Bombardier to slash production of regional jets
Planemaker to cut 1,330 jobs in Quebec, Northern Ireland
MONTREAL • Bombardier Inc. said yesterday it is cutting annual output of regional jets at its Mirabel plant by one- third at a cost of 1,330 jobs, including 485 in Montreal and 645 at its plant in Belfast, Northern Ireland.
The axe falls in late November and another 200 salaried jobs will go, mainly in Montreal.
Although Pierre Beaudoin, president of Bombardier Aerospace, warned last week a cut was likely because of a sagging orderbook, the decision came as a shock to Mirabel’s 1,600 workers.
Mirabel had hoped recent orders worth $ 2 billion U. S. from Northwest Airlines and Italy’s My Way Airlines would tide their plant over until airlines in the United States recover from their post- 9/ 11 crisis. Bombardier’s 70- seater CRJ700 and 86- seater CRJ900 jets are sold mainly in the U. S.
Mr. Beaudoin said the production slowdown will last at least through 2008 while leaving the door open to a revision if orders do recover.
While Bombardier has been struggling to improve its aerospace margins as competition mounts, it is still the world’s third- biggest civil aircraft producer and the leader in business jets.
Dave Chartrand, president of Local 217 of the International Association of Machinists and Aerospace Workers, said his union is worried how the cuts will affect Bombardier’s Montreal- area suppliers.
Alcatel shares rose 7.2 per cent to $ 12.89 U. S. despite missing analyst sales and profit forecasts. Lucent shares rose 6.4 per cent to $ 2.49.
Alcatel profits dropped 42 per cent in the third quarter ending in September to $ 194 million U. S. while sales rose just 1.4 per cent to $ 4.3 billion.
Sales of fixed- line gear, including an industry leading access lineup and advanced networking equipment developed in Ottawa, rose a healthy six per cent. Private system gear including satellites did well.
But mobile equipment sales fell nine per cent to $ 1.25 billion U. S. as Alcatel joined several competitors, including Motorola and Nokia, in reporting a weak quarter.
Industry- leader Ericsson likely widened a growing dominant position during the quarter with a modest five per cent increase in wireless network gear.
“ It’s clear that the competitive positioning has gotten a little tougher in mobile, and we don’t expect that to ameliorate in the next several quarters, hence the consolation,” Alcatel chief operating officer Mike Quigley said on a conference call.
In addition to Lucent, Alcatel is also buying part of Nortel’s money- losing wireless operations.
Alcatel said that some customers were waiting for that deal to close, hopefully in December, before they bought more gear.
All the Lucent wireless action was in North America where sales jumped about 35- per- cent as its handful of big customers bought heavily to get fiscal year- end bargains after holding off earlier in the year.
Lucent and Alcatel, like many other wireless equipment makers, are feeling the pinch in Asia. Low- cost competitors are stealing business and China continues to delay the long anticipated purchase of advanced wireless equipment.
“ China has been a real challenge for us,” chief executive Patricia Russo said. “ Like the rest of our competitors, we are awaiting the issue of 3G licenses.”
Alcatel and Lucent are also wrestling with a quick decline in sales of older wireline gear.
Nortel Networks, which is expected to report September- quarter results soon, is wrestling with the same issues. However, the strong Lucent U. S. wireless sales could be good news for Nortel because it shares many of the same customers.
Yesterday Tellabs, a Chicago- area competitor which has been doing well selling advanced access gear, added to the uncertainty.
Despite reporting a healthy 13- percent gain in sales to $ 522 million U. S. in the September quarter, Tellabs forecast sales of just $ 525 million to $ 550 million in the December quarter.