Monday, November 02, 2009

Deal between LACMTA, AnsaldoBreda unravels

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The expected $300 million deal between the Los Angeles County Metropolitan Transportation Authority and AnsaldoBreda for 100 light rail transit cars, and a new manufacturing plant to be built in the county, has stalled and appears to have fallen through.

LACMTA officials said the Italian railcar manufacturer had failed to submit suitable financial guarantees linked to an existing initial contract for 50 LRT cars, which has suffered from delivery delays and concerns over overweight cars. That jeopardizes not just the contract for additional cars but also AnsaldoBreda’s proposed $70 million factory.

Los Angeles Mayor Antonio Villaraigosa has counted on the deal to provide the new plant, which was expected to generate $368 million in economic activity, including 650 factory jobs. The Los Angeles County Federation of Labor had lobbied the MTA board in favor of the contract. Disappointed, Villaraigosa said, “"In these tough economic times, it was important to make every effort to bring good jobs to LA and simultaneously exercise due diligence to protect public funds in pursuing this contract." He continued, “Unfortunately after months of negotiations, at the last minute, satisfactory financial guarantees were not provided and the deal was not signed."

LACMTA board member Richard Katz, a Villaraigosa appointee, said AnsaldoBreda had been "unprofessional and so unbusinesslike," and said the company's inability to perform under its existing contract could result in litigation.

AnsaldoBreda officials have defended the company’s product and performance. In a statement, company 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."

Fantappié said Ansado/Breda has not given up on the LA market, declaring,  "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 LACMTA’s renewed bidding process to build the rail cars. LACMTA says it will launch a new bidding process quickly.