Transit agency signs ‘safety-net’ deal with France’s Alstom
Metrolinx orders from rival in case Bombardier fails to deliver on projects
Ontario’s transit agency Metrolinx, a major customer of Bombardier’s light rail vehicles, announced Friday it has turned to a competitor of the Montrealbased company over “serious concerns” quality vehicles won’t be delivered on time.
The deal marks the latest blow to Bombardier, after a week that saw major institutional investors calling for a change in leadership due to a “lapse of governance,” eventually forcing the chairman of its board to relinquish his executive role.
Metrolinx said it has entered a contract with French manufacturer Alstom for 61 light rail vehicles, a plan it calls “a safety net” in case Bombardier fails to deliver lightrail vehicles for two major projects in Toronto.
Under the $528 million agreement, Alstom will build 17 vehicles for the Finch West LRT project and, if necessary, 44 for the Eglinton Crosstown, both projects that Bombardier has already agreed to build vehicles for. The deal also includes an option for additional vehicles.
If Bombardier meets its contractual obligations and delivers vehicles on time, the 44 Alstom vehicles designated for the Eglinton Crosstown line will be reassigned to the Hurontario LRT project.
“Over the past several months, Metrolinx has had significant concerns regarding Bombardier’s ability to deliver quality vehicles according to the contract,” Ontario’s Minister of Transportation Steven Del Duca said at a news conference.
“I refuse to stand idly by during this time of uncertainty. From my perspective, it’s essential that we take responsible action in order to ensure that we successfully deliver on our promise to open these transit projects on time.”
Bombardier released a statement saying the company is “ready, able, and willing to deliver these vehicles to the people of Toronto on time.”
“As the Minister and Metrolinx are well aware, these vehicles can be ready ahead of schedule and well before a single track has even been laid on the Eglinton Crosstown,” the company said.
It also said the pilot vehicle Metrolinx ordered is ready and undergoing qualification testing.
“We believe what’s best for the people of Toronto and Ontario is that we work together to ensure taxpayers are not on the hook for another cancelled contract,” the statement said.
“We have addressed the issues raised in the past and we are confident this will be upheld in the dispute resolution process.”
Murtaza Haider, a professor at Ryerson’s Ted Rogers School of Management, said although the Metrolinx announcement won’t impact any existing contacts, it causes further damage to Bombardier’s reputation.
“The Bombardier name has suffered,” Haider said. “I think it’s time management do some soul searching. It’s time for them to realize the monopoly position that they thought they had may not be the case and that, if push comes to shove, people will go out and find alternative sources to fulfil their needs.”
Last November, Metrolinx formally notified Bombardier it intended to cancel a $770-million contract for 182 light-rail vehicles, citing “significant quality and manufacturing issues.”
Bombardier responded by filing a court injunction to stop the cancellation, claiming Metrolinx was in fact responsible for project delays.
In April, the Ontario Superior Court of Justice ruled in favour of Bombardier, granting an injunction that temporarily halted the government’s transit agency from terminating the deal.
Both parties will now participate in a court-ordered dispute resolution process.
Del Duca would not say whether the province would still consider Bombardier for future projects.
Metrolinx president and chief executive John Jensen said in a statement the agency cannot wait until after the dispute resolution — which could take a year to resolve — to determine whether Bombardier can meet its deadlines.
“We know for sure that Alstom’s light rail vehicles work. They are currently producing quality vehicles on time for Ottawa’s Confederation Line LRT project,” Jensen said.
“We are hopeful that Bombardier can get its program on track. However, the steps we are taking give us a safety net if it turns out Bombardier is unable to fulfil its contract.”