MONTREAL – Bombardier said Friday it plans to eliminate 7,500 positions – more than 10 per cent of its global workforce – through the end of 2018, the company’s second mass round of layoffs in less than a year.
About 2,000 positions will be cut across Canada, including 1,500 in Quebec, the Montreal-based aerospace giant said Friday. Two-thirds of the job losses throughout Bombardier will come from its transportation division, with the rest from its aerospace operations.
“I know these aren’t easy decisions in the short-term,” CEO Alain Bellemare said in an interview. “But they are the right decisions to ensure the future of the company.”
In February, Bombardier announced plans to cut 7,000 positions by the end of next year as it struggled to sell its signature CSeries passenger jet in the face of competition from global rivals.
Bombardier (TSX:BBD.B) said the latest round of job cuts is intended to save about US$300 million a year and is part of its recovery plan launched last year to improve profitability and competitiveness by 2020.
Bellemare said the measure will enable Bombardier to continue investing in its operations and secure more rail and plane work. The job losses will be partially offset by more than 3,700 new hires as it ramps up production of the CSeries plane and new Global 7000 business aircraft, as well as builds railcars for customers in Toronto and elsewhere, he added.
He said the new jobs will be created in countries where labour costs are cheaper but also within Bombardier’s existing network of global operations.
“It’s the only way that we can protect the thousands of jobs in the industry and at Bombardier,” he said. “It’s a very competitive industry and it’s important to take the necessary steps to remain competitive in this context.”
Bombardier said it expects to record between US$225 million and US$275 million in restructuring charges through the end of next year starting in the fourth quarter.
The announcement comes as Bombardier’s hand for federal help remains extended. Nearly a year ago, the company asked Ottawa for a US$1-billion investment.
Innovation Minister Navdeep Bains recently said the question of federal assistance was not a matter of if, but how it would be given. He said Ottawa wants Bombardier to keep its head office and jobs connected to its research and development activities in Canada.
Bombardier has received a US$1-billion investment in the CSeries jet from the Quebec government and sold a 30 per cent stake in Bombardier Transportation to Quebec’s pension fund manager, the Caisse de depot.
Bellemare said the job cuts have nothing to do with ongoing negotiations with the federal government.
The latest restructuring will include streamlining of administrative and other non-production related functions, the company said.
The manufacturer has been struggling because of a slowdown in business jet demand and production challenges for its railway products. It also faces large pension obligations and a whopping debt.
Bellemare wouldn’t say if other decisions, including speculation that it is planning to sell the Learjet business jet platform, are yet to come.
“We will continue to do what we need to do to ensure that the company is profitable long-term,” he said.
On its website, Bombardier said it has 31,200 employees in aerospace and 39,400 in transportation.