Commentary: Silver lining of the Talgo deal

Los Angeles County Metropolitan Transportation Authority trains to be overhauled by Talgo in Milwaukee.

Last updated on July 3rd, 2019 at 12:01 pm

Wisconsin’s deal with Spanish train-maker Talgo Inc. became a major fiasco for the state, but at least a silver lining has emerged.

The story goes back to 2009, when then-Gov. Jim Doyle announced the state would buy two 14-car train sets from Talgo for $47 million. The trains would be used for the Milwaukee to Chicago Amtrak Hiawatha service and for future high-speed rail service among Chicago, Milwaukee and Madison.

Doyle was criticized by Republicans for granting a no-bid contract to Talgo.

Then in early 2010, President Barack Obama awarded $810 million in federal funds to Wisconsin to establish high-speed rail service between Milwaukee and Madison. Republicans were again highly critical, blasting the project as a huge waste of taxpayer money.

As part of its deal with the state, Talgo pledged to assemble the trains in Wisconsin, and in 2010 chose a building at the former Tower Automotive/A.O. Smith complex in Milwaukee’s central city. The facility would produce the trains for Wisconsin and for others Talgo would supply for other parts of the country.

The high-speed rail project became one of the state’s most controversial issues. Doyle didn’t seek re-election in 2010 and Republican Milwaukee County Executive Scott Walker defeated Democrat Milwaukee Mayor Tom Barrett in the race for governor. Walker quickly made good on a campaign promise to kill what he called the “boondoggle train.” The $810 million was sent back to Washington and spent on rail projects elsewhere.

That was one thing. But then Legislative Republicans also balked at the Talgo deal. They refused to accept the trains, even though the state paid for them.

Talgo sued. Eventually, the company and the state reached a settlement in which the company received between $42 million and $52 million from the state and got to keep the trains. The Talgo plant in Milwaukee was shut down in 2014.

Walker and Republicans in the Legislature blamed Doyle for the Talgo deal and were glad to move beyond it.

But despite its bad experience in Wisconsin, Talgo returned to its Milwaukee plant in 2017. The company was awarded a $73 million, 56-month contract from the Los Angeles County Metropolitan Transportation Authority to overhaul dozens of heavy rail vehicles. Talgo decided to reactivate the Milwaukee plant to do that work, and to staff the facility with 25 to 30 employees.

More good news came recently when Talgo announced it was awarded a $138.9 million contract to overhaul rail cars for the Southern California Regional Rail Authority. The work will be done at Talgo’s Milwaukee plant, where at least 25 employees will be added.

In a neighborhood that has struggled to attract and maintain manufacturing jobs, Talgo’s presence is a big deal and much-appreciated. But it’s still ridiculous that the state didn’t keep the trains it paid for.

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Andrew is the editor of BizTimes Milwaukee. He joined BizTimes in 2003, serving as managing editor and real estate reporter for 11 years. A University of Wisconsin-Madison graduate, he is a lifelong resident of the state. He lives in Muskego with his wife, Seng, their son, Zach, and their dog, Hokey. He is an avid sports fan and is a member of the Muskego Athletic Association board of directors.

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