Bombardier builds its aviation sector

Deutsche Bahn regional trains sit on the production line at a Bombardier train factory in Goerlitz, Germany. Bombardier is seeking to win new orders for its rail and aviation products in China. Bloomberg News

Ancient Chinese philosophers emphasized the importance of balance. So does Zhang Jianwei, president and chief country representative of Bombardier China.

The native of Shandong province, the hometown of Confucius, said one of his top priorities is seeking a balance between the Canadian company's rail transport and aircraft businesses in China.

Globally speaking, trains and aviation each contribute nearly half of Bombardier's revenues. But in China, the two business sectors are extremely unbalanced.

Bombardier has been the most successful foreign train builder in China and has generated more orders in the country than its competitors, namely Alstom of France and Siemens of Germany.

High profile projects include a recent order for 80 high-speed trains by the Ministry of Railways in September. During the past decade, the company also has won orders for 370 high-altitude rail cars for the Qinghai-Tibet line, an automatic people-mover system, express-line vehicles for the Beijing Capital International Airport and more than 800 subway cars for Shanghai Metro Lines .

However, Bombardier, one of the world's leading regional aircraft manufacturers, has not received any orders from Chinese airlines since 2001.

Currently, six Chinese airlines operate only 38 Bombardier regional planes. Since 2001, its Brazilian rival, Embraer, won more than 90 regional jet orders in China, and the company had delivered 59 jets to China by the end of September.

Aviation challenges

The ongoing global economic crisis seems to have made Zhang's work harder. Airlines are battling with rising costs and declining yields.

The International Air Transport Association said that the global airline industry is expected to lose $11 billion this year. The losses are expected to continue in 2010, with the industry projected to report a $3.8 billion net loss.

The Civil Aviation Administration of China also encourages Chinese airlines to strictly control their capacity in order to maintain a balance between demand and supply.

"The economic downturn is only temporary. We are still confident about the long-term growth potential of China's aviation industry," Zhang said.

"My target is to let our aircraft orders match our train business," he said .

Zhang was hired by Bombardier in Montreal in 1995 after completing a Ph.D. at Canada's Montreal University.

The Canadian company gave Zhang charge of the rail business in China in 1998. Zhang was appointed chief country representative of Bombardier in China in 2005, and his responsibilities were extended to the aviation business.

Joint ventures

Bombardier was the first multinational train builder to establish a joint venture in China. The Canadian company set up Bombardier Sifang (Qingdao) Transportation Ltd in the coastal city of Qingdao in 1998 with China's CSR Sifang Locomotive and Rolling Stock Co Ltd.

The joint venture is mainly engaged in the design and manufacturing of railway passenger cars and rolling stock.

Later, Bombardier established two more joint ventures in Changchun in northeastern China's Jilin province and Changzhou in East China's Jiangsu province.

"Getting commercial orders was, in fact, not our prerequisite for setting up industrial partnerships with China's train builders. For us, it is a long-term vision," said Zhang, who was involved in the negotiation for the first joint venture.

Bombardier's rail business grew along with China's big expansion of its rail capacity in the following years.

The railway network expansion became a national priority and a core component of the government's economic stimulus measures announced late last year.

Railway investments are expected to peak in the coming two years, with annual investments in railways between 2010 and 2012 reaching no less than 600 billion yuan, according to the Ministry of Railways.

Many new rail lines will be high-speed networks allowing trains to run at speeds exceeding 250 km an hour. China will build 18,000 km of high-speed passenger rail lines by 2020, which will account for more than half of the world's total length of high-speed rail lines.

Missed opportunity

However, Bombardier Aerospace, the company's aviation arm, lagged behind its rail achievements.

Back in 2001, the company turned down a proposal from China's aviation manufacturing industry to jointly develop a regional airplane.

China later teamed up with Brazil's Embraer and set up a joint venture in Harbin of Northeast China's Heilongjiang province to produce the 50-seat ERJ 145 regional jet. The company was Embraer's first industrial initiative outside Brazil and has delivered 30 ERJ 145 jets to China.

"Bombardier missed a great opportunity. It misunderstood the Chinese market," Zhang said.

After he took charge of Bombardier's aviation business in China in 2005, Zhang began to actively promote industrial cooperation between the company and the Chinese aviation manufacturing industry.

The most attention-getting project might be the long-term strategic cooperation agreement signed by Bombardier and Aviation Industry Corporation of China (AVIC) in 2007.

According to the agreement, AVIC, the country's aviation manufacturing conglomerate, is a risk-sharing partner for Bombardier's latest CSeries aircraft, which is due to enter service in 2013.

Shenyang Aircraft Corp, a subsidiary of AVIC, designs and produces the center fuselage for the new aircraft. Bombardier will participate in the development of China's ARJ21-900 regional jet by helping to enhance the competitiveness of the ARJ21-900 and exploring potential commonality between the ARJ21-900 and Bombardier CSeries aircraft programs.

Bombardier has received 25 orders from Lufthansa and 25 orders from Lease Corporation International for its CSeries aircraft.

Shenyang Aircraft Corp also builds the fuselage for Bombardier's 70-seat Q400 turboprop regional airliner, for which it took over as sole supplier from Mitsubishi Heavy Industry.

"I believe now we are on the right track," Zhang said.

(China Daily 11/23/2009 page4)