Bombardier planning on selling rail division to Alstom

[BCL]

https://www.bloomberg.com/news/articles/2020-02-17/alstom-confirms-talks-to-buy-bombardier-s-train-business

 

[Devil's Advocate]

Sounds like chasing the commercial aviation market has created so much unrecoverable debt and weakened Bombardier enough that selling the rail division has become more attractive than keeping it.

 

[BCL]

Who writes this stuff?

https://www.bombardier.com/en/media/newsList/details.binc-20200217-bombardier-announces-its-strategic-decision-to-foc.bombardiercom.html
Bombardier Announces its Strategic Decision to Focus on Business Aviation and its Intent to Accelerate Deleveraging through Sale of Transportation Division to Alstom​

 

[Just-Thinking-51]

Standard PR spin. Bombardier is in financial trouble. Selling the rail division to get cash in hope to get a pay off from the airline division.

 

[The Journalist]

BBD and their workforce must be reeeally mad at Boeing. The (pretty ridiculous) dumping petition Boeing did scared them into selling the CS to Airbus, seemingly fearing the plane wouldn't be sellable in the US without them, and then the MAX mess showed up.
And now....the now-A220 is quite well received and has a 550 order backlog while the (still larger than the largest A220) MAX 7 hasn't even entered service yet.

 

[jiml]

Standard PR spin. Bombardier is in financial trouble. Selling the rail division to get cash in hope to get a pay off from the airline division.

If the sale completes at the agreed price it will give them just enough cash to pay debt.

 

[BCL]

Standard PR spin. Bombardier is in financial trouble. Selling the rail division to get cash in hope to get a pay off from the airline division.

I've taken writing classes before, and I was always instructed to make things simple. I had to look up what "deleveraging" meant. Let me give it a try.

"Bombardier announces plan to focus on commercial aviation and sell transportation division to reduce debt."

 

[BCL]

BBD and their workforce must be reeeally mad at Boeing. The (pretty ridiculous) dumping petition Boeing did scared them into selling the CS to Airbus, seemingly fearing the plane wouldn't be sellable in the US without them, and then the MAX mess showed up.
And now....the now-A220 is quite well received and has a 550 order backlog while the (still larger than the largest A220) MAX 7 hasn't even entered service yet.

As long as Boeing doesn't get back into rail.

 

[PerRock]

I've taken writing classes before, and I was always instructed to make things simple. I had to look up what "deleveraging" meant. Let me give it a try.

"Bombardier announces plane to focus on commercial aviation and sell transportation division to reduce debt."

Having worked in the news industry, writers & editors like to use odd words, especially in headlines. I think the excuse they've come up with is that a reader will read the headline, not know what the word is & read the story to find out. In reality, they're just doing word wheelies.

peter

PS.
Does this now mean that there is no North American company making passenger rolling stock anymore? I know that most of the international big players have plants here, but no one local? Is CRC/ARC/Whatever-theyre-calling-themselves Rail Car a thing? Switzerland's Stadler is making the latest Superdomes.

 

[jis]

And if comments in response to articles posted in Facebook is any indication, most people don’t read the article anyway. They let their imagination run wild with title and blather on endlessly based on that ensuing flow of consciousness. [emoji57]

 

[jiml]

And if comments in response to articles posted in Facebook is any indication, most people don’t read the article anyway. They let their imagination run wild with title and blather on endlessly based on that flow of consciousness. [emoji57]

That, and "if it's on Facebook it must be true".

 

[neroden]

Bombardier imploded themselves chasing the C-series without enough financing. They closed down (profitable) Learjet to finance C-series. They also closed down their original (profitable) snowmobile business, and stopped making their most profitable business jet. They outsourced train production to Mexico and made other stupid decisions which destroyed the reputation of the train division, and lost money. Then, facing bankruptcy, they sold half the train division to Quebec, and sold the C-series to Airbus. Now they're selling the rest of the train division to Alstom (which will probably net a nice profit for Quebec, or Alstom shares). I'm not sure what's left of their business jet division since they shut down Learjet and stopped making the most profitable model.

A sad end to a company which used to be well-run.

 

[bretton88]

So when does Siemens try to torpedo this? Alstom torpedoed the merger when Siemens tried to do this. Turnabout is fair play.

 

[jis]

So when does Siemens try to torpedo this? Alstom torpedoed the merger when Siemens tried to do this. Turnabout is fair play.

Siemens didn’t try to do anything like this. Siemens tried to merge with Alstom transportation division AFAIR. That is a much bigger deal than picking the carcass of a failing Bombardier, which is what Alstom is doing.

 

[cirdan]

Siemens didn’t try to do anything like this. Siemens tried to merge with Alstom transportation division AFAIR. That is a much bigger deal than picking the carcass of a failing Bombardier, which is what Alstom is doing.

I have always had the impression that Bombardier's problem was that they emerged from a series of ad-hoc and often poorly thought out mergers of a large number of rail manufacturers, followed by ineffective attempts at consolidating these former rivals. My very first ever job was with ABB Transportation which through the intermediary of Adtranz became part of Bombardier. Although I left long before it became Bombardier, I stayed in touch with several people who worked there (but have all since left). It was always my impression that if there was one thing that Bombardier didn't have, it was an overall and long-term strategy or understanding of the market. Typically they would set their eyes on a smaller competitor, pour hundreds of millions into buying that competitor, only to discontinue its products and shut down its factories some years later. One of my friends who used to be with Bombardier later moved to Stadler and he said that the only reason that Stadler was able to grow so quickly and bring such good products to market so quickly was because Bombardier was firing experienced and seasoned engineers and designers by the dozen. Sometimes an entire department of recently fired Bombardier guys would be hired by Stadler in a single day. Many of these were people who had good contacts to customers, knew their language, and knew how to sell. In some countries, Bombardier was later trying to sell their products using sales agents who didn't even know the local language or know the particularities of the local railroads. Sometimes they didn't even have enough people on the ground to even tender for jobs that would have been cut out for them. Effectively Bombardier was handing away profitable market share on a silver tray. The only thing Stadler did was to reach out their long arm and pick up the pieces.

I have no idea what Bombardier thought they were doing when they started all that. But it set them back and they never recovered.

 

[jiml]

In the rail business some of Bombardier's most recognizable products were acquired as you've described, rather than being their own designs. The two best examples - Superliner II's (Pullman Standard) and the ubiquitous lozenge-shaped commuter cars seen all over North America (Hawker-Siddley).

 

[NeueAmtrakCalifornia]

Looking at Bombardier's US (Plattsburgh, NY; Pittsburgh, PA; West Mifflin, PA; soon Pittsburgh, CA) and Canada (Thunder Bay, Kingston, La Pocatière) manufacturing facilities, Bombardier's Hornell location would have to be sold to someone else to prevent a loss in jobs as it would be redundant with Alstom's Hornell facility. It can't be CAF or Kawasaku though as they already have a manufacturing facility in NY (Elmira and Yonkers respectively) but any other manufacturer is fine.

 

[neroden]

I have always had the impression that Bombardier's problem was that they emerged from a series of ad-hoc and often poorly thought out mergers of a large number of rail manufacturers, followed by ineffective attempts at consolidating these former rivals.

I think they did OK until they started the ineffective attempts at consolidation. There was a period in which they were practically a holding company, and if they'd let the individual divisions do their own thing (maybe liquidating the ones which were least successful at sales) they would probably have been OK.

I don't even know why they did all that firing -- it was stupid. They were making money beforehand, and not afterwards.

Effectively Bombardier was handing away profitable market share on a silver tray.

Yep. The outsourcing to Mexico was probably the last straw.

 

[neroden]

In the rail business some of Bombardier's most recognizable products were acquired as you've described, rather than being their own designs. The two best examples - Superliner II's (Pullman Standard) and the ubiquitous lozenge-shaped commuter cars seen all over North America (Hawker-Siddley).

And the ABB/AdTranz light rail cars.

 

[cirdan]

I think they did OK until they started the ineffective attempts at consolidation. There was a period in which they were practically a holding company, and if they'd let the individual divisions do their own thing (maybe liquidating the ones which were least successful at sales) they would probably have been OK.

I think there were cases in which different parts of Bombadier were competing for the same jobs and they were undercutting one another's prices, leading to an erosion of overall profitability. I think top level management decided that the individual companies had way too much freedom and decided to take them onto the short leash, which probably makes sense. I think they also listened to the likes of McKinsey far too much who told them that excess capacity in factories was killing them and the way to fight excess capacity was to close factories and concentrate work onto fewer sites. The big glaring error in this thinking is that the rail maket is very much a boom and bust game and when orders started picking up they were unable to handle them.

 

[jiml]

The City of Toronto is planning to place a significant order with what's left of Bombardier, including options that will keep the Thunder Bay, ON, plant open for a few more years. The mayor said they were the preferred vendor over Hyundai, Siemens and two companies from China.

 

[jis]

Here is an actual article about the TTC order:

City staff recommend TTC buy up to 60 new streetcars from Bombardier

City staff are now recommending the TTC hammer out a contract to purchase up to 60 new streetcars from Bombardier about a year after the city’s protracted battle with the company over delivery delays finally ended.

www.cp24.com

Seems like the original 60 car option that was cancelled replaced by this order?

These are Flexity platform which is going with Bombardier Transportation to Alstom AFAICT. If in addition to these they can continue to sell updated Lozenges, then the Thunder Bay plant can chug on for a while I suppose.

 

[jiml]

You're right about the commuter coaches. Since they are the mainstay of GO Transit, the Government of Ontario has a vested interest in keeping Thunder Bay in operation. If they start rolling out with the Alstom name it will be the fourth "brand" for the same product: Hawker-Siddeley, UTDC, Bombardier and Alstom.

 

[jis]

You're right about the commuter coaches. Since they are the mainstay of GO Transit, the Government of Ontario has a vested interest in keeping Thunder Bay in operation. If they start rolling out with the Alstom name it will be the fourth "brand" for the same product: Hawker-Siddeley, UTDC, Bombardier and Alstom.

There are potential add on orders from several US operations for those lozenges that may be forthcoming as various commuter agencies grow too. Two of them in Florida come to mind as a starter.