October 16, 2015
Buy-America Domestic Content Requirements for Transit Rolling Stock
Current Law: There are two basic requirements for transit rolling stock (such as buses and rail
cars) under current Buy America law. The cost of components produced in the United States
must be more than 60% of the cost of all components, and final assembly must take place in the
United States. This standard was set based on thoughtful discussions between manufacturers and
the Federal Transit Administration after consideration of international and domestic supply
chains.
Based on the current Buy-America law, transit rolling stock manufacturers have invested
hundreds of millions of dollars in U.S. facilities, while also relying on an international supply
chain to remain globally competitive. These businesses employ thousands of U.S. workers and
support thousands of additional jobs through an extended supply chain.
Senate DRIVE Act and House STRRA Act: On July 30, 2015, the Senate passed a long-term
surface transportation authorization, H.R. 22. On October 16, 2015 the House introduced their
own authorization bill. Both bills change current domestic content rules for transit rolling stock,
raising the U.S. content requirements from 60% to 70% by 2020. All told, this represents almost
a 17% increase in domestic content. Supporters of an increase assert that a higher domestic
content requirement will increase or create U.S. jobs, but there is no empirical evidence to
support that assertion, and APTA believes that the increase may actually result in fewer U.S.
jobs, increased costs for transit systems, and U.S. suppliers abandoning the U.S. transit market.
Potential Concerns:
Decreased U.S. Jobs -- Contrary to its intended goal, an increase in Buy-America content
requirements will put U.S. jobs at risk. Increased domestic content requirements will limit
options and increase the cost of rolling stock for transit systems. Cost-effective buses and rail
cars built today, which are assembled in the U.S. under current Buy America rules, may not be
compliant under new requirements. In many cases, transit systems will have to pay for more
expensive components. With already severely constrained budgets, increased costs will mean
that some transit systems will have to delay new purchases and replace ageing vehicles at a
slower rate, putting further downward pressure on jobs. Running older buses will potentially
impact service reliability and safety.
In a globally competitive marketplace, taxpayers will get less bang for their buck with stricter
regulatory requirements for domestic content. A higher threshold could especially restrict access
to emerging technologies such as batteries and other propulsion technologies.
Reduced Competition -- In addition to cost increases putting U.S. jobs at risk, if the new
requirement forces component suppliers to abandon the U.S. transit market, it will be at the
expense of U.S. workers who now make those products. This is a real threat for transit bus
suppliers because transit buses comprise only 1% of the larger heavy-duty truck market that
these suppliers all serve. One only needs to look over the last decade to see a staggering number
of companies making the decision to no longer sell U.S. Buy America compliant buses.1 There
is only one domestic bus engine manufacturer in the market right now.
APTA believes that federal policy should encourage competition in the domestic transit rolling
stock market. Manufacturers have invested hundreds of millions of dollars in facilities in the
U.S. based on the current Buy America standard. Congress should not risk U.S. jobs by pursuing
policies that could reduce competition and drive up costs for transit systems.
Alternative Solution:
Study Effect on U.S. Job Market -- While advocates of increasing the Buy-America domestic
content standard may believe that the change will support the U.S. job market, transit product
manufacturers with on-the-ground expertise in manufacturing rolling stock firmly believe that an
increase could actually cause U.S. job losses. Clearly, before taking action that could
compromise the U.S. transit labor market and adversely affect public transportation services,
Congress should seek an impartial, non-partisan study to evaluate the effects – both positive and
negative – of increasing the Buy-America content standard. Such a study could be conducted by
the Transportation Research Board of the National Academies or another independent source.
1
According to the U.S. Government Accountability Office, “In 2004, 10 manufacturers produced 98 percent of the
reported buses; in 2013, 4 manufacturers produced 99 percent of reported buses.”
APTA proposed language to amend 49 U.S. Code § 5323(j) Buy America.
(10) Feasibility of Increases in Domestic Content Study—The Secretary shall select an
independent agency, other than the General Accounting Office, such as the National Academy of
Sciences, to conduct a comprehensive study of the potential benefits and adverse consequences
of increases in the current domestic content requirements for public transportation rolling stock.
Not later than one year after enactment, the study shall be conducted and a final report shall be
submitted to the Committee on Banking, Housing and Urban Affairs of the Senate and the
Committee on Transportation and Infrastructure of the House of Representatives. The study
shall examine and make recommendations on whether varying increases in current domestic
content requirements in subsection (j)(2)(c)(i) of this section would create new or additional jobs
or reduce jobs in the United States transit sector; increase or decrease costs for rolling stock;
increase or decrease availability of products, increase or decrease the number of companies
competing in U.S. markets; and produce other benefits or adverse consequences for the transit
industry, public transportation users, and taxpayers.