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Philly railcar maker Hyundai Rotem gives up and leaves town

"We pushed hard for SEPTA" to buy cars from a Philadelphia firm. "It didnt happen."

Massachusetts workers visit CRRC, a company owned by the Communist Chinese government, to learn how to build railcars for SEPTA and other regional U.S. transit monopolies at the new CRRC plant in Springfield, Mass. SEPTA in 2016 agreed to pay CRRC $137.5 million for new two-level railcars, leaving Septa's previous supplier, Hyundai Rotem, without orders. The Hyundai Rotem plant, which once employed 300 Philadelphia-area workers, has shut down
Massachusetts workers visit CRRC, a company owned by the Communist Chinese government, to learn how to build railcars for SEPTA and other regional U.S. transit monopolies at the new CRRC plant in Springfield, Mass. SEPTA in 2016 agreed to pay CRRC $137.5 million for new two-level railcars, leaving Septa's previous supplier, Hyundai Rotem, without orders. The Hyundai Rotem plant, which once employed 300 Philadelphia-area workers, has shut downRead moreCRRC

Hyundai Rotem is pulling its last office staffers from its 10-year-old, 300,000-square-foot factory on Weccacoe Avenue in South Philadelphia and vacating the premises, said Lois Kang, aide to Philadelphia City Councilman David Oh.

"We did a lot of work trying to keep the company here," Kang said. At its height, the plant — just south of Snyder Avenue between I-95 and the Delaware River — employed 300 workers, though by 2016  it had "reduced significantly." It will close for good at the end of August.

The factory built 120 Silverliner V commuter cars for SEPTA, starting in 2009, and finished a couple of later car-refurbishing contracts for the transit agency by 2016, Kang said. It was that summer that the wide-windowed cars had to be returned for welding repairs, leading to months of train schedule cuts and overcrowding. SEPTA  and Hyundai Rotem blamed the problem on a Pittsburgh-area welding subcontractor; Korean-owned Hyundai Rotem paid to rent substitute cars while the Silverliners were fixed.

Hyundai Rotem also built rail cars for Denver. The company had hoped to win another SEPTA contract to build two-level cars like those NJ Transit uses on its Trenton-New York line. But SEPTA's board, led by Chairman Pasquale T. "Pat" Deon Sr. of Bucks County, gave the $137.5 million new-car contract to a company owned by China's government, CRRC Corp., which last year built a plant in Springfield, Mass., to build trolleys for Boston and cars for Philadelphia and other cities.

SEPTA would "unduly limit competition" if it favored Hyundai Rotem just because it happened to be located in the city and could employ hundreds of local residents, Deon told City Council President Darrell L. Clarke in a March 2016 letter.  Within two weeks, the board had voted to give the work to low-bidder CRRC, dooming the South Philly plant.

Hyundai Rotem declined to renew its expiring lease with owner Rimas Properties, the Philadelphia Business Journal reported.

"The contract was critical," Kang said. "We pushed hard for SEPTA to initiate a pilot program to give preferences to local hiring. It didn't end up happening."

The Hyundai Rotem shutdown follows area heavy-industry layoffs in the last year at the Aker Philadelphia Shipyard at the other end of South Philly, and the Arcelor Mittal steelworks in Conshohocken, also due to lack of orders.

Deon complained in his letter to Clarke that there are few U.S. rail car plants left to buy cars from. That's a contrast with the mid-1900s, when the city was home to the mighty Pennsylvania Railroad. Railway equipment suppliers including the Baldwin Locomotive Works, Budd Co., and J.G. Brill Co. employed thousands of workers here at hulking plants. The industry withered as highway travel largely replaced railroads and factories moved to cheaper U.S. and foreign locations.