Union calling for more contracts as layoffs at Bombardier's Thunder Bay plant loom
The federal Liberals and Ontario Tories are blaming each other for the impending loss of 550 jobs at Bombardier's railway car plant in Thunder Bay, Ont., as the transportation giant's Canadian rail footprint continues to shrink.
Bombardier Inc. (BBDb.TO) announced Wednesday it is laying off half of the 1,100 workers at the plant as two major contracts in Ontario -- for Toronto Transit Commission streetcars and Metrolinx GO Transit rail cars -- are slated to end by 2020.
The layoffs -- which will amount to nearly 30 per cent of Bombardier's rail manufacturing workforce in Canada -- will begin in early November and continue until the contracts are completed, the Montreal-based company said.
Federal Labour Minister Patty Hajdu said Wednesday that Ontario's premier failed to deliver on a promised contract for the facility -- Thunder Bay's largest private sector employer -- in her hometown that could have saved jobs.
"Well, now it's come home to roost and now 550 families in Thunder Bay are suffering because of the fact that this Ford government refuses to take action and apply for the money that's sitting on the table, quite frankly," Hajdu told The Canadian Press.
Doug Ford shot back that his government has put forward a $28.5-billion Toronto-area transit plan that could help keep the facility afloat, but he hasn't "heard hide nor hair" about funding from Ottawa.
"They've been sitting on their hands," he told reporters at a premiers' meeting in Saskatoon.
Bombardier said the layoffs stem from "the cyclical nature of our business" as well as the Trump administration's Buy American measures.
"Things go up, things go down," Unifor local president Dominic Pasqualino said in an interview Tuesday. "But the thing is, it doesn't look like things are going to go back up."
The threshold for local content requirements on public transportation projects in the U.S. now sits at 65 per cent, and will climb to 70 per cent this fall. The rules also require final assembly south of the border, further threatening Bombardier's dwindling Canadian operations.
"A company like Bombardier has no choice but to have an American manufacturing footprint and supply chain," Bombardier said in a statement.
"With the Buy American Act, it's very difficult to leverage our Canadian facilities," added spokesman Eric Prudhomme.
Bombardier said Wednesday it will also lay off 87 workers at its plant in La Pocatiere, northeast of Quebec City, as contracts for New York subway cars and Toronto and Edmonton light rail vehicles wind down.
For now, the company employs 410 skilled workers in La Pocatiere and 360 in Kingston, Ont., all focused on rail contracts.
In January Bombardier signed a US$669-million deal to provide 113 commuter rail cars to New Jersey, but the contract yielded no additional work in Canada due to Buy American rules, the company said.
As work shifts to its plant in Plattsburgh, N.Y., Bombardier said it has chopped its team for the project to between 40 and 60 employees from as many as 200 in 2013. The Quebec workers now produce sub-components rather than completing car shells like they did in previous agreements with New Jersey Transit Corp.
"They have a troubled future unless they get more orders from Canada," said Karl Moore, an associate professor at McGill University's business school.
The plane-and-train maker has been downsizing its aerospace and railway operations for several years as it attempts to improve profitability.
In 2018 Bombardier turned a profit for the first time in five years as it ramped up train revenues. But delays and repair problems have dogged its contracts with Metrolinx and the TTC as well as customers in France and Switzerland, and in April the company cut its revenue and profit forecasts for 2019.
Corruption probes in Sweden, Brazil and Spain threaten to drain resources and tarnish its reputation. And a World Bank audit into a US$340-million contract awarded to a Bombardier-led consortium in 2013 to supply signalling equipment to Azerbaijan Railways could result in a possible ban from projects financed by the institution.
There are, however, glimmers of hope on the horizon.
In June, Metrolinx extended an offer for Bombardier to build 36 additional GO Transit rail cars. Bombardier said Wednesday that "negotiations have been progressing over the last three weeks" toward a "successful outcome in the very near future."
Unifor president Jerry Dias told The Canadian Press the deal would not prevent the planned layoffs, "but the company can slow down the line speed and save 150 jobs."
"If officials would have moved quicker a year ago, we may have been able to avoid much of this," he said. "People aren't going to hang around for one-and-a-half, two years, waiting and hoping that somehow additional work is going to be awarded."
The layoffs mark another point in the contentious relationship between the federal Liberals and the Ontario Tories, particularly over the billions in spending on infrastructure.
Ford said three months ago the province would contribute $11.2 billion to Ontario's transit plan, and asked the federal government, the City of Toronto and York Region to cover the rest.
"If need be, we'll backstop it ourselves," Ford told reporters on April 10, when asked what would happen if the other levels of government refused to help fund his project.
The federal labour minister argued Wednesday that Queen's Park hasn't applied for federal infrastructure money, which has meant the funds can't flow for projects that the Thunder Bay plant could supply.
Hajdu said she would look at what options are available to the federal government to help workers, including additional employment insurance benefits or work-sharing arrangements. Ford said in a statement his government will make sure workers "are properly supported."
Bombardier shares didn't budge Wednesday, closing at $2.22 on the Toronto Stock Exchange.