(The following story by Melinda Peer appeared at Forbes.com on March 11.)
MONTREAL — Bombardier Transportation shares got a boost Tuesday after the Canadian company steamrolled rival transport companies vying for a Belgian state-controlled railway contract worth $2.3 billion.
The Montreal-based aircraft and rail equipment company threatened to close its Belgian plant if the NMBS-SNCB railway company awarded the contract to another company. The stock gained 12 cents in Tuesday’s session, closing up 2.3% at $5.40.
France’s Alstom SA and Spain’s CAF SA are also bucking for the contract to build 1,200 rail cars for an express commuter line circling Brussels. Siemens AG, which doesn’t have a Belgian plant, has distinguished itself by offering the cheapest price. Bombardier Transportation’s tactic of issuing the ultimatum has almost certainly caught the attention of Belgian political leaders who are worried about an economic slowdown in their current struggle to form a national government.
Bombardier has improved the quality of its rail transportation division in recent years in an attempt to gain new business as global population growth, increased urbanization and energy concerns promise to drive demand for transport systems. The company refined train upkeep with a predictive maintenance system called Orbita. Other new services work to reduce energy consumption and improve security by sharing train car video footage with stations located along the route. The upgrades have helped the company win valuable business in emerging markets like China where the company has laid tracks. Beijing alone plans on spending $32 billion through 2010 on rail-cars and trains
The strength of Bombardier’s business has steeled it against European competitors, allowing it to pull the rails out from under them. Last February, Germany’s national railway bypassed homegrown Siemens, awarding a $1.6 billion contract for 321 regional trains to Bombardier.
The company’s Belgian plant in Bruges has done well locally. It is currently working on a NMBS-SNCB order for 90 double-deck coaches and 100 cars in a separate order from MIVB, Brussels’ regional transport authority.
(The Associated Press contributed to this article.)