Boston transit may cancel orders for railcars from Phila.

Fed up with what it describes as lengthy production delays and shoddy workmanship, Boston's transit authority is threatening to cancel its $190 million contract for 75 commuter railcars being assembled at a South Philadelphia factory.

The complaints about Hyundai Rotem Corp. are similar to those raised over the last several years by SEPTA, which is still waiting for delivery of the final three of 120 Silverliner V cars ordered in 2006.

"This seriously troubled procurement is at a point of crisis," said Jonathan R. Davis, chief financial officer of the Massachusetts Bay Transportation Authority, in a letter to Hyundai Rotem's new chief executive, Kyu-Hwan Han, in South Korea.

"Failing dramatic improvement and immediate corrective measures designed to remedy these defaults within the next 21 days, the MBTA must consider terminating the contract for cause."

The letter, obtained by The Inquirer, was dated Dec. 21. A spokesman for MBTA said this week that the Boston transit authority has not yet canceled the contract.

"The letter reflects the MBTA's strong desire to keep [Hyundai Rotem] focused on its contractual obligations. While some progress has been made, certain areas of concern remain," MBTA spokesman Joe Pesaturo said in an e-mail Monday. "It's important that [Hyundai Rotem's] new leadership team not only understand the procurement's ongoing issues, but also take the corrective actions necessary to address the shortfalls."

About 200 workers are employed at the production plant on Weccacoe Avenue in South Philadelphia, where railcars built in South Korea are assembled in order to meet federal made-in-America requirements.

Hyundai Rotem, a subsidiary of South Korean automaker Hyundai Motor Group, entered the U.S. transit market in the last decade by aggressively underbidding its more-experienced competitors. But its production has been troubled by material shortages, design flaws, production problems, labor conflict, and workmanship errors.

The company's woes were exacerbated by the unexpected death in mid-November of chief executive Min Ho Lee.

In his letter, Davis said workers at Hyundai Rotem's plant in Changwon, South Korea, had accidentally drilled through wire bundles in at least 10 cars as they were installing door panels.

He also complained that material shortages meant cars were being shipped to Philadelphia from Korea with missing parts, "increasing the burden on Weccacoe to perform additional unfamiliar work. The MBTA is concerned that Weccacoe has become the project bottleneck as a result of poor performance in Changwon."

A spokesman for Hyundai Rotem did not immediately respond to calls from The Inquirer about the MBTA's complaints.

SEPTA, which was Hyundai Rotem's first American customer, is still waiting for the last three of the 120 Silverliner V cars it ordered in 2006 for $274 million.

The total cost, including spare parts and associated training and management, is $330 million. Hyundai Rotem faces millions of dollars in penalties for the tardy deliveries of its SEPTA cars.

The last three cars are waiting for door and brake components and communications equipment, SEPTA spokeswoman Jerri Williams said. She said SEPTA expected that the cars would be delivered "by early February."