Morrison Woes Continue With Failure to Deliver Metrolink Cars

With ridership rising and a new Los Angeles commuter rail line in the works, Metrolink officials were looking forward to the delivery of 24 new blue-and-white passenger rail cars this year.

But because of production problems, rail car maker Morrison Knudsen now says it will be unable to deliver the first cars--initially expected in April--until year’s end and may not complete the entire order until 1997.

That has forced Metrolink to delay the December opening of a Riverside-Fullerton-Los Angeles line until the middle of 1996 and raises the specter of crowded coaches and frustrated commuters.

“You are going to have fewer and fewer seats and people will experience more and more crowding,” Metrolink Executive Director Richard Stanger said.

The problems faced by Metrolink and its riders--as well as rail commuters in other cities--is part of the troubled legacy of Morrison Knudsen’s former chairman, William J. Agee, who was ousted earlier this month amid mounting financial problems and corporate strife.

Last year, the Boise, Ida.-based firm suffered a nearly $60-million loss on transit car contracts as a result of delays, penalties and related problems.

There is growing concern among public officials over Morrison Knudsen’s ability to complete contracts as it negotiates with banks for much-needed cash. The company said Thursday that it won a reprieve on $150 million in short-term loans that are in default and expects to arrange a new financing package soon.

“It appears that the rail car business is their No. 1 problem,” said Paul C. Latta, an analyst for Ragen MacKenzie, a Seattle-based brokerage firm. “Who is going to pay for a product that is not complete and not meeting specifications.”

The late deliveries have created major headaches for transit agencies and their leaders. Earlier this week, officials of the California Department of Transportation were taken to task during a state Assembly Transportation Committee hearing over repeated delays in a $206-million contract that included the Metrolink coaches. So far, Caltrans has paid Morrison Knudsen nearly $80 million for 113 intercity and commuter rail cars and has received only three cars, which cannot be put into service until inspections are completed and numerous defects repaired.

“We have paid $80 million to MK and we have nothing usable to show for it,” said Assemblyman Richard Katz (D-Sylmar), chairman of the Transportation Committee.

Morrison Knudsen officials were not available for comment this week.

Promoted as the only U.S.-owned builder of passenger rail cars, Morrison Knudsen--primarily a construction and engineering firm--won about $1 billion worth of new orders from public transit agencies in the early 1990s as the nation was gripped by a “buy American” zeal. “America is back in the passenger rail business,” Agee proclaimed in 1993.

Ironically, Morrison Knudsen relies heavily on foreign suppliers, a fact that has contributed to some of its current problems. For example, the metal shells for Metrolink’s commuter cars are made by Mafera, a Brazilian firm. But production of the shells is stalled because of the supplier’s financial difficulties.

The cars also turned out to be more complicated to build than Morrison Knudsen had expected, according to transit officials and company statements. Overly ambitious production schedules, a lack of trained staff and other start-up problems plagued deliveries.

In New York, Morrison Knudsen delivered the first of 48 commuter cars to the Metro-North Railroad last October--18 months behind schedule. As a result of the delay, the agency was not able to add any trains, and seats grew scarce on the fast-growing New Haven Line to Connecticut, spokeswoman Margorie Anders said.

“In the beginning, they did not have a strong enough engineering staff to build a car of this complexity,” said Anders, whose agency will withhold more than $8 million from Morrison Knudsen to compensate for the delay.

Morrison Knudsen is also running at least seven months behind in its delivery schedule on part of a $379-million contract with Metra Commuter Rail in Chicago. The company is supposed to deliver 173 new cars by July. So far only four coaches have been shipped, because start-up problems, such as inadequate worker training programs, have disrupted production at Morrison Knudsen’s Chicago plant, where the legendary Pullman rail cars were once made.

Metra and other transit agencies are counting on the new wheelchair-accessible passenger cars to help them comply with the Americans With Disabilities Act, which requires the trains to be accessible to the disabled. Until it gets sufficient numbers of the new cars, Metra will have to continue its Dial-a-Ride bus service for disabled passengers at a cost of about $2.5 million a year.

In California, Caltrans and Morrison Knudsen had originally signed a $155-million contract in February, 1992, for the delivery of 88 cars by the middle of 1993.

“What we found is that their schedule was overly ambitious,” said Jim Drago, a spokesman for Caltrans, which was purchasing the cars for rail service statewide. “There was nothing to indicate at that time that they wouldn’t be able to deliver.”

Despite the lack of progress, Caltrans in November, 1993, expanded the contract to $206 million for 66 intercity cars--for long-haul service--and 47 commuter cars. Three intercity cars have been delivered since last fall.

But officials said all three cars are still sitting in Morrison Knudsen’s Pittsburg, Calif., plant after a Caltrans inspection found 142 problems, ranging from faulty latches on luggage bins to cracks in fiberglass frames, on two of the cars. The third car has yet to be inspected.

Caltrans says it expects Morrison Knudsen to correct the problems and put the cars into service at the end of March.

The company has blamed part of the delays on changes made by transit authorities. But Caltrans and other officials said the delivery schedules were adjusted in 1993 to take the changes--which included the building of three-level commuter cars as well as intercity cars--into account.

Despite the delays, Caltrans still has faith that Morrison Knudsen can meet its most recent schedules. In fact, the company probably has an advantage over other competitors if Caltrans ever seeks more new cars, agency spokesman Drago said.

“Morrison Knudsen would have a leg up because they have the tooling down and the assembly line in place,” he said.

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Times staff writer Dan Morain in Sacramento contributed to this report.

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Key Contracts

Morrison Knudsen’s ambitious foray into the passenger rail car business has been marred by costly delays in key contracts.

* Agency: Metro-North Railroad, New York

* Contract: 48 new cars for $117 million

* Problems: The first cars were delivered in October, 18 months behind schedule. Metro-North will withhold $8 million to $9 million in payments as a penalty.

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* Agency: Metra Commuter Rail, Chicago

* Contract: 173 new cars and the rehabilitation of 140 old cars for $379 million

* Problems: Morrison is two months behind in rehabilitating the old cars and at least seven months behind in building the new ones. Metra wants 16 additional cars in lieu of withholding $9.5 million in payments.

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* Agency: California Department of Transportation

* Contract: 66 intercity cars and 47 commuter cars for $206 million

* Problems: The initial delivery of commuter cars--24 of which will be used by Metrolink in the Los Angeles area--has been postponed from April to the end of the year or later. Morrison has so far delivered three intercity cars and is on schedule. Caltrans could withhold as much as $3 million in payments as a result of commuter car delays.

Source: Transit agencies