Bombardier Cuts Deal Blow To Belfast Economy

Bombardier (Toronto: BBD-A.TO - news) , the Canadian aircraft and rail manufacturer, is to cut some 580 jobs this year and 500 next year at its factory in east Belfast.

That equates to getting on for one in five of the site’s 5,500 workforce.

It’s another hammer blow for manufacturing in Northern Ireland, already the poorest-performing economy of the UK’s 12 regions.

Bombardier, based in Montreal, is a major player in the province’s manufacturing sector.

Its operations account, on their own, for around 10% of Northern Ireland’s manufactured exports.

The job losses follow a tough few years for the company, which also makes trains in Derby, where it employs more than 2,000 people and which recently won a contract to build carriages for Crossrail.

Bombardier’s Belfast site makes wings for the C-Series aircraft designed, ambitiously, by the Canadian group to challenge the dominance of Boeing (NYSE: BA - news) and Airbus in the narrow-bodied jet market.

Plans to build a new narrow-bodied aircraft were first announced by Bombardier as long ago as 2004.

The C-Series, carrying between 100-160 passengers, is smaller than the larger Airbus A320 and Boeing 737 that serve the market and are typically used by short-haul carriers such as Ryanair and EasyJet (Other OTC: EJTTF - news) . It (Other OTC: ITGL - news) was also marketed as being quieter and more fuel-efficient.

Unfortunately, the programme has been dogged by cost and time overruns that, in February last year, cost the former chief executive Pierre Beaudoin, a grandson of the company’s founder, his job.

It has fallen to his successor Alain Bellemare, recruited from the aircraft engine maker Pratt & Whitney, to pick up the pieces.

By the time the jet was showcased at the Paris Air Show, in June last year, it was more than two years late and had over-run its budget by C$2bn (£1.25bn). Total (Swiss: FP.SW - news) costs, by the time the project launches, are likely to have exceeded C$5.5bn.

The Northern Ireland government has contributed to the launch, pumping in more than £130m in grants and aid, while, more significantly, the taxpayers of Quebec have also chipped in.

In an extraordinary move last October, the government of Quebec paid C$1bn for a 49.5% stake in the C-Series project to see it through to completion, sparking outrage in the Canadian media about lame ducks being propped up and a major headache for the new Prime Minister, Justin Trudeau, whose father, Pierre, was himself dogged by a Quebecois secessionist movement when he was prime minister in the 1970s and early 1980s.

Contributing to the malaise is that orders for the C-Series have proved hard to come by.

Swissair was the first major airline to place a firm order, with the jets it has bought due to begin service by the middle of this year, but a previous order, from Qatar Airways, fell through after the latter walked away in March last year, its chief executive, Akbar Al Baker saying at the time that he had grown tired of waiting.

It is to this backdrop that the job cuts in Belfast announced today must be seen.

Bombardier has sunk some £500m into building a new 600,000 square foot plant in east Belfast to support the C-Series project, opened by David Cameron in 2013, as well as its existing operations elsewhere in Northern Ireland.

The company’s operations in Ulster date back to 1948 when the British aircraft builder Short Brothers, famous for its flying boats, relocated its manufacturing operations there from London.

The business was bought by Bombardier back in 1989 but, to many in Belfast, the business is still referred to as ‘Shorts’.

The latest job losses at Bombardier, following several hundred in May last year, come after a bleak 18 months for manufacturing in Northern Ireland.

Some 800 job losses were announced at the end of 2014 when Japan Tobacco (Other OTC: JAPAF - news) , whose UK brands include Silk Cut and Benson & Hedges, announced it was shutting the old Gallaher factory.

Last year saw Ballymena suffer another blow with news that the French tyre manufacturer Michelin (Paris: FR0000121261 - news) is closing its operations in the town, while Bombardier itself shed more than 300 jobs early last year.

The digger maker Caterpillar (NYSE: CAT - news) also announced plans to cut 100 positions from its Northern Ireland workforce late last year.

All is not lost for Bombardier’s Belfast workforce. The company also announced today that it had won an order for 75 of the new jets from Air Canada (Other OTC: AIDIF - news) .

However, the market remains highly competitive, with the two giants that dominate the sector, Airbus and Boeing, in no mood to make life easier for their smaller rival.