China’s Government-Owned CRRC Just Bought a German Locomotives Factory

Elizabeth Brotherton-Bunch

Elizabeth Brotherton-Bunch Digital Media Director, Alliance for American Manufacturing

An interesting little story from Europe popped up in our news alerts on Tuesday morning.

It seems that Vossloh, a German rail technology company, is divesting its locomotives business so it can focus on rail infrastructure.

Normally, we here at the Alliance for American Manufacturing wouldn’t pay much attention to the business dealings of a German manufacturer like Vossloh. But what caught our eye was who ended up buying Vossloh’s locomotives unit: China Railway Rolling Stock Corporation Ltd (CRRC).

Nikkei Asian Review reports:

“CRRC, the Chinese state company that is the world’s largest train maker, is set to gain a key foothold in Europe by acquiring its first factory on the continent… Vossloh announced Monday that it would sell a locomotive factory it opened last year to CRRC Zhuzhou Locomotive, a subsidiary of Hong Kong-listed CRRC.”

If you aren't familar with CRRC, it is a massive Chinese government-owned conglomerate with deep ties to the Chinese communist party. CRRC is a key player in the government’s “Made in China 2025” initiative, in which China is aiming to dominate sectors of the global industrial economy, including rail manufacturing.

Most of the recent attention about CRRC has been centered on the Chinese government’s efforts to use the company to dominate passenger rail car manufacturing, including in the United States. Backed by government subsidies, CRRC has severely underbid (and won) taxpayer-funded contracts to build rail cars in cities like Boston, Philadelphia, and Chicago.

But allowing a Chinese state-owned enterprise to use taxpayer dollars to build U.S. passenger rail cars has raised some big red flags.

A recent Oxford Economics report found that every $1 billion given to a Chinese state-owned company to build passenger rail cars leads to the loss of 3,250 to 5,100 jobs. There are 90,000 jobs — many of them unionized — in the transportation supply chain, and all would be at risk if China succeeded in controlling the U.S. rail and bus manufacturing market.

There also are major security concerns, including fears that China will use rail cars for espionage purposes (which isn’t far-fetched, given China’s sophisticated use of facial recognition technology and the fact it wants to build rail cars for the D.C. metro). There also are fears that CRRC will move into freight rail, which would create an litany of additional security issues.

In response, Congress is now moving to ban Chinese government-owned or controlled companies like CRRC from building passenger rail and buses (you can weigh in here).

But let’s get back to that Vossloh deal, shall we?

At first glance, it seems like a weird buy for a big company like CRRC, since the factory makes diesel locomotives for short distances. Railway consultant Maria Leenen told the Nikkei Asian Review that diesel locomotives are a shrinking market segment, and electric locomotives are the future of the industry.

So why would CRRC even bother? Simple. It wants access:

“The acquisition of Vossloh's business should give CRRC's European growth ambitions a significant boost as EU regulations effectively favor domestic producers, according to Klaus Holocher, a professor for transportation management at Germany's Jade University of Applied Sciences. ‘If a Chinese company acquires a domestic player, they get all the standards and technology required to bring its trains quicker onto European railway tracks,’ he said.”

Remember that CRRC is not a typical company — it doesn’t care if it makes a profit on any individual contract or even at a single factory. CRRC operates under the direction of the Chinese government and is motivated by the “Made in China 2025” plan. It wants to dominate markets.

CRRC’s entry into Europe now makes it a rival to players like Germany’s Siemens and France’s Alstom. Those two companies saw CRRC coming and sought “to combine their train businesses to thwart CRRC from grabbing European orders.” But the European Commission blocked the merger due to “serious competition concerns.” Now CRRC is making waves.

It's worth pointing out here that CRRC was created in 2015 through the merger of Chinese companies CSR Corp Ltd and China CNR, all with the encouragement of China's government. It now controls over 90 percent of the massive Chinese train industry. So much for competition, huh? 

But anyway, I digress. There is still a chance, although unlikely, that the German government will block CRRC’s purchase of the Vossloh factory. But even if that happens — again, it is unlikely — CRRC's decision to buy the Vossloh factory is a clear sign that the company is readying to make a splash in Europe.

Posted In: Allied Approaches, From Alliance for American Manufacturing

Union Matters

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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There is Dignity in All Work

There is Dignity in All Work