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Streetcars to have 25 per cent Canadian content

TTC follows recommendations to keep foreign bidders in competition; Bombardier has argued even 30 per cent was too low


December 19, 2007

Toronto’s next generation of streetcars should be 25 per cent Canadian made, the Toronto Transit Commission decided yesterday, in an effort to squeeze some domestic job creation into the $1-billion contract, North America’s biggest light-rail deal to date.

The move is also meant to avoid the controversy that dogged the TTC and Mayor David Miller last year, when the transit agency agreed to hand a $674-million subway car contract to Montreal-based Bombardier without competition in order to preserve jobs at the firm’s Thunder Bay plant.

A report from a private consultant Booz Allen Hamilton had warned the TTC that a Canadian-content requirement any higher than 21.8 to 25 per cent for the new streetcars could result in the politically embarrassing event of all foreign bidders dropping out, leaving only Bombardier.

The nine city councillors that make up the commission held a special meeting yesterday, hearing from labour activists who called for a 60 per cent Canadian content provision, similar to a federal rule in the United States.

The TTC voted to call on the federal and provincial governments to come up with across-the-board rules on Canadian content in transit vehicles.

“We are committed to jobs in Canada. … It’s just how far can you push without having a competitive environment,” said TTC vice-chairman Joe Mihevc, a left-leaning councillor and ally of Mr. Miller.

“We have struck the right balance between good competition and preserving good manufacturing jobs in Canada.”

TTC chairman Adam Giambrone said he would have liked to see a higher number than 25 per cent. However, he moved a motion to have the TTC demand an increase in Canadian content for the optional second phase of the contract, which contemplates buying up to 480 more vehicles for the city’s suburban light-rail expansion plans.

Commissioner Glenn De Baeremaeker, applauded by a handful of union activists at the meeting, moved a motion to hand the entire contract to Bombardier without competition to create Canadian jobs. He was voted down.

Bombardier could not be reached for comment last night, but company vice-president Mike Hardt had said recently that 30 per cent Canadian content was “very, very low” and would only create about 200 jobs.

Other companies that have expressed an interest in bidding on the contract include German-based Siemens and Vossloh-Kiepe, and French-based Alstom, all of which have said publicly they would include some Canadian content in their streetcars. Czech-based Skoda has also expressed an interest in bidding.

Toronto is not alone in grappling with the issue. In Montreal, Bombardier’s French competitor Alstom has launched a court action challenging the Quebec government’s move to force the Montreal Transit Corp. to deal exclusively with Bombardier on a $1-billion subway car order. A decision is expected next year.

In Vancouver, however, a public-private partnership is building the new Canada Line, a $2.05-billion, partly tunnelled light-rail line to Richmond, B.C., and the Vancouver airport, and all 20 new automated vehicles are being completely built in South Korea by Hyundai Rotem Co. Bombardier, which builds Vancouver’s current SkyTrain vehicles, bid on the contract but lost.

The line, funded with $720-million in private investment and to be run for 30 years by a private consortium, InTransitBC, had no Canadian-content provisions in its tendering process, spokesman Steve Crombie said. This allowed it to get the latest, state-of-the-art rail technology at a good price, he said.

“It hasn’t been an issue so far,” Mr. Crombie said. “This is the best car you could get for the best price.”

Toronto plans to buy at least 204 new low-floor streetcars at first to replace its aging fleet, if provincial and federal governments come up with the funding. If all goes according to plan, the first new cars will roll onto the city’s rails in 2010.

Buy Canadian?

While many other countries, including the United States, demand that local manufacturers benefit when their transit agencies buy new vehicles, recent major transit purchases in Canada have produced mixed results.

Vancouver The new Canada Line, a $2.05-billion rail line from Richmond, B.C., to Vancouver International Airport, is getting 20 automated, 41-metre, two-vehicle trains from Hyundai Rotem Co., which is manufacturing the vehicles in South Korea.

Montreal French manufacturer Alstom has taken Montreal’s transit authority to court over its move - mandated by Quebec’s Liberal government, which is providing 75 per cent of the funds - to deal only with Bombardier on a $1-billion subway-car order. (Montreal’s rubber-wheeled cars were actually designed by Alstom and based on the Paris model.)

Toronto Mayor David Miller and the city politicians on the Toronto Transit Commission were criticized after defying bureaucratic advice and choosing to deal only with Bombardier for a $674-million subway-car contract last year, saying they wanted to preserve jobs at the firm’s Thunder Bay plant. Yesterday, the TTC, which is allowing multiple bids on a $1-billion streetcar deal, voted to demand that companies include 25-per-cent Canadian content in their proposals.

Jeff Gray