Bombardier to cut 7,500
more jobs through 2018, mostly in rail
Send a link to a friend
[October 22, 2016]
By Allison Lampert
MONTREAL (Reuters) - Bombardier Inc said on
Friday it would cut 7,500 jobs, mostly in its train-making division, in
a second round of layoffs announced this year, following extended delays
and budget overruns in its aerospace business.
About two-thirds of the jobs are in Bombardier Transportation, the
Germany-based rail unit which had already been slated to eliminate about
3,500 workers. The rest will be in aerospace, the company said in a
statement.
Bombardier, which ended 2015 with 70,900 employees, said in February it
would cut 10 percent of its workforce over two years, with nearly half
of those jobs in the rail unit.
The unit, with a large staff in Europe, has struggled to deliver on some
high-profile public transit contracts, including in Toronto.
Bombardier said it expected the layoffs would lead to recurring savings
of about $300 million by end-2018. It will book restructuring charges of
$225 million to $275 million as special items, beginning in the fourth
quarter and through 2017.
The cuts are part of a broader turnaround plan backed by Canada's
second-largest pension fund, Caisse de depot et placement du Quebec, the
rail unit's largest shareholder, said spokesman Maxime Chagnon.
![](http://archives.lincolndailynews.com/2016/Oct/22/images/ads/current/pest-control-SDA-Termites-2015.png)
The Caisse, which secured three BT board seats after buying a 30 percent
stake in the division in November for $1.5 billion, wants Bombardier to
improve the unit.
In a telephone call, Bombardier Chief Executive Alain Bellemare said he
did not expect the cuts, which include 1,500 workers in Quebec and 500
in the rest of Canada, to affect talks with the federal government over
a $1 billion investment in its CSeries mid-range jet program.
Ottawa is under pressure from Quebec to match the province's $1 billion
investment in the narrowbodies. Navdeep Bains, the cabinet minister
heading negotiations, reiterated Ottawa's pledge to aid Bombardier on
Friday, although no deal has been finalized.
GOVERNMENT WANTS ASSURANCES
Bains said the government wants assurances on jobs, investment in
research and development and ensuring the company's headquarters stays
in Canada.
Asked by the Canadian Broadcasting Corp. whether he would insist
Bombardier maintain certain employment levels in return for aid, Bains
replied, "There are market conditions at play and we have to be very
careful about that".
Bellemare has pushed to improve profitability since he was hired in 2015
after the new CSeries jet, years late and billions over budget, had
loaded Bombardier down with debt.
"I think it has to be very clear that the decisions we are taking are
not related to our discussions with the federal government," Bellemare
said.
Quebec Premier Philippe Couillard, while lamenting the loss of jobs,
said his government had made the right decision to invest in the CSeries
program where Bombardier is now hiring.
[to top of second column] |
![](../images/102216pics/busine77.jpg)
Bombardier's C Series aircrafts are assembled in their plant in
Mirabel, Quebec, Canada on April 29, 2016. REUTERS/Christinne
Muschi/File Photo
![](../images/ads/current/demay_inv-lda081412.png)
In a note, Macquarie analyst Konark Gupta estimated Bombardier would hire about
3,700 workers for programs like the CSeries and its Global 7000 business jet,
which is expected to make its first flight next month.
The company has faced competition from China Railway Rolling Stock Corp, formed
by the merger of the country's two top train makers. In September, Bombardier
said it would join forces with the Chinese company to bid on international
contracts.
"There's a lot of questions around the health of some of their end markets,"
AltaCorp analyst Chris Murray said in a research note. He cited speculation over
whether Bombardier might dispose of units such as the weak-selling Learjet small
business jet division.
CIBC analyst Kevin Chiang said in a note the announcement showed Bellemare could
make changes at the company controlled by the Bombardier-Beaudoin family.
"A concern when (he) took over ... was whether he would be handcuffed by various
stakeholders in making the necessary 'tough decisions,'" he wrote.
In Northern Ireland, where about 5,000 Bombardier employees work, Economy
Minister Simon Hamilton said he would fight to save local jobs.
Last month, Bombardier halved the 2016 delivery forecast for the CSeries and
said it expected full-year revenue at the lower end of its previously announced
range.
![](http://archives.lincolndailynews.com/2016/Oct/22/images/ads/current/bennett_lda_123015.png)
Bombardier shares closed down 2 cents Canadian at C$1.76.
(Additional reporting by Allison Martell, Matt Scuffham and Alastair Sharp in
Toronto and Leah Schnurr in Ottawa; Editing by Richard Chang and Cynthia
Osterman)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |