http://www.thestar.com/news/gta/transportation/article/772727--companies-vie-for-chunk-of-1-2b-ttc-streetcar-contract?bn=1
Companies vie for chunk of $1.2B TTC streetcar contract
David Rider Urban Affairs Bureau Chief
A Vaughan company and a Montreal competitor are in a “war” to grab a lucrative piece of the TTC’s $1.2 billion contract with Bombardier to replace 204 streetcars.
The results, to be decided in the next month, will determine how many of the hundreds of direct GTA jobs forecast by Bombardier will materialize and where they will be located.
“It is important that we have a partner in the Greater Toronto Area,” said Wernfried Kühnel, sales manager for VEM’s traction motor division, in an interview from Dresden. “We choose two or three partners and in the coming weeks we will choose who we will work with.”
Germany-based VEM, which won a subcontract from Bombardier to design the traction motor for the Euro-styled Flexity Outlook cars, is looking for a Canadian partner to assemble the motors.
VEM is talking to companies including Sherwood Electromotion of Vaughan and IEC Holden of Montreal about assembling all or part of the motors, Kühnel said.
“This is not a friendly competition — it’s a war,” Kühnel said with a laugh.
Bombardier suggested to VEM that it find a Canadian partner for the motor assembly to help it meet the TTC’s requirement that 25 per cent of the value of the massive contract be spent on Canadian parts and labour, he said.
Bombardier has also said it wants to make sure jobs are created in the GTA, he added.
Richard Williams, a project manager at Bombardier Transportation, said three companies — Sherwood, which is primarily a motor repairer and refurbisher, IEC Holden, a motor manufacturer, and Toronto-based Ainsworth Inc., a supplier of electrical, communications, mechanical and control systems — have all been “very entrepreneurial” in trying to win a piece of the streetcar prize.
“All were very aggressive in trying to get into Bombardier because this is a huge contract; it’s (believed to be) the biggest tram contract in the history of the world, 204 (cars and) there might be more coming,” he said, adding the car produced “could be used as a platform for the North American market.”
There is no requirement in the contract for GTA jobs but “naturally if we can re-invest the monies into the Toronto area, naturally that’s greatly appreciated by the customer and by everybody,” he said.
Last June, after Toronto city council passed a motion to ratify the deal which will see the “light rail vehicles” built in Thunder Bay, Mayor David Miller told reporters: “This is probably my proudest moment as mayor of Toronto.
“We have just secured the transit future of this city for a generation. And not only that, they will create thousands of jobs in Thunder Bay and around the 905 for parts suppliers.”
A study commissioned by Montreal-based Bombardier, which beat out German-based Siemens for the contract, said the deal would directly generate 5,700 jobs, including 5,000 in Ontario, 350 of them in the GTA. The Toronto area would also benefit from another 4,100 jobs created through spin-offs, it said.
VEM will decide over the next month, after visits to Dresden from Sherwood and IEC Holden officials, which Canadian company or companies will get subcontracts and whether it will be for a full or partial motor assembly, Kühnel told the Star.
“We visited Sherwood last December,” he said. “We visited different Canadian partners and Sherwood is one of our favourites. They have good experience,” he said, adding the fact that most of Sherwood’s experience is in motor repair, rather than manufacture, wouldn’t be a problem because VEM staff would provide any needed training.
On its website, Sherwood describes itself as a “leading independent provider of assembly and remanufacturing services for rotating electrical apparatus for rail, mass transit and industrial applications,” with one plant in Woodbridge and another in Buffalo, N.Y.
In a recent interview, Sherwood chief executive George Gavrilidis told the Star his company — the only traction motor firm in the GTA — has manufactured streetcar motor components for the TTC for more than 30 years.
But, if VEM asks it to assemble the entire motor, Sherwood will do so and sub-contract the production of some parts, including castings, to other firms “through the GTA,” he said.
“The entire traction motor will be made right here,” Gavrilidis predicted.
But he said it was a “sensitive time” in contract negotiations and he didn’t want publicity until after he and other Sherwood officials go to Dresden, hopefully to sign a contract, around March 21.
John Overton, IEC Holden’s project manager on the TTC streetcar file, declined comment on the ongoing negotiations.
The City of Toronto is paying $834 million of the streetcar tab, with the Ontario government picking up the other $417 million. Miller failed to get Ottawa to pay one-third of the cost with money from the federal infrastructure program.
Whatever contracts flow from VEM could reap greater benefits. The TTC’s contract from Bombardier contains an option that would allow the provincial Metrolinx agency to buy another 200 cars for the regional Transit City light rapid transit lines at a preferred price.
If that option is exercised, industry experts say, it’s very likely that companies with subcontracts for the TTC streetcars will also get work on the Transit City cars.