UPDATE: Nippon Sharyo lays off 100 more workers in Illinois

Car-maker, California officials remain silent on the fate of a half-billion-dollar passenger car order
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Nippon
A bilevel passenger car mock-up stands gleaming under shop lights at the Nippon Sharyo's Rochelle, Ill., plant in May 2014.
Bob Johnston
ROCHELLE, Ill. — Another 100 workers have lost their jobs at Nippon Sharyo’s Rochelle manufacturing plant leaving an unknown, but likely small, number of workers at the facility.

“This difficult decision is the result of ongoing technical complications with the design of one of our prototype cars that have caused significant delays in the production schedule, as well as other challenging business considerations,” Nippon Sharyo officials say in a recent statement.

Nippon Sharyo holds a contract to build 172 bilevel passenger cars intended for regional rail service with agencies in California and the Midwest. The cars were to be purchased with $551 million allocated by the American Recovery and Reinvestment Act, and were intended to help Midwestern states replace aging equipment. The future of that order has been up in the air since a prototype car failed to pass a mandatory 800,000-pound buff, or safety, test in September 2015. The funding will expire and revert back to the U.S. Treasury on Sept. 30, 2017, if Nippon Sharyo is unable to deliver on the contract.

"The vendor has had challenges meeting the contract terms and schedule to date. We are working closely with the Federal Railroad Administration and the Illinois Department of Transportation on a workable solution with the vendor that would preserve the [recovery act] investment and deliver new railcars to our state,” say CalTrans officials in a statement.

CalTrans is responsible for administering the contract between the states and Sumitomo Corp. of the Americas and its sub-contractor, Nippon Sharyo.

“The Midwest states know that there are delays relevant to Sumitomo and Nippon Sharyo being able to deliver equipment,” Tim Hoeffner, head of the Michigan Department of Transportation’s rail office, tells Trains News Wire, “The states don’t know what the new delivery schedule is yet and are waiting for Nippon Sharyo, California (which is leading the railcar procurement) and the Federal Railroad Administration to come back to us with a proposed schedule and a path forward.”

Nippon Sharyo officials say the layoffs will not push back the production deadline on other projects. The company is best known for constructing the high-speed Shinkansen trains in Japan, and has also produced equipment for Sonoma-Marin Area Rail Transit in California and Union Pearson Express in Toronto. The company has operated its Rochell plant since 2012. The Rockford Register Star attributed two previous layoffs in 2015 and 2016 to the bilevel cars’ mechanical problems.

UPDATE: Comments from the California Department of Transportation. Jan. 24, 2017, 2:29 p.m. Central time.

NEWSWIRETrains News Wire

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