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Bombardier to scrap 7,500 more jobs as CEO deepens cost cuts
[MONTREAL] Bombardier Inc will cut an additional 7,500 jobs - more than 10 per cent of its workforce - over two years as the maker of trains and airplanes accelerates a restructuring plan after taking on billions of dollars of debt developing its marquee C Series jetliner.
Restructuring charges of US$225 million to US$275 million will be reported as special items starting in the fourth quarter and continuing through 2017, Bombardier said in a statement on Friday. The Montreal-based company expects the program to yield savings of about US$300 million a year by the end of 2018, saying it would ensure competitiveness and improve profit margins.
The plan marks the second major employment cut in eight months by Chief Executive Officer Alain Bellemare, who was hired in February 2015 with a mandate to restore profitability. He's working to overcome cost overruns and a delay of about two-and-a-half years on the US$6 billion C Series program, which was developed to rival products made by Boeing Co and Airbus Group SE.
About two-thirds of the cutbacks will occur in Bombardier's train business, with the remainder in aerospace, Mr Bellemare said in a telephone interview. About 2,000 jobs, or more than a quarter of the total, will be eliminated in Canada, he said.
"We are rebuilding Bombardier and we are refocusing the company on our key projects such as the C Series," Mr Bellemare said. "Our cost structure is high, and we need to do what is right to make sure we make money on our programs. We want to position ourselves so that we are stronger in the future." Mr Bellemare reaffirmed his confidence in Bombardier's strategy and its ability to achieve short-term goals as well as the objectives of a 2020 turnaround plan.
Mr Bellemare unveiled plans to cut 7,000 jobs over two years and about 60 per cent of that reduction had been achieved by the end of June. The manufacturer of planes and trains had a total workforce of about 70,900 as of Dec 31.
The employment reductions will be partially offset by new hiring to support the ramp-up of key programs such as the C Series and the Global 7000 business jet, Bombardier said without providing details. The company will "streamline" administrative and non-production functions and create centers for design, engineering and manufacturing in both its aerospace and rail businesses.
"There will be a significant offset in our resizing," Mr Bellemare said. Asked for specifics, Mr Bellemare said the company would probably look to hire more than 3,750 employees for "major" programs.
Headquartered in Berlin, Bombardier's rail unit makes subways, tramways and high-speed trains. Bombardier has come under criticism from Canadian politicians in recent months for missing deadlines on streetcar and light-rail contracts in the Toronto area.
Bombardier had US$8.96 billion of long-term debt at the end of June and US$4.4 billion of accessible liquidity - a figure that climbed to US$4.9 billion on Sept 1 after Quebec completed a US$1 billion investment in the C Series. The company's next maturity occurs in 2018 on US$1.4 billion in bonds.