[EnviroTO]

They are putting Transit City on some of their heaviest bus routes. As you mention, their largest cost by far is employees. Each new LRT/streetcar has only a single driver driving three times as many people and inside an isolated ROW making the trip faster. That in itself will reduce costs for the TTC.

 

[EnviroTO]

Imagine how the staffing costs will go down when this is replaced with LRT.

http://flickr.com/photos/17248968@N00/3407550821/

 

[Epi]

My big concern with this doubling of TTC spending on the streetcars is where the money is going to come from. I would wager that it may well be from subway projects.

To give you an idea of the magnitude of cuts that would be required to bring the TTC to profitability, I did a little bit of back-of-envelope math with the operating budget.

The TTC spends $978,846,000 (75% of its total budget of $1,304,902,000) on operating employees. The proposed subsidy for 2009 is $369,292,000.

Those costs work out to an average annual employment cost per employee of $90,499. To get the TTC to profitability without eliminating any positions would require a cut in the average employment cost to $56,356. This is obviously a pretty massive cut.

For 'true' profitability, we'd have to consider the cost of infrastructure. Since infrastructure is purely paid for by taxes, it'd be quite a bit before we get to making an actual profit.

That said, there is a way to do it, but the city and the citizens would not stand for it. All the TTC has to do is basically, cut all transit lines aside from the subways. Sell off the bus/streetcar routes to the highest bidder, maybe except the 1 or two routes that turn a profit. On some routes that are super busy, get rid of all local service and ONLY run express buses that are full and filter people to subway stations. Sell off all property that is not subway oriented, close subway stations which are not well used.

Then fire a ton of employees and tear up the union contract, open up every station that allows it to tons of retail (there's a lot of potential retail that could exist at places like Bloor and Finch that hasn't been taken advantage of) and start having the TTC be able to take on debt to finance capital projects.


The TTC spends a fortune on a lot of things which are seen as a public good which has nothing to do with running a business. This includes many, many unprofitable routes, putting bike racks on buses, running hybrid buses, low-floor buses (as they have less capacity and cost a lot more), WheelTrans, late night service and so on.

Basically doing all of this would arguably destroy public transit in Toronto, but hey it may turn a profit.


If we go for little changes, we can change things now which are done which shouldn't be to save small amounts here and there. This includes being anal about breaks and leeways, and making sure transit runs like clockwork. This includes banning idling for more than 10 seconds at intersections and at subway stations to save gas (in Japan buses turn off at red lights). This includes making as many of the operations automated as possible. And so on and so on...

 

[Whoaccio]

The TTC spends $978,846,000 (75% of its total budget of $1,304,902,000) on operating employees. The proposed subsidy for 2009 is $369,292,000.

Those costs work out to an average annual employment cost per employee of $90,499. To get the TTC to profitability without eliminating any positions would require a cut in the average employment cost to $56,356. This is obviously a pretty massive cut.

Am I the only one that find the current cost/employee absurdly high? I know it is an average and as such not totally accurate, but still. How can the average TTC employee make more than 2x the average resident in this city? Even after the 'massive cuts', the average TTC employee would still have a 43% wage premium to City averages. I mean, for reference, RBC's average cost/employee is 95k.

 

[TOareaFan]

Am I the only one that find the current cost/employee absurdly high? I know it is an average and as such not totally accurate, but still. How can the average TTC employee make more than 2x the average resident in this city? Even after the 'massive cuts', the average TTC employee would still have a 43% wage premium to City averages. I mean, for reference, RBC's average cost/employee is 95k.

Careful in equating employee "cost" to "wages". Most coporations (presumably, then, the TTC also) include benefits, perks and other costs (facilities, desks, etc.) in calculating employee "costs".

I know, as a rule of thumb, we tell line managers in our organization that when they are considering a new hire to take the wage they are planning to offer and double it to arrive at the expected "cost" of the employee.....not exactly spot on but a good rule of thumb for budgeting purposes.

The rule of thumb will vary according to each company's variables (all of our employees, for instance, are housed in relatively expensive downtown office space) but, for any company, it is safe to say that "employee cost" and "wages" are not the same thing.

 

[kEiThZ]

Those are wrap rates that incorporate the cost of benefits, vacations, training, etc. It does seem kind of high though. At that kind of wrap-rate, TTC is approaching the territory of air crew costs for a regional airline. I’d be curious to know what proportion from that is actual pay and if it’s the case that pay is around 50-60% of the rate, then what is the rest of it?

I hope that with the new streetcars and Transit City vehicles that per capita operations costs do come down. Irrespective of that, however, the TTC should be seeking to bring those wrap rates down.

 

[unimaginative2]

Those points are accurate. Like I said, they're average employee costs, which include benefits and certain facilities. On the other hand, the figures might be slightly understated because I divided the operating employee costs (i.e. not including senior management and a few others) by the total number of TTC employees. I assume the operating employees make up the vast majority.

Epi, I don't think slashing bus routes would lead to profitability. In fact, I suspect that more standard accounting would mean that many of the busier suburban routes make money. That aside, slashing the bus routes would dramatically reduce traffic on the subway, reducing its profitability. Pretty much the only practical route to profitability (if that is indeed a desirable or necessary goal) would be through cuts in compensation and reducing staffing levels, possibly through automation of tasks like fare collection and subway driving.

 

[Earlscourt_Lad]

If the money saved from reducing costs was put towards funding upgrades, increased service, or whatever else, and not put towards reducing the subsidy it wouldn't be a bad thing. I think we can take it as read that the TTC will never be profitable, given the various constraints put upon it. However, if it could achieve savings that would have the added benefit of improving the system I can't see a downside.

 

[TOareaFan]

If the money saved from reducing costs was put towards funding upgrades, increased service, or whatever else, and not put towards reducing the subsidy it wouldn't be a bad thing. I think we can take it as read that the TTC will never be profitable, given the various constraints put upon it. However, if it could achieve savings that would have the added benefit of improving the system I can't see a downside.

Why would we expect/want/desire a "profitable" TTC? Are the libraries (etc etc etc) expected to turn a profit?

 

[UD2]

Why would we expect/want/desire a "profitable" TTC? Are the libraries (etc etc etc) expected to turn a profit?

Why not? We voted Harris and Harper into office didn't we?

 

[Disparishun]

Why would we expect/want/desire a "profitable" TTC?

We shouldn't. Many routes that will never be profitable are nonetheless worth doing.

On the other hand, we should expect/want/desire things to be done as efficiently as possible. There's certainly a valid argument that contracting out routes to the private sector can be a good way of accomplishing that.
That would not require that routes be profitable -- only that public authorities continue to subsidize those routes.

The difference would be that, by running a reverse auction to see who is willing to provide the service on the specified route at the specified standards for the least subsidy, we'd be incenting efficiency. There's no reason that a centralized public body which runs all routes by itself can't be efficient. But they arguably have less incentive to be then someone who's bidding for the contract.

Any gain in lower costs would be slightly offset by monitoring costs to ensure that the winning bidder for a given route was truly meeting specified standards, since they'd have an incentive not to.

 

[TOareaFan]

We shouldn't. Many routes that will never be profitable are nonetheless worth doing.

On the other hand, we should expect/want/desire things to be done as efficiently as possible. There's certainly a valid argument that contracting out routes to the private sector can be a good way of accomplishing that.
That would not require that routes be profitable -- only that public authorities continue to subsidize those routes.

The difference would be that, by running a reverse auction to see who is willing to provide the service on the specified route at the specified standards for the least subsidy, we'd be incenting efficiency. There's no reason that a centralized public body which runs all routes by itself can't be efficient. But they arguably have less incentive to be then someone who's bidding for the contract.

Any gain in lower costs would be slightly offset by monitoring costs to ensure that the winning bidder for a given route was truly meeting specified standards, since they'd have an incentive not to.

I agree with efficiency goals/measures/dreams....just was responding to the neagtivity inherent in the "I guess it will never be profitable" message.....it can't be so setting the goal that high is just unatainable and destructively discouraging.

 

[W. K. Lis]

It's OFFICIAL, on Bombardier's side...

From Bombardier's website press release:

Bombardier Finalizes Contract to Deliver 204 Streetcars for City of Toronto

June 30, 2009 — Berlin Transportation

Landmark agreement with Toronto Transit Commission is largest single order for light rail vehicles in the world

Bombardier Transportation announced today that it has signed a contract with the Toronto Transit Commission (TTC) for the supply of 204 100% low-floor streetcars to replace the City of Toronto’s aging fleet of vehicles. The contract is valued at approximately $851 million CDN ($735 million US, 523 million euros). Deliveries for the 204-vehicle order are scheduled to take place between 2012 and 2018, with the first prototype vehicles arriving in 2011. Under the agreement, up to an additional 400 vehicles could be ordered at a later date as part of Toronto’s Transit City Plan to expand the existing streetcar network with 120 kilometers of new double-track streetcar lines.

The contract represents the largest single order ever for light rail vehicles worldwide and solidifies Bombardier’s position as the world’s leading provider of light rail technology. Bombardier now has more than 2,700 trams and light rail vehicles operating or on order in cities across Europe, Australia and North America.

“This is an important advancement for public transit in Toronto and a strategic contract for Bombardier,†said Raymond Bachant, President, Bombardier Transportation, North America. “We greatly appreciate the dedicated effort put forth by the TTC, the City of Toronto and the Province of Ontario in bringing this contract to a successful conclusion. We appreciate the trust the city has placed in us with this very special project.â€

Grego Peters, President, Light Rail Vehicles, Bombardier Transportation commented: â€We are proud to receive this impressive order and delighted to adapt our proven BOMBARDIER FLEXITY streetcar technology – which is today operating successfully in cities across Europe – for one of North America’s premier urban centers.â€

The new vehicles are based on FLEXITY 100% low-floor, light rail technology modified to TTC specifications and special requirements of Toronto’s streetcar network. The five-module, uni-directional vehicles with all-wheel drive are more than 28 meters long and 2.54 meters wide. The new vehicles will provide improved reliability and operating performance for the TTC along with a wide range of features, including a step-less interior allowing easy access at street level; car capacity for more than 240 passengers; increased heating and air conditioning capacity; improved customer comfort; enhanced accessibility, safety and other interior features; locations for bicycles, wheelchairs and strollers; more efficient passenger boarding and exiting; improved communications features; and a regenerative braking system that feeds power back into the TTC network.

More than 450 FLEXITY low-floorvehicles are in successful revenue service in Linz and Innsbruck (Austria), Lodz (Poland), Eskisehir (Turkey), Geneva (Switzerland), Brussels (Belgium), Marseille (France) as well as in Valencia and Alicante (Spain). FLEXITY low-floor vehicles will also soon enter service in Palermo (Italy), Augsburg and Krefeld (Germany).

Final assembly of the new vehicles for Toronto will take place at Bombardier production facilities in Thunder Bay, Ontario.

 

[kEiThZ]

Why would we expect/want/desire a "profitable" TTC? Are the libraries (etc etc etc) expected to turn a profit?

Nope. But then again libraries don't cost billions to build and operate. And there are plenty of alternatives to a public library...school libraries, university libraries, private libraries, etc. One would think though, that a service monopoly would at minimum, at least, come reasonably close to breaking even....particularly given how difficult it has become to drive in this city. I don't expect the TTC to make a profit, but I would like to see it become far more efficient than it is now....automate more functions, use more articulated buses, etc. It seems to me that a lot of that has to do with labour costs. When their cost per employee is close to that of an airline, but includes booth jockeys who could be automated out of existence, that tells me they aren't doing everything possible to generate the most revenue possible. Either cut the booth jockey or cut his/her pay. Can you imagine an airline giving the same pay to a pilot and a counter attendant?

 

[kEiThZ]

I wonder what impact these streetcars will have on labour costs. They should be reducing maintenance, while increasing capacity. That should translate to reduced demands for mechanics and operators.