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Chinese train company says its Montreal Metro bid would save taxpayers billions

By: Ross Marowits, THE CANADIAN PRESS

8/02/2010 5:04 PM | Comments: 0

MONTREAL - A Chinese railway manufacturer says it can save Quebec taxpayers billions of dollars and create up to 1,000 jobs in the city if it beats out a Bombardier-Alstom consortium for the contract to build new subway cars for Montreal's Metro system.Zhuzhou Electric Locomotive said Monday it would assemble the subway cars in a Montreal plant in order to respect the requirement that 60 per cent of the content be Canadian. Components and engineering would likely come from China.

"We can do it for less than half of what Bombardier has been quoted as offering and it doesn't matter if it's 300 cars or 1,000 cars," Glen Fisher, president of Zhuzhou's Canadian partner, CPCS Technologies Canada, said in an interview.

He said the company is prepared to take Montreal's transit authority and the Quebec government to court if it continues to limit bidding to manufacturers of subway cars using rubber tires.

The requirement unfairly favours Bombardier (TSX:BBD.B) and France's Alstom, the only two companies that make rubber-tire subway cars, he said.

Fisher said there is no reason why steel wheels couldn't be used in the Montreal subway, where appropriate tracks are already in place.

He said subway systems in Paris, Mexico City and Manilla have added some steel-wheeled cars to their rubber-tired fleets.

The Chinese cars could be added alongside existing cars until the entire fleet is updated within two years, although Fisher said the transit authority may want the timeline delayed.

"If we can't supply steel wheels to them and they go ahead with the (rubber) tires, Montreal is going to be burdened with a very expensive system that is, in the opinion of many people, obsolete now and may even be illegal in 40 years time because of the pollution and the energy waste from the rubber tires," Fisher added.

Officials with the transit authority and Bombardier declined comment.

But lawyers for the Societe de transport de Montreal last month notified the Zhuzhou that it won't redefine its needs and change the product it has operated successfully for more than 40 years "to accommodate someone who has repeatedly declared that they do not intend to deliver the product required."

Fisher said he fails to understand why the Bombardier consortium is seeking what he believes is as much as $2.5 million more than the $1.5 million per car it was paid in 2007 to deliver 400 cars to Chicago.

"Bombardier could build them for that price and we think we can even beat Bombardier on a lower price and make them 60 per cent in Montreal," he said.

While it may be politically difficult to take on a Quebec business icon like Bombardier, Fisher said his Chinese partners have the technical ability to deliver a quality product.

Cameron Doerksen of Versant Partners recently said he sees the Bombardier-Alstom consortium as the front-runner given its previous selection as preferred bidder and its manufacturing presence in Quebec.

Through CPCS Technologies, Zhuzhou has signed a tentative agreement with the owners of the Dominion Bridge plant where automated trains were built for Toronto's Pearson Airport.

The company proposes to use 18,000 to 27,000 square metres of space in the building's monstrous indoor bays that were once used to build steel bridges.

Between 750 and 1,000 people would be hired to assemble 1,050 cars (including options) in a deal estimated to exceed $3 billion. Bombardier proposed to assemble its subway cars in La Pocatiere, 140 kilometres northeast of Quebec City.

The Chinese firm may also use Montreal as a base, possibly in conjunction with Chicago, to supply high-speed train equipment and electric passenger and freight locomotives that will be required for proposed new railway networks in the U.S.

The Quebec and Montreal governments reopened the contract for bidding after the Chinese company threatened to challenge the previous tender process in court. The original tender, being negotiated with Bombardier Transportation and Alstom, was for 342 cars.

Zhuzhou said Montreal's transit authority has refused to grant access to the subway to assess the available infrastructure, track and welded rail system in order to prepare a comprehensive proposal.

CSR Zhuzhou Electric Locomotive Company Ltd. was founded in 1936. In 1958, it developed and manufactured the first main-line electric locomotive in China.

In trading on the Toronto Stock Exchange, the class B shares of Bombardier Inc. closed at $5.34, down 11 cents or more than two per cent.

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