MTA's rail-car contract falls apart at last minute, scuttling hundreds of jobs [Updated]

A tentative and controversial deal to build 100 rail cars for Los Angeles County's transit system has fallen through -- taking with it plans to build a $70-million factory that would have created hundreds of local jobs.

Last-minute negotiations failed to result in a contract with AnsaldoBreda, an Italian manufacturer that is three years behind schedule on an existing contract to deliver 50 rail cars to the Los Angeles County Metropolitan Transportation Authority. Despite those delays -- and the delivery of cars that were 6,000 pounds heavier than specified -- AnsaldoBreda was positioned to win the new $300-million contract through an option with a deadline of Friday at midnight.

Just weeks ago, L.A. Mayor Antonio Villaraigosa had hailed the impending deal because the company said it would build the rail cars at a new Los Angeles factory. Villaraigosa had cited a study estimating that the plant would deliver $368 million in economic activity, including 650 factory jobs and close to 1,000 union construction jobs to build the facility. The Los Angeles County Federation of Labor had lobbied the MTA board in favor of the contract.

Today, the mayor expressed disappointment. "In these tough economic times, it was important to make every effort to bring good jobs to L.A. and simultaneously exercise due diligence to protect public funds in pursuing this contract,” Villaraigosa said in a statement. “Unfortunately after months of negotiations, at the last minute, satisfactory financial guarantees were not provided and the deal was not signed.”

Hours before the deadline, the company raised new issues -- including a cap on daily penalties for delivering rail cars behind schedule, said MTA spokesman Marc Littman. Transit-agency negotiators declined to make additional concessions and the time period to reach an agreement expired.

The deal’s disintegration has ramifications beyond the future work, said MTA board member Richard Katz, a Villaraigosa appointee. He cited an agreement under which AnsaldoBreda was going to provide two free rail cars, which sell for $3 million each, to make up for building the vehicles heavier than specified. The heavier cars forced the MTA to reinforce some bridges.

In tones that reflected the soured relations between the company and local officials, Katz called AnsaldoBreda “unprofessional and so unbusinesslike,” and said the company's inability to perform under its existing contract could result in litigation.

Officials from AnsaldoBreda could not be reached, but the company has defended its work and says it can point to the successful delivery of rail cars in other cities.

[Updated at 10:26 p.m.: In a statement, AnsaldoBreda president and CEO Giancarlo Fantappié said that his company had provided sufficient financial safeguards for MTA and that he regretted a deal could not be reached "despite multiple efforts to negotiate in good faith on both sides." He added: "Despite this turn of events, Los Angeles continues to represent a focal point for our strategy in America." AnsaldoBreda is eligible to take part in new bidding to build the rail cars.]

The MTA intends to rebid the work quickly and hopes to sign a contract that will result in local jobs, Katz said.

The effort to exercise the option with AnsaldoBreda has long had critics, including county Supervisor Mike Antonovich, who in a statement called the latest development “a victory for taxpayers.”

The company “failed once again to deliver on a promise made to the people of Los Angeles County," said Antonovich, who also sits on the MTA board. “Los Angeles city insiders and special interests attempted to ram through a substandard outfit, creating costly delays in the MTA's ability to seek a legitimate firm to build rail cars.”

-- Howard Blume

Comments

[Alex Kasperavicius]

While this is a big setback, I have a feeling it's a good thing. Building a union train car manufacturing plant in LA for just a 100 car order was starting to feel like a white elephant. It simply couldn't have made economic sense for a number of reasons - one gets the feeling that something else was going on.

Besides, AnsaldoBreda has a history with not living up to its delivery contracts with other cities and this will clear the way for a more cost effective solution - and give us bidding options in the future. Hopefully the union pushers will realize they screwed this up with their insane demands and get out of the way so we can get the project on track (no pun intended).

[crooks and liars]

the mayor never stands for the taxpayers of los angeles only for his special interest and unions

[Larry Darrell]

Advanced European businesses do not build factories in thrid-world locations.

[Bill]

Bombardier makes excellent rail cars in Canada. Why can't we use them?

[Andy Klein]

The MTA should look to US Govt. owned GM to locally build these needed rail cars. Didn't GM contribute to the tearing down of the Red Car routes in order to secure large county contracts for GM made buses, remember RTD? Also, Italy is not really a serious competitor with a USA unionized labor force. Italy is a culture that is famous for "La Reposa" & a long history of fierce labor disputes that shut down the nation.
Andy Klein
Pasadena

[Q. Macphail]

AnsaldoBreda has demonstrated that it cannot meet the existing contract deadlines or technical requirements, nor be trusted to negotiate in good faith: What makes anyone think that getting even further involved with them, for any reason, is a good idea?

Politicians and unions looking for quick-fix job schemes never seem to understand that these deals rarely work: If any legitimate company thought there was a solid long-term economic reason to build a factory in southern California, they'd do it on their own.

Time and again, these flawed "job creation" deals have proven to be nothing but white elephants wasting taxpayer dollars.

[Bugs]

Dopes. Why can these cars made by NON UNION skilled workers for a much more competitive price? Answer: Union sucking politicians looking for reelection $$$.

[Kevin Alber]

i agree with Bill - Bombardier is the number one rail car builder in the world, number one monorail builder, and number three aircraft builder (behind only Boeing and Airbus).
Charles Bombardier is a personal friend who i have several projects with - i would be more than happy to give the Mayor or MTA a personal introduction to the Bombardier family. Bombardier is a very reliable company and would be more than interested. i spoke with Charles about this situation a few months ago and of course he was interested.

[Stu Watson]

Best news I've read this weekend. AnsaldoBreda never was negotiating in good faith and their sad performance on their current rail car order shouldn't be rewarded.

[J in Pasadena]

If the MTA was not corrupt to its core they would have jettisoned AnsaldoBreda years ago. The company is probably lavishing massive kickbacks on MTA analysts. Imagine the extra energy wasted on rail cars that are THREE TONS OVERWEIGHT! Plus, the size and seating layout on those new cars is plainly uncomfortable. Is there not an American company that can do this contract? MTA and their AnsaldoBravo cronies: Obviously they are ripping off all of us. Bravo to the negotiator for making them honest again.

[carter]

Well, let's get going with either an American company or Bombardier from Canada.
When was the last time you thought of quality control from an Italian auto company, meaning Fiat, Alfa Romeo, etc. Why did they abandon the American car market - the Japanese offered quality control that they could not - think it is any different in the rail car biz?!

[GEOJungle]

A bad deal gone,lets make sure we get a better deal with a company that has a better track record ,Lets forget about the local factory ,and try to get the rail cars at a cheaper price .

[Jeff]

The best lightrail cars are made by Siemens in Northern Califorina built in the US... It you need proof look at the San diego cars....

[Warren]

"The heavier cars forced the MTA to reinforce some bridges."

How much did this cost? Ansaldo-Breda should be required to reimburse the MTA the cost for their mistake.

[skd]

The German company Siemens, which already has a facility in South Los Angeles, would be more than happy to make trains in LA. They would educate people locally to work in the factory and deliver the trains on time and within the weight limits.

Why haven't we said arrivederci and ciao to AnsaldoBreda a long time ago.

[ferenc]

mta should never contract with gm, ford is available, if you want a union contractor. otherwise have one of the japanese co's do it.

[Jack]

Antonovich +1, Villaraigosa 0.

At least one board member had the balls to stand up to this corrupt deal. Mayor V has some nerve blaming Breda when he and his labor cronies were the ones pushing this firm on the MTA>

[Ed C.]

Siemens is available. No one is complaining. And if not Siemens, there's Kawasaki as well as Bombardier.

[Mike Lorrey]

If MTA is so concerned about economic activity, perhaps they should concentrate on fixing their taptogo.net website so that commuters will be able to create new TAP accounts with which to replenish their TAP cards online. Account creation functionality has been broken for more than two months, and emails to support there have not been returned or acted upon. Furthermore, more than half of the locations in Burbank where I've attempted to replenish my card physically report that their MTA TAP terminals are broken and MTA has not responded to requests for maintenance.

Furthermore, MTA lost my application to receive a reduced fare student TAP card, which I applied for two months ago at Union Station, and which they were obligated to deliver within 20 business days. For a poor college student who is already bringing over $30,000 of economic activity to the area, these sort of delays are costly and intefere with my education, given my off campus housing is more than 3 miles from campus because government interference has prevented construction of more dorms.

So far 100% of my interactions with the MTA organization result in abject failure to serve the public. For someone who has recently moved to the area, my experiences so far with government in California explain to a T why this state is becoming a banana republic.