Rolling stock producer CRRC Corp (CRRC) will invest $60 million to build a factory in Springfield, Massachusetts where it will assemble cars for Boston's subway system, the company said in an announcement via its Weibo account Saturday.
Earlier this year, CRRC won a $566 million contract from the Massachusetts Bay Transportation Authority (MBTA) - the operator of public transportation in the greater Boston area - to design and manufacture 284 vehicles for the city's Orange and Red lines, according to the MBTA's website.
Under the Buy American Act, which ensures that transportation infrastructure projects use U.S.-made products, 60 percent of government procurement projects must come from the U.S. CRRC's announcement cited this as one reason for building the plant.
The plant will create 150 manufacturing jobs and 100 construction jobs, the Xinhua News Agency reported Friday.
According to its announcement, CRRC will give priority to women employees as well as those from minority groups.
The move could also be viewed as a step forward in CRRC's overseas strategy, Wang Mengshu, a railway tunnel expert and an academician at the Chinese Academy of Engineering, told the Global Times Saturday.
"Going global reflects that the domestic market for high-speed trains is nearing saturation point," Wang said, noting that producing U.S. subway cars could be seen as a positive factor when CRRC bids for future U.S. rail projects.
Quicker global expansion is a highlight of CRRC's strategy, Beijing-based financial portal caixin.com reported Wednesday. Overseas orders are expected to reach $7 billion to $8 billion in 2015, it said.
Wang said the move could support CRRC's expansion in the U.S. by enhancing its maintenance services.
CRRC's first-half revenue from foreign markets rose about 61 percent, it said on August 31, and overseas revenue accounted for about 12 percent of total revenue.
The new U.S. operations may not be very profitable, however, because of higher labor and raw material costs, Zhao Jian, a professor at Beijing Jiaotong University, told the Global Times Saturday.
Zhao also noted that "urban rail transit equipment differs from equipment for high-speed trains, requiring different technologies consistent with local climate conditions."
