Bombardier competitor to build Metrolinx LRT cars in Toronto, create 120 jobs

A French company whose light rail vehicles will replace Bombardier Transportation transit vehicles under a revised contract withMetrolinxis going ahead with a plan to build those vehicles in the Toronto region.

AlstomCanada spokeswomanMarilenaVaranoconfirmed on Thursday that her firm will establish a manufacturing plant in Brampton, Ont to build future cars on the Sheppard EastLRTand Finch WestLRTprojects in Toronto.

She initially said the project, which has not been formally announced, would create some 200 jobs but later revised that to 120 jobs. The company already employs more than 300 Canadians at facilities in Ottawa and near Montreal.

Metrolinx a provincial government agency in charge of transportation for the Greater Toronto and Hamilton Area announced Thursday it will accept only 76 light rail vehicles of the 182 originally ordered for $770 million from Bombardier. A source confirmed the new contract is worth $392 million.

CEO Phil Verster said the 106 Bombardier vehicles that were to be used on the two lines will be replaced by 61 larger cars purchased through a $528-million agreement signed last spring withAlstom.

Future cars on those lines will likely also be built byAlstom.

"We brought a second supplier into the market, which creates a totally different competitive dynamic andAlstomwill now build vehicles right here in Toronto for Toronto on those projects," he said. "And that's very exciting for us."

The Bombardier cars will now be used only on Toronto's $5.3-billion Eglinton Crosstown project.

A history of tension

Metrolinxhad previously asked a court for the right to cancel the contract with Bombardier over doubts about its ability to fulfil train orders in a city where gridlock has become an increasing frustration for commuters. But a judge said it couldn't without first going through a dispute resolution process.

Metrolinxsays its new deal with Bombardier includes harsher penalties if vehicles aren't delivered on time or if the quality of the vehicles is unacceptable.

Verster said details of the penalties are confidential but confirmed his agency is liable to pay $500,000 per day to the consortium building the Eglinton Crosstown project if the cars are late. It had previously been $1,500 a day for each late vehicle.

"What I can say is that the financial penalties (to Bombardier) are significant and they offset our exposure we have if the delivery of the vehicles are late," he said.

Bombardier to recover lost revenue

Bombardier said the lost revenue from the smallerMetrolinxorder will be offset by an 18-month extension of its Go Transit operation and maintenance contract in the Greater Toronto Hamilton Area.

"We have always been resolved to find a clear negotiated path forward, one that delivers value to all parties, and foremost to the people of Ontario," said Benoit Brossoit, president of the Americas region for Bombardier, in a statement.

Metrolinxhad previously indicated it wanted new operators to take over the suburban GO Transit and UP Express airport rail services after the current contract expires in 2023. It had said its existing contract with Bombardier was worth about $100 million per year.

Ontario Transportation Minister Steven Del Duca said in a statement Thursday his government intends to ensure suppliers like Bombardier fulfil their obligations so that transit projects are completed on time.

"We will continue to be vigilant with respect to Bombardier's performance," he said.

"Simply put, they are expected to deliver as per our new agreement or face significant consequences."