MONTREAL — Troubled rail and aviation equipment manufacturer Bombardier Inc. is in talks with Alstom about the possibility of combining the two companies’ rail business, Bloomberg reports.
Bloomberg, citing “people familiar with the matter,” said preliminary talks had been held in recent months. Representatives of the two companies declined comment.
The news came after Bombardier stock dropped by 39% on news of disappointing fourth-quarter sales and a possible exit from its joint venture with Airbus to build the A220 jet.
Both companies had previously discussed possible mergers with German firm Siemens; a Siemens-Alstom merger was blocked by European regulators in 2019 because of antitrust concerns [see “European Union blocks Siemens-Alstom deal,” Trains News Wire, Feb. 6, 2019].
Bombardier’s recent service issues and construction delays with equipment orders include a current problem with New York City subway cars [see “NYC Subway withdraws new Bombardier cars for faulty doors,” Trains News Wire, Jan. 10, 2020], and a long-delayed order for Swiss high speed trainsets [see “Bombardier agrees to extra trains for delayed Swiss order,” Trains News Wire, Nov. 8, 2019].
The company, stung when a major VIA Rail Canada equipment order went to Siemens in 2018 [see “Bombardier CEO decries lack of local-production requirement in VIA deal,” Trains News Wire, Dec. 14, 201], laid off more than 500 workers from an Ontario plant last year because of a drop in equipment orders [see “Bombardier to lay off 550 in railroad manufacturing arm,” Trains News Wire, July 16, 2019.]
Alstom’s highest-profile current North American project is construction of Amtrak’s next-generation Acela trainsets at its plant in Hornell, N.Y. [see “A first look at the next-generation Acelas,” Trains News Wire, June 13, 2019].
The merger between Alstom and Bombardier in their rail car manufacturing division would have come too late to have an influence on the Amtrak order for the next generation of Acela Express train sets. Perhaps the new Acela prototype would have gotten a more graceful styling. While Bombardier acquired the assets of Pullman-Standard, the designers and technicians that made P-S great had since retired and passed on.
The EU erred in not allowing the Alsthom-Siemens merger, the competition for all businesses is China and Chinese business, this applies to every Western industry in existence today, including the big tech firms. The only way to win is economy of scale, you have to just outsize them. How does this affect rail and railroads, until you allow these large combinations the existing players are going to be beat out cost wise by CRRC every single time.