The threat of lost streetcar contracts, a bribery investigation and the tie-up of two super-sized European rivals haven't derailed Bombardier's plans to become a stronger, more profitable global competitor
MONTREAL—None of the challenges facing Bombardier’s railway business, be it the threat of lost streetcar contracts, a bribery investigation and a super-sized European rival, will derail its plans to become a stronger, more profitable global competitor, division president Laurent Troger said.
“I am pretty convinced that we have all the assets in our hands to remain a leading edge company in this industry,” he told The Canadian Press in an wide-ranging Oct. 19 interview from Ottawa.
Troger was in the nation’s capital to meet with federal officials, including Transport Minister Marc Garneau.
Earlier this week, he spoke with some Toronto Transit Commission board members amid a lawsuit and threats that the city’s transit authority and Ontario’s transportation agency Metrolinx will shift to other suppliers for future orders because of delays in delivering streetcars and a light rail transit vehicle prototype.
Troger insisted the company will deliver the entire order of 204 streetcars by the original contract deadline of 2019 and will also meet the delivery deadline for Metrolinx LRT vehicles. Still, Metrolinx new CEO Phil Verster said he’s still waiting for an update on a recovery plan.
Troger seemed equally unfazed by legal challenges related to a bribery investigation into shell companies used as part of a US$340-million contract to sell railway equipment in Azerbaijan.
Troger said he doesn’t expect Bombardier will face criminal charges after a Swedish employee was acquitted on charges of aggravated bribery.
“The verdict has been given and for us it’s over,” he said, despite the prosecutor’s consideration of an appeal.
He added that he doesn’t think a World Bank audit will result in the company being banned from the agency’s development contracts.
Troger and several senior officials were caught in wiretaps talking about the media storm swirling around Bombardier’s actions that incited criticism of the company’s business culture.
He declined to comment on the recordings or say if he has been interviewed by police. But he defended the company’s actions.
“Bombardier has positioned a very high level of business ethics in the company and I am ensuring that it is happening every day,” he said.
Despite watching its two main European rivals say they plan to join forces, he said the Berlin-based subsidiary feels no pressure to join Siemens-Alstom in forming a European railway champion as suggested by France’s finance minister.
“I’m not today seeing this as a priority for Bombardier,” he said.
Bombardier Transportation has the scale, products and reach to go it alone and strongly compete against both the proposed German-Franco rival and its larger state-owned Chinese competitor, China Railway Construction Corporation Ltd., he said.
Troger said Bombardier will have an opportunity to differentiate itself because the Siemens-Alstom teams will be distracted by a lengthy regulatory process, protracted integration period and political concern about job cuts.
He added that the railway manufacturing industry is not necessarily driven by size, but the ability to deliver value to customers.
When Quebec’s Caisse de depot struck a deal two years ago to buy a 30 per cent stake in Bombardier Transportation for US$1.5 billion, the partners were keen to participate in the railway sector’s consolidation.
He fully expects Bombardier will continue to partner on projects as it is doing with Siemens in India, Alstom on the Montreal metro contract and China Railway in China.
He said there are enough global projects to go around because growing urbanization and awareness of climate change is propelling cities and regions to adopt green solutions such as mass transit.
Even though Bombardier will be smaller than its European rivals, it still has significant scale and great technology, said analyst Chris Murray of AltaCorp Capital.
“They have a very robust backlog and I expect that backlog is going to continue to grow and an excellent footprint in Europe which happens to be the largest market in the world,” he said in an interview.
However, Murray said the factors driving industry consolidation won’t disappear over the next decade.
“So do we expect that there’ll be some sort of resolution over time? There logically has to be.”