Talking Trains With IBM’s Head Of Rail Innovation

The media took notice last month when IBM announced it was opening a “Global Rail Innovation Center” in Beijing. It was an intriguing and timely announcement, certainly. And though we couldn’t help but think that it would have been cool to locate it in a place like Detroit, but we also know that China is the new world leader in high speed rail investment and any sane profit-minded company wants to be where the action is. A sense of proportion: China has made a $730 billion commitment to fast passenger rail, compared to $13 billion in the US.

In any case, it struck us an exciting project and were glad to have the chance last week to speak with Keith Dierkx, the director of this new center, and hear his thoughts on where high speed rail in the US is headed–both literally and figuratively. He was nice enough to chat with us from Beijing on his birthday and offer some insights on what goes on at this rail innovation place, what factors will determine whether HSR hits the big time in the US, and how to kickstart a domestic rail equipment industry.

You argued in Forbes recently that it’s a good thing that the US is only now getting serious about passenger rail. Do you really believe that?
Absolutely. There’s an interesting analogy with Africa in this context. Africa went from no phones to mobile phones very quickly. They were able to leapfrog all that expensive copper infrastructure for landlines. I think we’ve got a similar opportunity to leapfrog intermediate technologies and go straight to 250 mph state of the art trains. It makes competition with the regional airlines all the more compelling.We’re late to the game, but things have advanced so much over the last several years that we have an opportunity come in, cherry pick the best solutions, and go right to the head of the class.

Ed Rendell has talked about how rail should replace air travel under 500 miles in this country. Do you agree?
That’s a very real alternative. I do think the opportunity with rail is more around replacing shorter commuter airline travel than replacing car travel. For example, people who are driving to San Francisco and LA are probably driving for a specific reason. Maybe they want to have a car there. But when they take a plane–by the time you get to the airport two hours ahead of time, go through security, get your bags…–high speed rail competes very well.

How could rail change how Americans live?
As you know, one of the challenges in the US because of “car culture” is that we have spatially organized our society in a very diffuse way with suburbs. And so there’s this sense that we’re not concentrated enough from an urban center to urban center standpoint. I think rail offers a viable way to do that and to become enormously more green as a country.

What will it take get Americans on board, so to speak?
I think its success comes down to providing a good experience for the passengers. You know, everyone talks about the speed–and, yes, speed’s a big part of it–but if you can offer a great passenger experience, you’re going to drive a lot more people to the train than is reflected in current estimates.

Success will have to be based on more than just being green though.
Rail opens up lots of interesting opportunities. For example, there might be an intermediate stop somewhere in the central valley of California. Well, a bunch of things can happen now. For instance, you’ve just expanded the commuter distance. Somebody who is outside the whole work ecosystem of LA, because they live three hours out–all the sudden, they are 45 minutes away by train. Plus, it’s a passive commute. You can get work done the whole time. We could see really the growth of entirely new kinds of suburbs and commuting communities.

Do you think this is politically doable?
The political aspect to this, of course, becomes in some ways the big dynamic. If it really is about stimulus and job creation, then you have to weigh options beyond what you and I might consider the optimal spend–that is, picking corridors in the Northeast, the Midwest, LA/San Francisco and LA/Vegas, Florida, and maybe in the Southeast. If the politics are going to dictate, then it maybe makes sense to spread the investment a little thinner. Unemployment is high across the country and a lot of state and local governments are looking to do things.

The announcement last month that IBM was opening a Global Rail Innovation Center in China got quite a bit of attention. Where did the idea come from?
The genesis of this is pre-economic meltdown, pre-stimulus package and all of that. A couple of years ago the management team engaged me and a number of others to look at what we all thought was going to be significant growth in rail.

Two years ago, what made you believers in the global opportunities for rail?
Well, three things. First, rail is considerably greener than other modes of transportation. You’re pumping only a third to a tenth as much carbon into the atmosphere. So it’s a thing you can feel good about. Second, it’s enormously economical. Railroad companies tout that you can move a ton of freight more than 400 miles on a gallon of gas. Third, we’re seeing a lot of attention now to the problem of congestion and the productivity loss it creates. If you can bypass all that congestion on roads and in airports, rail obviously resonates there as well.

Why Beijing?
In the next five years, China is investing more in high speed rail than the rest of the world combined. But “global” is the operative word here. India is looking at upgrading their rail networks. In the Middle East, the Saudis, the UEA, the Jordanians and others are all looking at it. All these people who for thirty or forty years have been waiting on the rail industry, this is what they’ve been waiting for.

How long has China been gearing up for its massive investment in HSR?
They’ve been talking about what they call Passenger Dedicated Lines for several years. In the past, they moved both passenger traffic and freight on the same lines. Obviously, they needed to do something. This enormous build out of the HSR frees up their traditional rail network for freight. So, they’ll have more high speed rail than the rest of the world combined–but they’ll also be getting better freight capacity.

What’s an “innovation center,” by the way?
It’s co-located with our research lab and the IBM Development Lab–our software lab–in Beijing. We’re partnering with advisers ranging from academic organizations like Tsinghua University and Michigan Tech to Motorola to the California High Speed Rail Authority. There are some areas that are of particular interest to us, but we’ve also opened it up and want the agenda to be driven by our advisers—that is by the railroads themselves and others.

Where do you see the biggest business opportunities with HSR?
There are a couple areas we’re focusing on. One is building reservation ticketing and customer service systems. So how do they identify the individual passengers by name and offer them new services and capabilities? Let’s use California as an example: If you’re traveling from San Francisco to LA, how can I manage that experience for the rider to make it more pleasant? So maybe it’s the boarding, the seat assignment, wireless connectivity, a whole set of new services and technologies that make the trip easier and more comfortable. Things like Google Transit. Think if you could just look on your phone and see that when you get off in LA you go two tracks over and your connection will be leaving in five minutes. Or you could see your bus transfers, or know ahead of time if there’s a delay.

And the second?
The second area is asset management capabilities–so, managing the lifecycle of locomotives, cars, and rail. In one of your recent articles, you talked about how much safer rail travel is than car travel and how many rail accidents you would see if they were equal in that respect—but there’s the reality that rail accidents become very high profile things, whether it’s the guy in LA last year who’s texting, or the recent tragedy in the Washington Metro. So you look at how to manage rail assets with technology to make everything even safer than it already is.

For example?
We were talking to a state government–I’m not at liberty to say who they were–and we were envisioning this whole idea of like a digital corridor whereby with sensors along the track or on the trains themselves would give real time telemetry and safety information to the engineers. In the US, there is active legislation around something called positive train control – it’s going to be mandated for all the railroads – and it’s the ability to basically manage and control a train. So if a train were to go through three red fences, you’d have the ability to stop it remotely.

You’ve seen the IBM Smarter Planet ad campaign, of course — well, when we think about this digital corridor, the things that I am describing are very much in that vein. So, how do I instrument all of these assets to provides a safer level of travel and use technology to do preventive work?

I’ve seen an estimate that the passenger rail in the US could be a $150 billion opportunity. Does that seem reasonable?
Absolutely. The Chinese are spending, I think, in the neighborhood of half a trillion dollars. So $150 billion is a pretty reasonable number. They talk about California being a $40 billion spend. If you built five or six of those corridors like that, that’s $200-250 billion dollars. If some are smaller than that, the $150 number seems as good as any other right now. I wouldn’t be surprised to see Chinese looking to partner in the US and look to deliver some of their technology too.

Did IBM consider putting this center in Detroit or another struggling industrial center here in America?
I mean, we’re global. IBM recently made an investment–nothing to do with rail, but an investment–in the state of Michigan. I think we’ve got a center there doing some stuff. The fact is, I’m going to avail myself of our global capability. I’ve mentioned a number of our partners, including Michigan Tech. They have a rail center, and have put forward a number of suggestions about doing some testing in Michigan.

So how does the US capture some of the economic benefits of a business dominated by foreign companies?
In terms of manufacturing capacities, that’s an interesting political question because what a lot of companies do–and you’ve seen it in the airline industry and other things–is look to global sourcing models. So, political leaders in the US might make the decision that if a company were going to participate as a vendor partner in one of our high speed rail networks that it would have to make some investment. I don’t have any visibility on that, but it’s not an atypical thing. In China, of course, when you look at Siemens and ABB and the rest–they’re all here. IBM is doing the same thing. That co-innovation, co-investment model makes a lot of sense. Once it becomes more clear where the spend is going to be in the US and how it’s going to take place, it will be very natural for governments to look at their suppliers as investment partners.

You mentioned being involved with California High Speed Rail Authority. Do you expect that project to get built?
That’s my hope. I‘m listening to Quentin Kopp and he’s listening to me in terms of what global best practices are, what works what doesn’t work–those kinds of things. My job is to listen and then bring the best that IBM has to bear on doing all this. But it’s going to take $40 billion. My biggest concern as a citizen of California is the political challenge. Building this is an incredibly smart thing to do, but you I don’t have to tell you what’s happening in California with the budget and all that. But these are once in a lifetime opportunities. We’re at a key moment relative to infrastructure–not just rail, but this whole idea of a smarter planet, which seems to me a wonderful way of thinking about it.

So now is a good time to invest in infrastructure then, you’d say.
It’s a very exciting time in general around infrastructure. You’ve got a great name for your website because infrastructure is the name of the game for the next twenty or thirty years. I think energy is going to be a huge issue for all of us. These trains are almost in all cases going to be electric, so how do we manage smart grid technology to be able to do that? The good news is it all ties together. But likewise the challenge is that it all ties together–that makes it an enormously complex set of scenario.