Canadian plane and train maker Bombardier Inc will shed jobs for the second time this year, cutting about 10 percent of its global workforce over two years as it deepens turnaround efforts at its rail division.
The Montreal-based company, which has struggled in recent years with cost overruns in its aerospace unit, said on Friday it will cut about 7,500 jobs, with about two-thirds in Bombardier Transportation. The rest will be in the aerospace division.
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The company said restructuring charges of $225 million to $275 million will be accrued as special items, beginning in the fourth quarter and through 2017.
Chief Executive Officer Alain Bellemare said he did not expect the job cuts, which include 1,500 workers in Quebec and 500 in the rest of Canada, would affect the company's talks with the federal government over a $1 billion investment in its CSeries jet program.
"We understand these are difficult decisions ... but in the end what we are going to be left with is a leaner, stronger organization," Bellemare said in an interview, adding the moves were part of a broad turnaround plan aimed at improving operations amid cost and productivity concerns.
Bombardier expects recurring savings of about $300 million by the end of 2018.
In February, the company said it was cutting 10 percent of its workforce, also over two years. Nearly half of the cuts are in its rail arm, which has a large staff in Europe.
"It's a fairly substantial cut," AltaCorp analyst Chris Murray said of the latest move. "The majority of it will be in the transportation group and that makes sense given their move to improve profitability there."
In Northern Ireland, where about 5,000 Bombardier workers design and manufacture aircraft wings, fuselages and other parts and service planes, Economy Minister Simon Hamilton said he would fight to save local jobs.
"Today's announcement by Bombardier will come as a great shock to the Northern Ireland workforce," he said. "It had been our hope that the announcement in February represented a peak in potential job losses."
David Chartrand, ���Quebec coordinator for the International Association of Machinists and Aerospace Workers, said "the mood in the shop on the floor is 4,500 frustrated members."
Bellemare said Bombardier will simultaneously be "strategically hiring" for its growth areas: The CSeries family of narrowbody jets and its Global 7000 business jet, which is expected to make its first flight next month. That will be a boost for the Global 7000 whose entry into service has been delayed two years.
Last month, Bombardier sliced in half the 2016 delivery forecast for its CSeries aircraft and said it expected full-year revenue at the lower end of its previously announced range.
The company will also hire staff to support major rail contracts it has won, it said.
Canada's second-largest pension fund, Caisse de depot et placement du Quebec, owns a 30 percent stake in the rail business, which it bought last November for $1.5 billion. The investment provided a bigger cash cushion for Bombardier's plane-making unit.
Canada's federal government is under pressure from the Quebec government to match that investment. Quebec last year invested $1 billion in the CSeries program for a nearly 50 percent stake in the project.
Innovation Minister Navdeep Bains, who is in charge of the negotiations, has cited "good quality jobs" as one factor in the talks.
"I think it has to be very clear that the decisions we are taking are not related to our discussions with the federal government," CEO Bellemare said. "We are doing this because we want to save jobs in Canada."
(Editing by Gopakumar Warrier and Jeffrey Benkoe)