Oberstar would establish a monopoly in electronic toll equipment (EDITORIAL)

James Oberstar house transportation chair wants US Government 'stimulus' money to go only to projects that use items "manufactured in the United States." (Oberstar 2009-01-07 http://www.tollroadsnews.com/node/3922) The United States has only one factory manufacturing electronic toll transponders and readers - TransCore's in the northern part of Albuquerque NM. That plant supplies electronic toll systems in the US south, in Florida, Texas, Oklahoma, Georgia, Puerto Rico, Washington state.

Oberstar would set up TransCore as an electronic toll supplier monopoly.

More than three quarters of the electronic toll equipment deployed in the US is imported - all the E-ZPass equipment of the northeast, mid-Atlantic and mid-west, and almost all the Title 21 equipment used in California and Colorado.

The E-ZPass gear, all the transponders and readers, come from Mark IV's factory in the Toronto area. The western toll systems supplied by Sirit also come out of Canada.

ASTMv6 equipment as supplied by Raytheon is manufactured under contract in Israel.

In the E-ZPass recompete under way at the E-ZPass Inter Agency Group and in the longstanding USDOT-supported effort to develop a new vehicle communications system using 5.9GHz (VII, Omniair) international companies loom large too.

The Europeans and Japanese have been using close to 5.9GHz (5.8GHz) frequency for over a decade - the US uses 915MHz - so companies like Kapsch, Q-Free, and Siemens in Europe and Mitsubishi, Hitachi and others in Japan bring a wealth of experience with the on-road use of the higher frequency.

Do we really want to forgo their product offerings?

Do we really want to force them to set up manufacturing plants here in the US?

What is 'manufacturing' anyway? Just assembly?

The manufacture of the brilliant sticker toll tags at TransCore's factory in Albuquerque is fully automated. When I visited it was churning out eGo sticker tags all by itaself. There was no one anywhere near it. Not a single employee.

Of course it required occasional attention and some maintenance, but modern automated assembly machines themselves provide few jobs.

So are the Oberstar rules going to mandate locally manufactured components? Chips, memory, antennae other components are international commodities.

Are the Oberstar rules going to specify the value of the end product that must be manufactured in the US?

Will projects be divisible?

Could a toller take US 'stimulus' money for the road works themselves and have those comply with the Oberstar made-in-US rule by forgoing Korean steel and Taiwan cement for the US steel and US cement, while separating out the toll collection part of the same project and using only toll revenue to finance electronic toll equipment and be free of the Made in the USA requirement?

Maybe they could contrive to retain the option to use Canadian-made toll equipment by doing a total toll system upgrade at the same time the new toll road was being built to argue they were separate projects.

This opens up the prospect of a plethora of rulemaking and compliance and policing issues and expense. And to what purpose?

The uncertainty engendered by the prospect of Made-in-USA rulemaking will destroy jobs and investment. Why, for example, commit money to 5.9GHz if it is unclear what the nativist rules will really be and how broadly they will apply?

TransCore is a fine company with a great history (as Amtech) of pioneering electronic tolling and it plays a leading role in toll systems in the US and outside. Its sticker tags and multimode transponders and readers are outstanding. But TransCore is great in part because it has been brought up in a fiercely competitive domestic and international environment.

Many in the US industry could think of nothing more destructive to innovation and value for money in electronic tolling than the Oberstar-style protectionism that would slam the door on international competition. Or if not slam the door, put a whole heap of obstacles in the way.

A TransCore monopoly would be bad for tollers, bad for motorists and, in the end bad, for TransCore itself.

Such protectionism could be an economic disaster since it would encourage beggar-your-neighbor measures all over the world, diminishing choice of suppliers, reducing economies of scale, spawning monopoly, and inviting retaliation against the US and US exports and US business abroad.

Many analyses of the Depression of the 1930s attribute its depth and persistence to misguided protectionism - think Smoot-Hawley Act - and other forms of governmental intervention that had unforseen consequences and detracted from private sector employment and investment. This was bipartisan bungling -  first under President Hoover then under President Roosevelt.  (Amity Shlaes "The Forgotten Man, a new history of the great depression" Harper Collins 2007)

Oberstar's "made in the US" condition for 'stimulus' grants panders to populist sentiment and to special interests, and it is wrong. Bad public policy. It should be denounced and rejected. And as far as possible the toll industry should avoid taking tainted 'stimulus' money.

TOLLROADSnews 2009-01-11