Bombardier payment puts government priorities into question

By Taylor C. Noakes on April 19, 2015

On Thursday April 2nd 2015 there was a large anti-austerity protest in Montreal. Several hundred kilometres to the northeast of the city, at the Bombardier plant in the small Kamouraskan town of La Pocatiere, Quebec’s economy minister, Jacques Daoust, declared that if the province were truly in a state of austerity it could not issue a $31.5 million advance payment for new Metro trains.

Perhaps the students, teachers, nurses and diverse other public sector workers didn’t get the message, as apparently austerity had been overcome since the release of the budget on March 26th. Reported total budget cuts amounted to more than $700 million, with healthcare and education taking the hardest hit as anticipated.

The prepared communique issued by the STM at the press conference featured commentary from Daoust, two area Quebec Liberal Party MNAs, Mayor Coderre, Phillippe Schnobb of the STM and representatives from the Bombardier-Alstom consortium, which won the bid to build 468 new Azur Metro cars for Montreal back in 2010. At the time the agreement was for a total of $1.2 billion, with delivery scheduled for between 2014 and 2018.

The announcement made was that the Quebec government would give nearly $32 million to the STM to pay to Bombardier-Alstom as an advance on the $1.2 billion contract signed in 2010. In return the STM would receive four new Azur train sets, each composed of nine Metro cars (or 36 of the 468 agreed upon five years ago).

The official government line was that this advance was good for the Quebec economy, that it would keep 145 or so Bombardier-Alstom workers from being temporarily laid off and that it would allow Montreal to take delivery of the new Azur Metro trains we’re ‘impatient to get’, according to the Mayor.

Never mind that the only Azur delivered by Bombardier-Alstom in 2014 was the test model, or that the project originally intended to create 400 full time production jobs has so far only created 245. What’s disconcerting is that the government of Quebec just gave the STM $31.5 million to buy four Metro trains it can’t use. 

According to STM spokeswoman Isabelle-Alice Tremblay the four completed Azur Metro trains will remain in storage in La Pocatiere until new automated control software is delivered. The software is being designed by an Italian subsidiary of Alstom that specializes in automated control software for mass transit systems, and according to the consortium it is because of delays in the development of this software that the delivery of new Azur trains has been delayed. In January the company was considering the temporary lay off of about 145 workers at the La Pocatiere plant as a consequence of this delay.

The delay is related to software, not hardware. The company has stated that the delay in delivery of the software in turn delays construction of the trains as the trains are to be delivered 100% complete for an immediate entry into service. Not having the software, according to the STM, means the trains can’t operate in the Metro (this despite the fact that the test model already delivered has been operated manually in the tunnels, though it only operates during off-service hours for testing and evaluation). 

Thus, even if the four new Azurs are delivered to the STM, they likely won’t be allowed out of the garage unless the STM changes their operating procedures and organizational ‘best practices’ vis-a-vis manual operation of Metro trains. Both Bombardier and the STM say this will not happen, and Bombardier spokesperson Marc-Andre Lefebvre indicated the trains will be stored at a Bombardier warehouse in the Greater Montreal region before being delivered to the STM, and won’t enter regular service until the new automated control system is fully operational.

Bombardier indicates that in addition to the evaluation train already delivered, another 40 Azur Metro cars have been completed, enough for four complete trains, and that these are stored in La Pocatiere. The $31.5 million advance will pay for 245 workers to continue production of Azurs at a rate of one car every five days, with a total of eight trains to be completed by the end of this year. 

Assuming the automated control system is delivered and functional by the end of the year, the Azurs could conceivably begin entering service in early 2016. Originally, the trains were due to begin deliveries in the spring of 2014.

Lefebvre indicates Bombardier will increase the production rate to one car every two days once the control system is delivered, as the trains will then be ready for immediate entry into STM service and the government will issue more funds to the STM to in turn pay the Bombardier-Alstom consortia. This increase will bring total employment at the La Pocatiere plants to over 400. 82% of the 2400 people reportedly working on this project are employed in Quebec by Bombardier-Alstom or suppliers and sub-contractors, according to Lefebvre.

That said, the production line at La Pocatiere is going to have to be kicked into overdrive sometime soon if Bombardier is to complete all 468 Azurs by the end of 2018.

There was no clear indication given as to when the Bombardier-Alstom consortia will have this software problem corrected so as to get back on track with their construction and delivery schedule, other than an estimate it should be corrected by the end of this year. So, they now have just under 32 months left to build 428 Azurs; that’s 13.4 Azurs per month from now until December of 2018. The STM says they will fine Bombardier-Alstom for late delivery, though what constitutes late delivery seems to have been left open to interpretation. It’s highly unlikely Bombardier-Alstom was planning on delivering 52 new train sets on the eve of January 1st 2019.

The press conference was strategically timed for the day before Good Friday and the Easter long weekend, a slight modification of the more typical Friday afternoon time slot favoured for notices of unpopular government bills and general bad news (the hope being that the story gets buried over the weekend). Ultimately, despite considerable flowery talking points outlining the presumed economic sensibilities of the reigning Quebec Liberal Party, this is bad news both for Quebec taxpayers broadly speaking and the citizens of Montreal in particular. It’s not just that we are very clearly not going to receive these trains any time soon (there’s still months of additional testing and training to be completed on top of the construction and delivery delays), it’s that we’ve just spent money on something we can’t immediately use. A payment has been issued for a product which is not yet completed as per the signed contract, simply for the purposes of saving a hundred or so people from being temporarily laid off. 

Marc-Andre Lefebvre says the advance payment will help ensure Bombardier can stay on schedule. No doubt it will help. But of course, had the government not issued the payment, and Bombardier in turn suspended production, they would still be responsible for delivering the trains by the end of 2018, lest they incur the fines for late delivery the STM assures will be enforced. The software problem is their responsibility after all.

Perhaps the real problem lies in politicians’ management of expectations. We were told we needed new Metro trains a decade ago when the Charest government offered the job to Bombardier without a bidding process, ostensibly because of the immediate economic stimulus and the necessity to be expeditious. We were told that the oldest trains, the now 50 year-old MR-63s, were in dire need of replacement because they kept breaking down. Ten years later they’re still in service and the STM says thanks to its rigorous maintenance regimen the now 40 year old MR-73s will remain in service until at least 2036, another twenty years. Both models are among the best performing in North America, calculated to travel twice the distance between breakdowns when compared to the continental average. Most Metro service interruptions are caused by passengers, not equipment failures. Despite this the government continued pushing the idea of new Metro trains, even going as far to hold a bidding process that ultimately rewarded Bombardier-Alstom the $1.2 billion contract four years after they had already won it. Government even touted the Azur would operate on the expanded Blue Line, even though the Blue Line uses six-car trains and the Azur is only available in a nine-car configuration.

In sum, we’ve spent nearly $32 million and have received a single evaluation train we can’t use operationally, and we’re subsidizing a Fortune 500 company to stick to a production schedule it had already agreed to, and all this to keep 145 people from temporary lay offs from building something we can neither use nor need any time too soon.

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