Bombardier Inc. is headquartered in Montreal, Quebec, Canada and serves as the parent company for two main divisions: Bombardier Aerospace and Bombardier Transportation. These divisions provide advanced products including commercial aircrafts, business jets, rail transportation equipment, systems, and services. Additionally, Bombardier Inc.’s stocks are traded on the Toronto Stock Exchange (BBD) and it is included in both the Dow Jones Sustainability World and North America indexes. It should be noted that global expansion remains a key priority for Bombardier Inc.
Bombardier Inc. is benefiting from growth in emerging markets, allowing them to take advantage of opportunities, cut costs, and enhance their global dominance and competitiveness. Over the past decade, Bombardier Inc. has gained valuable experience in managing international ventures and thriving in a dynamic global market. With operations in 60 countries and a diverse workforce, Bombardier Inc. enjoys both direct and indirect economic advantages.
The management of a global supply chain spans two industries: Transportation and Aerospace. This involves dealing with suppliers in more than 68 countries for Transportation and over 49 countries for Aerospace.
Bombardier Inc. emerged as the top global performer in 2011, securing the leading position in business jets, turboprop aircraft deliveries, and several divisions of rail transportation. This triumph established them as the forefront runner in the worldwide rail industry.
HISTORY
Joseph-Armand Bombardier, who founded Bombardier Limited in 1942, is recognized as the inventor of the snowmobile.
Bombardier focuses on ensuring that winter travel in Canada is as comfortable as travel during other seasons. The company specializes globally in the development, engineering, and retailing of various transportation and recreation products. These products include Ski-Doo snowmobiles, aerospace components, heat-transfer products, and engines. Bombardier also contributed to the construction of snowmobiles during World War II. Their plants are located in Quebec, Austria, Iceland, Belgium, France, the UK, Finland, Mexico Germany Czech Republic Switzerland and the US.
Bombardier, a company with annual sales of $11.6 billion and assets worth $14.2 billion, has over 53,000 employees as of January 1999. It is primarily owned by Les entreprises de J. Armand Bombardier Limitee, which holds a 63% stake in the company. The majority of Bombardier’s income, accounting for more than 80%, comes from international markets rather than Canada.
In August 1986, Bombardier successfully purchased Canadair LTD for $120 million. Later on, in April 1990, they acquired the bankrupt Lear Jet Corp and then obtained a fifty percent share of De Havilland in March 1992 before finally acquiring the remaining balance in 1997.
These resources were consolidated into a new aerospace division, resulting in Bombardier becoming the third-largest global producer of civil aircraft (following Boeing and Airbus) as well as the leading manufacturer of regional aircraft. Presently, the company has made significant advancements into the manufacturing of rail cars and buses and played a key role in engineering the shuttle trains for the Euro Channel Tunnel. Since its inception in 1942, Bombardier has undergone substantial transformation.
TRATEGY AND MARKETS
Bombardier Aerospace
Bombardier’s main focus is on executing and advancing program development. Their commitment lies in producing excellent products that meet customer requirements and improve their competitive edge. With a varied range of business and commercial aircraft, Bombardier provides clients with distinct performance benefits. Moreover, they currently have seven aircraft models being developed, further solidifying their position as an industry leader. Additionally, Bombardier is actively expanding its customer services to better meet customer demands.
Bombardier is strengthening its worldwide footprint to improve customer service and cut costs. In recent developments, the company has established sales and marketing offices in Shanghai, China, and Dallas, USA. Furthermore, they have enhanced customer service across multiple regions including Africa, Canada, China, Europe, India, Qatar Russia and the US.
In their commitment to bolster manufacturing and development initiatives, Bombardier has set up an engineering service office in Bangalore, India. Additionally, plans are underway for a manufacturing facility in Morocco.
Bombardier Aerospace is aiming to enhance the reliability, customer satisfaction, and profitability of their products through impeccable execution. The Bombardier Vision Flight Deck has shown remarkable performance and consistency, having been employed in Global5000 and Global6000 aircraft. The company achieved a notable increase in the availability of “off-the-shelf” parts worldwide, from 90.3% to 93.3% in 2012. Additionally, their CRJ700/900/1000 NextGen regional jets and Q400 NextGen aircraft were granted authorization for operation in Russia and the Commonwealth of Independent States in the same year.
Markets Bombardier Aerospace is well positioned to capitalize on long-term market opportunities. Their Business aircrafts comprise three families of business jets, making them the most comprehensive offering among all business aircraft producers. This gives them a competitive advantage in an anticipated growing market. It is projected that there will be 24,000 worldwide business jet deliveries over the next 20 years, with estimated annual revenues for the industry reaching $39.8 billion by 2031.
Business strategy and International Management
Felicia Cote-Floyd |8 Bombardier Aerospace is a leading provider of commercial aircrafts with three families that offer exceptional performance. They have a strong position in the market and anticipate delivering around 12,800 new aircraft over the next two decades. In the “20-to-149-seat” commercial aircraft sector, their estimated revenue for 2031 is $34.8 billion. Their objective is to enhance their service offering in order to meet the evolving needs of their customers.
This market provides great growth opportunities, including an increase in the number of owners and operators who are subcontracting non-core service activities. The customer fleets are expanding worldwide and there is a shift towards providing complete “nose-to-tail” services and predictable expenses.
Strategy
Bombardier Transportation’s strategy revolves around prioritizing customer needs throughout the entire lifecycle. Their goal is to maintain their position as technology leaders and adopt a comprehensive and continuous approach to meet these needs. They aim to be a trusted partner for customers globally, consistently working towards earning this distinction with every project they undertake. Their dedication lies in developing innovative and cost-effective solutions, seizing opportunities presented by fast-growing markets, and ensuring flawless execution. Additionally, they are committed to actively participating in Research and Development to continuously drive new innovations.
Bombardier Transport has introduced several new innovations, including the WAKO tilting bogie with active radial steering. This feature can increase transport capacity by up to 60%. Another advancement is ORBITA, a system that monitors vehicle systems and subsystems to detect service issues before they become problematic. Additionally, Bombardier Transport offers TRAXX locomotive last mile technology, which eliminates the need for shunting vehicles and reduces costs. They have also developed MITRAC permanent magnet motors that provide higher power productivity compared to traditional engines. In order to fully take advantage of fast-growing markets, Bombardier Transport employs various strategies to seize opportunities in target markets.
They have a Local footprint project in Brazil and India with fully preserved manufacturing plants. They have partnerships with local players such as China and Russia and local capability building, including a Project Management academy in Saudi Arabia. They also have multiple licensing agreements with local partners in China to report new market divisions, specifically in the light rail segment. Their flawless execution is strongly recognized by the customers of Bombardier transport, and they have received a strong endorsement from the City of London for the Olympic Games.
Bombardier Transport guarantees the highest level of reliability and availability for trains operating in the UK. The driverless subway in Singapore was delivered two weeks earlier than the agreed date, and the re-signaling project in Madrid (utilizing CITYFLO650 technology) was completed without any disruption to service. Bombardier Transport leads in innovation and develops customized solutions for customers, continuously improving their processes and aiming to expand their business both domestically and in new strategic markets.
Bombardier Transport is thriving in markets worldwide, securing substantial and strategic orders. The company’s ability to withstand global competition remains unmatched, making them the leading provider. They are experiencing steady growth in their established central markets and robust expansion in emerging rail markets. With a strong market presence, Bombardier Transport is well-prepared to seize future opportunities. Positive industry fundamentals and global trends further support the favorability of rail transportation.
Their accessible market is predicted to grow at a rate of 2.8% annually, reaching $112.4 billion per year in 2017. Despite a challenging economic environment, the market has shown resilience due to government investments in rail. The rolling stock segment remains the largest, accounting for $53.8 billion per year in 2017, and Europe is expected to continue investing heavily, maintaining its position as the largest market. With Europe being the primary market, Bombardier Transport will receive a significant number of orders for local and intercity transportation, particularly in key cities in France and Germany where improved solutions for commuters are expected.
The UK will see significant investments in the London Underground and Crossrail projects. Additionally, major investments are anticipated in Sweden, Belgium, and the Netherlands, which are important markets for Bombardier Transport. The Northern American sector will experience continuous high levels of investments in metros, with growth projected for high-speed and signaling. Despite the predicament, key cities like New York, San Francisco, Montreal, and Toronto are persisting with investments in greener transportation.
The continuation of this trend is expected through investments in metros and the potential development of high-speed plans. The services market is widely accessible, and operators often subcontract traditional service activities. The positioning of new signaling standards in the U. S. will trigger an investment trend. Rail investments for the rest of the world will be driven by major events, aging fleets, and constant freight services.
Governments in Brazil, Russia, and the Middle East are investing in advanced rail projects for the upcoming Olympic Games and FIFA World Cups. Russia and other CIS states are also planning to upgrade their outdated fleet and infrastructure, especially for light rail, trains, and signaling. The anticipation of increased freight movement has led to expectations of locomotive orders in Brazil and South Africa.
FINANCIAL RISK ANALYSIS
Risks and uncertainties General economic risk
Possible loss can occur due to unfavorable economic circumstances, such as a decline in important markets, which may cause consumers to delay acquiring products or services. This can lead to lower order intake, cancellations or delays in deliveries, reduced accessibility to customer financing, increased involvement in customer financing, downward pressure on selling prices, and higher inventory levels. Additionally, there may be a decrease in customer advances, slower collection of receivables, reduced manufacturing activities, decreased production of certain products, termination of personnel, and negative impacts on suppliers. The business environment risk refers to the potential loss caused by external factors, particularly the financial condition of the airline industry, business aircraft customers, and major rail operators.
In addition, the occurrence of acts of terrorism, natural disasters, global health threats, political instability, or the eruption of war or continued conflicts in specific regions of the world may lead to a decrease in orders or the rescheduling or cancellation of a portion of our existing backlog for certain products. Moreover, there is a risk for potential losses associated with risks linked to the nature of Bombardier’s operations. Besides, our businesses often undertake substantial and intricate projects structured as fixed-price contracts, thereby exposing us to production and project execution risks.
Bombardier encounters multiple risks, encompassing supply chain management, information systems, intellectual property rights, and integrating new business acquisitions. They also confront financial risks such as potential losses associated with the liquidity of their financial assets, counterparty credit risk, restrictive debt covenants, financing support for specific customers, and government support.
Market risk for Bombardier is the potential loss from unfavorable changes in market factors, such as fluctuations in foreign currency exchange rates, interest rate fluctuations, decreases in asset residual values, and increases in commodity prices.
Bombardier overall financial results analysis of 2012
In 2012, Bombardier’s revenue was 16.8B$, a decline from the previous year’s earnings of 18.3B$. Their EBIT before special items accounted for 5% of their revenue, which was lower than the previous year’s rate of 6.6%. Overall, their fiscal year’s EBIT represented 4.1% of revenues, in contrast to the previous year’s figure of 6.6%.
In the year ending December 31, 2012, the net income was $692 million, which is lower compared to the $865 million in 2011. This resulted in an adjusted EPS of $0.38, down from $0.48 in the previous fiscal year. Additionally, net income for 2012 declined to $598 million from $837 million in 2011. The usage of free cash flow also decreased to $741 million for 2012 compared to $1.2 billion in 2011.
Despite these figures, Pierre Beaudoin, Bombardier’s CEO, stated that the results for 2012 do not fully reflect the company’s potential. They are actively working on developing innovative products and expanding their presence in high-growth markets.
Bombardier demonstrated their adaptability during the financial crisis, showcasing a remarkable 19% growth in backlog compared to 2011. This significant achievement should not go unnoticed. The company has three key priorities that will enable them to achieve long-term sustainable development. The first priority is their range of cutting-edge products and services, which will receive further enhancements as a variety of groundbreaking platforms are introduced from Bombardier’s facilities starting in 2014.
The second focal point is their growing presence in important global markets, which brings them closer to their customer base. Lastly, there is a focus on solidifying customer satisfaction by delivering impeccable performance on every order.
Bombardier Aerospace financial results analysis of 2012
Revenues for 2012 were 8,6B$, the same as in 2011. EBIT before special items accounted for 4. 4% of revenues in 2012, compared to 5. 8% two years earlier. Overall, EBIT for the year was 4. 7% of revenues, while in 2011 it was 5. 8%.
In 2012, Bombardier Business Aircraft saw a significant increase in order levels, with 343 net orders compared to 191 in 2011. The department secured two major orders, including one from VistaJet for 56 Global aircraft worth $3.1B and another from NetJets Inc. for 100 Challenger aircraft worth $2.6B. On the other hand, Bombardier Commercial Aircraft received 138 orders in 2012 compared to 54 in 2011. Overall, Bombardier Aerospace’s backlog grew by 38%, reaching $32B in 2012 compared to $23.9B in 2011.
In terms of financial performance, the company expects the EBIT margin to remain at a similar level as in 2012 for the year 2013. However, in 2014, Bombardier Aerospace anticipates an EBIT margin of approximately 6%, taking into account an expected dilutive effect of 2% from the entry-into-service of the CSeries aircraft. Additionally, cash flows from operational activities are projected to be around $1.4B by the end of 2013.
Regarding deliveries, Bombardier Aerospace aims to deliver approximately 190 business aircraft and 55 commercial aircraft in 2013.
Bombardier Transport financial results analysis of 2012
For 2012, revenues amounted to 8.1B$ compared to 9.8B$ in 2011. EBIT before special items for the year was 453M$, while it reached an impressive 700M$ in 2011. This indicates that the EBIT margin of 2012 accounted for 5.6% of revenues, whereas it was 7.2% in 2011. The EBIT for 2012 stood at 290M$, compared to the 700M$ reported two years ago, resulting in an EBIT margin of 3.6% in 2012 and 7.2% in 2011. In terms of free cash flow, Bombardier Transportation generated 386M$ in 2012, while the previous fiscal year showed a free cash flow usage of 424M$.
In 2012, new orders for Bombardier reached 9.4B$ compared to 9.7B$ in 2011. The company achieved a personal best order backlog of 33.7B$ in 2012, up from 31.9B$ in 2011. Bombardier Transportation continues to secure orders globally across all its product sectors. Notable examples include the 937M$ contract from Metrolinx/GO Transit in Toronto for 10 years of operation and maintenance services, and the 897M$ contract from San Francisco Bay Area Rapid Transit District (BART) for 410 metro cars.
The City of Basel’s Transport Authority in Switzerland has signed an agreement for the purchase of 60 FLEXITY trams, which are priced at $241 million. Abellio Rail NRW GmbH in Germany has also ordered 35 TALENT 2 Electrical Multiple Units, priced at $226 million. Additionally, Public Transport Victoria of Australia has placed an order for 40 VLocity Diesel Multiple Unit vehicles, priced at $216 million. Bombardier Transport plans to enhance its competitiveness and cost structure by taking measures such as closing a plant in Germany and reducing the number of employees by approximately 1,200 worldwide, including in Germany.
The end of the 2012 fiscal year saw a reorganization charge of 119M$, which was connected to the planned measures. It is anticipated that revenues in 2013 will exceed those in 2012, with a growth rate in the high single digits, excluding currency impacts. The group is also expected to maintain its free cash flow generally in line with EBIT, although there may be significant variations from quarter to quarter. Bombardier Transportation has extended its target date to achieve an EBIT margin of 8% by 2014.
SWOT ANALYSIS
Bombardier has several overall strengths, including a strong marketing position, a diversified business model, a continuous focus on innovation, beneficial packages for employees, a strong emphasis on research and development, and generating total revenue from 17 different segments. They also experience strong profit growth. However, Bombardier does have weaknesses, such as relatively low employee productivity compared to other major companies in their field and overfunded employee benefit obligations.
They are the pioneers in the rail and transportation industry, which means they cannot ignore the mistakes made by other companies in the past. What are the opportunities? Sustainability? Innovation? Expanding into new markets? Adopting more efficient technology? Offering cost-effective solutions for purchasing and maintenance? Enhancing safety, for example, through the use of inboard motors that are safer than those found on speedboats. What are the threats? Competition? Economic downturns and the state of the global economy? Environmental concerns, considering Bombardier’s operations must adhere to strict environmental regulations?
Tightening of credit in the financial market affects customers and suppliers.
Bombardier Aerospace has several strengths. Firstly, it is a part of a well-known and global brand. Additionally, it produces high-quality and technologically advanced products. Moreover, Bombardier Aerospace owns Learjet, which is considered one of the most respected jet companies in the world. Furthermore, as the world’s third largest aerospace company, it holds a prestigious position behind Boeing and Airbus. Lastly, Bombardier Aerospace has a broader scope of engines and material developments, providing a competitive edge.
On the other hand, Bombardier Aerospace also faces certain weaknesses. Due to the recession, there were significant layoffs, particularly at the company’s headquarters in Montreal, Quebec, Canada. Additionally, there was a drop in revenues from 2011 to 2012.
The company faces challenges in competing with Boeing and Airbus. However, there are opportunities to explore new efficient technologies that could reduce jet prices and increase consumer and supplier demand. The company can also focus on producing a greater quantity of commercial aircrafts in order to stay ahead of Airbus and Boeing and enhance their competitiveness. On the other hand, the high cost of research and development impacts their profitability. Additionally, they face significant competition from Airbus and Boeing.
The economic crisis has had an impact on the organizational structure.
Bombardier Transportation has several strengths in the transportation industry. It is well diversified across different territories and has a strong track record in incorporating acquisitions. The company is also strong in product costing and offering, with solid employee support and a well-recognized, strong corporate culture. It is known for its capability to deliver agreements, effectively manage and govern itself, and utilizes “just-in-time” delivery process and subcontracting noncore functions to external suppliers.
Weaknesses: The company lacks expertise in propulsion systems, locomotives, and switching communications gear. It relies on some of its competitors for locomotive components.
Opportunities: There is potential for growth in the European market as the European Commission places high investment priority on developing a European-wide highspeed train infrastructure system. Additionally, European policies and green initiatives encourage the use of public transportation, resulting in a culture of high public transportation ridership.
The lack of support from the North American government for green initiatives has resulted in a low ridership culture for public transportation. Additionally, government regulations in the U.S. require passenger cars to be reinforced and strengthened, leading to heavier trains that are not well-suited for markets outside of North America.
CONCLUSION
In conclusion, the global demand for this Canadian company has noticeably increased.
From its inception to its worldwide expansion, Bombardier has consistently aimed to connect with people through groundbreaking innovations and outstanding customer service. The company operates with utmost integrity, garnering trust and respect from its customers. They are also dedicated to achieving excellence in every aspect of their work and remain focused on preserving sustainable shareholder value through the delivery of innovative products and services. Clearly, as the sole provider of both rail transportation and aerospace, Bombardier sets the bar high and continues to introduce new offerings.
Despite facing multiple threats and risks, this company’s strategies are highly effective and their effort to expand their market segments is continuous. However, I managed to surpass the possibility of failure and stood out from the rest.
REFERENCES
- www. aviation. ca
- www. wikiswot. com
- www. bombardier. ca
- www. businessinsider. com
- www. flightglobal. com
- www. mcafee. cc
- www. scg-strategy. com
- www. josephinevyam. com
- www. avitrader. com 10. www. aviationpros. com
