Europe

German Firms Plan U.S. Railway Expansion


Europe's largest engineering company, Siemens, and German national railway operator Deutsche Bahn AG announced on Saturday that they are hoping to jointly enter the U.S. high-speed rail business.

Both companies have been hurt by the global financial crisis and are hoping to find a boost in profits from U.S. President Barack Obama's plans to invest up to $8 billion (€5.6 billion) in the U.S. rail sector. Obama's plan, which was unveiled in April, envisions creating up to 10 new high-speed rail corridors between major cities, such as Miami and Orlando as well as San Francisco and Los Angeles, with trains travelling at top speeds of over 150 mph (240 kph). For the 2010 fiscal year budget, Obama has proposed a separate, additional €5 billion investment in high-speed rail service.

According to information obtained by SPIEGEL, as part of the proposed joint effort, Siemens would supply high-speed ICE-3 trains and transport technology, while Deutsche Bahn would be in charge of operating the rail links. The latter company's consulting division, DB International, has already started looking into how to implement the plan.

The Spanish railway operator RENFE already uses Siemens ICE-3 trains, and a number are on order from both China and Russia.

Possible Plan Derailments

Still, the companies have one issue to deal with before this proposed collaboration gets their full blessing. At the moment, Siemens and Deutsche Bahn are in a dispute about who will foot the bill for the replacement of faulty parts on ICE trains, which caused a train to derail last year in the western German city of Cologne.

Company executives will be meeting this week to try to resolve the issue. "As long as we do not have this issue resolved," Deutsche Bahn said in a statement, "our joint entry into the U.S. rail business will not happen."

Deutsche Bahn hit the headlines earlier this year when it was revealed that the state-owned railway operator had been spying on its own employees. After almost a decade in office, then-CEO Hartmut Mehdorn reacted to mounting pressure by stepping down and was replaced by Rüdiger Grube in May.

Under Mehdorn, there had also been talks of . However, in an interview with SPIEGEL ONLINE earlier this month, Grube said that "there probably won't be an initial public offering before 2013 or 2014."

Siemens also has its own share of internal issues to deal with. In the wake of a €1.3 billion ($1.9 billion), SPIEGEL has learned that up to two dozen ex-employees are suing the company for either being fired or not having their contracts renewed as a consequence of the scandal.

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