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Bombardier Sets Course for the Future With New European Passenger-Vehicle Manufacturing Network Strategy.

Business Editors


Bombardier Transportation (TSE:BBD.A.)(TSE:BBD.B.) today announced plans for implementing its new European passenger-vehicle manufacturing network strategy.

This plan, which is part of an overall strategy, calls for concentrating capital intensive activities into specialized plants, thus ensuring greater stability of workload while maintaining final assembly presence in a large number of European countries. This reorganization will mostly occur in Germany, Sweden as well as the United Kingdom and entails the closure of three plants and the conversion of two manufacturing plants to service facilities.

Following the acquisition of Adtranz last May, Bombardier Transportation undertook an extensive analysis of all its production sites and services activities in Europe in order to determine the most efficient use of its assets with regards to market needs. This detailed evaluation was based on three objective criteria: commercial importance and existing obligations of each site; economic evaluation and existing capacity along with staffing levels. Technical skills, know-how and expertise of the workforce within the organization were also assessed.

As a result, bogie, carbody and light rail vehicle manufacturing will be concentrated in dedicated sites. Activities related to final assembly of vehicles will be assigned to specific facilities. Certain plants like Vasteras in Sweden will be dedicated to Services. (See Appendices 1 and 2 for details). Manufacturing plants located in Ammendorf (850 employees) and in Vetschau (110 employees) in Germany along with the services centre located in Doncaster (150 employees) in the United Kingdom are earmarked to cease their activities. In most cases, affected employees will be offered alternative employment, although not necessarily at their current work locations. The new program will be implemented essentially over the next year. Negotiations with social partners in the respective countries will be initiated shortly.

During a press conference held in Berlin, Bombardier Transportation President and Chief Operating Officer Pierre Lortie stated that "although Bombardier and Adtranz were - and are - an excellent fit from a market-coverage, product-portfolio and technology perspective we still need to work relentlessly towards creating, for the long term, a truly competitive organization which can best leverage our combined strengths, offer a solid future and provide sustainable opportunities for employees." Mr. Lortie added, "We are well positioned to maintain our global market leadership. We believe that transit systems along with the maintenance/service sector will experience rapid growth. Moreover, the confidence customers have shown us since the acquisition of Adtranz on May 1, 2001 will also enable us to dampen the impact of the restructuring on our workforce."

The costs involved with the implementation of the European manufacturing network strategy are part of the special restructuring charge of CDN $ 180 million announced by the Corporation on September 26, 2001 or are part of the purchase equation of Adtranz.

Bombardier Transportation is the global leader in the rail equipment, manufacturing and servicing industry. Its wide range of products includes passenger rail vehicles and complete rail transportation systems. It also manufactures locomotives, freight cars, propulsion & controls and provides signaling equipment and systems.

Bombardier Inc., a diversified manufacturing and service company, is a world leading manufacturer of business jets, regional aircraft, rail transportation equipment and motorized recreational products. It is also a provider of financial services and asset management. The Corporation employs 79,000 people in 24 countries in the Americas, Europe and Asia-Pacific and its revenues for its fiscal year ended Jan. 31, 2001 totalled $16.1 billion Cdn.


European passenger-vehicle manufacturing facilities

Bogies: There will be three core (3) bogie sites to serve all of Europe and the export markets. These are Siegen (Germany), Derby (UK) and Crespin (France).

Carbodies: The manufacturing of aluminum and steel carbodies for passenger cars in Europe will be concentrated in Bautzen and Gorlitz (Germany), Kalmar (Sweden), Derby (UK), Crespin (France) and Bruges (Belgium). We are also considering Amadora in Portugal to respond to additional capacity requirements.

Final assembly: The following plants will be final assembly core sites:

Aachen and Hennigsdorf (Germany)
Derby (UK)
Crespin (France)
Brugge (Belgium)
Kalmar (Sweden)
Amadora (Portugal)
Pratteln (Switzerland)

Specialized Facilities: In addition, certain sites have been assigned specialized mandates. This is the case for Vienna in Austria and Bautzen in Germany for LRV and Gorlitz for German double-deck trains. The site in Ceska Lipa, Czech Republic will be a supplier of primary parts and welding substructures while the bogie facility in Pafawag, Poland will develop into a supplier of bogie frames. Wakefield will continue doing some final assembly but will gradually grow into the refurbishment business. Randers, (Denmark) has a special mandate for the S-Train Copenhagen and Villeneuve (Switzerland) for the Nina II vehicles.

Other manufacturing facilities remain dedicated to their current respective missions: Locomotives and Freight, Propulsion & Controls, Services and Signaling


Specific plans for sites in Germany, the United Kingdom and Sweden

-- Germany

It is intended to close the site located in Ammendorf in the second half of 2002. These production activities have been subjected to under-utilization for several years. The carbody manufacturing is planned to go to Bautzen while final assembly and testing will be concentrated in Hennigsdorf. Employees will be offered alternative jobs in other sites.

It is intended to close the Vetschau plant in the second half of 2002, due to overlapping activities with the Siegen site and the absence of needed critical mass. Bombardier Transportation aims to offer all employees a job either in Siegen, Gorlitz or Bautzen, where production is scheduled to ramp up.

The site in Siegen is Bombardier Transportation European center of competence for bogies with responsibility for the entire value-added chain from R&D, from manufacturing to testing and commissioning. It will get an increased workload due to the transfer of activities from Vetschau and the growth of activity in Europe.

In the Hennigsdorf plant, the final assembly as well as testing and commissioning activities shall be expanded. Electrical components are expected to move to the FAGA plant in Berlin-Marzahn. The carbody manufacturing activities would phase out at the end of 2003. It is planned that most of the affected employees will either go to final assembly at Hennigsdorf or move to FAGA in Berlin-Marzahn. Their workload will stabilize by receiving the electrical component scope from Hennigsdorf. Overall, the employment at Hennigsdorf will remain at about the same level.

Kassel is the German hub site for locomotives. At the same time, Bautzen is planned to specialize in the production of light rail vehicles as well as in steel carbody manufacturing. Bombardier Transportation intends to concentrate double-decker vehicle manufacturing and both steel and aluminum carbody manufacturing in Gorlitz. Aachen will continue to assemble double-deck vehicles for the Dutch market as well as the Talent regional train. Mannheim remains the German hub site for Propulsion.

-- United Kingdom

In Derby, it is planned to shift bogie production from Derby Pride Park to Derby Carriage and the wheelset activities from Derby Carriage to the Crewe plant which is already producing wheelsets.

It is intended to close the service site in Doncaster and to transfer the refurbishment activities to Wakefield. Bombardier Transportation intends to offer all employees in Doncaster new jobs either in Wakefield or at other Bombardier facilities.

-- Sweden

It is planned that Kalmar will become a core site in the European manufacturing network. Therefore, final assembly activities shall be moved from Vasteras to Kalmar. Testing and commissioning of vehicles will remain in Vasteras. In turn Vasteras is expected to become a Service facility for Sweden.
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Publication:Business Wire
Geographic Code:1CANA
Date:Nov 13, 2001
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