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Bombardier loses major New York contract for commuter coaches

 Updated at 17:04 on April 1, 2005, EST.
  MONTREAL (CP) - Bombardier Transportation has lost a major contract to provide commuter coaches for New York, its second big contract loss in the same week that the company eliminated its stock dividend.

Bombardier was counting on the contract with the Port Authority of New York and New Jersey to maintain jobs at its large plants at La Pocatiere, Que., and Plattsburgh, N.Y. Instead, Kawasaki Rail Car Inc. will provide 340 rail cars for $499 million US, as part of an $809-million total investment program by the transit authority that includes maintenance of the coaches.

Losing the contract, revealed in New York on Thursday the same day as Bombardier reported its year-end results, will not require immediate layoffs, David Slack of Bombardier Transportation said in an interview. "Obviously we're disappointed by the outcome, especially considering our presence in New York and the long tradition of products we've got in the region there," Slack said. "It would have provided job security for both La Pocatiere and Plattsburg. We will be conducting a full assessment of the outcome in order to learn from it."

The Port Authority program, announced in June 2004, attracted three bids. Anthony Coscia, chairman of the Port Authority, would not say if Kawasaki's bid was the lowest of the three the board considered, but he said it offered the "best value" because the total cost of acquiring, operating and maintaining the trains would be lowest with the Kawasaki cars.

On Wednesday, Canada's defence department awarded a 22-year military pilot training contract worth $1.8 billion to a group headed by a small company from Kelowna, B.C. Bombardier Aerospace, which holds the current pilot training contract until the summer, complained that a consortium led by Kelowna Flightcraft got preferential treatment in the bidding process. The defence department denies this.

Regarding the Port Authority contract, Bombardier had intended to build the stainless steel coaches in La Pocatiere and do final assembly in Plattsburgh. It had also made plans to manufacture components in Mexico for the bid to reduce costs, which would have cut 300 jobs at La Pocatiere, but now that plan has been scuttled.

The Quebec plant currently employs 1,600, but 350 jobs will be gone by year-end, as announced late last year. It is busy on two other large contracts: electrical multiple unit cars for the New York Metropolitan Transportation Authority and 100 multilevel cars for New Jersey Transit. Slack said the Port Authority contract was not included in Bombardier Transportation's backlog, which stood at $21.3 billion US on Jan. 31.

Bombardier Inc. reported Thursday a loss of $85 million US, the third yearly loss, as revenues advanced to $15.8 million. The company also eliminated its dividend. Bombardier Transportation, based in Berlin, is in the process of reducing its workforce by 7,600 people, and closing several plants to improve profit margins. That division had revenues last year of $7.6 billion. Bombardier shares (TSX:BBD.SV.B) were off 12 cents, or 4.44 per cent, at $2.58 on Friday, in addition to 13 cents lost Thursday.

The Port Authority system, called PATH, runs from downtown Newark to Lower Manhattan and Herald Square, carrying about 200,000 riders each weekday. Kawasaki Rail, a unit of Kawasaki Heavy Industries Ltd. of Japan, will make the car shells in Lincoln, Neb., with final assembly in Yonkers, N.Y. Deliveries will start in 2008.

The Canadian Press, 2005

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