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Bombardier puts the brakes on North American high-speed train plans

(The following article by Bertrand Marotte was posted on the Globe and Mail website on June 3.)

MONTREAL -- Bombardier Inc. has put on ice its once-ambitious plans for high-speed train travel in North America.

André Navarri, president of Bombardier Transportation, said in an interview yesterday that there is little appetite for high-speed rail in North America, unlike in Europe and parts of Asia.

"For the time being, there is no project which is close to being promoted," he said. Asked about the potential for its once highly touted JetTrain technology in North America, he replied: "As there is no high-speed corridor for the time being, there is no JetTrain."

Bombardier Transportation spokeswoman Hélène Gagnon said later that Bombardier is no longer in discussions with any government bodies anywhere in North America regarding the funding of high-speed train travel.

"There is no project of any kind in Canada or the United States that is the subject of discussions," she said.

Bombardier Transportation is the rail unit of the global plane and train maker.

Montreal-based Bombardier had for the past several years been running a major campaign to spark interest in its high-speed train technology in the United States and Canada.

A high-profile attempt to win approval in Florida for its 240-kilometre-an-hour JetTrain failed last November after taxpayers voted it down.

And Bombardier, along with French partner Alstom SA, has been plagued by technical and other problems with their Acela Express train operated by Amtrak in the Washington-New York-Boston corridor, the only existing high-speed train in North America.

"Is there a market in North America for a very high-speed train? It's a difficult issue," Mr. Navarri said at corporate head office.

While high-speed trains have staked out a place in the popular, well-established rail system of Europe, "it's a little more difficult to find the right [rail] corridors in North America," he said.

"We are still prepared to discuss the [high-speed] potential in North America, but in North America we will mainly focus on the mass transit market," said Mr. Navarri, a former senior executive at Alstom who was hired last year by Bombardier to lead a sweeping restructuring at Bombardier Transportation.

It is difficult to get all the players -- especially governments -- to agree on how best to develop high-speed train travel in North America, he added.

"Up to now, it has not been possible to find this agreement, with the exception of Acela."

In Canada, Bombardier had high hopes for its JetTrain, particularly in the Quebec City-Windsor, Ont., corridor, and had been lobbying the federal government for financial assistance to upgrade the corridor at a cost of up to $3-billion.

"Quebec City-Windsor for the time being is on ice, for financial reasons," Ms. Gagnon said.

Other city-to-city links that Bombardier had identified included Calgary-Edmonton, Chicago-St. Louis, Los Angeles-San Francisco and Orlando-Miami.

Mr. Navarri said he is not disheartened by an embarrassing series of technical glitches, delivery delays and contractual disputes related to the Acela Express.

He said he is confident that the latest snafu -- the Acela was yanked out of service in April after cracks on brake components were discovered -- will be amicably settled and won't degenerate into a legal brawl, as happened four years ago over costly design changes.

Meanwhile, Mr. Navarri said he expects strong growth from Eastern European countries as they join the European Union and become eligible for funding to upgrade their aging rail equipment.

Bombardier Transportation -- the world's largest manufacturer of rail transportation equipment -- also sees growth from the planned standardization of Europe's patchwork rail signalling system, as well as from the boosting of its services unit to about 30 per cent of revenue from 17 per cent today, he said.

Outside Europe, China represents a huge potential market for Bombardier, Mr. Navarri said.

He also said Bombardier Transportation's restructuring plan -- announced last year -- is on track and even ahead of schedule, with a work force reduction of about 15 per cent, to about 30,000 from more than 35,000 and the closing of seven facilities in Europe by the end of this year.

"All these plans are starting to show good results, especially in terms of profitability," and the rail unit should reach its target of 6-per-cent profit margins in the medium term as expected.

Six per cent is not the ultimate goal, he added.

"After that, we want to go even further."

Friday, June 3, 2005

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