Walker, Super Steel chairman rip state and city on Talgo deal

Milwaukee County Executive Scott Walker, a Republican candidate for governor, and Super Steel Products Corp. chairman Fred Luber last week ripped state and city officials for deals with Spanish train manufacturer Talgo Inc.
Last year the state awarded a $47.5 million no-bid contract to Talgo for two high speed train sets. The state plans to buy two more train sets from Talgo.
As part of the deal with the state, Talgo agreed to establish a train assembly facility somewhere in Wisconsin. The company considered sites in Milwaukee, Janesville, Racine and Appleton. Talgo recently announced it will lease 133,000 square feet of space from the city of Milwaukee in a building at the corner of North 27th Street and Townsend Street in the former Tower Automotive complex.
The city purchased 84 acres of the former 140-acre Tower site last year for $4.5 million. The property is bounded roughly by West Capitol Drive, the Soo Line railroad tracks, West Townsend Street and North 27th Street. The city plans to spend about $30 million to redevelop the property and attract new businesses to a development that city officials call Century City.
Super Steel submitted an unsuccessful bid to do the train assembly work for Talgo.
Walker and Luber said the no-bid contract from the state for Talgo and the city’s investment in the former Tower Automotive plant, which will be used by Talgo, was unfair to Super Steel.
“I think the deal stinks,” Walker said. “Our concern is that the government has stepped in and undermined the efforts of Wisconsin companies…first in a no-bid contract under the leadership of the governor and then to have the city of Milwaukee, under the leadership of (Mayor) Tom Barrett, take millions of dollars of taxpayer’s money first in purchasing the Tower Automotive site and then investing even larger millions of dollars in renovating that site. (Talgo) went forward with a site that was essentially subsidized by the taxpayers of the city of Milwaukee.”
Barrett is also running for governor, as a Democrat.
“We should be doing everything in our power to support existing Wisconsin businesses,” Walker said. “I just want to reinforce for the sites in Janesville, Appleton and Racine as well as Super Steel here in Milwaukee, how can any of those from the private sector compete when you have a site that is bought by taxpayer’s money and in which millions of dollars of taxpayer money is being used to essentially set it up?”
Luber said Super Steel sought assistance from the city in its efforts to land the Talgo contract.
“Going back to last summer, Super Steel took Talgo to the city of Milwaukee and asked for help,” he said. “On the first of February, Rocky (Marcoux, commissioner of the Department of City Development) told us what he was going to do with Talgo. Instead of funding us, (the city) was going to fund the Tower (Automotive) facility with millions to rebuild the building, free rent for a year and then no taxes and all utilities and the other things including job training. At 84 years old I never thought I’d live long enough to have the city take business from us. We have the only train manufacturing plant in the state of Wisconsin. Now there’s going to be another one at the Tower site built by the city with our taxpayer money.”
However, Department of City Development spokesman Jeff Fleming said city officials originally pushed for Super Steel to get the Talgo contract and only offered the Tower Automotive site to Talgo after the company told city officials that the Super Steel facility would not meet its needs. Talgo will lease the space at the Tower Automotive site from the city at market rates, for $2.59 per square foot, or $344,470 a year, Fleming said. The city is not providing free rent or utilities, he said.
“What Scott Walker and Fred Luber are saying is false,” Fleming said.
The state issued a request for information to see if any other companies wanted to build the high speed trains. State officials said Talgo was the only company to respond. But Luber said the specifications for the bid were specifically set for Talgo, so no other train company but Talgo could get the bid.
“The whole thing was set in concrete that Talgo was going to get it,” Luber said. “Who else could quote but Talgo? The specs were all Talgo.”
Super Steel has about 250 employees, and is located on Milwaukee’s far northwest side. At its peak earlier this decade, Super Steel had more than 700 employees. The company recently filed for receivership under Chapter 128 of the state statutes. Luber, the founder of the company, recently signed an agreement to purchase the company. Luber has formed a new company, called SS Acquisition LLC, that would serve as the buyer of Super Steel if the bid is approved by a judge. The purchase would include the Super Steel name, inventory, all machinery and equipment, as well as current customer contracts.
Super Steel will continue as a new company, Luber said. He has indicated that if the sale of the company to him is approved, he has agreed to hire “substantially all” 250 Super Steel employees.
Although he is upset about the state’s no bid contract with Talgo and the city’s investment in the Tower Automotive site, Luber said his company’s failure to get the Talgo contract was “not a major part” in the company filing for receivership.
He also said there is a “possibility” that the company will do subcontracting work for Talgo.
Walker has raised concerns about the proposed high speed rail line from Milwaukee to Madison that would be built with $810 million in federal funds. The high speed rail line is supported by Barrett and Gov. Jim Doyle.
“I still have concerns about the (state operational) funding mechanism,” Walker said.