Caixin
Mar 27, 2017 05:32 PM
BUSINESS & TECH

CRRC Wins Subway Deals in Philadelphia, LA

(Beijing) — Leading Chinese railway equipment maker CRRC Corp. Ltd. has won contracts to supply subway cars to Philadelphia and Los Angeles, a knowledgeable source said on Monday, extending a string of similar U.S. deals as it aggressively exports its technology.

The Los Angeles deal will see CRRC supply 64 rail cars for the red and purple lines on the city’s subway system for a total price of about $128 million, a source close to CRRC told Caixin, speaking on condition of anonymity because the deals haven’t been formally announced. The source added the cars are set for delivery in 2020 or 2021.

The Philadelphia deal will see CRRC deliver 45 subway cars to the U.S. east coast city for a total price of about $137.5 million, the source said.

The pair of deals comes after CRRC announced previous contracts to supply subway cars to the U.S. cities of Chicago and Boston. A source also told Caixin last week a consortium led by CRRC and Canada’s Bombardier is the lead candidate to supply subway cars to New York City in a deal that could soon be announced.

The Philadelphia deal is slightly different from the others, involving carriages that are more similar to those seen on traditional trains rather than on subway systems. Cars from that deal are priced at about $3.1 million each, or well above the price of the Los Angeles deal, which averages $2 million per car.

China has spent trillions of yuan over the last decade building up state-of-the-art subway and high-speed rail systems throughout the country, providing greater mobility within and between cities as part of its transition from a planned to a free-market economy. That process has created a group of companies like CRRC, which have developed cutting-edge technologies that many are now trying to export.

Like the earlier deals in Boston and Chicago, the latest agreements in Philadelphia and Los Angeles will require CRRC to set up local manufacturing facilities and buy more than half of components for rail cars locally, a common condition for such big contracts and one required by U.S. law. CRRC will buy most of the main components for cars in the U.S., with external shells being shipped from China for final assembly at the U.S. manufacturing plants. The company broke ground on its $100 million Chicago factory earlier this month.

Contact reporter Yang Ge (geyang@caixin.com)

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