Canadian Business
By Ross Marowits, The Canadian Press
MONTREAL – Bombardier Aerospace says its North American workforce has nothing to fear by plans to spend about US$200 million to add a low-cost manufacturing plant in Morocco.
The world’s third-largest aerospace manufacturer signed a memorandum of understanding Wednesday with the North African country to build the plant in stages over eight years.
Under study for a couple of years, Bombardier hasn’t finalized what it will manufacture in Morocco. It is looking at small simple structure assemblies like floor sections, panels and flight control services.
“This is more actually looking at reducing our reliance on third-party facilities. It’s a good way for us to bring a lot of manufacturing capacity back to our organization,” spokeswoman Haley Dunne said from the Moroccan capital of Rabat.
Dunne said the company continues to invest in its current facilities as it looks to expand its product line in civil and business aircraft.
“It’s important for us to keep investing in those facilities too and investing in those workforces,” she said in an interview.
Aerospace president Guy Hachey, who led a delegation of 10 company executives to Morocco, said globalization of the industry has opened up new markets and new opportunities.
Morocco provides lower manufacturing, shipping and transportation costs, proximity to Europe and a commitment from the government to develop the country’s aerospace industry.
The Montreal-based company has extended it presence around the world by adding customer service centres and opening its first low-cost centre five years ago in Mexico.
“By establishing its own fully integrated manufacturing facility in Morocco, Bombardier Aerospace will serve as a catalyst for the aerospace industry in the country and will look for opportunities to share some of its knowledge and complex manufacturing processes,” Hachey said in a news release.
The exact location for the plant has not been announced.
Manufacturing is scheduled to start in 2013. By the end of 2020, employment in Morocco is expected to reach 850 skilled and trained workers.
Bombardier (TSX:BBD.B) also considered Turkey but selected Morocco because it has a thriving aerospace industry that has attracted many of the world’s top players.
Morocco’s aerospace sector employs about 8,000 people, mainly in the Casablanca region.
“After our evaluation, Morocco checks all the right boxes, it met the most of our criteria and it was the most favourable choice for us,” Dunne said.
Details of the government support are confidential.
The project was announced at the Dubai Air Show, but reports of the venture surfaced in May when Hachey spoke to an industrial conference attended by Morocco’s king.
Bombardier Aerospace has manufacturing facilities in Montreal, Toronto, Wichita, Kan., Belfast Northern Ireland and Mexico.
About half of Bombardier Aerospace’s 30,000 workforce is based in the Montreal area.
Cameron Doerksen of National Bank Financial said the Moroccan venture will likely follow the model established in Mexico by starting small and moving labour intensive work to the lower-cost jurisdiction.
He doesn’t believe there will be any impact on employment at Bombardier’s North American facilities, which has grown since it opened the operations in Mexico
“Bombardier’s got some ambitious growth plans here with the CSeries and the new Learjet and Globals, there’s going to be lots of work,” he said in an interview.
“They’re not going to move aircraft assembly operations to Morocco. That’s not happening any time soon and it’s not happening in Mexico any time soon.”
Doerksen said Bombardier’s investment is small and will take awhile before there’s any impact on its results.
Although Bombardier sees big sales opportunities in Asia, Dunne said the company has no “definite plans” to add another manufacturing site in this part of the world.
Bombardier is a plane and trainmaker with US$17.7 billion of annual revenues.
On the Toronto Stock Exchange, Bombardier’s shares lost six cents at $4.25 in Wednesday trading.
