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Bombardier Rail Vehicles Production site in Thunder Bay, Ontario.Bombardier/Handout

Bombardier Inc. plans to cut as much as half of the work force at its Thunder Bay rail-car plant, according to government officials.

The announcement could come as soon as Wednesday. The company did not respond to a request for comment Tuesday evening.

The company plans to cut 550 jobs, says a senior federal government source, who was granted anonymity by The Globe and Mail because they were not authorized to speak publicly on the matter.

Bombardier has used the plant, which employs about 1,100 workers, to make streetcars for the Toronto Transit Commission in a long-running and fraught contract that should see its final deliveries later this year. Bombardier has also used the plant to fulfill a contract with Metrolinx that devolved into legal action before the transit agency cut the order in half in 2017.

A Bombardier executive told the CBC in June that the contracts were coming to an end this year, and that layoffs were likely in the fourth quarter. He did not say how many.

Ontario’s Minister of Transportation, Caroline Mulroney, issued a statement Tuesday protesting against the decision, which Bombardier has not formally communicated to employees. The announcement said the Ontario government “learned that Bombardier intended to give notice to several hundred workers at their facility in Thunder Bay” and that Premier Doug Ford had spoken to Bombardier and to Unifor, the union that represents workers at the plant.

Ms. Mulroney’s statement said Metrolinx is “actively pursuing the purchase from Bombardier of more than $100-million in additional GO Transit cars that would be built in Thunder Bay.” The minister’s office clarified Tuesday night that Metrolinx wanted to buy more trains under an existing contract. It said detailed negotiations are ongoing.

Federal Employment Minister Patty Hajdu said in a statement: “I am very disappointed to hear of layoffs at the Thunder Bay Bombardier plant. I have been in constant contact with the employer and the union. I know that these are difficult times for Bombardier employees and I – along with our federal Liberal government – are here to support them.”

Dominic Pasqualino, president of Unifor Local 1075 in Thunder Bay, did not confirm the layoff numbers but anticipated significant job losses: “It’s not good. I’m always afraid that there are going to be more layoffs.”

Thunder Bay Mayor Bill Mauro called the plant “far and away our largest private-sector employer, a very significant contributor to the economy of Thunder Bay and the regional economy, and a very significant contributor to an entire supply chain in Southern Ontario … its impact is broad, and it’s a very difficult time for the workers and their families.”

Mr. Mauro, a former member of the provincial legislature, said the municipal government, knowing the contracts were ending, “has been talking to everybody who is relevant to this situation … so they understood we were positioned and had the capacity to meet the needs of mass-transit procurement in Southern Ontario.”

That demand will be best met, however, with stronger policies to direct governments and agencies to use Canadian suppliers and vendors, he said. “Even if the TTC and Metrolinx were to go forward with more procurement with support from the province and/or federal government, without a Canadian content policy, there’s less certainty the work would even stay in Ontario.”

NDP Leader Andrea Horwath blamed Mr. Ford’s government for the job losses. “It should never have come to this. The alarm has been sounding for a while on the need to tender contracts for the rolling stock Ontario needs.”

Bombardier’s train operations, known as Bombardier Transportation, have been troubled by late shipments, underperformance and allegations of corruption. Customers in Canada, Switzerland and France have complained about delays in receiving their orders. The World Bank continues an audit into how a Bombardier-led consortium won a US$340-million deal six years ago in Azerbaijan; a negative finding could jeopardize Bombardier’s ability to get World Bank help in securing contracts in emerging markets. Laurent Troger, head of the unit, resigned in February.

The company had improved financial results at Bombardier Transportation, with the order book growing and profit margins increasing. In April, however, the company cut its 2019 revenue and profit guidance, citing in part late deliveries and other struggles in its rail unit.

The 2009 TTC order of up to 204 streetcars met with repeated delays and, ultimately, a legal claim by the TTC against the company that was settled earlier this year.

In 2018, the TTC said 67 of the 89 streetcars delivered by Bombardier needed to be sent back to the factory to repair substandard welding. The agency is struggling with the choice of using Bombardier for more streetcars or finding a new provider, which would take even longer.

In December, 2017, Metrolinx cut in half a $770-million deal with Bombardier, reducing the number of vehicles to 76 from 182, and brought in Bombardier competitor Alstom as a supplier. The new agreement also toughened the late penalties Metrolinx could impose on Bombardier for tardy deliveries.

With a report from Brent Jang

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