Bombardier Transportation

Bombardier Transportation
Type Subsidiary
Industry Rail transportation
Founded 1974
Defunct January 29, 2021
Fate Acquired by Alstom
Headquarters Berlin, Germany
Toronto, Ontario
Area served
 Worldwide
Products
Revenue US$7.4 billion (2020)
Number of employees
 36,000 (2020)
Parent Bombardier Inc.

Bombardier Transportation was a Canadian-German rolling stock and rail transport manufacturer, with headquarters in Berlin, Germany. It was one of the world's largest companies in the rail vehicle and equipment manufacturing and servicing industry. Bombardier Transportation had many regional offices, production and development facilities worldwide. It produced a wide range of products including passenger rail vehicles, locomotives, bogies, propulsion and controls. In February 2020, the company had 36,000 employees, and 63 manufacturing and engineering locations around the world. Formerly a division of Bombardier Inc., the company was acquired by French manufacturer Alstom on 29 January 2021.

History

20th century

1970s: Formation and first orders

Canadian company Bombardier Inc. entered the rail market in 1970 when it purchased Lohner-Rotax of Austria. While Lohner built trams, Bombardier was more interested in its Rotax business, which built engines for its Ski-Doo snowmobiles. But Bombardier held onto the rolling stock business, and in 1974 secured an order from Société de transport de Montréal (STM) to build metro trains for the Montreal Metro. The core of the transportation group was formed when Bombardier purchased the Montreal Locomotive Works (MLW) in 1975. The purchase of MLW gave Bombardier a rail focused manufacturing facility, that had an established history of building locomotives, freight railcars, and passenger railcars.

1980s: Expansion to the US and Europe

With the purchase of the MLW, Bombardier acquired the LRC (Light, Rapid, Comfortable) tilting train design which it heavily marketed to both Amtrak and Canada's Via Rail, however, the program was only modestly successful with Bombardier selling about 100 LRC coaches to Via. In 1987, Bombardier bought the assets of two major US railcar manufacturers, Budd and Pullman-Standard. With these new assets, and no desire to remain in the business of building freight locomotives or freight cars, Bombardier sold off MLW to General Electric in 1988.

In the late 1980s Bombardier Transportation gained a manufacturing presence in Europe with the acquisition of a 45% share in BN Constructions Ferroviaires et Métalliques (whose principal facility was in Bruges, Belgium) in 1986. This was followed by the acquisition of the second-largest French railway manufacturer ANF Industrie with its main plant in Crespin in 1989. Bombardier Transportation had become by that time the leading North American producer of rail equipment which had sold 825 subway cars to New York City in the 1970s and 1980s.

1990s: Expansion to Mexico, Germany and the UK

Back home in Canada, 1991 brought a big expansion for Bombardier. The company was able to acquire the Urban Transportation Development Corporation (UTDC) from the Government of Ontario after its parent company Lavalin went bankrupt. In addition to the core UTDC assets, Bombardier also received the rail manufacturing division of Hawker Siddeley Canada which had been purchased by Lavalin and merged into UTDC. The Hawker Siddeley assets included a manufacturing plant in Thunder Bay, Ontario.

That same year in Europe, the company established its Bombardier Eurorail division consisting of ANF, BN, BWS (the former assets of Lohner), and the English bodyshell maker Prorail, which it had purchased in 1990. The company also owned the North-American rights to the French TGV through an agreement with GEC Alsthom. In 1992, the company acquired Mexico's largest railway rolling-stock manufacturer, Concarril, from the Mexican government.

The late 1990s also saw an major expansion in European operations. The company purchased Waggonfabrik Talbot (whose factory was in Aachen, Germany) in 1995 and Deutsche Waggonbau (DW) in 1998, which added factories in Bautzen and Görlitz, Germany along with a plant in Villeneuve, Switzerland which DW had purchased the prior year from Ateliers de Constructions Mécaniques de Vevey.

21st century

2000s: Western world's largest rail-equipment manufacturer

Bombardier's former Berlin headquarters in 2016

The company's biggest acquisition came just after the turn of the century when it purchased Adtranz from DaimlerChrysler. Adtranz was a sprawling multi-national company twice the size of Bombardier at the time, which had only become profitable in the months before the merger. The combination would make Bombardier the largest rail-equipment manufacturer.

DaimlerChrysler agreed in August 2000 to sell Adtranz for US$711 million (equivalent to US$1.208 billion in 2022), a price considered to be low by industry analysts. The sale was cleared by the European Union in April 2001 on the condition that Bombardier would license or sell the Adtranz regional train and tram products to Stadler Rail in the German market, due to the large market share of Bombardier and Adtranz in the country. The deal would make Stadler a viable independent company providing competition to Bombardier. The takeover came into legal effect on 1 May 2001 with a final price of US$725 million. After the purchase, Bombardier Transportation moved its head office to Europe, while keeping a few plants in the US and Canada for the smaller North American market.

However, the merger was not smooth. Within weeks Bombardier said that it was misled about the financial situation of Adtranz, and the combination of the two companies took years to resolve. One of the major issues was the sprawling footprint of the two companies in Europe. Even after closing some locations, in the early days after the merger Bombardier planned to operate 27 manufacturing sites across 14 countries. The number of sites meant that some would see the scope of their work decreased.

In 2004, amid overcapacity in the European passenger train industry, Bombardier announced eight sites would close. Later that year in September, DaimlerChrysler agreed to refund Bombardier US$209 million, making the final sale price for Adtranz just $516 million.

2010s: Global operations and decline

The transportation division's financial woes continued into the 2010s, reflecting a broader trend within the company. Bombardier's aviation division racked up billions of dollars in debt developing the CSeries airliner and the Global 7000 business jet.

Between 2012 and 2015, the company announced the closure of several plants including the former Waggonfabrik Talbot plant in Germany, and a factory in Australia, and a facility in Hungary was nationalized.

In the same period, Bombardier agreed to several potentally lucrative, but risky contracts to build R179 cars for the New York City Subway, the Fleet of the Future for San Francisco's Bay Area Rapid Transit, Flexity streetcars for Toronto, Aventra EMUs for the London Overground and Twindexx EMUs for Switzerland's SBB. Each of these contracts was valued between 600 million to 1.8 billion dollars, but each called for highly specialized, one-of-kind equipment, and many also included late-delivery penalties. Deliveries of each would be delayed, beset by software issues, and reliability problems once trains were placed in service.

Under increasingly dire financial pressure, Bombardier Inc. announced in May 2015 that it planned to split or spin-off Bombardier Transportation as a separate publicly traded company, while retaining control as the majority owner. The sale would generate money needed to continue the financing of the troubled CSeries jet, and Transportation division managers said the independence would allow them to better compete with a growing Chinese presence in the European market. An IPO was planned for late 2015.

However, before the IPO could be floated, the Caisse de dépôt et placement du Québec (CDPQ) stepped in and agreed to give Bombardier a US$1.5 billion infusion of cash. In exchange CDPQ, a crown corporation which manages pension and insurance plans, would receive a 30% stake in the company. The deal was structured as a bond/equity hybrid, with shares returned to CDPQ dependent on the financial performance of the company.

Over the next few years, Bombardier worked to correct issues with the cars it agreed to build in the earlier half of the decade, and simplify production though more selective bidding, greater standardization and centralized procurement. It also planned to layoff thousands of workers in Germany. However, the penalties the company was hit with for late deliveries wiped out many of the divisions profits. By 2018, Bombardier slipped to become the 3rd largest rail-equipment manufacturer in the Western World and fourth globally, eclipsed by CRRC, Siemens and Alstom.

Between mid-2018 and late-2019, Bombardier started selling off many of its commercial aviation assets, notably selling the CSeries to Airbus. This left the company as a manufacturer of rail vehicles and business jets.

2021: Sale to Alstom

In February 2020, Alstom agreed to buy the Bombardier Transportation division and signed a memorandum of understanding to do so, for between €5.8 billion and €6.2 billion. The deal required approval by Alstom shareholders at a meeting held in October 2020, as well as approval by European regulators. Bombardier's major shareholder, Caisse de dépôt et placement du Québec, had already agreed to the sale. In July 2020, the European Commission approved the sale. Bombardier Inc. announced on 1 December 2020 that the transaction would be closed on 29 January 2021 for €4.4 billion.

Products and services

Rapid transit rolling stock

New York City Subway R62A car
MBTA Red Line train (Boston Subway)
CTA 5000 in Chicago
Bucharest Metro second-generation trainset
New York City Subway R142 car
New York City Subway R179 car
London Underground 2009 Stock
Delhi Metro broad gauge train, manufactured by Bombardier
Toronto Rocket subway car
Bombardier Innovia Metro 300 car at Vancouver Skytrain
Regina train

Bombardier's standard metro vehicles are the mid-sized fully automated and driverless Innovia Metro with the option for linear induction motor propulsion or a conventional rotary motor, and the high-capacity customizable Movia platform, which is powered by conventional motors and can also be fully automated. In addition, Bombardier has produced many custom models not based on either model.

Monorails

The company's main product is the Innovia Monorail.

Note: Bombardier Transportation acquired Universal Mobility Incorporated's UM III technologies in 1989. UMI produced nine monorail systems from 1969 to 1984, which are included in the list above.

Trams and light rail vehicles

Locomotives

LRC trainset

Bombardier's locomotives are mostly linked to their acquisition of Adtranz and Montreal Locomotive Works, as well as joint venture with Alstom.

TRAXX electric locomotive

Other than the LRC, all other locomotives were based on European designs.

Passenger cars

Multi-Level car

Regular-speed multiple-unit trains

Gautrain Bombardier Electrostar

High-speed trains

Acela train

People movers

Bombardier also supplies propulsion units, train-control systems, bogies, and other parts, and maintains train fleets.

Services

In addition to manufacturing a wide variety of passenger rail vehicles and locomotives, Bombardier Transportation provides services for commuter train providers.

Facilities

Bombardier Transportation has production facilities or product development in:

Legal issues

Deutsche Bahn

In early 2013, Deutsche Bahn announced that it was suing Bombardier for €350 million because of some serious defects in trains used on the suburban S-Bahn rail network in Berlin. This was in addition to the €160 million it was asking for from Bombardier because of problems with more than 200 regional trains operating in southern Germany and problems with the brakes in regional and local trains in Munich. The matter was settled out of court in March 2015. Lutz Bertling, head of Bombardier's transportation division at the time, confirmed the two firms had come to an agreement, saying: "The settlement is a positive signal for our future cooperation."

Everline

In January 2015, the Canadian Broadcasting Corporation (CBC) reported that South Korea's Special Investigation Unit for anti-corruption produced a report accusing Bombardier Transportation of corruption in the pursuit of the 2004 contract to build an 18 km (11 mi) elevated Light Rapid Transit (LRT) rail system called the Everline connecting the Giheung Station on the Bundang (Yellow Line) of the Seoul Metropolitan Subway system to a large amusement park named Everland, via Yongin, the 12th largest city in South Korea, about 30 km (19 mi) from central Seoul.

The investigation report alleges that Bombardier provided gifts and trips to Canada for civil servants and politicians involved in the contract decision, which was based on revenue expected from an inflated estimate of 180,000 passengers per day using the service. It also alleges that Bombardier created a $2-million slush fund for the Canadian citizen Kim Hak-Pil, a high-ranking Bombardier executive in South Korea. Bombardier has consistently denied the corruption allegations, stating that "They were not pleasure trips. There is a need to convince the people that our technology works well.... If it had been corruption, they would have charged us." The statute of limitations has now expired, due to lack of evidence according to Bombardier.

Everline operation has been financially troubled since construction was completed in 2010. The system remained dormant until service began in 2013 while the line owner successfully negotiated with the city of Yongin a minimum revenue guarantee of 29.5 billion KRW per year regardless of passenger load. This is said to be a serious burden for the city because ridership is reported to have risen to only about 20,000 passengers per day on the 30 carriages, or about a quarter of the maximum possible capacity of the fleet in a 12-hour day. A reason suggested for this is the fare of 1100 KRW (about US$1 in 2015); it is impossible to pay for Everline trips via a transfer surcharge on a connecting subway ticket. A 2014 web page of a Seoul tour service retailer makes no mention of the Everline among the suggested modes of bus transport between Seoul and Everland. A lawyer who filed legal action on behalf of the citizens of Yongin is reported to have provided details about Bombardier's pursuit of the contract. He said that "between 2003 and 2005, Bombardier funded three luxurious trips to Canada to each of 37 people" including 18 Yongin city councillors on so-called "LRT field trips".

Toronto Flexity streetcars in December 2018

Toronto Transit Commission

On 16 October 2015, the Toronto Transit Commission (TTC) announced that it has asked its board to consider legal action against Bombardier. TTC staff is recommending that the TTC board "commence legal action, or make a claim allowed for already in the contract, of $50 million for late delivery" against Bombardier. Bombardier had committed to delivering 67 custom-built Flexity Outlook streetcars to the TTC by October 2015 for its streetcar system, but only 10 were in service at the time.

On 28 October 2015, the TTC board voted in favour of a lawsuit against Bombardier "for at least $50 million to recoup lost costs", according to Chair Josh Colle, because of the company's failure to deliver the additional new streetcars.

See also