MONTREAL — Bombardier Inc., the industrial giant that took advantage of dubious loans from the Canadian government to clinch aircraft sales in the United States, is now making locomotives in Mexico with federal loan support, according to the National Post.
The union representing hundreds of laid-off workers at a Montreal locomotive plant is condemning the federal aid to a major U.S. railway to buy 1,000 locomotives from General Motors Corp. and GM subcontractor Bombardier.
General Motors is assembling some of the locomotives at its plant in London, Ont., while Montreal-based Bombardier is executing its undisclosed share of the contract at its plant in Mexico.
The help is provided through the Export Development Corp. with a loan on favourable terms to Omaha-based Union Pacific Railway for its largest locomotive order, valued at $3.2 billion Cdn.
The London plant, part of GM’s Electro-Motive Division, could not meet the delivery schedule of three to four years for the largest order it has received, so it called in Bombardier, which was happy to deliver the work to its underused plant in Sahagun, Mexico. The scheme – described as perfectly legitimate by the EDC – has been attacked by the Canadian Auto Workers and lobby group Transport 2000.
CAW official Abe Rosner says it is not logical to use public support for the Mexican part of the contract, when the Alstom locomotive plant in Montreal has laid off most of its workforce for lack of orders.
“There’s is absolutely no doubt that we could do that work, and I have to tell you that we were shocked when we saw that report,” Rosner said in an interview. “It’s just incredible that public money is being given to a company that was going to do this work in Mexico.”
The 90-year-old Alstom facility, which Rosner says is the only one able to assemble and refurbish large locomotives in Canada, formerly belonged to Canadian National, which sold it to French industrial giant Alstom in 1996.
Rosner said that in January 2001 the Alstom plant had 630 unionized workers: “Today it has 180 and the prospects for the future are worse right now.”
The World Trade Organization recently ruled that Canada broke trading rules by providing cut-rate loans through EDC to Bombardier customers in the United States and Spain.
The loans helped Bombardier beat rival Embraer of Brazil to snag orders worth $4 billion US for regional jets.
General Motors spokeswoman Sheri Woodruff said the company will not reveal the value of the Union Pacific locomotive order, but she did not dispute published reports of $2 billion US.
Woodruff and Bombardier refuse to say how many units were subcontracted to Bombardier, which has a strategic alliance with GM to do subcontract work when GM’s London facility is overloaded
“It’s a relationship we’ve been pleased with, they do good work . . . and it’s consistent with an agreement we have with our union in Canada that allows us to sustain a very stable workforce in London,” said Woodruff.
Harry Gow, president of Transport 2000, believes Bombardier’s Mexican plant has more than half of the entire order.
“Bully for Bombardier, but why doesn’t the EDC ask for guarantees that the equipment would be produced in Canada?” asked Gow.
“Why are we doing foreign aid through a Canadian job-creation program?”
Woodruff said about 700 of the 4,000-horsepower locomotives have been delivered so far to Union Pacific.
EDC spokesman Rod Giles said the loan of an unrevealed amount to Union Pacific is in line with its mandate to help Canadian companies export. Giles said the loan was to finance the purchase of locomotives built in London, which he said created or saved 850 jobs at that Ontario plant.
“Our transaction is in support of General Motors; where they source from is not up to us,” said Giles.
France Fortin, communications director for Alstom Canada, confirmed that the Montreal plant could have taken on the General Motors subcontract won by Bombardier, but she said Alstom was not invited to bid on it.
Bombardier Transportation, which normally announces every order for its rail and mass transit equipment, did not make public the GM order. Spokesman Gilles Lepage said it is company policy not to reveal subcontracts.
The unit of Bombardier Inc. is the world leader in rail and mass transit equipment, with most of its plants in Europe.