Bombardier Hunts U.S. Rail Riches From Airports, L.A. Olympics
(Bloomberg) -- Bombardier Inc., North America’s biggest maker of passenger trains, is looking to cash in on a U.S. rail boom.
The Los Angeles Olympic Games in 2028, airport people movers and fleet renewals in states such as New York and New Jersey will drive a flurry of U.S. train orders, said Bombardier executive Benoit Brossoit. That gives the company a chance to shore up its North American business after major stumbles with the New York subway and two projects in Toronto.
“The U.S. market is really bubbling over,” said Brossoit, who will step down next month as head of Bombardier’s rail unit for the Americas. While the global rail industry is posting annual growth of about 3 percent, “in the U.S. we think we can grow at about 20 percent a year for the next five years.”
Landing more business in the U.S. would buoy Chief Executive Officer Alain Bellemare’s goal to boost the whole company’s sales to $20 billion by 2020. The rail business, which has built everything from New York subway cars to high-speed trains in China and Italy, accounted for about half the company’s revenue last year.
Projects of interest to Bombardier include a proposed high-speed rail link between San Francisco and Los Angeles, planned people movers at various airports and potential rolling stock orders in cities including Washington and New York. Bombardier also anticipates rail projects in Los Angeles ahead of the summer games a decade from now.
“An event such as the L.A. Olympics is a great catalyst,” Brossoit said in an interview Tuesday at a company factory outside Kingston, Ontario.
The company also plans to bid on service and maintenance contracts around the U.S., he said. Brossoit will be replaced by Elliot Sander, a former CEO of New York’s Metropolitan Transportation Authority.
Bombardier’s rail division has had a mixed run in North America recently. In June, a group that includes Bombardier won a $4.9 billion contract for an automated people-mover system at Los Angeles International Airport. But the Montreal-based manufacturer was blocked from bidding last year for a $3.2 billion New York subway-car contract because of past delays.
In another setback, deals to supply light-rail vehicles and streetcars to Toronto have been plagued by delays. After a string of missed deadlines, the city’s Metrolinx transportation agency placed an order with Bombardier rival Alstom SA.
Bombardier will deliver 204 streetcars to Toronto by the end of next year to complete its contract with the city’s transit commission, Brossoit said Tuesday. The delays forced the company to invest about $20 million to increase capacity at the Kingston facility.
Brossoit spoke after Bombardier showed off the first of 76 light-rail vehicles it will deliver to Metrolinx.
North America generated about $1.85 billion in sales for Bombardier’s rail operation last year, representing 22 percent of the unit’s global revenue.
©2018 Bloomberg L.P.