Chinese firm wins $1.3b rail contract in Chicago

China's train making giant has won a $1.31 billion deal to build rail cars for Chicago, its second major supplier deal in the US. CRRC Corporation's contract is not only the largest rail car order in Chicago's history but also the largest railcar export project by a Chinese enterprise in a developed country, according to a statement the CRRC sent to the Global Times on Thursday. Analysts said winning the bid for the Chicago Transit Authority (CTA) rail car project is a sign that China's rail technology has advanced over the years and is now in a leading position in the world. According to the CRRC, the city of Chicago awarded the contract to build 846 railcars to CSR Sifang America, a subsidiary of the CRRC. The CTA's base order is for 400 cars, with an option to purchase the balance in the future. The CTA launched its bid in 2014 in an attempt to replace half of the city's old rail cars, according to a CRRC statement. There are 8 underground rail lines in Chicago. The CTA said the new cars will have stainless steel bodies, LED lighting and signages, and AC power propulsion for a smoother, quieter ride. The new rail cars, once delivered, will significantly reduce the average age of CTA rail cars and are expected to save the CTA about $7 million annually in reduced maintenance costs and reduced use of power. As part of the bid, CSR Sifang has also pledged to build a brand new rail car assembly facility in Chicago, the first of its kind in 35 years. The facility is expected to generate 170 jobs, and represents an investment of $40 million. Prototype models are expected to be complete in 2019, and the cars will go into service in 2020, the CRRC said. "Building factories overseas helps the company fend off costs caused by pollution and resource consumption," Wang Mengshu, a railway expert at the Chinese Academy of Engineering, told the Global Times Thursday. Meanwhile, the company faces challenges as the demand for railway projects in the US is not as high as expected, experts said. "The US may not be the ideal market for railway exports," Zhao Jian, a railway professor at Beijing Jiaotong University told the Global Times on Thursday. "Demand for railway projects is not big in the US, as the US railway system is already mature." Chugging along China is involved in multiple overseas rail projects currently under construction, including a $5.5 billion project in Indonesia, a 470 kilometer-long railway between China and Laos, an 800 kilometer-long railway in Thailand, and a 300 kilometer-long railway between Hungary and Serbia, according to a statement posted on the website of the State Council Information Office on February 3. Wang noted that China's rail technology is in a leading position compared to other countries, which lures a growing number of partners around the world. "The next step is to improve rail track maintenance by offering advanced training to local workers," said Wang. The Chinese government has taken a series of measures to boost railway construction. Chinese Premier Li Keqiang stated in this year's government work report that the government will invest more than 800 billion yuan ($123 billion) on railway infrastructure development this year. This is similar to the 824 billion yuan investment in railway infrastructure construction in 2015, but significantly higher than investment before 2013, according to a report Moody's sent to the Global Times on Thursday. The CRRC, a merger of former rivals China CNR Corporation and CSR Corporation, won its first US contract in October 2014 when CNR was awarded a $567 million deal to supply 284 subway train cars to Boston, Reuters reported on Thursday. The CTA did not respond to inquiries about the new facility as of press time.