Domination of new company puts into question the role of private operators.
Neo-liberalism has become the defining approach most western political systems take to developed their economies after the fall of the Berlin Wall The repeated failure of left-oriented regimes to articulate a popular alternative to corporate welfare and reductions in government size hasn’t helped much. One prominent consequence in Europe and North America has been a privatization of formerly public services. This embrace of the so-called Washington Consensus has had a major effect on public transportation systems, which remain largely owned by local, regional, and national governments, but whose operations increasingly are being transferred to private firms.
I have no interest in extolling the value of these corporations, and their profit motive is likely resulting in less-than-ideal service provision, but the outsourcing of transit operations is undoubtedly producing a massive new industry whose business should be of interest to those in the public transportation trade.
In the U.S., Veolia Transport already manages the operations of Tri-Rail in Miami, New Orleans RTA, San Diego Sprinter, and Los Angeles Metrolink, among others. Though most large cities in Europe and the U.S. continue to run their own services through municipal or regional authorities, the tirades of conservatives against government control will likely result in more and more such operations being transferred to private control. In general, these private operators bid to provide a service that a city requests and then get a contract derived from city funds that lasts several years. There’s little proof that private contractors do this work any better than the public authorities had done it before.
The basic idea? Private profit at public expense.
Nonetheless, four large companies — Veolia Transport, Arriva, Transdev, and Keolis — are leading the way, and making big bucks doing it. Except for Arriva, which is British, the other three companies are French, and tightly aligned with the French government, which invests directly in the companies. Veolia Environnement, which is France’s largest private employer, and whose interests also involve water, waste, and energy distribution, is 10% owned by the Caisse des dépôts et consignations (CDC), which is a sovereign funds investor that funds infrastructure projects and major French companies. Transdev is a direct affiliate of the CDC (70%) and also connected financially with RATP (25%), Paris’ transport operator and a French government subsidiary. Keolis is 55% owned by SNCF French rail, a government subsidiary, and 26% controlled by the Caisse de dépôt of Québec, similar to its French counterpart.
Veolia, which has been having financial difficulties with its transport unit, recently announced its interest in acquiring Transdev. The operation is supported by the CDC and (its ultimate leader) French President Nicolas Sarkozy, a staunch supporter of the privatization of public services. The new company would have 130,000 employees, annual revenues of €8 billion, and be 50% controlled by CDC, 50% by Veolia. The merger would be finalized in early 2010 if it comes through. As part of the deal, SNCF, in affiliation with Eurotunnel, will assume control of Veolia’s cargo operations in France and Germany.
The merged company would control 42% of the French transit market, and collectivities in the country are already worrying about the merger’s effect on competition. Less of it could mean increased costs for municipalities looking to outsource their bus and train networks.
As these companies expand, the French government and its private interest are making their mark on transit service provision around the world. SNCF, which has taken control of Eurostar and has a managing stake in the Italian upstart NTV, is planning a similar take-over of European high-speed operations as they’re opened to privatization; SNCF has made well-known its interest in operating American services such as California High-Speed Rail. This isn’t necessarily a bad thing — anyone who has visited French cities knows the quality and reliability of service provided there.
But French transit and rail services work so well because there’s a strong political will to support their well-being, even when they’re privately run. Is that true in the U.S.? Will private operations run by mammoth European corporations be supported adequately by public subsidies? Or will this de-governmentalization of service provision mean lower wages for workers, less safety, and a general disinterest from the public perspective in continued investment in alternative transportation?
I don’t have the answers to these questions, but they’re worth asking as global corporations take command of driving our buses and trains here, there, and everywhere.