Bombardier to cut about 10% of global workforce over two years

Canadian company to cut about 7,500 jobs, about two-thirds in transportation division

Canadian aircraft and train maker Bombardier, a major employer in Belfast, is to shed jobs for the second time this year.

The company said it would cut about 10 per cent of its global workforce over two years as it deepened turnaround efforts at its rail division.

The Montreal-based company, which has struggled in recent years with cost overruns in its aerospace unit, said on Friday it would cut about 7,500 jobs globally with about two-thirds of those in Bombardier Transportation. The rest of the cuts will be made in the aerospace division.

It said restructuring charges of $225 million to $275 million will be accrued as special items, beginning in the fourth quarter and through 2017.

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It is unclear what the latest announcement will mean for its Belfast aerospace operation, which is already undergoing cuts.

In August it said it would accelerate its Northern Ireland redundancy programme and axe a further 95 jobs on top of a planned 630 redundancies this year.

Global downsizing

The Canadian Aerospace group first announced in February that it intended to reduce its Northern Ireland workforce by a total of 1,080 people between this year and next as part of a "global downsizing" strategy.

Responding to the latest announcement, Alastair Hamilton, chief executive of Invest Northern Ireland, said: “Today’s news will be very upsetting to those working for the company, and their families, especially following on from the announcement made in February.

“The company is yet to provide the detail on where these job losses will come from and therefore we do not yet know the potential impact on Northern Ireland.”

Bombardier chief executive Alain Bellemare said it was a difficult decision "but in the end what we are going to be left with is a leaner, stronger organisation".

He said it was part of a broad turnaround plan aimed at improving operations amid cost and productivity concerns.

Bombardier said it expected recurring savings of about $300 million by the end of 2018.

In February, the company cut 10 per cent of its workforce, also over two years, and with nearly half of the cuts in its rail arm, which has a large workforce in Europe.

As it did in February, Mr Bellemare said Bombardier would simultaneously be “strategically hiring” for its growth areas: the CSeries family of narrow-body jets and its Global 7000 business jet, which is expected to make its first flight next month in a boost for an aircraft whose entry into service has been delayed two years.

Last month, Bombardier sliced in half the 2016 delivery forecast for its CSeries aircraft and said it expected full-year revenue to be at the lower end of its previously-announced range.

The company will also hire to support major rail contract wins, it said in a statement. Canada’s second-largest pension fund, Caisse de Depot et Placement du Quebec, owns a 30 per cent stake in the rail business, which it bought last November for $1.5 billion, providing a bigger cash cushion for Bombardier’s aircraft-making unit.

Investment

Mr Bellemare said he did not expect the job cuts, which include 2,000 workers in Canada including 1,500 in Quebec, would impact the company's separate talks with the federal government over a $1 billion investment in the CSeries.

Ottawa is under pressure from the Quebec government, which last year invested $1 billion in the CSeries programme for a nearly 50 per cent stake in the project, to match that investment.

Innovation minister Navdeep Bains, who is in control of the negotiations, has cited "good-quality jobs" as one factor in the talks.

“I think it has to be very clear that the decisions we are taking are not related to our discussions with the federal government,” Mr Bellemare said. “We are doing this because we want to save jobs in Canada.”

Invest Northern Ireland expressed disappointment at the announcement with its chief executive, Alastair Hamilton, saying it was too early to assess the potential impact of the decision.

“It is important to note that today’s announcement by the company signals an ongoing ramp-up on its newest aircraft programmes, the CSeries and Global 7000, both of which have significant Northern Ireland work content,” said Mr Hamilton.

– (Additional reporting: Reuters)

Mark Hilliard

Mark Hilliard

Mark Hilliard is a reporter with The Irish Times