Friday, September 25, 2009

AnsaldoBreda lands LA contract despite criticism

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Brushing aside doubts raised by several of its own members, the Los Angeles County Metropolitan Transportation Authority Board of Directors, in an 8-3 vote, Thursday awarded a AnsaldoBreda a contract option for 100 additional light rail vehicles, holding the Italian company to its pledge to build a new rail manufacturing plant with union labor in Los Angeles.

"This means that LA is going to be the center of green jobs in the nation," said city Mayor Antonio Villaraigosa, who ardently supported AnsaldoBreda’s package. "This facility will not only provide railcars for the MTA, but for the [California] High-Speed Rail Authority, for virtually every transit facility in the hemisphere."

Countered LA County Supervisor Mike Antonovich, who voted against the contract proposal, ". . . . [Ansaldo]Breda has failed to deliver on time in two previous MTA contracts, and the current contract is already three years behind schedule in delivering certified railcars." MTA Chief Executive Art Leahy had also expressed reservations over exercising the contract option.

MTA staff has struggled with AnsaldoBreda over the production of the first 50 LRT cars, though AnsaldoBreda repeatedly has pledged to address all outstanding problems. Under the contract option, AnsaldoBreda must reduce the weight of its cars, which are 6,000 pounds too heavy, and make them compatible with the rest of the fleet.

Before the Board vote, AnsaldoBreda officials circulated an email indicating that the firm’s parent company, Finmeccanica, would back AnsaldoBreda's financial guarantees. The parent firm offered a $300 million performance bond, and a $75 million irrevocable letter of credit that could be used by the MTA if the company fails to perform. Mayor Villaraigosa and other board members said those financial terms were unprecedented.

AnsaldoBreda has contracted with Shangri-La Construction to build a 240,000-square-foot manufacturing plant on a 14-acre parcel of city-owned land at 15th Street and Santa Fe Avenue.

AnsaldoBreda Inc. President Giancarlo Fantappiè said the MTA set “very, very tough terms,” but that the move to Los Angeles would position the company to compete for future rail contracts. Among others, AnsaldoBreda faces competition from Siemens Transportation Systems, which is expanding its workforce and existing facility in Sacramento, Calif., to handle an expected surge in U.S. LRT orders. AnsaldoBreda has an assembly plant for railcars in Pittsburg, Calif., though the bulk of its manufacturing takes place in Italy.