As part of a major consolidation project that it says will save $25 million a year, Bombardier has embarked on an 18-month project to consolidate all Learjet production, completions and deliveries in Wichita, and all such Challenger work in Montreal.
Specifically, Learjet 40, 45 and 60 completions will be moved from Tucson, Ariz., to Wichita, where the airplane is currently assembled. Completions of Challengers, also now performed in Tucson, will move to Montreal, where the Challenger 604 and 800 and the Global Express are built. Assembly of the new Challenger 300 will move from Wichita to Montreal. The new Global 5000, and Global Express XRS, will also be built in Montreal.
The Tucson facility, after being a completion center for nearly 30 years, will focus instead on being a maintenance facility. Bombardier will add a Regional Aircraft Service Center to the Business Aviation Services Center that already operates there.
The relocations, expected to be completed by the first quarter of 2005, will result in the loss of 800 jobs in Tucson over the next 15 to 18 months and the elimination of 350 jobs in Wichita over the next 12 to 15 months. Bombardier’s Wichita operation now employs about 2,600 workers, down from about 4,000 two years ago, according to The Wichita Eagle. However, 300 new jobs will materialize in Tucson over a three-year period as a result of the creation of the Regional Aircraft Services Center there, Bombardier said.
Bombardier said the consolidation will “significantly reduce its production cycle times and inventory levels, while improving its competitiveness.” The plan should not come as a surprise. Bombardier Aerospace for months has hinted it intends to consolidate and create “integrated manufacturing centers.” The decision comes amid wide-ranging organization changes for Bombardier, revealed earlier this year by the company’s new CEO, Paul Tellier. The reorganization was announced on the heels of posting a net loss of $418.6 million in the last fiscal year, due primarily to the depressed market for business jets and regional airliners. Part of the sweeping changes include the sale of several non-core assets, including Belfast City Airport in Northern Ireland; the consumer products division, which included Bombardier’s original product (snowmobiles); and its pre-owned aircraft financial portfolio.
As a result of the divestitures, Bombardier said it will concentrate solely on its aerospace and transportation products–primarily business and regional aircraft and rail cars. The divestitures and equity offering are intended to generate more than $1.3 billion before year-end