Bombardier is the family-run Canadian aerospace and rail-industry giant whose expertise spans generations. After weathering the financial crisis, Bombardier CEO Pierre Beaudoin is setting the firm’s ambitions ever higher.
The past couple of years have been quite a ride for Pierre Beaudoin, the 51-year-old ceo of Bombardier, who took over the plane and train maker from his father in 2008. After a bumpy reorganisation of the company’s rail division that included a cull of 1,200 jobs and the closure of a plant in Germany, the end of 2012 saw Bombardier’s profits drop by 29.8 per cent. Yet the family-run Montréal-based company has continued to invest heavily in research and development and 2013 saw the much-anticipated launch of its new CSeries aircraft.
Bombardier has bet big on its new plane – which is its largest jetliner to date. While the cost of getting the CSeries into service – estimated at CA$3.4bn (€2.4bn) – is likely to offset its earnings until at least 2015, revenues are expected to nearly double over the next five years largely due to the introduction of the new aircraft.
The company, which was founded in 1942 by engineer-inventor Joseph-Armand Bombardier, has facilities in more than 25 countries and 71,700 employees making everything from amphibious aircraft to high-speed locomotives. And while all eyes are on the new aircraft, Bombardier is finding new customers in markets such as China, India and Thailand where demand for high-speed trains and transport systems are growing.
Monocle: Let’s start with the new CSeries. Why is now the right time for a new plane?
Pierre Beaudoin: What we do very well at Bombardier is identify market niches that are not well covered by other manufacturers. We feel that this category of aeroplane – 100 to 150 seats – is not addressed by Boeing or Airbus or other regional manufacturers.
M: Some airlines have bluntly stated that they won’t be investing in a new generation and prefer to rely on tried and tested models. Is this new plane commercially viable?
PB: That’s always the challenge initially, and there’ve been some products particularly by the two larger manufacturers that have had some early service problems. We’ve done our homework so that the new plane enters service flawlessly. Plus, it brings significant advantages to the airlines with 20 per cent less fuel burn, and it is four times quieter compared to all existing airplanes today.
M: What are the biggest markets for your aerospace division?
PB: We are growing across Asia, where new airlines are expanding very rapidly. So from a development perspective, definitely Asia is a growing market. This also applies to our train manufacturing. In China we have 4,000 employees building trains. Now we’re testing the Zefiro 380, which goes 380km/h. China has to move a lot of people across the country and they have long distances to cover. But this goes further: how to move people within the city? What kind of subway system do we need? Do we have the right light-rail system to bring people to and from airports? It’s all in development.
M: Why are there still problems for transitioning to a high-speed rail system in North America?
PB: First of all, it’s a question of priorities and how you really want to travel. Trains are very efficient in very dense markets where you can move a lot of people between cities. There are quite a few corridors in North America that would justify that but it’s a question of whether we want to invest more in a train system or in highways. I think as people travel more throughout the world and they experience high-speed trains, they are coming back and saying exactly what you’re telling me. Why don’t we have that here? The other thing is putting in place the right infrastructure. I think it’s a question of time.
M: You’re based in Montréal.What is the industrial future of the city and Québec?
PB: Montréal is an aerospace hub and it has 45,000 employees in the industry. Here the sector has already developed a know-how at the same level as those in Seattle and Toulouse where Airbus and Boeing are. Of course, to be realistic when it comes to manufacturing in Canada you can’t expect all your components to be made in Montréal or Québec. So local manufacturers who want to be successful have to make sure they’ve developed a global network of suppliers.
M: Bombardier has over 70,000 employees. How have you managed to keep business within the family for so long?
PB: We’re a public company, controlled by the Bombardier family. The advantage is that we think and commit long term. When you invest in a new aeroplane that will be in use for the next 20 years and it takes you five years to develop it, it’s important to be committed, the same way families are.
There’s this combination of pride and the desire to make a difference with the products that we build. My grandfather, Joseph-Armand Bombardier, passed away when I was two. But later when I was at our snowmobile department I met people who had worked with my him directly so I got to hear a lot of stories and get an understanding of how he approached things – how focused and involved he was with the community.
As for my Dad, as I’ve gained more experience it has become easier to have the same level of discussion. Today he’s a non-executive chairman so it’d be more an ad hoc discussion a few times a year when there is something I’m not quite sure about. So the working relationship is very good.
M: What’s the best advice he’s given you?
PB: Perseverance. Our business is more like a marathon than a sprint. You need to have a great idea, do your homework first and then persevere to the goal. I think the best advice is to be patient and to stick to what we believe is the right thing to do.
M: What’s next for Bombardier?
PB: The next five years will be very exciting for us because we’ve gone through the economic downturn without stopping investment in R&D while a lot of our competitors didn’t do much. We’re now more established globally and I see lot of growth ahead of us, whether it’s in the US, Europe, or Asia.