Talgo outlines implications for Milwaukee site if Wisconsin cancels HSR program

When Spanish train builder Talgo Inc. committed to opening a facility in Milwaukee to manufacture high-speed trains, the company was prepared to stay awhile.

In early March, the state of Wisconsin announced it ordered two trains to operate on its Chicago-to-Milwaukee Hiawatha intercity passenger-rail service. In addition, the Oregon Department of Transportation ordered two Talgo trains to operate on the Cascades service between Eugene, Ore., Seattle and Vancouver, British Columbia. Those trains also would be built at the Milwaukee plant.

Beyond that, the Wisconsin DOT had expected to exercise an option for two additional Talgo trains that would operate on the Milwaukee-to-Madison high-speed rail line.

But just two months after opening the Milwaukee facility, Talgo’s future in Wisconsin is in jeopardy. Last week, Gov. Jim Doyle stopped construction of the Milwaukee-Madison line in the wake of the Nov. 2 election of Republican Scott Walker as the state’s next governor. Walker has said he will stop the project once he takes office.

And if Walker follows through on his threat, Talgo will be “forced to shut down the manufacturing operation in Milwaukee” in 2012, says company spokesperson Nora Friend. By November’s end, Talgo expects to have 40 people working at the plant; by spring 2012, the company plans to employ 125 people at the site, she said.

“We are very committed to meeting our contractual obligations, which say we must stay in Milwaukee until 2012 and deliver the equipment to the states of Wisconsin and Oregon,” says Friend. “But after that, we’ll have to cut our losses and move on. If there’s no business and if Wisconsin is not enthusiastic about expanding their rail program anymore, we’ll have to look to states that are.”

If Talgo does close the facility, there would be “substantial” financial implications for the car builder, though Friend wouldn’t say to what extent.

“This has been a huge investment for Talgo,” she says. “We entered into this agreement thinking it would be very long term.”

So did the city of Milwaukee, which has invested more than $6 million in the facility, says Milwaukee Department of City Development spokesperson Jeff Fleming, adding that Talgo's lease for the site — which is owned by the Redevelopment Authority of Milwaukee — has an "out clause" after 24 months. City officials hoped Talgo’s presence in an area that was “in dire need of revitalization” would attract more manufacturing business, says Friend.

If Wisconsin shuts down its high-speed rail program, Talgo would continue to operate a maintenance facility at the Milwaukee site for the Hiawatha equipment, Friend says.

Meanwhile, another state has approached Talgo about moving its manufacturing operations south.

Illinois Gov. Pat Quinn recently sent a letter to Talgo officials “welcoming them to move to Illinois,” says Friend. It’s too soon to say if Talgo would make the move — especially since Wisconsin’s plans to stop high-speed rail construction are not final — but Talgo does appreciate the invitation.

“Illinois has a strong rail plan and they also have a very robust supply chain, and that’s always good for manufacturers,” she says.

— Angela Cotey