Article i saved from Nov 18, read while we ride green today Mehran Ebrahimi
Director of the Study group in aeronautical business Management and professor in the Department of Management and Technology, ESG UQAM
Over the past few weeks, several commentators have been outraged to see Bombardier announcing layoffs and moving away from commercial aircraft, after the Quebec government invested 1 billion USD in the C Series program.
However, this "strategic refocus" appears to be a rational response to very real issues. With its 9 billion debt, Bombardier must reduce its costs and stop investing in unprofitable activities to complete its recovery. It is all the more true that a window opens in the business aircraft sector, of which Bombardier remains the world leader, with the coming into service of the global 7500 business jet.
Fierce competition in commercial planes
On November 8, Bombardier announced the sale of its turboprop Q400 aircraft to the The Canadian company Longview and indicated that it was looking at the future of the regional CRJ jets built at Mirabel.
It should be known that Bombardier's commercial aircraft sector is the only one that is not profitable. Its two platforms are based on aging technologies, dating back 30 years in the case of the CRJ. This reduces their attractiveness in the market, while the competition from Brazilian, Chinese, Japanese and Russian manufacturers, all massively subsidized by their Governments, is becoming increasingly fierce.
In order to maintain its market share, Bombardier would have to invest a fortune to put its products to the liking of the day. Currently, his financial situation does not allow him.
The management has made the right decision in selling the Q400 program. As for the CRJ, its survival passes either through a partnership such as that concluded with Airbus for the C Series programme, or by reducing production costs and accelerating sales. otherwise diIn other words, there is still hope of saving these jobs.
Let's be realistic. Bombardier's future is more than ever spent by business aircraft, a market valued at 250 billion US over 10 years. With its Learjet, Challenger and global ranges, Bombardier surpasses all its competitors in terms of the number of devices delivered, and the massive investments made to develop the global 7500 business aircraft are poised to bear fruit. The first copy of this new aircraft is due to be delivered in December 2018 and its backlog is already completed until 2021.
This is great news for our aerospace cluster, which remains healthy despite the negative news of the last few days. Indeed, the fuselage of the Global 7500 will be produced at Stelia Aerospace in Mirabel, the staircase, the cockpit and the radome will be built at the Bombardier plant in St. Laurent and the interior finish will be carried out in Dorval.
This program will support thousands of well-paying jobs here in Quebec for at least 20 years
Positive impacts in the Aerostructures
With its four factories, including that of St. Laurent, the aerostructures sector should also benefit from the refocusing of Bombardier.
This unsung division has advanced expertise in the design and production of wings, cockpits, fuselages and complex structures. As a supplier of A220 (ex-C Series) and Global 7500, it is well positioned to take advantage of the growth of these programs, as do the approximately 1200 Bombardier suppliers in Canada.
The partnership with Airbus could also lead to new collaborations in the Aerostructures, with Airbus looking for experienced suppliers for its commercial aircraft programs, whose backlog of orders is overflowing.
To seize this opportunity, Bombardier must compete with the best in the industry in terms of cost and productivity, hence the need to lighten the company's structure.
When Alain Bellemare came to the head of Bombardier in 2015, he inherited a colossal task: to redress a heavily indebted company, struggling with three development programs that threatened to lead him into bankruptcy. Its strategy was to mitigate the risks of the company, while concentrating its resources on the most likely growth opportunities.
It is true that this strategy demands sacrifices. These sacrifices are all the more difficult as there is a bit of each of us in Bombardier. However, they are necessary to save the vast majority of the 15 000 jobs that depend on this Quebec flagship and the 40 000 that our aerospace cluster has, the third largest in the world.
As for us, we must ask ourselves: As a company, are we prepared to support this sector, which generates more than 14 billion turnover and which ranks first in Quebec's exports?
GLTA