Industrial Rail problems could hurt N.B. manufacturing
Province invested $22.5M in loans and guarantees in refurb project
An economic development consultant says production problems at Industrial Rail in Moncton could leave New Brunswick in the lurch.
In 2009, the provincial government provided $22.5 million in loans and guarantees to back Industrial Rail's refurbishment project.
Earlier this week, Industrial Rail laid off 85 workers while officials try to figure out how to solve a problem with the framing in the floors of the cars.
David Campbell said both companies have a lot at stake.
"If they have to find a new supplier and get this done somewhere else in Canada, it's going to be a big delay for Via and a big problem," said Campbell.
"So hopefully they can come to a resolution where the company can refurb these cars and make a little money at it and also supply Via in a timely fashion."
Industrial Rail's contract to refurbish 98 passenger cars for Via Rail is worth $109-million..
Via officials expected 27 train cars would have been delivered by now. So far, only 10 have been completed.
The province is aware of the situation and "is involved in doing what it can," a spokesperson for the Department of Economic Development said.
"I have to believe there's some sort of resolution," said Campbell, "because if Via and this company sever the business arrangement right now, it's bad news for the company, bad news for the province, and it's equally bad news for Via.
"They'll have to find a new company, negotiate a new contract and run into all kinds of new costs associated with reopening this whole process."
Campbell said if Industrial Rail cannot complete the contract it will hurt more than just the company.
"The province is trying to find areas of manufacturing expertise where we can grow the manufacturing sector of the economy and this is one area that we thought had potential so if this project goes under I would suspect it's going to be very hard for that specific company to land more projects in related industries."