Kawasaki’s biggest customer says contracts could be in jeopardy

Published: Sep. 17, 2020 at 8:16 PM CDT
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LINCOLN, Neb. (KOLN) - Kawasaki’s Lincoln plant could soon face major cuts, as the plant’s “number one customer” is losing hundreds of millions of dollars every week.

The Metropolitan Transportation Authority is responsible for New York’s subway system. Chairman and CEO Pat Foye said the MTA has taken quite a beating thanks to COVID.

“Ridership is recovering, but it is still way below what it was pre-pandemic,” Foye said.

In a press release, the MTA said it “is currently experiencing $200 million in revenue losses every week – an unprecedented crisis that eclipses even the Great Depression’s impact on its ridership and finances. These declines, compounded by the loss of state and local taxes and subsidies that support the organization, have left the MTA with a $16 billion projected deficit through 2024."

“The last seven or eight years, we’ve done about nearly a billion dollars of Kawasaki, with new trains, new parts, etc,” Foye said.

But, with no money coming in, the MTA said it may have to gut its $51.5 billion capital construction plan, putting current and future Kawasaki contracts in jeopardy. That includes a $3.6 billion contract for up to 1,500 cars. Mass production was set to start in 2021.

“The losses we are trying to solve for are caused by the pandemic," Foye said. “We would’ve made operating surplus of 80 million dollars. That’s what we were projecting in January before the pandemic. Now, we’ve gone from that to billions and billions of dollars in losses.”

Foye said the MTA’s fate rests in the hands of the Senate. The MTA is asking for an emergency aid package of $12 billion.

“We are engaging in self-help," Foye said. "We are not a governmental entity that is money-losing or wasteful and we are doing everything we can to help ourselves. But we cannot cut enough to eliminate or cut a $12 billion gap.”

In a statement emailed to 10/11 NOW, a spokesperson for Sen. Ben Sasse said, “Two things: First, Senator Sasse has supported and will continue to support targeted aid to families and businesses that need help during the pandemic. Second, there’s a big difference between emergency assistance and bloated bailouts for decades-old problems. Here’s the truth: the MTA was drowning in red ink before the virus. According to the Comptroller of the State of New York earlier this year, ‘The amount of outstanding long-term debt issued by the MTA more than tripled between 2000 and 2019, reaching $35 billion, and is projected to approach $53 billion by 2023.’ Instead of threatening jobs and demanding a bailout, the MTA should show taxpayers how it plans to tighten its own belt.”

For now, the Lincoln Kawasaki plant said it is doing okay, but there is room for concern.

In a statement emailed to 10/11 NOW, a spokesperson said, “Kawasaki Rail Car Inc. (KRC in Yonkers, New, York) did receive the letter today from the Metropolitan Transportation Authority addressing concerns related to the COVID-19 pandemic and its toll on public transportation systems. Kawasaki Motors Manufacturing Corp., U.S.A. (KMM in Lincoln, NE) currently has enough work that is fully funded to carry us through, but it is of course something we are paying attention too. The MTA is our No. 1 customer and if they believe that federal assistance is needed for its long-term financial health, we certainly support them in that effort.”

Foye said without quick action from the Senate, the MTA will be forced to make drastic cuts, not only impacting the New York economy, but the entire nation, and likely people here in Lincoln.

Click here to read the letter the MTA sent to Kawasaki, along with 11 other suppliers.

Copyright 2020 KOLN. All rights reserved.

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