Florida Gov. Rick Scott visited California in May, hoping to lure away dissatisfied business owners from high-tax California to the low-tax Sunshine State.
Now, a company in Florida behind the first privately funded U.S. high speed railway is manufacturing its trains ... in California.
The world is upside down.
The company building the railway is Brightline, owned by Fortress Investment Group. It's taking a huge gamble that high speed rail is a concept whose time has come. "Everybody loves trains," said Brightline President Mike Reininger.
Reininger might seem an unusual guy to be running a railroad. His resume includes 12 years at Disney, where he spent much of his time developing resorts. Another Brightline executive came from MGM Resorts. Their goal with the new railway is to create a "hospitality experience" that will mix state-of-the-art transportation with attractive train stations offering retail and other amenities.
Brightline cars will be decked out with comfortable seats, large windows, aisles twice as wide as those on airplanes, hands-free bathrooms cleaned regularly, outlets everywhere, free Wi-Fi, and something called a "gap filler," which allows you to walk onto the train without stepping up or down. "The train literally reaches out to greet you at the platform," said Reininger. The train will travel up to 125 mph to get you from Miami to Orlando in three hours.
Brightline raised $1 billion in equity and debt to launch the first phase of the rail service, which will start next year between Miami, Fort Lauderdale and West Palm Beach. It will use existing rail corridors, and the company is building stations on land it already owns. A second phase to send trains to Orlando will cost another $1.5 billion.
Reininger believes Brightline can capture at least 1 percent of the estimated 500 million annual car trips between cities in South Florida and Orlando. Ticket prices have not yet been revealed, but he said they will be competitive with the cost of driving. "At the end of the day, we know we've got to do one thing. We have to change your behavior a little bit. We have to convince you to get out of your car and get into what we consider a smarter way to travel."
If the concept works in Florida, Brightline might look at other markets in places like Texas or California.
Brightline chose Siemens USA to build and maintain the first five trains, though it won't disclose how much it paid. Siemens is doing that work in Sacramento. California happens to be trying to build its own high speed rail, funded by taxpayers, with a total price tag that could top $68 billion, nearly 30 times the price of Brightline's Florida train.
The Siemens USA plant stands a few miles away from the California state Capitol, where the political climate appears increasingly antagonistic to manufacturing. That doesn't bother Michael Cahill, president of Siemens USA's rolling stock division. He said the company has been in the Golden State for 30 years.
"One of the great things about California is the positive spirit," said Cahill. "In California there is an enthusiasm here that is unmatched anywhere else in the country."
In fact, Siemens USA increased its 600,000-square-foot manufacturing plant in Sacramento by 20 percent because of the Brightline contract. The locomotives they're building for Florida will run on clean diesel, and the passenger cars are made of stainless steel to make them resistant to rust.
There are also a lot of other locomotives and rail cars being built inside the Sacramento plant for other cities and states, from San Francisco to Calgary, Washington state to Illinois. "Our production is growing," said Cahill. "We've added, compared to last year, about 150,000 man hours of work in the factory."
Cahill said another advantage of remaining in California is the sun. "Up to 80 percent of the power we use is generated by solar panels."
One of the challenges, though, is the lack of skilled labor. Welders are in high demand, so Siemens has started its own training program to develop new talent.
That new talent includes 23-year-old Denise Robertson, who could be seen welding a new train car this week. Robertson used to solder metal for jewelry, but she heard about the welding training program and decided to sign up. "It opened up a whole new world for me," she said. "I learned you could actually make a pretty good career in welding."