Off the Rails? - The Acela Express Railway Installation

The complex history of the relationship between the companies involved in the Acela Express railway installation is mined for key lessons for marketing relationships particularly those within international marketing projects. In this case study, INSEAD Professor David Soberman and Nicholas Rowell, Research Associate, analyze the management of a franco-north american relationship and lay out key learning points for the future with special relevance for international, multi-partner projects.

by David Soberman, Nicholas Rowell
Last Updated: 23 Jul 2013

What happens when misunderstandings and mishaps in an international marketing mega-project sour a relationship? How to get back on track? How to get on top of marketing priorities to start with? This case study by Professor David Soberman and Nicholas Rowell, Research Associate, scrutinizes the relationship between the French company Alstom, world leader in tilting-train technology, and Bombardier, Canadian transportation market leader, throughout the installation of the Acela Express for Amtrak in the north-eastern United States. It looks in detail at the dynamics and logic of the project, from the bidding process and competition to the installation and subsequent confusion and recriminations.

The Acela Express seemed to be a straightforward technical challenge – the trains were based on existing and proven technologies – requiring those involved to mould these technologies and adapt them to Federal Railroad Administration regulations and the Northeast Corridor environment. But was this really the principal test of this huge project involving multiple partners? As events unfolded, the challenge in hand appeared to be far more than simply technological. As technical problems multiplied with the trains, Bombardier’s relationship with Amtrak began to turn sour. As if to symbolize the incipient breakdown in relations, when Amtrak President David Gunn was finally able to ride the Acela Express, the train travelled less than 15 miles before breaking down.

Despite tortuous efforts by the companies involved since the early 90s - building relationships, melding technologies, adapting to differing regulations - the high value consortium began to fall apart. Eventually Alstom received notice that Amtrak was contemplating discontinuation of the Acela Express service and putting the Metroliner – slightly slower and older but with a much better performance record – back into service. Brickbats flew, legal moves were threatened by both sides, and soon the parties were in the courts and at each other’s throats. How could it have come to this?

Ironically, at the very time when the recriminations and technical problems reached a peak, indications emerged that the Acela Express might fulfill its financial promise: it was earning a profit of $51.3 million – $19.33 per passenger – on revenues of $271.2 million and the train had become popular with travellers despite its unreliability. Insiders and enthusiasts conceded that, “The trains are popular with passengers (when they work properly) and have played a key role in the ridership increases the Northeast Corridor has experienced.” The good news, according to Amtrak, was that passengers had really taken to the train: “When it works, the passengers love it.” While ready to concede this, Bombardier insisted that, “Passengers don’t see everything going on behind the scenes.”

The complex history and management of the relationship between all players is mined for key lessons for marketing relationships particularly within international projects. It offers a vital exercise in both technology and project management, and is suitable for managers, marketing managers and senior executives.

INSEAD 2003

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