What does Bombardier eliminating 7,000 jobs mean for Canada?
Bombardier’s announcement Wednesday that it would slash about 7,000 jobs over two years was softened by the news it will increase hiring to support its struggling Cseries jet production.
The Montreal-based firm, which employs 64,000 people around the world, said Wednesday the layoffs will include 2,830 jobs in Canada, including 2,400 in Quebec. Layoff notices are expected to be issued in the coming weeks and completed by next year.
Here is a breakdown of the jobs affected in both Canada and Europe:
- 3,200 from transportation
- 2,500 from aerostructures and engineering services
- 800 from its aerospace product development engineering group
- 500 from its business aircraft unit
Bombardier said it currently has 3,450 people working in its CSeries division, a number the company says will rise as it ramps up sales and production.
Amid the bad news there was a sign that Bombardier could be reviving its fortunes: a letter of intent that could see Air Canada buy 45 CSeries 300 planes, with an option to buy up to 30 more.
“Air Canada’s commitment is a strong endorsement of this outstanding aircraft,” Bombardier president and CEO Alain Bellemare said in a release, adding that it “will become a catalyst for future orders in North America and around the world.”
Aviation analyst Rolland Vincent said Bombardier’s announcement didn’t come with many surprises.
“We expected a lot of what we heard this morning, what we didn’t hear is anything regarding the governance of the company,” Vincent said. “I think that is the big, big 800-pound gorilla in the room.”
Bombardier is still hoping for a financial assistance package from Ottawa that Transportation Marc Garneau said the Liberal government is still considering. The aerospace company has already received $467 million from both Ottawa and Quebec for the CSeries aircraft.
Speaking with a reporter Wednesday, Garneau said he was “saddened” by the job losses but reiterated the government wants to make sure there is a “good financial case” for Bombardier’s proposal.
“This is an unfortunate moment and its part of Bombardier’s restructuring,” Garneau said.
WATCH: Transport minister ‘saddened’ by Bombardier job cuts
Federal Innovation Minister Navdeep Bains said earlier the government will ensure any action taken with respect to Bombardier will be in “the interest of Canadians.”
“We have been clear that such an important decision will only be made after due diligence, careful consideration and a strong business case,” Bains said.
Vincent said a financial handout from the feds could further complicate Bombardier’s ownership
“You have got tens or hundreds of thousands of shareholders, you have millions of taxpayers, and you have four family members who are governing this company,” he said. “There is this sort of classic battle.”
“If the federal government decides to support Bombardier, what does that mean for the equity ownership? Who is going to control the company?”
Bombardier’s quarterly results missed analysts’ expectations with revenue in the fourth quarter at $5 billion, down from just under $6 billion a year earlier.
“This is a company in transition. 2016 is going to be tough year for them,” said Vincent, former director of international airline analysis at Bombardier Aerospace. He said some of the biggest issues for Bombardier began almost 15 years ago.
“Strategic failures like taking on way too many projects, having them all run on top of each other, massive cost overruns and quite a bit of mismanagement,” Vincent said.
The company said it expects to record $250-million-$300-million in restructuring charges in 2016 in connection with the layoffs.
Bombardier’s stock fell below the $1 mark on the Toronto Stock Exchange for the first time in 25 years closing at 90 cent last month. In early trading Wednesday, Bombardier shares surged more than 25 per cent to $1.13 on the TSX.
*With files from the Canadian Press
© 2016 Shaw Media