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Bombardier is citing progress on its five-year turnaround plan as it announces the reduction of 7,500 jobs and strategic hiring to support its C Series and Global 7000 aircraft programs.
The company launched the turnaround plan last year and said today’s actions support its efforts to build its earnings growth potential and highlight its focus on improving productivity, reducing costs and optimizing its worldwide footprint.
“The actions announced today will ensure we have the right cost structure, workforce and organization to compete and win in the future,” said Alain Bellemare, Bombardier president and chief executive officer, in a news release.
“We are confident in our strategy, our leadership team and our ability to achieve both our 2016 goals and our 2020 turn-around plan objectives.”
Bombardier said it will streamline its administrative and non-production functions across the organization and leverage its worldwide footprint to create centres of excellence for design, engineering and manufacturing activities in both its aerospace and rail businesses.
The job cuts affect 2,000 people in Bombardier’s Canadian workforce and will trim the company’s global staffing level by almost 10 per cent, according to the Canadian Press.
Two-thirds of the affected global positions will be in transportation and nearly 2,500 in aerospace, the Canadian Press reported.
In addition to strategic hiring in aerospace, Bombardier will partially offset its job cuts with hiring to support its major rail contracts. More than 3,700 strategic hirings are reportedly expected.
Bombardier said it expects to achieve recurring savings of about $300 million by the end of 2018 as a result of today’s actions.
The company said it also anticipates recording $225 million to $275 million in restructuring charges that will be reported as special items when accrued, starting in the fourth quarter of 2016 and continuing through 2017.
Quebec’s provincial government has invested US$1 billion in the CSeries, and Bombardier has requested an additional US$1 billion from Canada’s federal government.
There was no word Friday morning if other measures, such as the rumoured sale of Bombardier’s Learjet business jet platform, are also being planned.
“When we launched our turnaround plan last year we committed to transforming our company; to reduce costs, to leverage our scale and to become more efficient in all our operations, and that is exactly what we are doing,” said Bellemare in a statement.
“While restructuring is always difficult, the actions announced today are necessary to ensure Bombardier’s long-term competitiveness and position the company to continue to invest in its industry leading portfolio while also deleveraging its balance sheet.”