TTC: Flexity Streetcars Testing & Delivery (Bombardier)

[MisterF]

The original premise of my post was that perhaps Bombardier should be spreading the job wealth around, considering the amount of public money they're got to be receiving in the form of contracts over the coming years.

I'm not suggesting relocating existing jobs, but when you look at the number of contracts that will be coming down the pipe in the coming years, it would be reasonable to assume that Bombardier is going to need additional workers in order to handle that demand. If that's the case, why not make a condition of the contract (not specifically for Bombardier, anyone can bid for it, but we know Bombardier will probably win) that the vehicles must be manufactured in areas of Ontario that have seen a decline in their manufacturing industries in recent years. Or perhaps including some incentive in the contract for the winning company to do so (tax break, etc).

There are empty or extremely underused auto manufacturing plants in both Oshawa and Windsor (Oshawa may have demolished some of theirs though), and existing workforces that a) have manufacturing experience, and b) are looking for work.

These contracts aren't just about the vehicles, they have the potential to be about the economic stimulus related to the manufacturing of these vehicles. It's commonly said that the best form of social assistance is a job. In this case, for those hard-hit areas, these manufacturing jobs would be good jobs, and arguably would be a better economic stimulus dollar for dollar than most other programs the government could implement.

Call it social engineering if you want, call it meddling in the private sector. But when the government is handing out tax dollars to private companies, I believe it's the government's responsibility to ensure that those tax dollars are being spent with optimal benefit to its citizens. Right now there are many citizens in economically devastated areas who are willing and capable of manufacturing those vehicles if given the chance, and those people and areas would benefit significantly from the chance to do so.

Isn't having a plant in Thunder Bay the very definition of spreading the jobs wealth around? Thunder Bay (and northern Ontario as a whole) needs the jobs a lot more than Oshawa does and it's every bit as economically devastated as Windsor. It's not like it's some far off, foreign place. It's in the same province! I say good for Thunder Bay.

 

[DSC]

Isn't having a plant in Thunder Bay the very definition of spreading the jobs wealth around? Thunder Bay (and northern Ontario as a whole) needs the jobs a lot more than Oshawa does and it's every bit as economically devastated as Windsor. It's not like it's some far off, foreign place. It's in the same province! I say good for Thunder Bay.

+ 1

 

[dowlingm]

If the LRVs were built in S Ontario, they wouldn't have to be hauled a thousand Km to and fro. At least if a line was operating in Oshawa, there's some chance an actual LRV line would be built in Oshawa at some point and there are lots of auto sector suppliers in the area who could be leveraged.

I think Thunder Bay needs industrial development which builds on local strengths in order to be sustainable, instead of clinging to the hope of the south expending billions on equipment orders on an ongoing basis, especially now Alstom are assembling LRVs in Ottawa and may challenge for orders in the future.

 

[smallspy]

If the LRVs were built in S Ontario, they wouldn't have to be hauled a thousand Km to and fro. At least if a line was operating in Oshawa, there's some chance an actual LRV line would be built in Oshawa at some point and there are lots of auto sector suppliers in the area who could be leveraged.

The shipping cost of something as big as an LRV is a very, very minute fraction of the total value of the car. Transport to its final destination rightly has no bearing on choosing a manufacturer.

I think Thunder Bay needs industrial development which builds on local strengths in order to be sustainable, instead of clinging to the hope of the south expending billions on equipment orders on an ongoing basis, especially now Alstom are assembling LRVs in Ottawa and may challenge for orders in the future.

Alstom is not building a plant in Ottawa. Their only permanent assembly location is in Hornell, New York, and unless they magically win a ton of orders in the next year that is not likely to change anytime soon.

Dan
Toronto, Ont.

 

[denfromoakvillemilton]

Oshawa is 50 minutes from Toronto. 20 percent of Oshawans work in Toronto. Thunder Bay needs those jobs more. Whether we should always buy Canadian is another question. Siemens makes great things.

 

[nfitz]

Whether we should always buy Canadian is another question. Siemens makes great things.

On the 204 + option for 396 more cars for TTC, Siemens bid about $7.5 million per car, compared to $5 million by Bombardier. At that price, I hope they are good things. Having the existing Ontario capacity doesn't save you increaseing the price by 50%!

 

[drum118]

On the 204 + option for 396 more cars for TTC, Siemens bid about $7.5 million per car, compared to $5 million by Bombardier. At that price, I hope they are good things. Having the existing Ontario capacity doesn't save you increaseing the price by 50%!

Base on Siemens bids in the US, their cost would had been lower than Bombardier if they had any real chance of winning the bid in the first place. It been a given going back as far as 2004 that these news cars were going to be built in Thunder Bay. Siemens bid was a save face and why none of the other big boy had no interest in bidding on the contract in the first place.

When one puts all their eggs in one basket like TTC, you get what TTC has to deal with now.

During the bidding stage, some commissioner wanted work to be done in Toronto to the point having a plant on the waterfront and rolling the cars off the assembly line onto TTC track, but got shot down.

With the changing of trade agreement for Canada and the world, buy Ontario & Canada Requirement will become history.

Just think what TTC or Toronto could do on the saving of $204+ million if a real bid process took place in the first place.

 

[W. K. Lis]

The difference for the current US bids is that the network is being built to the vehicle specs. In Toronto, the vehicle is being built to the network specs. Two different specs. Building to vehicle specs means building the tracks to a wider curves and smaller incline requirements. Building to network specs means building the vehicle to handle the tighter curves and steeper inclines.

 

[nfitz]

Base on Siemens bids in the US, their cost would had been lower than Bombardier if they had any real chance of winning the bid in the first place. It been a given going back as far as 2004 that these news cars were going to be built in Thunder Bay.

I'd put more stock in that if TTC hadn't thrown away all the initial bids, because of technical concerns, and then retendered it.

It was an open bid, with the primary decision based on price, if they met the technical standards. I believe after they retendered, both Siemens and Bombardier met the technical standards. Had Siemens bid less than Bombardier, they'd have won.

 

[chriskayTO]

So if Siemens knew they wouldn't get the contract, why would they even bother "playing ball" by bidding in the first place?

 

[wopchop]

So if Siemens knew they wouldn't get the contract, why would they even bother "playing ball" by bidding in the first place?

They wouldn't waste money in preparing a bid if they knew with 100% certainty that they would lose.

 

[cplchanb]

I'd put more stock in that if TTC hadn't thrown away all the initial bids, because of technical concerns, and then retendered it.

It was an open bid, with the primary decision based on price, if they met the technical standards. I believe after they retendered, both Siemens and Bombardier met the technical standards. Had Siemens bid less than Bombardier, they'd have won.

I can guarantee that there was a political part in it as well. Bombardier is in thunder bay and is well established
Siemens had no assembly plants around at that time and relied on a promise to set up one if they won. Even if they undercut bbr in price Canadian content would've negated that. That is why they also won the subway contract. They say that bbr was the cheapest option but for sure there was backroom deals to keep them at the top

 

[nfitz]

I can guarantee that there was a political part in it as well. Bombardier is in thunder bay and is well established
Siemens had no assembly plants around at that time and relied on a promise to set up one if they won. Even if they undercut bbr in price Canadian content would've negated that.

Doesn't that say that Siemens couldn't beat Bombardier's price? That suggest to me that it was open.

That is why they also won the subway contract. They say that bbr was the cheapest option but for sure there was backroom deals to keep them at the top

I don't think there was any bidding on the subway contract.

 

[cplchanb]

Bombardier has had a past relationship with the gta transits
Therefore when it comes to price they have bargaining flexibility knowing that they have a longtime customer
Siemens on the other hand has no relationship therefore they have little room to play with
Its all about business relationships. That is why they were able to sole source the Rockets and how they were able to undercut Siemens on the streetcars

 

[TOareaFan]

Bombardier has had a past relationship with the gta transits
Therefore when it comes to price they have bargaining flexibility knowing that they have a longtime customer
Siemens on the other hand has no relationship therefore they have little room to play with
Its all about business relationships. That is why they were able to sole source the Rockets and how they were able to undercut Siemens on the streetcars

I am not involved in the transportation industry but does it really operate that significantly different than most industries? Usually when you are chasing a new customer you are willing to accept lower pricing to "get your foot in the door"....take a lower (or no) margin on that first deal hoping that it leads to future business where you can get your pro forma margins. It is why Rogers/Bell give things/deals to new cell phone customers that existing loyal customers can't get....it is why (back in the day) Beckers were famous for their "buck 99 bag of milk".....you tempt/lure new customers with pricing then hope to make your margins going forward.

Again, from the outside I would suspect that the ability of BBD to outprice the market has more to do with the barriers to entry in this particular business with this particular customer. The unique specs that the TTC have in their needs have already been developed and the cost amortized over past contracts...so now they can roll these out cheaper and, yes, perhaps competitors have to develop some local manufacturing/assembly that they don't have and are trying to recover that during the first deal (fearing there may not be a second) so these costs that BBD don't have give them the ability to price thinner.

I don't know.....but they are all companies driven by the need/want/desire to deliver returns to shareholders so there is likely a reason or two for the pricing differences.