(The following article by Eric Reguly was published in the January 4 online issue of the Globe and Mail.)
TORONTO — In the bowels of Bombardier’s headquarters in Montreal is a musty old file called “Toronto to Montreal: The High-Speed Rail Dream,” or something equally prosaic. It probably hasn’t been touched for years.
For as long as anyone can remember, Bombardier has wanted to build a sleek, fast, Euro-style rail link between the two cities. It never worked; regional jets got off the ground instead.
But if you thought that rail rockets were the last thing on Paul Tellier’s mind, you might be wrong.
Mr. Tellier is the new chief executive officer of Bombardier. He replaced Robert Brown in December and he’s on a mission to restore the fortunes of Canada’s premier maker of transportation equipment.
The man who ran Canadian National Railway for a decade has already told us that his first job is to clean up Bombardier’s financial statements and address corporate governance concerns. After that, it’s anyone’s guess.
Will he shrink Bombardier, then split it into separate plane, train and leisure companies? Will he just shed the leisure bits — Ski-Doos, Sea-Doos and outboard motors? Is “non-core” considered everything but regional and business jets? If so, will any “focusing” result in the sale or spinoff of the train division? And so on.
Here’s a guess: Trains will not only remain a core business at Bombardier, they will form the base of its future growth strategy. Mr. Tellier probably already has a vision of building a high-speed train system, financed by scads of taxpayer money, between Toronto, Ottawa and Montreal and eventually connecting Windsor and Quebec City.
But why would this long-dead, multibillion-dollar project come alive now? On this project, the stars are nearing perfect alignment.
Let’s start with the company itself. Bombardier’s regional jet order book is far from dead — the business jets and turboprops are getting hit the hardest — but the outlook is not promising.
With bankrupt airlines, rising fuel costs, the threat of a geopolitical nightmare triggered by a U.S. invasion of Iraq and assorted terrorism attacks, 2003 and 2004 are likely to be grim years for plane makers.
One passenger jet downed by a shoulder-mounted Stinger missile, the threat that no airline wants to talk about, could paralyze the airline industry.
The fear and hassle-factor associated with flying has made road and rail travel more attractive.
Bombardier happens to own the world’s biggest train business, though one rife with problems.
Two years ago, it bought German train maker Adtranz for $1.1-billion. Bombardier is now suing DaimlerChrysler, the seller, for $1.4-billion, implying Adtranz has negative value.
If that weren’t bad enough, the Acela express trains that it made with France’s Alstom for Amtrak turned into expensive PR disasters when cracks in the suspension were found. But with great potential for a North American train renaissance, this is not the time to downgrade or sell the business.
The train renaissance, of course, has been predicted for years, only to die at the altar of bargain gasoline.
Any renaissance needs a driving force. This time, in Canada at least, it could be Mr. Tellier.
With the plane division in a shallow dive, he will be tempted to ramp up the train side. A high-speed Toronto-to-Montreal link is the obvious catalyst.
His credentials are near perfect. Not only does he know the rail business, he knows the government. Before he joined CN in 1992, he was the top federal civil servant. He is said to have exceedingly good relationships with the Prime Minister’s Office and in David Collenette’s shop at Transport Canada.
If the high-speed train is to go, he will need to convince the feds that a public-private partnership, code for gutting what little remains of the federal infrastructure fund, is the way to do it.
His timing would be brilliant. Jean Chrétien just hauled Canada into the Kyoto accord. Passenger trains are Kyoto-friendly (between Paris and Brussels, the 300 km/hr trains have eliminated air travel and have become the transportation of choice between Paris and London, and Paris and Marseilles).
Although a high-speed link between Toronto and New York City might make more economic sense, the business community would love to get from Toronto to Montreal in three hours or less in frequent, reliable and comfortable trains. If the Prime Minister has one more legacy beyond Kyoto that he wants to leave, this might be it.
Saving the environment, saving Bombardier, creating jobs and a North American showpiece for 21st century rail technology, bringing Toronto and Montreal closer together — what could be better?
All that stands in its way is a few billion dollars and a train load of imagination. Time for Mr. Tellier to get to work.