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Bombardier Aerospace and China

GM.

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This country is all f'ed up. Just give everything to China, Cirrus, Piper, the whole shebang. Uneducated Americans will one day be sweeping floors for the world. Again yesterday I bought a pizza for $9.31 and I gave the little HS tart at the register $10.31 after she already rung it up and she was totally lost. I left her that way for over a minute and two attempts of giving me incorrect change, it makes me sick...or should I say tired?


"We’re going to be very cognizant” about protecting trade secrets, he says. “It’s a major issue that we’ve considered.” RIGHT!

***

Bombardier Aerospace President Guy Hachey is just doing his job in trying to put a positive spin on his company’s new CSeries jet, which has not attracted a new order in 13 months.

The aircraft builder is seeing an “enormous amount” of interest in the 110- to 145-seat aircraft “in every region of the world,” he tells financial analysts. “We feel very good about where we are.” But in private, Hachey must be more than a little bit worried that the CSeries has attracted just 90 firm orders since the program’s launch in 2008. The Paris Air Show—which will shine a spotlight on aircraft builders’ order books—is just two months hence.

So it is not surprising that some industry observers are wondering whether Bombardier’s new “strategic agreement” with China’s state-owned Comac is a sign of desperation. The two entities will explore a range of cooperation, including bundling the CSeries and Comac’s fledgling C919 into a family and coordinating designs to increase commonality. For Comac, such a linkup would provide much-needed expertise in marketing and service support and, perhaps, access to next-generation technology. But what does Bombardier get in return?

Following Rail Business Playbook

The Canadian company has been at the forefront of Western aircraft builders in integrating China into its global supply chain. The fuselage for its Q400 turboprop already is produced there, and the fuselage for the CSeries will be. Bombardier believes the CSeries is ideally sized for China’s rapidly expanding airline market. Yet the company has not sold a passenger aircraft in China in more than seven years. “The only thing I can think of is that Bombardier is trying to generate some orders in China” by teaming with Comac, says Teal Group analyst Richard Aboulafia. “Other than that, what is the point? I’m baffled.”

But others note that Bombardier is no novice in China. They think it may simply be following a playbook established by Bombardier Transportation, the rail business that accounts for just over half of the company’s annual sales of $17.7 billion.

That entity also got off to a slow start when it entered China in the 1990s. Today, the nation is Bombardier's most profitable market. The deal with Comac “is part and parcel of a long-term strategy to increase their presence in China,” says Cameron Doerksen, an analyst with National Bank Financial in Montreal. “They’ve had some pretty good success on the rail side. I don’t think this is desperation.”

The tie-up with Comac could well come to naught. In 2007, the companies announced a similar partnership that foresaw Bombardier participating in the development of a stretched version of Comac’s ARJ21 regional aircraft. The project was later shelved as the Chinese government shifted its focus to the larger–and more advanced–C919.

Hachey says the new agreement does not mean Bombardier will simply hand over its best technology to a rising Chinese competitor. “We’re going to be very cognizant” about protecting trade secrets, he says. “It’s a major issue that we’ve considered.”
 

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