Mark Collins – Bombardier Q400 Turboprop Hitting Some Fans Too

It’s not just the new CSeries jetliner that has, er, issues. How can Ottawa bail out jobs in la belle province should the company outsource Ontario jobs in order to boost profitability of the slow-selling prop plane? Handouts for Ontario too?

Bombardier still aims to outsource jobs as it seeks bailout from Ottawa

Bombardier Inc. is pushing to shift major chunks of work on its Toronto-built Q400 turboprop planes [more here] to Mexico and China, even as it seeks a billion-dollar bailout from Canadian taxpayers.

The transportation giant’s proposal to shift assembly of wings and cockpits for the turboprop planes to facilities in Mexico and China, respectively, would eliminate about 200 jobs at the suburban Toronto factory where those components are assembled now, sources familiar with the situation say.

A proposal by the company to outsource wing and cockpit production was rejected by workers at the Toronto plant in October, but Bombardier has not given up on the idea. “They are still determined to offload the wing and the cockpit to Mexico and China,” said one source familiar with the discussions.

Such a move could prove hugely awkward for the federal government, which is studying a request by Bombardier for a $1-billion (U.S.) investment in its C Series plane program to match a deal struck with Quebec. The company is trying to shore up more financial resources for the new aircraft to take it to projected break-even in 2020-21. It plans to build between 15 and 20 C Series planes this year…

Bombardier has had trouble over the past year winning new orders for commercial and business aircraft, which has hurt both revenue and profitability. At a list price of about $31-million (U.S.), the Q400 has a particular problem in that it is an estimated 20 per cent to 30 per cent more expensive than rival aircraft made by European joint venture ATR [more here].

Although Canadian carriers such as Porter Airlines Inc. and WestJet Airlines Ltd. have embraced the Q400, Bombardier has largely failed to persuade customers outside North America to pay more for the extra speed, size and technology that the aircraft offers. It is now trying to remedy that situation [see here and here]…

In a briefing with reporters in late October, Bombardier chief executive Alain Bellemare suggested the company was still aiming to make changes to Q400 production despite the union’s stand. It’s a great aircraft but it’s too costly, he said. “We need to bring the costs down so we can bring the price down.”

Bombardier management detailed the challenges facing the Q400 at an investor-day meeting last November. Fred Cromer, who leads Bombardier’s commercial aerospace business, said that while Bombardier ought to get paid for some of the plane’s performance advantages versus the competition, airlines using the planes to fly shorter distances don’t necessarily make use of those performance advantages.

Bombardier’s production plan for the Q400 assumes it can maintain a global share of about 30 per cent for the aircraft while pushing for more. “This airplane should do much better than that against the competition,” Mr. Cromer said…

Pity the poor feds.

Mark Collins, a prolific Ottawa blogger, is a Fellow at the Canadian Global Affairs Institute; he tweets @Mark3Ds