Posts Tagged: taxpayers



Public Transit: Politics, Procurement Policy and Taxpayer Dollars

Lots of folks nowadays love local. Suppose someone asks you, “Do you support local produce? Or in this case, locally manufactured trains?” Many would probably answer “Yes”. But what if I told you this means it will cost an extra 10-15%, would your answer change?

A recent article in the Globe and Mail discusses the relationship between mass transit and political agendas. It appears that throughout the world high-stakes rail projects worth millions or even billions of dollars are becoming entangled in a struggle that pits the bottom line against local interests.

In this age of globalization, companies around the world are constantly looking to cut costs while maintaining quality and driving innovation. That is, except companies in the public transit industry.

In Canada, the provincial government of Ontario requires 25% Canadian content on all provincially financed transit infrastructure. These regulations, aimed at protecting and stimulating local jobs and economies, elicit both support and criticism. Already Siemens has lobbied the province to relax this policy. It argues that this legislation unfairly gives Bombardier the upper hand since it’s the only company capable of manufacturing rail vehicles in Canada. In essence, Bombardier is the only show in town and politicians know it (how’s that for competition?).

The question is therefore: is it fair to enact these type of regulations? More importantly, do they inhibit cost-savings and are governments getting the best deal for the taxpayers who ultimately fund transit projects?

Rational arguments exist on both sides of the coin and a consensus isn’t likely to be reached anytime soon. More often than not, policy is is influenced by current political agendas of the ruling party and the economic state of the region.

But now let us flip the story around and look to see what all of this means for CPT.

Although the world’s two main cable manufacturers are both involved in global distribution, for the most part their manufacturing tends to be concentrated. As these companies continue to increasingly serve the urban market they should look to existing legislation and practices for public transit manufacturing. Perhaps it isn’t too soon for them to consider further global expansion of their manufacturing facilities.

Larger manufacturing capabilities in several targeted geographic locations may very well give them the presence, exposure and political support needed to convince governments and citizens alike that cable manufacturers are truly serious about the needs of the local urban market.

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