TTC: Flexity Streetcars Testing & Delivery (Bombardier)

[AlvinofDiaspar]

Given that a) the TTC spec is harder to procure and b) TTC has the moral high ground and c) probably some bargaining leverage at the moment, in that Bombardier needs a venue where it can prove that it has truly recovered it capability, I'm happy to see TTC order more vehicles from Bombardier and drive a harder deal arount delivery penalties.l

BBD can't even prove that it had recovered its' capability by failing yet another (what is now, the 4th, 5th?) downwardly revised milestone. Overpromising and underdelivering lose business - it is one lesson the firm needs to learn. And companies aren't stupid - they know they can string you along if the perceived sunk cost (operational/temporal, financial, political) is high enough that it represents a barrier to pulling out.

AoD

 

[crs1026]

BBD can't even prove that it had recovered its' capability by failing yet another (what is now, the 4th, 5th?) downwardly revised milestone. Overpromising and underdelivering lose business - it is one lesson the firm needs to learn.

AoD

Yes, and every media article I have seen this week, especially the more business flavoured ones, is reporting on the ML settlement in a way that depicts Bombardier (as a statement of fact) as unable to meet schedule. Bombardier has lost the public credibility part of the battle. Lawyers and PR people can't help them now. The ML court case was their last forum to deflect criticism. By agreeing to a settlement, that chapter closes and now they have to face the delivery commitment head on.

By your logic, having demonstrably failed, we should shut Bombardier down today, fire everybody, and be done with it. That's not going to happen. The TTC situation represents an opportunity for both parties - for TTC to get credible vehicles at best price, for Bombardier to restore its cred. Time to be pragmatic...... but the penalties have to put Bombardier at risk.

- Paul

 

[AlvinofDiaspar]

Yes, and every media article I have seen this week, especially the more business flavoured ones, is reporting on the ML settlement in a way that depicts Bombardier (as a statement of fact) as unable to meet schedule. Bombardier has lost the public credibility part of the battle. Lawyers and PR people can't help them now. The ML court case was their last forum to deflect criticism. By agreeing to a settlement, that chapter closes and now they have to face the delivery commitment head on.

By your logic, having demonstrably failed, we should shut Bombardier down today, fire everybody, and be done with it. That's not going to happen. The TTC situation represents an opportunity for both parties - for TTC to get credible vehicles at best price, for Bombardier to restore its cred. Time to be pragmatic...... but the penalties have to put Bombardier at risk.

- Paul

Yes, but notice that the Metrolinx settlement actually cut their order - not double down on the company (beyond their GO maintenance contract). What you are proposing here isn't that - but actually milk them for more cars at a more favourable price when they can't even build them according to schedule in the first place. That's giving additional business for the same product when excellence wasn't demonstrated.

AoD

 

[crs1026]

Yes, but notice that the Metrolinx settlement actually cut their order - not double down on the company (beyond their GO maintenance contract). What you are proposing here isn't that - but actually milk them for more cars at a more favourable price when they can't even build them according to schedule in the first place. That's giving additional business for the same product when excellence wasn't demonstrated.
AoD

Well, as I said, the ML settlement was lose-lose. Kind of like when a company has a strike for a month and then the parties have to settle for about what was on the table before the work stoppage began. Nobody wins from that kind of conflict. I won't analyse the specifics in detail but ML took a hit on cost and Bombardier took a hit on market share and grip on future orders. What has fallen off the table is, nobody is even asking whether ML might have caused some of its own discomfort with the order. That's a bullet dodged by ML. Cancellation is the bullet dodged by Bombardier. So, it's a sane thing to have reached an agreement, but it's not a happy solution for anybody.

And to be clear - as I also said, any new TTC order to Bombardier has to have really, really, punitive penalties for non-delivery. And cost similar to the original order (some escalation may be understandable, costs have risen since the first order was signed). TTC probably has some additional leverage right now, and they need to use it fully. I am not suggesting that TTC approach Bombardier on bended knee.

- Paul

 

[TOareaFan]

And to be clear - as I also said, any new TTC order to Bombardier has to have really, really, punitive penalties for non-delivery. And cost similar to the original order (some escalation may be understandable, costs have risen since the first order was signed). TTC probably has some additional leverage right now, and they need to use it fully. I am not suggesting that TTC approach Bombardier on bended knee.

- Paul

I thought we were talking about an option that is in the original order....options are, typically, the ability to add on additional orders at the same contract price of the initial order....that is why there is time bounding on when they can be exercised.

 

[nfitz]

Sorry that’s rewarding incompetence and basically create even more of a barrier to end a failed relationship./QUOTE]A failed relationship? And yet the Bombardier subway train deliveries were reasonable, and their production for GO continues unabated.

 

[crs1026]

I thought we were talking about an option that is in the original order....options are, typically, the ability to add on additional orders at the same contract price of the initial order....that is why there is time bounding on when they can be exercised.

We were, but we may have drifted. Thanks for reminding us

I guess it's a question of whether there is ever any 'minor' renegotiation when an option is exercised. Certainly, either party can insist that the option has to be exercised as originally agreed to. But in my experience little things (colour of interior panels, handrails, headlight placement, whatever) always seem to change when the "Mark II" order is rolled out.

A harsher penalty clause might not be a "little" thing - and there might be counter demands - but my simple brain says no harm in trying, and given performance to date, Bombardier can hardly be shocked or offended if TTC suggested the deal needed to change.

In the end, we are speculating about how much recovered performance matters to Bombardier as a matter of brand image. I may well be naive about this. While I don't think TTC should walk away from the option on principle, as @AoD has suggested, I have a lot of faith in their ability to look after their interests assertively. I hope I'm not naive about this too.

- Paul

 

[rbt]

In the end, we are speculating about how much recovered performance matters to Bombardier as a matter of brand image

BBDs brand is held in relatively high regard except in one of the smallest transit markets (North America). The large majority of their transit related revenue is perfectly safe aside from Chinese bids undercutting BBDs prices.

 

[jordanmkasla2009]

BBDs brand is held in relatively high regard except in one of the smallest transit markets (North America). The large majority of their transit related revenue is perfectly safe aside from Chinese bids undercutting BBDs prices.

^^ This. Everywhere else in the world Bombardier has very little problems meeting schedules.

We must also recognize a reality of the Ontario market more than the North American market as a whole. The Ontario Government backed themselves into a corner on these orders. By passing a law in 2008 requiring all transit procurement projects to have at a minimum 25% Canadian Content, they created a situation where Bombardier had an outright advantage over all others just by being Canadian. On another point, Bombardier has a facility in Vienna that pumps out Flexity trams on a regular basis and whose supply chain could have easily handled the Metrolinx, TTC, Waterloo and Edmonton orders. They could have been shipped to Canada assembled and ready to break in and without much of the teething issues we have now. But instead we have to deal with assembly in Thunder Bay for TTC and Kingston for all others using suppliers that can't even handle Bombardier's schedule or standards.

 

[steveintoronto]

Everywhere else in the world Bombardier has very little problems meeting schedules.

I beg to differ. I wrote a lengthy and referenced post an hour ago, and then deleted it. I thought the point it made was redundant, BBD's reputation is poor in many cases. This is often regional, however, as the European plants are very successful and established ones bought-up by BBD via acquisition, not competence transfer. It's my opinion that they will be spun off again, and snapped back up by large European consortiums, the Cdn plants being sold to a separate buyer due to inefficiencies and lower level of know-how. And it just might be Chinese bought by CRRC, who BBD have many agreements with as it is. CRRC, unlike BBD, also has a massive cash surplus and is a vertically integrated company. They are, by far, the largest rail rolling stock manufacturer in the world.

The Ontario Government backed themselves into a corner on these orders. By passing a law in 2008 requiring all transit procurement projects to have at a minimum 25% Canadian Content, they created a situation where Bombardier had an outright advantage over all others just by being Canadian.

Any and all bids would have met the same content requirement, albeit Siemen's protestations at the time where to the effect of: "You don't want to go this route if you want a quality product". They pulled their bid, and they were right.

The German manufacturer Siemens AG has decided not to submit a bid on the project, leaving Montreal-based Bombardier and a small British company, TRAM, as the final competitors.

http://www.cbc.ca/news/canada/toronto/bombardier-appears-to-lead-ttc-streetcar-bidding-1.704218

See: http://business.financialpost.com/t...cars-on-time-has-ripple-effects-across-canada

Ask London Underground and the Mayor and Council what their impression is of BBD...and they're far from being alone.

BBD is in far deeper than they can handle. Most of their problem is management. You can buy in top notch engineering, and make it work. You can't buy marketing smarts when the head office if full of inbreds however.

See: https://www.theglobeandmail.com/rep...r-rail-deal-with-chinas-crrc/article36799318/

 

[M II A II R II K]

63rd streetcar after 3 years and 3 months since the first one coming out.

 

[drum118]

TTC to replace some streetcars with buses on routes as Bombardier misses latest deadline

 

[AlvinofDiaspar]

^^ This. Everywhere else in the world Bombardier has very little problems meeting schedules.

We must also recognize a reality of the Ontario market more than the North American market as a whole. The Ontario Government backed themselves into a corner on these orders. By passing a law in 2008 requiring all transit procurement projects to have at a minimum 25% Canadian Content, they created a situation where Bombardier had an outright advantage over all others just by being Canadian. On another point, Bombardier has a facility in Vienna that pumps out Flexity trams on a regular basis and whose supply chain could have easily handled the Metrolinx, TTC, Waterloo and Edmonton orders. They could have been shipped to Canada assembled and ready to break in and without much of the teething issues we have now. But instead we have to deal with assembly in Thunder Bay for TTC and Kingston for all others using suppliers that can't even handle Bombardier's schedule or standards.

It doesn't matter - at the end of the day, BBD signed a contract requiring them to use the Thunder Bay plant but couldn't get it to work because of their supply chain issues. That's a problem at their end for them to resolve.

AoD

 

[steveintoronto]

TTC to replace some streetcars with buses on routes as Bombardier misses latest deadline

From the article:

Brad Ross, spokesperson for the TTC, told CBC Toronto on Friday that the agency plans to move some of the cars from the 506 Carlton and 505 Dundas routes to more critical routes, such as 504 King. The TTC board will put the idea to the board in January, and if approved, it expects the plan to take effect starting in February.

That's both good and bad news. Good for King Street, as the project *must* succeed, and it's been hobbled in too many ways as it is by a penny-pinching Council that has no concept of thrift when building the unattainable and impractical, yet sends Johnny to school with no shoes in winter and then complains about the marks. (Council has yet to collectively comment on King, but it could yet go badly).

The 506, meantime, is jammed solid every time I've taken it (most days of the week around 4PM westbound from Spadina on my present project) for the last few months. If it takes buses to run the route for the sake of the King Korridor, by all means do it.

It doesn't matter - at the end of the day, BBD signed a contract

Exactly...a "contract". And it's not like the failing was a one-off, it's been time and time again. Unfortunately the penalty for missing the deadline(s) is capped. And BBD have already calculated that into their response.

How many times does abuse have to happen before the costs of leaving are less than staying?

Addendum: Just re-reading the National Pest link from my post two back. For those defending BBD against Metrolinx' concerns, and others dissing the P3 model being used in Crosstown and now many more Metrolinx projects (along with Infrastructure Ontario) note this: (And this can go wrong, the challenge, as with all agreements, is to do it right)

[...]
Back in Edmonton, Nicholson said the private-public structure of the Valley Line deal insulates the city from the kind of delays currently punishing Toronto transit riders. Edmonton has signed a 35-year deal for a consortium made up of Bombardier, Bechtel Corp., EllisDon Corp. and Fengate Capital Management Ltd. to design, build, operate and maintain the 13-kilometre line for 35 years.

“The beauty of the P3 model is that the other partners hold them accountable,” he said. “If it reaches a situation where they aren’t able to deliver, the city of Edmonton will be the least of Bombardier’s problems. The other partners could simply swap out a different train provider. We feel it will work out.”
[...]

http://business.financialpost.com/t...cars-on-time-has-ripple-effects-across-canada

 

[Andy_in_Toronto]

I saw 4456 running on Queen St. today. However, it was not in service!