Canadian Manufacturing

Mexico cancels high-speed rail contract, opening door for Bombardier

US$3.7-billion contract cancelled after being awarded to Chinese consortium; about 70 per cent of Mexico's trains have been supplied by Bombardier



MONTREAL—Mexico has cancelled a high-speed rail contract granted last week to a Chinese-led consortium, opening the door for a possible bid from Bombardier Inc., the Canadian transportation company said.

“I can’t tell you a definite yes but obviously we will be interested. We will be looking into that bid once more,” spokesperson Marc Laforge said in an interview.

He said the company didn’t submit a bid last time because requests for extensions from several companies were not granted.

The Chinese group comprised of China Railway Construction Corp. Ltd. (CRCC) and China South Locomotive & Rolling Stock Corp. Ltd. (CSR) was the only bidder on the project.

A statement from President Enrique Pena Nieto’s office said the process will be reopened to give others a chance to submit bids.

It said the decision to extend bidding, reportedly for six months, was made for reasons of transparency.

The manner in which the US$3.7-billion project was awarded has been criticized by some opposition lawmakers.

Bombardier Transportation has been active in Mexico for 22 years and sees good opportunities as the country modernizes its infrastructure.

Laforge said the Chinese would likely offer stiff competition in another round of bidding given its low-cost operations.

“They are part of the competition and it’s up to us to adapt,” he said.

Walter Spracklin of RBC Capital Markets said the new bid could also attract interest from Germany’s Siemens AG and Alstom of France.

“While the Chinese-led consortium will likely remain very competitive in any rebid process, we believe Bombardier will have a real opportunity to win the contract,” he wrote in a report.

A visit earlier this year to Bombardier’s Mexican rolling stock manufacturing facilities left the analyst believing the company was well positioned to win the majority of nearly US$8 billion of contracts in the country.

About 70 per cent of Mexico’s trains have been supplied by Bombardier and it is the only major manufacturer in the country with regional design, manufacturing and service operations, Spracklin said.

Mexico’s first high-speed train is intended to travel 210 kilometres between Mexico City and the central city of Queretaro, where Bombardier Aerospace has a large manufacturing presence.

—With files from The Associated Press

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