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Bombardier to shed Belfast factory in revamp, shares slide on forecast fears
[MONTREAL] Bombardier put its Belfast wing-making factory on the block as part of a wider shake-up, while the plane and train maker's failure to commit to meeting its 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, which is 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 also 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, which is 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 US planemaker Boeing in a dispute that had threatened to slap a 300 per cent duty on sales of jets for which the plant supplies wings.
The company's chief executive Alain Bellemare called the steps, which include the sale of a separate facility which produces aeronautical equipment in Morocco, "a strategic move".
The two facilities generate about half of the US$2.25 billion to US$2.5 billion in revenues expected for the aero structures division in 2019, the company said. Its division in Morocco produces structural components for the company's regional jets.
Mr 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.
After dropping as much as 10 per cent, Bombardier shares partially recovered and were down 4.7 per cent at C$2.23 in afternoon trading.
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 say the Belfast plant pioneered a leap forward in carbon-fibre wings technology that may be attractive to Airbus for its next generation of planes.
AltaCorp analyst Chris Murray said Airbus, along with other large aerostructures companies like Spirit Aerosystems would be logical contenders.
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 while 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 who long provided the majority of workers in Shorts and the nearby Harland & Wolff shipyards.
Bombardier's announcement came before an annual general meeting where it is expected to face questions from investors on whether its turnaround plan is still on track as its transportation unit grapples with delayed rail contracts.
Its chief financial officer would not commit to previously-announced objectives for 2020, such as growing revenues to US$20 billion, and would review the targets only later in the year.
Investors were already rattled when Bombardier cut its first-quarter and full-year revenue targets for the transportation division, its largest unit, raising concerns over whether it will still meet its 2020 targets of boosting margins and generating US$20 billion in revenue.
The company said in a statement it was making progress toward completing five long-term rail projects that have been marred in some cases by delivery delays and production problems, but these would take a few more quarters for completion.
The rail division, which is expected to generate US$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.
Besides creating a single aviation division headed by business aircraft president, David Coleal, the company said it 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.