste taxpayers' money..."
11/9/2010: Illinois, and others, ask for the money Walker declined:
State Sen. Jeffrey Schoenberg (D-Evanston) said he would work with other lawmakers to persuade the U.S. Department of Transportation to transfer the money to Illinois.
He also would like to see trainmaker Talgo, Inc. move here. Talgo has said it can’t promise to stay in Milwaukee if the state rejects the rail project...
Illinois has competition — Gov.-elect Andrew Cuomo in New York already has sent the DOT a letter saying his state would take the money if Wisconsin rejects it.
* 12/ 9/2010

High-speed rail funds scatter to other states

California is the big winner, with up to $624 million, followed by Florida, up to $342.3 million; Washington, up to $161.5 million; and Illinois, up to $42.3 million. Smaller amounts will go to New York, Maine, Massachusetts, Vermont, Missouri, Oregon, North Carolina, Iowa and Indiana..
In a meeting with reporters in Waukesha, Walker called the decision a "victory" because he sees the rail line as a symbol of excessive government spending...

Even with the federal government paying all construction costs, Walker has said he didn't want state taxpayers to bear any of the operating costs. The state initially estimated those costs at $7.5 million a year, after subtracting fare revenue, but revised ridership estimates could have cut taxpayers' share by $2.8 million. The state also could have used part of its federal highway funds to cover 80% to 90% of the taxpayer share.
4/12/2012:  Layoffs begin at Talgo's Milwaukee factory, costing real people real jobs, according to Milwaukee Mayor Tom Barrett who noted Wisconsin's overall weak employment numbers.

* 4/25/2012: National media note job losses in Wisconsin as worst in the country:
Wisconsin lost 23,900 jobs between March 2011 and March 2012, according to data released Tuesday by the US Bureau of Labor Statistics. The state’s lead in job losses is significantly greater than the rest of the 50 states: No other state lost more than 3,500 jobs.

The majority of the losses in Wisconsin, 17,800, were in the public sector. However, the state lost more private-sector jobs, 6,100, than any other state. The only other states to report private-sector job losses in the same time period (instead of private-sector gains) were Mississippi and Rhode Island.
*   5/9/2011: Under pressure from Milwaukee business leaders, Walker asked the feds to return $150 million rail money he'd rejected to fund improvements on the Milwaukee-Chicago Amtrak line while shutting out the Madison line and westward connections to the Midwest high-speed rail system - - and is turned down.

*  5/24/2012: Walker spins the jobs numbers as better than they are, earning a "mostly false" rating from PolitiFact. 

5/29/2012: Officials at Racine meeting say loss of Talgo train facility will harm Chicago-Milwaukee corridor development.
Turning down $810 million for high-speed rail and not honoring the state's contract with Talgo is killing job creation in the Milwaukee-Chicago corridor. Focusing so heavily on roadways is a "path to nowhere," Racine Mayor John Dickert said...
What our region needs, he continued, is a complete intermodal system so the region resembles that of other communities with healthy mass transit systems.

"Look at Minneapolis or Seattle, they're both growing," Dickert continued. "In Iowa, they've seen $1 billion in economic development because of one leg of a commuter train line. We could be like that, too. We want to create that movement of people in our district. We know it. The rest of the world knows it, but they don't know it in Madison."
12/5/2012: State sued over train building loss:
A manufacturer has sued Gov. Scott Walker and is claiming it does not have to turn over two new train sets that have cost the state more than $42 million.

The state agreed in 2009 to buy two new train sets from Talgo Inc. for Amtrak's Hiawatha line, which runs from Milwaukee to Chicago, but Walker's administration and Republicans in the Legislature have repeatedly clashed with the firm since last year....

Talgo has been in the political spotlight since Wisconsin won an $810 million stimulus grant to build a high-speed rail from Milwaukee to Madison. The federal government revoked the award after Walker won election in 2010 on a promise to stop the train.

The lawsuit, however, centers on the trains for the Milwaukee-Chicago line and is not related to the abandoned Milwaukee-Madison line.
12/12/2012: Walker's claim to have created almost 100,000 jobs rated "pants on fire" by PolitiFact:
By his administration’s own yardstick, his statement is false. We think it’s ridiculous to -- after private admonitions -- publicly present it this way. Pants on Fire.
3/21/2013: High-speed track upgrades, rail equipment construction and related procurement management is booming in Illinois:

Illinois to take lead in buying high-speed locomotives

Feds select IDOT to manage purchases for passenger routes in 5 states

Locomotives capable of exceeding the 110-mph speed limit on the passenger rail corridor between Chicago and St. Louis will be bought for Illinois and four other states under a process the Illinois Department of Transportation will lead, officials said Thursday.

The Federal Railroad Administration selected IDOT to manage the multistate procurement of at least 35 next-generation locomotives for high-speed rail corridors in Illinois, California, Michigan, Missouri and Washington state, Gov. Pat Quinn said....

The new locomotives to be bought through a competitive-bidding process will be paired with 130 bilevel rail cars being built at the Nippon-Sharyo plant that opened last year in Rochelle in northwestern Illinois.

The federal government has allocated $808 million to build the locomotives and passenger coaches, officials said.

Twenty-one of the locomotives and 88 of the rail cars will operate on routes in the Midwest, IDOT spokesman Mike Claffey said.
3/28/2013: Wisconsin's job growth ranking has fallen dramatically from 11th nationally when Walker took over to 44th, government data in the Journal Sentinel show:
Wisconsin ranked 44th out of the 50 states in private-sector job creation in the 12 months from September 2011 to September 2012. The state's position has deteriorated progressively from a revised rank of 41st in the previous 12-month period through June 2012; and from a rank of 37th in the 12 months through March 2012.
"Wisconsin is falling behind," said Abdur Chowdhury, an economics professor at Marquette University....
Wisconsin ranked 11th among the 50 states in 2010 in private-sector job growth, outperforming the nation as a whole.
But it dropped to 38th in 2011, Gov. Scott Walker's first year in office.
For Walker, Wisconsin, and the workforce, less a missed opportunity than a willful and costly mistake.


Anonymous said...

Emerging rail industry??? You can’t be serious. Transporting people efficiently by trains ended a hundred years ago when they invented automobiles which didn’t require a rail line to every single destination and allowed people to create their own travel schedule.

There is one good rail project that will be needed in Wisconsin, however, and that will be the trains needed to haul iron ore. I am looking forward to seeing those long ore trains which will be a sign of prosperity once again returning to Wisconsin.

oldmoderate said...

This is a really great summary. I wonder if the folks at the Wisconsin Technology Council have weighed in on this.

Paul Trotter said...

Outstanding Mr. Rowen!

James Rowen said...

Passenger rail is a multi-billion dollar industry in the US and worldwide. Talgo and Super Steel are/were Milwaukee manufacturers and all the spin-off employment was there for the taking, along with construction on the SE line for several years.

And as Eisen pointed out, the university connections regionally are lost.

Thank you, Paul, and Oldmoderate.

zombie rotten mcdonald said...

I am particularly charmed at Nonnie Mouse's self-refuting comment.

Rail lines are dead! Except when they aren't!

Anonymous said...

Anon 6:40 AM is really hitting Poe's Law for me.

Echoing the rest, great summary.

Anonymous said...

If no government funding or passenger fare supplement were required to fabricate and maintain the trains, install and operate the rail system, I would support high speed rail.

If it failed - well, look what the elected did for GM.

James Rowen said...

To Anon 5:51 p.m. - - Highways
are 100% subsidized by the gov't.


Anonymous said...

I believe a users tax is collected at the pumps.

Only a double standard if fares = pay for the system like toll roads.

James Rowen said...

Doesn't cover the costs.

Anonymous said...

"I believe a users tax is collected at the pumps."

You are sadly mistaken. That tax covers less than half of the cost of maintaining the road system, and 0% of the costs of enforcing the law on the road system, 0% of the costs the road system impose on public health, and 0% of the cost of securing the supply lines that provide us with the fuel for using our road system.

Anonymous said...

CAFE standards means less taxes will be collected. Do we really need more debt and higher taxes with high speed rail?
A far superior private investmentwill be in LNG and propane technology to offset diesel and gasoline.

Anonymous said...

Real Americans drive their own vehicles. Only socialist European sheep herd themselves onto trains to be transported at government mandated schedules and destinations.

Real trains haul coal and iron ore.

Anonymous said...

Yup. Like every American, I love me my freedom.

That's why I took a government class, and then a government written test, and a government practical test, paying the government at every step, to get a government issued card with my picture on it, so I could drive.

And then I bought a car from a government approved make& model, got it inspected at a government licensed shop, retitled with the government, registered with the government, and insured by a government licensed insurer. Then I fueled it with a government regulated fuel blend and got moving. (On roads lined with government agents monitoring my speed and how I drove).

Cuz I'm not like those European sheep who just pay cash for train tickets and move around without the government caring or even knowing.


Anonymous said...

@2:26- love the sarcasm - yet you can still buy bus or train ticket in the USA and travel without the GOV. knowing.

Anonymous said...

Excellent timeline. You need to sticky this post at the top of your blog!!!STAT!!!

Anonymous said...

Even heavily used rail systems lose money and need subsidy to maintain level of service, pay overtime, pay pension, pay health care. If this was a great idea it wouldn't need public charity. The state would win the battle but lose the war with Talgo who would fill temp jobs for a few years, and bail. Who's stuck with the bill when it goes over budget or doesn't meet revenue projections. Illinois.

Anonymous said...


Even heavily used rail systems lose money and need subsidy to maintain level of service, pay overtime, pay pension, pay health care. If this was a great idea it wouldn't need public charity"

Amtrak, the most heavily subsidized rail system around, got a 12% subsidy.

Our highway system, meanwhile, gets over a 50% subsidy. If the highway system wasn't subsidized, Amtrak would have an easier time competing with it, and would ask for even less of a subsidy.