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3600 jobs at risk as Bombardier to shed Belfast factory in revamp

Written by Business World, on 3rd May 2019. Posted in Ireland

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Bombardier put its Belfast wing-making factory on the block as part of a wider shake-up, while the plane and train maker's reluctance to say it would meet 2020 goals sent shares lower.

The Canadian company said on Thursday it would unite its corporate and regional jet units, while selling off two aerostructures operations, including the Belfast plant, the largest high-tech manufacturer in Northern Ireland.

Bombardier's retreat from Belfast comes at a sensitive time for the British government, which is struggling to agree a deal to leave the European Union, in large part because of disagreements over the future of the Irish border.

The plant and its 3,600 workers are an important constituency for Northern Ireland's largest unionist party, the Democratic Unionist Party, which is propping up Prime Minister Theresa May's minority government.

Stunned workers at the factory, just yards away from the shipyard that built the Titanic, urged the British government to ensure jobs were retained.

"It's a shock to the system given what we have all been through. It's taken a toll," said Noel Gibson, a sheetmetal worker who has worked at the plant for 29 years.

The plant escaped major job losses last year when Bombardier won a trade victory against U.S. planemaker Boeing in a dispute that had threatened to slap a 300 percent duty on sales of jets for which the plant supplies wings.

Bombardier Chief Executive Officer Alain Bellemare called the steps, including the sale of a separate Morocco facility that builds components for the company's regional jets, "a strategic move."

The two facilities generate about half of the $2.25 billion to $2.5 billion in revenues expected for the aero structures division in 2019, the company said.

Bellemare said he expects the sales to take several months.

Bombardier is shedding its commercial aviation businesses to focus on more profitable corporate jets and passenger rail cars.

But the rail division, Bombardier's largest unit, has faced recent headwinds because of delivery delays and production problems at a handful of long-term projects.

Investors were rattled last week when Bombardier cut its first-quarter and full-year revenue targets for the transportation division.

Bombardier expects to deliver nine trains this year as part of a long-delayed order to Swiss Federal Railways (SBB), Danny Di Perna, president of the transportation division, told Reuters.

The company is producing another 15 trains for Swiss this year which are expected to enter service in 2020.

The rail delivery delays led Bombardier executives to shy away from reaffirming 2020 objectives, such as growing revenues to $20 billion. The company will review the targets later in the year. The rail division, which was expected to generate $10 billion next year, is crucial to Bombardier's five-year turnaround plan, after heavy investment in aircraft production drove it to the brink of bankruptcy in 2015.

Bombardier shares dropped as much as 10%, then bounced a bit to close down 5.13% at C$2.22 in Toronto.

Bellemare said the company will be working with Europe's Airbus SE to find a buyer for the wing-making facility, which produces wings for the A220 narrowbody jet.

Industry analysts said the Belfast plant pioneered a leap forward in carbon-fiber wings technology that may be attractive to Airbus for its next generation of planes.

Airbus declined to say whether it was interested in buying the plant but described it as a "key supplier."

A spokesman for Britain's May said that while the move was disappointing and unsettling for workers, Bombardier's Belfast business has a healthy long-term order book.

Bombardier bought the plant from Short Brothers, the world's oldest planemaker, in 1989. It has been a pillar of Belfast's economy for decades and given many locals apprenticeships.

It is of particular significance to the mainly Protestant unionist community which long provided the majority of workers in Shorts and the nearby Harland & Wolff shipyards.

The company said it will create a single aviation division headed by business aircraft president, David Coleal, and will consolidate its five aerostructures businesses to focus on facilities in Montreal, Mexico and its newly acquired Global 7500 business jet wing operations in Texas. (Reuters)

Source: www.businessworld.ie

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