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Chinese Electric Bus Factory, A High Voltage Route Or Short Circuit?

 November 30, 2011 ⋅  Post a comment

This guest post was submitted by a reader known to the GUARDIAN who is well versed in the bus transportation industry.

By Jimmy D. Bus,
Guardian Transportation Correspondent

When it comes to electric buses in America, it appears Communist China’s Zonda Corp. attempted to establish a marketing beach head in the Treasure Valley six months ago when they approached Valley Regional Transit with a request for a “letter of interest.”

It was a carrot on a stick type of deal with no real commitments from either side. It offered the potential of a factory, up to 1,000 jobs, and an all electric bus fleet for VRT. To borrow a phrase from a Boise City attorney, it was “squishy.”

Public documents reveal the following about the proposal.

As part of a regularly scheduled VRT Management Committee meeting on May 9th, local politicos reviewed a proposal “… to explore an opportunity to expand transit services in the region through an economic development project that is considering locating in the region.” Basically the proposal would have provided VRT with a fleet of electric buses which would become an all electric transit system world showcase. All at little or no additional burden on taxpayers according to the document.

Local politicos did something the local media didn’t do with this proposal – they looked this gift horse in the mouth and said WHOA !

They were shocked at what they saw. Initially they were energized by the prospect of all the jobs this economic development (always key words) proposal would bring, but then they began to find faults in it. Little details like who would actually pay the operating costs for all this expanded service were not addressed clearly in the proposal. And, according to my sources, apparently the “style” at the initial presentation prior to this meeting didn’t sit well with some of local politios either.

According to VRT minutes of this meeting, the VRT attorney was directed to bring back to the Committee at a future date a simplified draft “Letter of Interest” indicating VRT’s possible interest in the project.

On May 11th– two days after the VRT meeting at which Zonda USA was not represented– Zonda USA issued a press release saying it would establish a headquarters in Boise sometime in 2011. That same release also said the company had met with Valley mayors and with State government representatives to finalize details of the move. It appears Zonda USA either got their wires crossed or they were out of phase with what had transpired at the VRT meeting just two days before. Six months later we hear that office will be established by the end of 2011. Promises, promises, isn’t that what the world is made of now?

At a special VRT Management Committee meeting on May 18th, VRT Management Committee members approved a rather vaguely worded LETTER to Zonda USA expressing interest in exploring the proposal further. Again, no commitments.

News about this proposal apparently remained dormant for about six months until the DAILY PAPER, and other local media, reported on it recently. So the obvious question is why now? Why six months after the proposal was first broached?

Local politicos were correct in looking this gift horse in the mouth and saying WHOA ! The transit bus building business is a tough one. According to both Federal and university study documents only about 5,000 transit buses of all sizes and types are built in the US each year by the five major bus builders – one of whom controls almost 40% of the market. Unpredictable demand, extreme challenges, tenuous financial condition of bus manufacturers, serious concerns regarding the state of the industry, general lack of volume in orders, and thin profit margins are all words found in these publications.

So just how does Zonda USA intend to be financially successful in this challenging, competitive environment where so many others have failed? And how does it intend to meet the “Buy America” requirements, the Altoona Test requirements, and other requirements imposed on transit authorities using Federal transit funds to purchase vehicles? We don’t know. We do know that they already have competition from other bus manufacturers, one of whom announced an all electric prototype bus this past October. Another claims to have 80% domestic content in their vehicles, well exceeding the “Buy America” threshold.

Will enough orders be obtained, a condition for building the plant according to the daily story, to build an all electric bus manufacturing plant in the Treasure Valley? More importantly, will it employ thousands of workers? And lastly, where in the Valley will it be built? The answer to all those questions is we will have 2C.

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