New TTC Subway Cars

[spmarshall]

Weren't most "fit and healthy dudes in their twenties" in 1918, er, at war or returning home from war?

Oh yeah. Steve's PM, and GWB's still in the White House. You might be on to something.

 

[ahrvojic]

Article

Siemens steps up lobby for TTC contract
Says it would create plant in Ontario to build subway cars
Vote set for this week on Bombardier's `sole-source' bid
Aug. 28, 2006. 01:00 AM
KEVIN MCGRAN
TRANSPORTATION REPORTER

Siemens says it would create a train assembly plant in Ontario if it managed to wrestle the controversial "sole-sourcing" contract to build 234 TTC subway cars away from Quebec-based rival Bombardier.
"We're still very interested in this project," said Mario Péloquin, manager of business development for Siemens Canada. "We were looking at maximizing the amount of work we could do in this province because those would be new jobs.
"We would do final assembly in Ontario. We would open a facility here, we would contribute to the economy here and we would create some jobs."
That Bombardier would create and preserve jobs in Ontario was the key point Mayor David Miller and TTC chairman Howard Moscoe made while drumming up support for the controversial decision not to tender the $710 million contract.
A Bombardier report suggested the five-year TTC contract would create an average of about 500 jobs a year in Ontario, both directly with the company, and indirectly with suppliers. It would peak at 720 jobs in the third year of the contract.
Péloquin said he didn't know how many jobs his contract would create, but hinted Ontario could be a permanent base for its North American market because "once we're here, we're here." Siemens is based in Germany.
The TTC, however, is not interested in hearing from Siemens, said Péloquin. Instead, a vote on the Bombardier deal is set for Wednesday with five of the eight commissioners already having declared their support.Two independent consultants concluded the Bombardier offer was a fair deal, in line with recent train purchases in New York City and Chicago.
Bombardier's bid calls for the subway cars to be built for $499.4 million, but comes with $110 million in extras.
Siemens told the TTC it could build the same number of cars for $535 million, but added those come with many of the "extras" Bombardier put outside its bottom-line price.
"It's a complete vehicle with all the technologies I think the TTC could possibly want," said Péloquin. "This is the complete package.
"We don't have an allowance for contracting and contingency. We've accounted for some changes to make it fit on the track, because their gauge is different."
A Bombardier official said Siemens' offer was not to be taken seriously.
"Of course they have not seen the specification; it's easy for them to mention a price when you don't even know specifications," said Helene V. Gagnon, senior director of public affairs for Bombardier Transportation.
"We've seen now with two independent experts looking at our proposal, comparing it using various methods, they came to same conclusion that our price is reasonable and competitive.
"We believe we're providing value for money. The cars we are going to provide are going to cost less than the T1 cars we sold in 1992. They will have added features for security, and rider comfort, yet cheaper than what they were in '92."
Péloquin said he received no feedback after he submitted Siemens' unsolicited offer to the TTC in March. He said he takes issue with the notion that going to public tender would raise costs.

 

[cassiusa]

If Siemens is serious about possibly setting up shop to complete the cars in Ontario, this is definitely something the TTC and politicians should take into account.

 

[unimaginative2]

Here's Barber on the issue. Not a bad analysis, though the claim that helping keep jobs in Thunder Bay does nothing for Toronto taxpayers since it's a provincial concern is a bit odd. After all, Toronto taxpayers do live in this province...

Subway-car deal shows politics as usual will keep on rolling

JOHN BARBER

E-mail John Barber | Read Bio | Latest Columns
Free trade is like socialism: It doesn't work in one country alone -- and the one or the few countries that attempt to prove otherwise always lose. That is why none of the three governments responsible for funding the Toronto Transit Commission's latest acquisition of subway cars is going to upset the sole-source deal recently negotiated with local supplier Bombardier Transportation.

If no other country protected its own industries with similar tricks and schemes, there would be no need for them: The invisible hand would do its work to the benefit of all. But with similar favouritism entrenched virtually everywhere railway cars are made, the invisible hand is paralyzed -- and protection becomes essential.

Whether or not those governments actually intend to pay their share of the $700-million contract is another story. Neither provincial nor federal funding is yet secure.

You'd think that the province was good for its one-third share. It would be hard to renege on the cost of trains so soon after announcing construction of the Sorbara Express -- an extension of the Spadina line past York University to Vaughan. The city also did the province a considerable favour by taking all the flak for the sole-source contract with Bombardier.

As critics of the deal pointed out, saving jobs in Thunder Bay does nothing for Toronto taxpayers. The fate of Thunder Bay is overwhelmingly a provincial concern -- and there's no way the McGuinty government, which has paid so much for new auto plants in southern Ontario, could afford to let this contract go offshore.

Yet the province lounged calmly outside the ring while the Milleristas got battered for their support of Thunder Bay. When the latter enlisted help, citing a "Buy Ontario" provision in a previous subway-car contract, the province drew back further, saying it would have no objection to a competitive tender.

Luckily for all concerned, Bombardier sharpened its pencil and produced a bid two outside consultants deemed acceptable, based on prevailing world prices for new subway cars. With the Buy Ontario premium reduced from an alleged $100-million to an indecisive argument amid a constellation of prices, the contract should survive.

In the aftermath of the TTC's expected approval of the Bombardier deal at its meeting today, the biggest unknown is the intention of the federal government. The TTC's expectations are based on announcements by the previous government, and even those won't be enough to pay the whole nut.

Earlier this month, Finance Minister Jim Flaherty signalled that his government may withdraw previously announced support for the extension of the Spadina line..

If the feds have any shame, they won't complain about the cost of the Bombardier contract. Despite not being tendered, it represents a model of due diligence compared to what Ottawa intends to do with billions in new defence spending.

Free market be damned: Invoking "national security" to get around a law designed to prevent regional pork barrelling, the government plans to hand out contracts on a purely political basis. In doing so, it has abandoned all pretence that it is any different from the Liberals who played the same game -- though rarely so blatantly.

It goes without saying that every one of those contracts will be sole-sourced, and most will make Toronto's subway purchase seem puny. Over the next 20 years, Canadians will spend almost $10-million for 16 helicopters and 17 airplanes -- to be built and maintained at a location determined entirely by the federal cabinet.

Nobody's clean in this business. Unfortunately, saying so won't keep the trains rolling.

jbarber@globeandmail.com

 

[ganjavih]

How about a little reward from the Ontario government for our contribution to keeping jobs in Thunder Bay?

 

[unimaginative2]

Like a third of the cost of our subway cars? Yearly "special funding" for the TTC that no other transit system receives?

Seriously, though, I'd be interested to see if Siemens goes for one last push by offering concrete employment commitments. If they outdo Bombardier, we should carefully examine their offer.

 

[boiler2000]

TTC Votes To Award Subway Contract To Bombardier
Thursday August 31, 2006

www.citynews.ca/news/news_3214.aspx


A plan to award Bombardier the contract to build 234 subway cars worth $710 million breezed through a vote by TTC officials Wednesday night.

The deal, which must still pass a full city council vote in September, has come under scrutiny over the potential cost to taxpayers.

Critics including Toronto mayoral candidate Jane Pitfield said the deal should have been put out to tender before simply being awarded to Bombardier.

"Another two to three months just to allow other companies to bid. That's all it would take, and then we'll know whether we're really getting the best deal for Toronto taxpayers," Pitfield argues.

But Mayor David Miller and most of the transit commissioners believe going with the Montreal-based transportation giant is a good idea because it'll create jobs in the province.

Bombardier has promised to build the cars in Thunder Bay, creating about 350 positions.

TTC commissioner Howard Moscoe defends the decision on the grounds that independent consultants deemed Bombardier's price for the work 'reasonable.'

Pitfield says she'll vote 'no' on the plan when it comes up for a vote in council.

 

[maxy505]

Poor economic understanding is what you get when you elect Socialists. This contract should have gone to the lowest bidder, in-province or not. If it's more expensive to build in Thunder Bay then we should stop the wasteful subsidies and let them find work in a competitive sector. If Siemens is cheaper because of foreign subsidies, all the better -- why not let them contribute to the TTC?

Comparative advantage is beneficial to all parties involved. It's the reason that we don't each have to grow our own food and weave our own clothes.

 

[unimaginative2]

If we always stuck to our comparative advantage, the only things Canada would produce are fish, fur, and logs. Do you have any idea how much market protection was needed over decades in order to develop a Canadian industrial and financial sector?

 

[Suicidal Gingerbread Man]

Comparative advantage is beneficial to all parties involved. It's the reason that we don't each have to grow our own food and weave our own clothes.

Someone's been taking night classes at a third rate school of economics.

 

[scarberiankhatru]

^ Intro to economics courses invariably candy-coat comparative advantages that way.

 

[hkskyline]

Why waste the resources to build more expensive items at home when those resources can better employed in more useful endeavours? Even if Siemens were to come up with a better offer, since the there is no tendering process, there is no systematic way to evaluate or even consider it.

 

[hkskyline]

Germs can accumulate on any surface, from escalator hand rails to the doorknob. As long as people wash hands on a regular basis, and especially before eating, the chances of getting a nasty infection are quite low.

 

[maxy505]

The reason the topic is covered in intro economics is that it is a fundamental principle, and it is never superceded by more "advanced" economics.

If we always stuck to our comparative advantage, the only things Canada would produce are fish, fur, and logs.

No, Canada has a comparitive advantage in many fields. Don't forget our human capital (educated, mobile, healthy), proximity to aforementioned resources, physical infrastructure, stable government, mostly free markets, etc.

Do you have any idea how much market protection was needed over decades in order to develop a Canadian industrial and financial sector?

mmm... yeah, none. All our market protections have ever done for us is drag on the economy.

 

[spmarshall]

I don't think so. The National Policy, which imposed a tariff wall against the US in favour of locally-produced manufacturing helped to make Ontario and Quebec an economic powerhouse. The Canadian automotive industry would have likely been non-existant, because Sam McLaughlin of Oshawa and Ford realized that they would profit by assembling cars here - thanks to that, we have a large manufacturing sector, even if protections such as the Auto Pact have disappeared. Upon that grew the service industry and governments with tax money to spend on infrastructure, health and education that makes us today.

The early trade barriers were there for a very good reason - to allow Canadian industry to emerge and be in a position to compete.