TTC wants to sell $51.7-million tunnel boring machines to Chinese company for just $9.2 million

NationalPost.com
July 21, 2014
Natalie Alcoba

The Toronto Transit Commission wants to sell four tunnel boring machines that burrowed the Spadina subway extension for a fraction of what it paid, arguing that it doesn’t make sense to reuse the excavation technology on future projects.

Yorkie, Torkie, Holey and Moley, as they were christened, have completed their 6.4-kilometre journey from Downsview station to York University and Vaughan. The TTC has stored them at the city’s decommissioned Keele Valley landfill site.

The transit agency bought the mammoth, Toronto-built machines from Caterpillar Tunnelling Canada Corporation for $51.7-million in 2009, before tax.

A report on the agenda of this week’s TTC meeting recommends selling them for $9.2-million, apparently the best price the commission could get, and about $6-million less than the TTC had budgeted.

Staff considered refurbishing the quadruplets to tunnel the Scarborough subway, but selling them is the “preferred option.” The TTC says it would cost $28.8-million to ship, store, refurbish and return the four machines to service.

It also estimated the amount of money new machines, with new technology, would save the agency in productivity — new TBMs could shave 1.7 months off the schedule, which translates into $22-million, the TTC said. That means refurbishing the machines would save $3.3-million, an amount the TTC says is “not significant when the risks of refurbished equipment breakdowns or the increased productivity of new TBMs are considered.”

Councillor Maria Augimeri, chair of the TTC, said at first it seemed to her “counter intuitive” to sell the machines when there is more digging to be done. But staff told her there would be “negligible” savings on machines that would be 65% slower than the newer generation. “It is better for someone else to put them in use now, rather than spend a huge chunk of money to mothball outdated technology for eight years,” she wrote in an email.

The TTC’s math assumes that it will cost $54.1-million to purchase four new machines, a small increase from what it paid in 2009 for machines that were slower. The TTC was unavailable for comment Monday.

A request for prospective purchasers in North America yielded no interest. Two companies responded to a public ad. The highest bid was $1.5-million (tax included) and it was rejected. The TTC received two more offers, the highest at $4.2-million, but the prospective purchaser never followed through, it said.

In the meantime, Caterpiller sold its Tunnel Boring Machine assets to a Chinese company called Liaoning Censecience Industry Co. Ltd., which later adopted the Canadian corporate name Lovsuns Tunnelling Canada Ltd., the TTC said.

In May, Lovsuns offered to buy Holey, Moley, Yorkie and Torkie for $9-million. “TTC staff requested a better price,” the report stated. “Lovsuns increased their offer to $9.2-million indicating that it would not increase it more and expressed urgency in finalizing the sale.”