Bombardier’s Chinese CSeries supplier remains full-production risk, says analyst by News Staff Posted Oct 16, 2012 12:59 pm MDT AddThis Sharing ButtonsShare to TwitterTwitterShare to FacebookFacebookShare to RedditRedditShare to 電子郵件Email MONTREAL – Bombardier has taken steps to reduce the risk that a Chinese supplier will delay the first test flight of the CSeries, but an industry analyst who toured its facility remains concerned about its ability to produce sections of the fuselage once full production begins next year.The Montreal-based aircraft manufacturer, which hopes to begin test flights by the end of the year, recently moved production of the mid-fuselage section from Shenyang, China, to an in-house facility in Belfast.SAC Commercial Aircraft Company (SACC) continues to supply the rear fuselage section and has already shipped the first one to Mirabel, Que., where it has been joined with other sections.Although this is positive, Walter Spracklin of RBC Capital Markets said the Chinese partner remains a risk to meet full production targets.“We believe the facility’s ability to ‘repatriate back’ the fuselage components that were moved away from SACC remains a key uncertainty â€” as it was not made clear on this trip why SACC struggled,” he wrote in a report.Cameron Doerksen of National Bank Financial said Bombardier (TSX:BBD.B) moved the mid-fuselage work in-house because SACC took on more work than it could handle and slow development progress, but intends to shift the work back for full production because of its lower costs.“The SACC building is largely empty currently, but appears to be large enough to support the originally intended work volume on the CSeries,” he wrote.The Chinese have been ramping up the complexity of parts it has delivered of the past five years for the Q400 fuselage and tail section. Doerksen expects Bombardier will pursue a similar strategy for the CSeries program.“When the work was shifted to SACC from Mitsubishi in 2007 there some initial production issues, but these were quickly resolved and SACC is now a reliable supplier on the Q400.”Doerksen said Bombardier indicated again that the first test flight of the CSeries remains on track. The schedule remains “very tight” and the analyst said the first test flight vehicle will have is rolled out by early to mid-November for the program to remain on time.“There is a high degree of skepticism that the CSeries will meet the target test flight date, but we would not consider a short delay to be a major issue for the program,” he wrote, adding that the market assumes there will be a delay of at least several months.Meanwhile, Bombardier says there are no plans at this time to resume negotiations to end a strike by 825 unionized Learjet employees in Wichita, Kan.“We’re still in a holding pattern,” said business jet spokeswoman Danielle Boudreau.The workers rejected a five-year contract that offered no raises the first year and a one per cent raise for each subsequent year. It would have retained pension plans, but increased the cost of health insurance premiums to the same level in place for more than 4,000 of Bombardier’s union and non-union employees in the rest of the United States.Boudreau said the strike is having no impact on production at this time.On the Toronto Stock Exchange, Bombardier’s shares gained five cents at $3.74 in afternoon trading.
In completing his first calendar year with the company, Robin Lindahl, Normet Group’s President and CEO, is reorganising “to maximise the company’s strategic focus and achieve the growth ambition to double the company revenues by 2020.” Normet’s operational model and organisation will be changed he says, “to fully capture the market potential and to better respond to our customer requirements.”“The coming changes will be done to strengthen capabilities across Normet’s offering as well as build stronger process solution capabilities in the underground mining and tunnelling community. We will also look at synergies and efficiency in our global supply chain to gain further competitiveness,” announced Lindahl. These changes will be fully implemented by the end of 2016 and the new organisation will be operational as of January 1, 2017. “These changes will have positive impact to overall personnel as we plan to further strengthen key focus areas.”From January 2017 Normet will have three Business Lines, namely Equipment, Life Time Care and Ground Control & Construction Technologies as well as Market Operations and Global Supply Chain Operations which all report directly to the President and CEO, Robin Lindahl.The new Equipment Business Line will be responsible for all the equipment businesses and further development of the Normet offering. It will include the Product Management organisation, R&D, sales support functions, and will spearhead Normet EQ 2020, “a strategic initiative designed for the evolution of our offering for market leadership into the next decade.” The Equipment BL will be headed by SVP Kari Hämäläinen.The new Life Time Care Business Line will be responsible for Service business and development of the Normet offering. “It will include the Service Product Management organisation, Service Marketing & Agreements, Service Operations and Normet Academy. Customer service and support is a keystone of Normet’s strategy.” The Business Line will be headed by SVP Mikko Immonen who joined Normet from Outotec Oyj “where he has been an integral part of creating a strong service business over the last seven years.”The Ground Control and Construction Technologies Business Line will be headed by SVP Odd-Bjørn Kleven. “He oversees the amalgamation of Construction Chemicals and Rock Reinforcement, whose technological offering anchors the solutions approach taken to Normet’s tunnelling and mining customers.”Market Operations will concentrate fully on the customer interface, sales and marketing, solution offering and strengthening of the company’s LTC (Life Time Care) network. This will be headed by Mike Rispin, Senior Vice President of Sales and Marketing. The regional set up will continue with six regions each headed by a Vice President.CIS/Mongolia – Jorma PiironenEMEA – Janne LehtoAsia – Alan PengellyAustralia/NZ – Neil FitzmauriceNorth America – Greg HallettLatin America – Marcelo AnabalonSupply Chain Operations, headed by SVP Timo Rask, encompassing sourcing and global production network for Equipment and LTC, “takes a renewed global approach to ensure the most competitive placement of Normet’s offering at the customer interface.”