MONTREAL — Bombardier, one of the world’s biggest manufacturers of planes and trains, said Thursday it will cut about 1,750 employees in Montreal, Toronto and Ireland over the coming months because of weak demand for its largest business jets.
Up to 1,000 of the lost jobs will be in Montreal, where Bombardier has its main operations, while 480 positions will be eliminated in Toronto and another 280 in Belfast.
The cuts will begin in June and continue until the first quarter of 2016, said the company, which employs more than 70,000 people, about half in its aerospace division.
“This is a difficult but necessary decision,” Eric Martel, president of the business aircraft division, wrote Thursday in an email to employees.
He said the company will try to limit the impact through retirements and by transferring as many employees as possible to other aircraft programs.
The manufacturer has cut at least 4,550 aerospace and support jobs since last July, including 1,000 in the United States and Mexico when it paused development of the Learjet 85.
The latest job cuts will affect union, non-union, office and contract employees.
Bombardier (TSX:BBD.B) signalled the move last week when it announced a production decrease of its Global 5000 and Global 6000 aircraft to reflect conditions in some markets such as Latin America, China and Russia. It said layoffs are just one tool to reduce costs, along with savings from suppliers and elsewhere.
The reductions announced Thursday will touch nearly 36 per cent of the 2,800 Global aircraft jobs in Montreal, where the plane interiors are installed and the finishing touches are completed before delivery.
Toronto’s final assembly facility currently employs 1,750 workers. Belfast supplies aerostructures and does engineering work.
Brad Duguid, Ontario’s economic development minister, said he was disappointed to learn of the Bombardier layoffs in Toronto. But he added he remains confident that Bombardier “will continue to be a strong global force within the aerospace sector.”
“I expect that as global factors calm and economic strength is regained across the globe, Ontario will see increased investments and job creation from companies like Bombardier.”
Analyst Benoit Poirier of Desjardins Capital Markets estimates Bombardier will save about US$135 million a year and increase the aerospace’s weak margins as a result of the cuts.
Walter Spracklin of RBC Capital Markets said the magnitude of the workforce reduction was “somewhat surprising” given the early signs that the business jet market may be reaching its low point.
“Nevertheless, we view it prudent for Bombardier to bring production in line with current/recent demand and we believe management will work proactively to readjust line rates (hopefully upward) should demand conditions warrant,” he wrote in a report.
Martel told employees that despite the short-term uncertainty in key international markets, the company is well-positioned to be the market share leader in the aerospace sector.
Bombardier is continuing to develop Global 7000 and 8000 business jets that will better compete with new aircraft from Gulfstream, its chief rival.
Bombardier remained the largest business jet manufacturer for a 10th consecutive year last year, delivering 204 aircraft, including 80 Globals. That compared with 150 for Gulfstream.
But the US$7.56 billion value of the shipments trailed Gulfstream by about US$220 million.
In the first quarter of the year ended March 31, Bombardier saw its profits fall 13 per cent to US$100 million.