Bay Bridge Project: Lost Opportunity for US Jobs?
CNBC Senior Correspondent
It is designed to be an icon—and unlike any bridge in the country.
After years of debate and delays, the dramatic new eastern span of the San Francisco-Oakland Bay Bridge is finally taking shape.
At the heart of the project is a unique “self-anchored suspension span” — twin roadways linked to a soaring, 500-foot tower by a single, mile-long cable.
A little over a year before the bridge’s scheduled opening, the bridge is already a conversation piece, though not for the reasons planners had hoped.
Instead of marveling at the design, what many are talking about is the fact that the suspension portion of the bridge was made in China.
Critics say the decision to outsource the span — the central tower and the two 1,500 foot steel road decks were fabricated in a specially-built factory in China and shipped to San Francisco Bay — was a missed opportunity to create thousands of American manufacturing jobs.
California officials contend the U.S. does not have the manufacturing capacity or the workforce to build such a project on its own.
A CNBC Investigations Inc. review of the process has found miscommunication, misconceptions and missteps that have, at the very least, tainted what planners had hoped would be an architectural and engineering triumph.
“The Bay Bridge: 100% foreign steel,” proclaim billboards along the freeways approaching the bridge (to be accurate, the suspension span of the bridge is only about 80 percent foreign steel according to the California Department of Transportation — CalTrans — and the entire eastern span, from Yerba Buena Island to Oakland, is about 20 percent foreign).
The Alliance for American Manufacturing, which sponsored the billboard campaign, says whatever the actual content, the decision to use Chinese steel was scandalous.
“I think every California taxpayer should be outraged by this,” says executive director Scott Paul.
But the outrage extends beyond California.
“What is it about American regulations, American taxation, American labor cost and attitudes that makes it cheaper to go to China,” asked former House Speaker Newt Gingrich when asked about the bridge at a CNBC Republican Presidential Debate in November.
“It is good for America to have free trade,” said former Massachusetts Governor Mitt Romney—now the presumptive GOP nominee—at the debate. “But China is playing by different rules.”
CalTrans Bay Bridge Program Manager Anthony Anziano told CNBC in an interview that the state had no choice but to go overseas.
“The largest companies in this country just simply didn’t have the capacity to be able to do that work in the time that we required,” he said.
That point remains a subject of bitter debate. And with the project now near completion, it is not clear the decision to outsource the span yielded anything close to the savings officials had hoped for.
Now budgeted at more than $1.75 billion for the suspension span alone, the section has encountered nearly $300 million in overruns. And while officials recently moved up the projected opening of the bridge to Labor Day 2013, it is still as much as a year behind the schedule that was planned when the contract was awarded.
In the end, the time and budget is nearly identical to the single bid the state received to build the bridge with American steel: a five-year, $1.8 billion proposal by a joint venture of American Bridge Company and Fluor Corporation that the state rejected in 2004.
There is no way of knowing what overruns that proposal would have encountered, and it, too, contemplated buying some of the steel from overseas. But independent steel industry analyst Michelle Applebaum says American firms have a better track record than the Chinese when it comes to bringing in large projects without major overruns.
“Just looking at dollars and sense, there was a much better argument for this to be done domestically,” says Applebaum, who describes herself as an ardent free-trader.
Was China the cheaper option?
And she says any cost advantage the Chinese might have had would easily have been made up by the benefits to the U.S. economy. She believes officials in California fell victim to a mindset that says China is automatically cheaper.