Love-Fest at AREMA? No Way!

All the work that piled up while I was at the American Railway Engineering and Maintenance of Way Association Conference in Louisville had to be taken care of before I could post, and today it looks like I can, so here goes.

Creosote made a comment to my post made prior to the Conference, referring to the AREMA Event as a "love-fest". His main point was the conflict with the Railway Supply Institute affair, which occurred in Chicago. I asked several people about this, and really got no answer that satisfies. That said, this conflict was only part of more dissatisfaction and frustration then I have ever seen at an AREMA Conference. Love-fest is was not!

The date conflict may have been due to the coordination between AREMA and REMSA for the Trade Show portion of this year's event. You will recall that there have been over the past years a clash of "organization egos" to determine whose show would be where and when. Every year, one or the other group asked suppliers to trot out their exhibits, buy more giveaways, and spend three days hawking their products to an audience that was comprised of fewer and fewer real customers. Suppliers were getting tired and edgy. So, this year was the first "Expo" coordinated by the two rival groups. It could be that the only date they could agree upon created the conflict with the Railway Supply Institute's event.

But more than that, there were real issues from many suppliers who found out that the fee required for the Conference did not allow for attendance to the Expo, unless you happen to work for a Railroad! Consultants and Agency types had to fork over another $150 to $250, depending on whose story you believe. So, many potential customers and contacts decided to go to the Louisville Slugger Museum rather than the Expo. That did not sit well with many suppliers.

In fact, I heard one person mention that their company would not be exhibiting again if more money was required for admission.

One other item, at least two presenters who were scheduled were late for THEIR OWN PRESENTATION! It is hard to take seriously someone's presentation if they don't take it seriously themselves.

On a reaffirming note, all of the suppliers I spoke with confirmed my opinion noted in an earlier post, that production was at a record high, and that future material bids were going to be much higher, if a bid were to be made at all.

Another positive, almost everyone commented on what wonderful hosts the people of Louisville, Kentucky were to the entire group.

However, I have heard rumblings of dissatisfaction with the direction the American Railway Engineering and Maintenance of Way Association is headed, now more than ever. More on that in future posts. The 2006 Conference only seemed to add to the rumblings.

Sending Out RFQ's for a Transit Agency? Your Bids May Surprise You!

Recently, I submitted a Bid in response to a Request for Quotation (RFQ) from a particular Transit Agency. Our company priced our product fully 50% higher than previous bids for similar material. In talking with other non-competing suppliers, I am hearing similar stories from them. Bids are coming in at higher prices everywhere and for everything.

Wish I could be more specific, like naming materials and Agencies. I just cannot.

But that's not as important as the trend. I believe this is ultimately going to result in bad news for Public Agencies. Prices are going to go higher. Supply at those higher prices is going to be harder for them to find. Why? Several reasons.

-Suppliers are finally beginning to assign a cost to the voluminous and over-complicated Bidding Documents. In other words, Agencies and their Consultants are "Scaring their Bids". Take, for example, my Bid noted above. The Bid Form alone totaled over two dozen pages! Many of the forms required information that was frankly obtrusive. As is typical with any government agency, these things are not getting simpler. The cost in time and money to do business with these Public Transportation Agencies is out of proportion when compared to other customers, which leads me to the fact that:

-Class One Railroads are buying things like never before! Everybody that I talk with is crazy busy! I know I am, which is one reason my posts are more infrequent. So, if you were making widgets as fast as you can, and one customer is buying almost everything you can make, but here comes another customer who requires this-that-and-the-other to be happy, you will ask yourself, why put up with the hassle here? Case in point: For some time, railroad material suppliers have filled their production schedules with work obtained by winning bids from Agencies. Suppliers put up with the associated aggrevation in order to cut overhead with full production. Now, Class One Railroads are claiming all of that once-excess production. And, I don't know any supplier who would rather deal with an Agency than a Railroad.

-Not only that, but US Suppliers are being courted by foreign concerns! And these people are more than willing to purchase a quality US-made product without anywhere near the problems that must be dealt with when working with a domestic concern. That means nothing but more pressure on production.

Here's what it boils down to: Production capacity is not increasing; production demands are increasing. The result will be, believe it or not, that suppliers can begin to select their customers!

It is already happening. Our Bid resulted in a call from the Agency wondering why our Bid was so high. We explained. Believe me, we explained. If that Agency could read between the lines, the message was that we just didn't want the problems that came with doing business with them. And, we are running pretty close to capacity! Bottom line: It's going to cost you.

So what will happen? No-hassle Railroad customers will be the first to be supplied. Customers whose adversarial RFQ's and Bidding Documents look like CYA documents for potential lawsuits will not. Should be interesting.

New Secretary of Transportation

UPDATE:

The Association of American Railroads weighs in with a prepared statement.

Getting There comments comprehensively.

* * *

According to Reuters, President Bush will formally name Mary Peters as his nominee for the Secretary of Transportation post recently vacated by Norman Mineta. This is the closest thing to a bio I could quickly find on Ms. Peters.

The Air Transport Association was gushing over the selection.

Obviously, her experience is much deeper with the Highway side of life than it is with rail. Looking thru the quotes of her speeches while at the FHWA in 2003 and 2004 don't lend much light on what we can expect from her. But some things are visible.

She comments at several times and in several ways about creating public-private partnerships that are viable on a value added basis. We shall see how that translates into that particular partnership as defined by Amtrak. We know that highways are often a "Big P" Public and "little p" private situation. We also know that such an outlook was not part of the Administrations' Amtrak situation.

Stay tuned.