Metrolinx to buy Vehicles from Bombardier Competitor
Metrolinx has reached a deal to buy vehicles from another company in case Bombardier is unable to deliver on its troubled order for Eglinton Crosstown cars, the Star has learned.
According to sources familiar with the deal, Metrolinx has agreed to purchase 61 cars from French manufacturer Alstom as a backup plan if Bombardier doesn’t come through.
Ontario Transportation Minister Steven Del Duca is expected to announce the plan at a press conference at a construction site for the $5.3-billion Crosstown light rail line Friday morning.
Bombardier, which was not given advance warning of the Alstom purchase, did not return the Star’s messages Thursday evening. Del Duca’s spokesperson and Metrolinx officials declined requests for comment, as did a spokesperson for Alstom.
The Alstom purchase is a stinging blow to Bombardier’s reputation and is a sign of how far Metrolinx’s faith in the Montreal-based rail manufacturer has fallen.
Sources said the Liberal government is looking for “certainty†to ensure the Crosstown rolling stock will be delivered on time and on budget. By announcing an alternative supplier for the cars, Queen’s Park is sending a signal to Bombardier that it does not want a reprise of the TTC streetcar fiasco.
Metrolinx, which is the provincially owned transit agency for the GTA, is not cancelling its order from Bombardier. Working with both companies at once is intended to guarantee the transit agency can open the Crosstown by 2021 as scheduled, while sparing it the significant financial penalties it would incur if it unilaterally broke the Bombardier contract.
The 61 Alstom vehicles could be used to operate the Finch West LRT and Hurontario LRT that Metrolinx is building in Toronto and Mississauga, respectively.
But if Bombardier fails to deliver enough cars to open the Crosstown on time, some of the Alstom vehicles would be shifted to the Eglinton line. Metrolinx would then buy additional cars from Alstom to cover the other lines.
Sources say that provincial officials believe the dual purchases are an innovative solution to a messy situation that safeguards the LRT timelines while protecting the public purse.
“The purpose of this is to make sure that none of the three projects are delayed,†said one source.
In 2010, Metrolinx signed a $770-million deal with Bombardier to buy 182 vehicles to run on the Eglinton Crosstown and other Toronto LRT lines. The order has been bogged down by delays and legal battles, and Bombardier has yet to deliver the first two pilot vehicles that were supposed to arrive in spring 2015.
Citing Bombardier’s myriad manufacturing problems, last fall Metrolinx claimed the company had failed to live up to its obligations and served the company with a notice of intention to terminate the contract. Bombardier took the agency to court and scored a victory in April, when an Ontario Superior Court judge blocked Metrolinx from cancelling the contract for default.
Metrolinx was shocked by the decision and still had little confidence that Bombardier would be able to deliver on time. The agency believed it had to seek alternative suppliers or risk severe financial penalties.
In court filings, Metrolinx said if the opening of the Crosstown were delayed, the agency would be liable to pay the construction company building the LRT line a penalty of up to $500,000 a day.
In its own arguments, Bombardier didn’t dispute that the order had been delayed, but maintained it was still capable of producing a fleet in time for the Crosstown’s opening day. The company argued that the first pilot car was ready for testing but Metrolinx had refused to accept it.
The company accused the transit agency of trying to get out of the contract. It alleged that Metrolinx no longer required all 182 vehicles it had ordered because some of the LRT lines that were planned at the time of the 2010 purchase have since been either cancelled or deferred.
Metrolinx had intended to use 76 Bombardier vehicles on the Crosstown line, but the Alstom vehicles are larger, which would allow the agency to operate it with a smaller fleet.
If Bombardier does come through with the vehicles, Metrolinx will use 17 of the Alstom cars on the Finch line and 44 on the Hurontario LRT.
Four years ago, Alstom won a contract to supply 34 light rail vehicles for Ottawa’s transit system.
Metrolinx’s decision to buy cars from a competitor comes at a sensitive time for Bombardier, which is holding its annual general meeting in Montreal this week under a cloud of controversy about its executive leadership and performance on major contracts.
A Star investigation published last week detailed a litany of problems with Bombardier’s production of new streetcars ordered by the TTC, including the company’s persistent failure to manage a global supply chain, build parts to specifications, or set realistic schedules.
Bombardier recently faced heavy criticism for a proposal to increase compensation for its executives by almost 50 per cent despite accepting $1.3 billion in assistance from the Quebec government and a $372-million loan from Ottawa. After public protests, Bombardier agreed to scale back the proposed increases.
The company, whose
aerospace division has struggled with its C Series jet program, posted a
$31-million loss in the first quarter of this year.
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