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

Nov. 10, 2014 – 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, the Canadian transportation company said.

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

He said the company didn’t submit a bid last time because the request for an extension from several companies was not granted.

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

A statement from Mexico president Enrique Pena Nieto’s office said the process will be reopened to give others a chance to submit bids. It says 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 said it 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 and France’s Alstom.

“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 region with regional design, manufacturing and service operations, Spracklin said.

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

— With files from The Associated Press