Metro deal's economics stink, too

Karl Moore, a professor of business strategy at McGill University, says his best estimate is that we'll wind up paying about half a million dollars too much for each of the 468 cars in the Métro deal contract.

And there's more: another contract is in the offing since Montreal needs a total of about 1,000 new metro cars, and whoever gets the first contract is nearly certain to win the follow-up order.

Multiply half a million dollars by 1,000, notes Moore, and you've just diverted about $500 million from spending on health care, education or road repair into a delightful profit windfall for Bombardier shareholders.

Now that's not to say that opinion on this is unanimous. You can find smart people in Quebec who go along with Charest's reasoning that the existing metro equipment is so old that there's just no time to spend on allowing competitive bids...

Read full article: Montrealgazette.com, October 7, 2010