Bombardier to launch factory in Russia

Bombardier Inc. says it's close to finalizing an agreement to start producing its Q400 propeller-driven airliners in Russia.

A deal to establish a joint venture with state corporation Rostec could lead to some 100 turboprops, valued at US$3.4 billion at list prices, being built for the Russian market.

The deal, which local media in Russia says will see production start this year, flows from a series of preliminary agreements signed last August.

The final assembly line in Russia would complement Bombardier's Toronto operations, where final assembly of the 70- to 80-seat turboprop currently take place.

Bombardier Aerospace announced last week the permanent layoff of 1,700 employees, primarily in Montreal and Wichita, Kan., where it makes jets, as it steps up efforts to cut costs amid delays with two new aircraft and a tough market for both commercial and business planes.

The Q400s are used by airlines around the world, including Toronto-based Porter Airlines and WestJet's new Encore regional service and Air Canada-affliated Jazz.

Bombardier spokesman Marc Duchesne wouldn't confirm details of the agreement, but said it would include a firm order from Rostec for up to 100 planes that would involve Russian leasing company Ilyushin Finance Co.

"Discussion between Bombardier and Rostec are ongoing and both sides are working toward the conclusion of a definitive agreement and things are going very well but we need a couple of more days just to finalize the details,'' Duchesne said in an interview Monday.

The Moscow Times quoted a Russian government official saying at the World Economic Forum in Davos that a deal had been signed and a Bombardier representative confirming the planes would be built in Russia's Ulyanovsk region, about 900 kilometres east of Moscow.

Analysts said the agreements are designed to deepen Bombardier's roots in Russia by "locking in'' the Russian market for the Q400 against its main rival ATR.

They also had said the Russian agreements could "revitalize'' the Q400, whose orders have been lagging.

Bombardier delivered 29 Q400s and received 17 net orders last year. That compares to 36 deliveries and 50 net orders in the prior year.

On the Toronto Stock Exchange, Bombardier's shares gained one cent at $3.87 in Monday morning trading.

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  1. clint posted on 01/27/2014 04:35 PM we know the real reason for the layoffs here.
    1. Richard posted on 01/30/2014 05:25 PM
      @clint the Q400 is built in Toronto not here
  2. LMAO posted on 01/27/2014 05:12 PM
    "The final assembly line in Russia would complement Bombardier's Toronto operations, where final assembly of the 70- to 80-seat turboprop currently take place".

    After setting up shop overseas we will transfer your jobs to offshore manufacturing. It's our way of thanking you all for the government tax dollars you invested to keep the company afloat. Please take comfort in the knowledge your jobs will soon benefit someone else's family while you kiss your lifestyle goodbye.
    1. Richard posted on 01/30/2014 05:27 PM
      @LMAO Whch government Tax dollars are those?
      Care to explain
  3. markR posted on 01/27/2014 07:16 PM
    So Bombadeer is now in job creation in Russia while we cut jobs in Canada. How much money is Russia giving you or is it the Canadian Taxpayer's funding this latest venture??? Time to give CEO Beaudoin his walking papers.
  4. Drew posted on 01/28/2014 08:38 AM
    Any Company that out sources to another country and buy passes our working force should loose any tax breaks.
    1. Richard posted on 01/30/2014 05:26 PM
      @Drew Even it that outsourcing saves and creates jobs here? See my post above
  5. BBD2 posted on 01/28/2014 04:17 PM
    Not one western company has made a profit in Russia in the last 50 years.
    Get cash up front for 100 Q400's before spending a penny in Russia.
    1. Richard posted on 01/30/2014 05:26 PM
      @BBD2 That is S O P
  6. Richard posted on 01/30/2014 05:24 PM
    You people dont understand how this works....Russia says they will buy planes if they are built there.
    Bombardier agree and sends maybe 250 jobs there,,,,,but they keep thousands here!!!!!!
    Bombardier says no and Russia buys their planes from ATR we lose thousands of jobs.
    They will only assemble the 100 planes that Russia bought....All the main components will be built here and shipped there.....We win buy keeping our jobs

    You think Bombardier is the only company to do this? They all do this. Canadair used to build parts for Boeing and McDonald Douglas......Boing and Airbus have parts built all over the world....Its called doing business
    1. Drew posted on 01/31/2014 01:30 PM
      @Richard " DOING BUSINESS" is the 1% buzz word for getting rich. The labor force their is cheaper and the overhead profit is bigger. Who gets the profit the Ceo and the share holders. Meanwhile the little guy is out of a job in turn his buy power is diminished. When that happens our economy will suffer so he does not buy electronic stuff and there goes Future Shop and Best Buy. It is a vicious circle caused by over seas contracting out.
    2. Skeptic posted on 01/31/2014 08:40 PM
      @Richard Fair enough, but what are the odds that once the 100 Russian planes are assembled, the line stays open because they are able to build planes for less money, albeit with lower quality than the Toronto plant. The Q400 is getting creamed by the ATR72 due to the large cost difference between the two aircraft. Knock 4 million off the price of a Q400 and it starts to become very competitive.
      Just look at the plant in Mexico. Bombardier broke ground at this plant with assurances it was to be used for wiring harness assembly only. They are currently building doors, fuselage sub sections, and a large portion of the Lear 85 there. Eventually they will assemble an entire aircraft. I understand the need to source to cheaper countries, but in the long run, it doesn't end well for those lacking in marketable skills this side of the border.
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