AnsaldoBreda Plays Corporate Incentive Politics with L.A.

Company wants Los Angeles Metro to sign up for a new rail production facility… at the cost of 100 rail vehicles

Five years ago, the city of angels signed a contract with AnsaldoBreda, an Italian train maker, for 50 new light rail vehicles, with two options for a total of 100 more. The city had a bit of a historical relationship with the company, since its predecessor Breda had also produced the first cars for the Red Line subway back in 1993. The company has also built heavy rail vehicles for Atlanta and Washington and light rail vehicles for San Francisco, Cleveland, and Boston.

But though the first of those fifty trains arrived in Los Angeles in the summer of 2005 for use on the city’s Green, Blue, and Gold light rail lines, today, the company has yet to complete the delivery: it’s three years behind schedule. To make matters worse, the trains are 6,000 pounds heavier than Metro initially predicted. Though the city’s experience isn’t as bad as Portland’s with Colorado Railcar – Tri-Met literally had to assume control of the company to get it to finish the trains it had promised – it is unfair for a city to have to deal with such inefficient, incompetent contracting.

Now, Metro, which needs those 100 extra cars to serve its new Gold Line Eastside Extension, to open late this year, and the Expo Line, to open early 2010, must decide whether to sign up for the options it initially made with AnsaloBreda or whether to put the light rail cars up for competitive bids by other companies such as Siemens, Alstom, or Bombardier. Theoretically, it would be easier and perhaps cheaper to simply ask the Italian company to continue producing the cars, as they’ve already been designed; on the other hand, other manufacturers have been successful in delivering vehicles without such delays and design flaws. Metro staff – and the organization’s President Roger Snoble – would prefer a new contract with another company.

AnsaloBreda knows it’s in the doghouse, so it has offered Los Angeles another deal: if the city agrees to purchase the contract option’s 100 cars, it will move its headquarters and production facilities to the city. Mayor Antonio Villaraigosa, who also chairs Metro’s board, likes the deal because it would provide up to 500 new unionized manufacturing jobs in the city and 100 white collar headquarters jobs.

The problem, as Tim Rutten pointed out in a good column in this morning’s L.A. Times, is that the company has been trying to make this deal with cities all over. It told Miami and Madrid that it would build plants in those cities if they awarded rail contracts. Even more astonishing, AnsaloBreda moved its headquarters and a manufacturing plant to Pittsburg, in the East Bay, in 2007, on the assumption that it would build Los Angeles’ rail cars – as well as those for San Francisco and San Jose – there. How many places can this company have production facilities? How frequently is it willing to move its headquarters? What would the move it’s now promising to Los Angeles mean to communities in Northern California that would likely lose their jobs in the process?

The company’s offer makes me incredibly suspicious of its good will, now completely dubious considering its pitiful track record. Though the company may indeed move its plant to the city, how long will it actually stay there? What other city will attract AnsaloBreda’s attention in the next decade and make it decide to pull its investment out of Los Angeles?

This is blackmail, and Los Angeles shouldn’t be playing into it. Time for a new process of competitive bidding.

14 Comments | Leave a Reply »
  • martarider

    Don’t know much about the situation in LA but I can tell you the cars Breda sold to MARTA are lemons. They are only a couple years old but have been plagued with problems, such as the minor issue of the doors refusing to open (which has been very widespread). MARTA’s original fleet of Franco-Belge & Hitachi cars was recently rehabbed by Alstom and those are now performing much better than the Bredas despite being upwards of 30 years old.

    I’m pretty sure Boston has had no end of problems with their Breda LRVs as well. Why should US agencies keep propping up this firm when there are far more competent alternatives out there?

  • JP

    It would be a nice if Detroit made rail cars. Talk about retooling.

  • GM should have to make rail cars, as a condition of accepting bailout money. Weren’t they responsible for ripping up all the tracks 60 years ago and setting us on our way towards auto-dependancy? Its only fitting.

  • Interurbans

    This whole deal with Breda is on the edge of being criminal. It is bad enough for the MTA to select Breda for the first 50 cars, but to consider buying an additional 100 cars is criminal. Every city in the US that has bought Breda cars has had major problems including Cleveland, San Francisco and Boston for light rail cars have had to spend millions to rework their systems to accommodate the Breda cars. Do to the poor fit, trim, and a poor level of manufacturing and design the cars continue to be very troublesome, expensive to operate and keep running. You can also include Los Angeles with the Red/Purple line cars. The MTA has had from the start major problems keeping enough cars running to fulfill the required schedules.

    The Chicago CTA, Atlanta and Washington DC did have a somewhat better experience with Breda where their experienced long time in house people wrote the specifications and made sure that Breda followed the specs. The MTA does not have the experienced in-house people to write the specks or see that they are followed. However the Breda cars were much more troublesome than cars from other venders.

    With this background and the knowledge in the transit industry of just how bad Breda cars are, how could the MTA even consider Breda as a candidate for bid let alone actually select them to supply their cars. Now they want to order another 100 substandard troublesome cars on top of the first 50. How many years will the MTA and the train riders of Los Angeles have to live with poor quality cars before they will have a chance to replace them with a quality product from the many quality LRT car providers world wide? Breda may have the low bid but after the change orders and problems even before the cars go into service they cost more.

    Breda now has their US “headquarters” in Buffalo and who says they will not move them again when they get another order for cars elsewhere.
    I would think for an order of 100 cars the selected manufacture would locate and assembly or manufacturing plant in Los Angeles as Breda “said” they would. Siemens had an assembly plant in the Los Angeles area for the P2000 cars now in service on the Gold and Green Lines.

    Again should accept inferior, substandard, overpriced, poorly designed troublesome cars because they will build them in LA? Don’t they call this a bribe? So why is the MTA considering buying an additional 100 cars when there are so many less expensive quality cars to choose from?” Is the word Criminal when it comes to why the choice, what other reason could there be? Who will win the lobbyist or a quality car manufacture?

    Alan Fishel

  • Alan did hit the nail on the head: Metro lacks the RIGHT staff to supervise Breda. When the staff that knew how to Manage Breda left to run Washington, DC, things fell apart at Metro and have stayed in disarray to this very day.

    Alan: The Breda contract has two 50 car options for $2.3 and $2.4 million. The most recent 77 car order from UTA in Salt Lake City was for $3.6 million per car. Based upon the Metro needs, rebidding could cost LA Taxpayers up to $144,000,000, yep, over 1/8 of a billion dollars.

    Don’t you think you could hire some industry professionals to police Breda and totally enforce the contract and get the cars the way they are supposed to be for less than $1 million? The Siemens cars took Metro 10 years to get into service, so there is a history of not dealing with rail car fleets in Los Angeles.

    No one has done the proper research to understand what is really wrong here. I’d look at lack of adult supervision of and by the Metro Rail staff. There are some managers who know how to get Breda to perform. But not every transit property has managers with that level of skillset.

  • Well Well

    Erik and Interurban (aka MC & RS) forgot to mention that if there’s something “criminal” here is their competitor, and a convicted one. I understand that college is expensive nowadays and that some people at MTA hate to work just for a little paycheck, but give the job to a felon that buys its contracts and makes trains that break in the middle is a little too much for my taste. Click all of them. Well worth the time.

    http://www.nytimes.com/2008/12/21/business/worldbusiness/21siemens.html?_r=1

    http://hubpolitics.com/2006/11/29/mbta-is-pod-at-blue-line-delay/

    http://www.eriksrailnews.com/archive/april04.php

    http://tdu.to/msg/msg36931.html

    https://www.entrepreneur.com/tradejournals/article/154048078.html

    http://findarticles.com/p/articles/mi_m0BQQ/is_9_45/ai_n15730583?tag=content-inner;col1

    http://www.thefreelibrary.com/Report+slams+Siemens+rail-car+plant:+inexperienced+workers,+delays+in…-a016682382

  • Unemployed Railcar worker

    Colorado Railcar was less than 20% of the dollars that WES was over budget. Can you say Scapegoat! Too bad all those people in Colorado had to loos there jobs, the product was great, just ask Alaska Railroad, they love theirs.

  • TDW

    Washington, DC has now gotten rid of Breda too. In their most recent contracts, the 2000 and 3000 cars originally built by Breda ended up being rebuilt by Alstom and performance is much better with the improvements. The 4000 cars from Breda will be rebuilt soon and that builder is unknown because it is being paired with the new 7000 series cars.

    When Washington bought their 5000 series cars, Breda lost in the bidding and that contract was awarded to CAF. On the 6000 series cars which just finished delivery last year, that contract was awarded to Alstom. The track signals are now mostly Alstom as well.

    The big reason that Alstom and CAF were chosen for the most recent projects was on overall value, not just the lowest price. In all these cases, Breda lost big time. After the initial bugs were worked out with the CAF cars, the Alstom cars and rebuilt Breda cars were delivered, they all perform better than the fleet average.

    Word to the wise- do NOT go with AnsaldoBreda. Instead, go with a manufacturer such as Alstom or Bombardier. They know how to get the job done and are consistantly better with on-time deliveries and performance.

  • TDW

    1 other comment about Breda. In Buffalo, NY, their latest contract is about 3 years behind schedule already. This is an order to rebuild 27 LRV’s originally built by Tokyu of Japan. The first vehicles were supposed to be unveiled in 2008 and complete in 2010. So far, the first 4 are not even complete. They’re proposing to build a plant in Schnectady, NY to complete the order. So yes, Buffalo, NY is going through the same thing. Unfortunately, Breda was judged to have the best technical ability in this case.

  • Woody

    UPDATE, or, Funny you should mention this now:

    The LA Times is reporting that this deal has fallen through.

    http://www.utu.org/worksite/detail_news.cfm?ArticleID=49532

  • TDW

    Here is an update on the AnsaldoBreda Buffalo, NY project. It was reported that it will be at least 2-1/2 years before the rehab project is completed. The initial 2 cars which were supposed to be done in 2007 are still just stripped down to the body shells.

    Good job Breda. The Buffalo News which mentions Alstom being next door can produce 1 car per day for NYC. Why is Breda only doing 1 car per MONTH in this project??

    http://www.buffalonews.com/home/story/957558.html

    Of course the newspaper names GMI as the actual rebuilder. Not true as GMI was contracted by AnsaldoBreda to do the rebuild after SuperSteel closed. Nice how the unions and NFTA get a pass here in NY for a project that will be at least 3-1/2 years late by the time it’s finally complete.

  • Ocean Railroader

    They could have the Portland Streetcar company make the new cars maybe they could use this chance to add some classic looking streetcars to the mix on the light rail lines to make them more fun looking. But they should open up for public bids and get a better deal.

  • TDW

    As for the AnsaldoBreda Buffalo, NY project, only 2 of the 27 cars to be rebuilt have been completed. The rest are expected to be done in 2015, which means it will have taken them 9 years to rebuild a 27 car fleet. Pathetic.

    Looks like Miami is next in line to be screwed by AnsaldoBreda. And doesn’t this sound familiar to what happened in LA?
    http://www.miamiherald.com/2012/09/09/2993704/mayor-wants-to-replace-136-metrorail.html#disqus_thread

    AnsaldoBreda’s lobbyists promised to build a factory in Miami, and won their contract over CAF because of the factory. Now, the Miami contract may not be eligible for federal funding because it violates law.

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