Wednesday, March 18, 2015

Of Learning Curves, Infant Industries and Streetcars

Photo Credit: Daniel Rosenbaum for The New York Times

Two interesting articles caught my eye this morning.

In the first, The New York Times reports that the streetcar fad appears to be waning:
Just a few years ago, the streetcar revival was all the rage in cities across the country. Portland, Ore., seemingly set the trend with its 11.5-mile system, which opened in 2001 and was said to spur economic development while carrying 16,000 passengers on weekdays.
Elsewhere, New Orleans is extending its streetcar lines, while Atlanta, Tucson and Salt Lake City have also moved ahead with similar systems, almost always pegged to the promise of transit-related economic growth.
Yet as several cities inaugurate new systems or expand older ones, the streetcar revolution, facing fiscal and operational challenges, has stalled elsewhere. Last July, San Antonio abandoned its planned streetcar system after changing mayors, reallocating the $92 million it had set aside.
In the second, the Oregonian has a post-mortem of sorts on United Streetcar, the troubled nascent streetcar builder in Clackamas that finally called it quits.

United Streetcar, the Clackamas company expected to put hundreds of Oregonians to work manufacturing a new generation of streetcars, has all but closed up shop without meeting job projections.
In the years since, United Streetcar landed contracts and built 18 vehicles for Portland, Washington, D.C., and Tucson, Arizona. But the company shut down manufacturing in late 2014 when orders dried up.
While it is true that the market for streetcars has slowed I think United Streetcar's problems were more fundamental.  It was trying to learn streetcar manufacturing from scratch in an industry that has high fixed costs.  There was a big learning curve to surmount and it is quite clear that they did not do so with nearly enough speed.  There are many instances of infant industries that, spurred on by initial government support, ended up becoming globally competitive.  Take Airbus as example number one.

But streetcars to me seemed to be a losing proposition from the start.  And without emergence into a viable ongoing concern without government support there was little to recommend spending taxpayer dollars on streetcars from the USA rather than more reliable, timely and cheaper streetcars from the Czech Republic.

I am sad to report that I was right.

Oh and as a coda to this whole thing, the idea of streetcars (without the ability to engage in avoidance manouvers) commingling with regular car traffic easily appears to be wishful thinking.

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