(Canada.com posted the following Canadian Press article on its website on March 6.)
MONTREAL — As aircraft orders fall, Bombardier Inc. is taking the sickle to its aerospace division, cutting 3,000 additional jobs, more than half in Montreal and Toronto.
The surprise announcement Wednesday came the day after Canada’s biggest aircraft maker slashed its profit outlook for the fourth quarter and warned of asset writedowns in aerospace, which accounts for about half of Bombardier revenues.
Like most aerospace companies, Bombardier has been hurt by a slump in the air travel market, which has forced carriers to cut spending on new airliners. Bombardier is a major supplier of regional aircraft, smaller fuel-efficient jets used by regional carriers to feed big full-service airlines such as United, American and Delta.
As well, the slump in the U.S. economy has led to a slowdown in capital spending by thousands of companies, prompting fewer orders for corporate jets, another key market for Bombardier.
The two bombshell announcements this week bear the footprint of Paul Tellier, who became chief executive of the transportation giant just weeks ago after building a take-no-prisoners reputation at Canadian National Railway, the country’s largest rail company.
Tellier cut tens of thousands of CN Rail employees at all levels in the mid-1990s and acquired two U.S. railways to transform the former Crown corporation into the most efficient railway in North America.
While Bombardier is considered an efficient company, Tellier arrived in the context of the worldwide aviation slump as well as a slowdown in the U.S. economy that hurt demand for corporate jets
Bombardier, the third-biggest aircraft maker after Boeing and Airbus, is the world leader in both regional and business aircraft.
“He’s operating in just a terrible environment,” sympathized analyst Christopher Sears, of MacDougall MacDougall & MacTier Inc.
“Tellier has proven he’s one of the best managers in Canada, but . . . it’s going to take a real turn in the airline business for them to benefit. That could be a ways off,” said Sears.
The cuts announced Wednesday include 1,200 at the Short Brothers plant in Belfast, Northern Ireland.
It brings to 8,300 job cuts announced by Bombardier Aerospace since the terrorist attacks of Sept. 11, 2001, battered the already weak aviation sector, although about 1,000 people have since been recalled. This does not include a four-month temporary shutdown at Bombardier’s Learjet plant in Wichita, Kan., which ends April 1, and six weeks at the de Havilland plant in Toronto.
Bombardier did not provide a breakdown in the Canadian cuts, but a Montreal union official said 630 unionized workers will be let go from Montreal-area manufacturing plants between March 21 and June 6.
Michel Lauzon, president of the International Association of Machinists and Aerospace Workers local, said the union heard the news only Wednesday morning.
“This is absolutely unacceptable,” said Lauzon.
Buzz Hargrove, president of the Canadian Auto Workers union which represents Toronto employees, said the workers understand the fact that there are fewer aircraft sales.
“But the company is trying to take advantage of this downturn to outsource a lot of our jobs and throw a lot more people out of work, so that’s our problem with this announcement,” Hargrove told CBC Radio.
Bombardier has 6,000 employees at Short Brothers in Belfast; 15,000 workers in Montreal making regional jets and the Challenger business aircraft; and 3,000 at its de Havilland division in Toronto making Global Express, Global 5000 and Q series turboprops.
Bombardier common shares dived as much as 91/2 per cent after the job cuts were announced, following a nine per cent tumble the previous day.
The shares were off 34 cents to $3.86 Wednesday, compared with $25 just before Sept. 11, 2001.
Karl Moore, management professor at McGill University, said Tellier is making the right moves.
“I think Bombardier is doing the right things in terms of getting their costs in line with their revenues, which at this point are out of line and so unfortunately a lot of families are getting hurt.
“What you see is Paul Tellier beginning to take hold of Bombardier and taking it in the direction that he feels is more appropriate.”
Bombardier said Tuesday it expects to earn only three to eight cents a share in the fourth quarter ended Jan. 31, not counting any special items.
This suggests the company will declare a quarterly loss, its first in a decade.
Peter Smith, president of the Aerospace Industries Association of Canada, said the cuts are another blow to the Canadian aircraft sector, as many Canadian companies are sub-contractors to industry leader Bombardier.
Smith said the only thing that can revive the commercial industry is a comeback in aviation and a stronger U.S. economy.