Bombardier Inc. president and CEO Pierre Beaudoin has his hands full these days: July’s loss of a $2.18-billion deal to build trains for London’s Thameslink line, putting into doubt the very future of the company’s Derby factory; the continuing threat of reduced government spending on rail projects; and flagging sales of the workhorse CRJ regional jet. Beaudoin tells Bertrand Marotte that, despite it all, he’s confident the global train and plane maker will pull through the turbulence just fine.
Any lessons learned from losing the Thameslink bid? The loss was very disappointing. In context, though, last year we won three very big contracts at the same time, so you have to always take things in consideration. But Thameslink was important for our Derby plant, and what we’re doing now is reviewing our opportunities in the U.K. What is our competitive advantage? Can we be competitive? And does the government really want local procurement and a local rail industry? Because it’s a different strategy if you’re going to go for low cost in other countries versus supporting local content.
Do you have to be more aggressive these days to win government rail contracts? The way we approach these contracts is that they’re complex products, and very often you commit to maintenance over 30 years. We will take a contract at Bombardier if it makes financial sense for the long term. But I’d rather pass on a contract if I can’t have a return, because I want to be a good supplier—and a good supplier is a profitable one.
How will the wave of government austerity measures affect Bombardier’s financial health? If you look at Europe—and the case of the U.K. is a good example—they will continue to invest in rail. That’s what the people want. In Europe, mass transit plays a very big role in how people get to work. Travelling in high-speed trains plays a very big role. I do not think they will slow down that investment.
On the aerospace side, after creating the market for regional jets, you seem to be falling behind, with rivals like Brazil’s Embraer and France’s ATR outselling you. What happened? Well, you can’t look at just 12 months, because it really depends which accounts are being bid. There are some accounts that are truly made for the ATR product because it’s a traditional turboprop that’s less expensive than our Q400. If the customer has short routes and doesn’t need the speed—well, [ATR]has an advantage. If customers need the speed, a little bit like the Porter model in Toronto—they need the speed to compete against jets—the ATR is not even in consideration.
What about emerging markets? Are you happy with your efforts to expand there? I think there are some areas where we could beef up our sales and we are doing that. We need to think about Latin America a little bit more, understanding that we have a major competitor from Brazil. We need to pay a little bit more attention to Africa, although we’ve had success there. And, of course, opening the Chinese market for the C Series and maybe some sales of turboprops and CRJs is also important.
Bombardier is sometimes criticized here in Canada for exporting jobs—to Mexico, for example, in aerospace. I think that we’re a very transparent employer. And we’ve been very forthcoming that we need to make sure that we remain competitive. In the case of Mexico, it’s something that we’ve discussed with our employees in Montreal. If I’m going to compete with a Brazilian manufacturer, I’ve got to have some content that is at the same cost—otherwise, I’m going to jeopardize all the jobs.