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Bombardier Inc. (BBDb.TO) is suspending work on its contract to build the city of Montreal's new metro cars for six months as it works through a supplier program on critical software for the rail equipment.
The Montreal-based company, the world's only maker of both planes and trains, said Friday it will stop manufacturing for the $1.2-billion contract from the end of April to the end of October. It still expects to meet a 2018 deadline to deliver the equipment, consisting of 468 subway cars. Each train set will have nine cars each.
About a third of the company's 430 workers at the company's train plant in La Pocatière, Que. will be laid off temporarily, said company spokesman Marc Laforge. Other employees continue work on separate contracts including Toronto's Rocket subway trains and New York City's subway.
The stoppage is not financially material to Bombardier, said Mr. Laforge. But because the company gets paid based on certain confidential delivery milestones, it does face a deferment in being paid on this contract, he said. "Some of the payments will be delayed."
The problem lies with a supplier of the train set's automatic control system, Mr. Laforge said. The supplier in question, Italian-based Alsaldo STS, is working under the responsibility of contract partner Alstom SA, he said.
The automatic control system is critical software whose functions include overriding manual manoeuvres made in error, Mr. Laforge said. "You need to have it."
Bombardier has built 40 of the 468 cars it has been contracted to build. It can't go any further without Alsado's equipment, he said.
"There comes a point where you have to stop," said Mr. Laforge. "We've completed what we could complete."
The contract to replace Montreal's aging rubber-tired subway cars has been a conflict-filled saga involving legal battles and political interference. At the beginning of the process a decade ago, Quebec sought to strike a one-on-one deal with Bombardier. Paris-based Alstom then muscled in and the two companies concluded they should partner on the deal. A period of confusion followed when the Montreal transit authority concluded it had to open a new international tender process because the size of the contract was enlarged.