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Bombardier’s rail unit may expand in U.S. on stimulus

(Bloomberg News circulated the following story by Hugo Miller on January 7.)

WASHINGTON, D.C. — Bombardier Inc., Amtrak’s largest supplier, may build more trains in the U.S. as President-elect Barack Obama’s administration prepares a $775 billion stimulus package and the passenger railroad is set to win new funding.

“If the new administration walks the talk in terms of helping the transit agency to fund more projects, we could expect to grow our business in the U.S.,” Andre Navarri, president of Bombardier’s rail business, said today in a telephone interview from the unit’s Berlin headquarters. That may lead to additional U.S. production, he said.

Bombardier’s plans reflect the stimulus package, which would boost infrastructure such as rail lines, as well as approval by Congress in October of $13.1 billion in passenger-rail spending over five years. Three-fourths of that would be for Amtrak, which would get an increase in its annual federal subsidies to an average of $1.93 billion, from $1.3 billion now.

Montreal-based Bombardier’s rail business now generates about 75 percent of its revenue in Europe.

The U.S. stimulus plan, if approved, may result in orders from transit agencies across the U.S., including those in Chicago, San Francisco and New Jersey, Navarri said. The Chicago Transit Authority has an option for 300 more subway cars from Bombardier, after ordering 406 in 2006. The option may be valued at $426 million, based on the original contract.

‘Very Encouraging’

Increased funding for Amtrak is “very encouraging,” Navarri said. The U.S. railroad already is renovating its fleet of Acela high-speed trains, with that work done by Bombardier.

Because Amtrak hasn’t yet released a new spending plan, it’s too early to speculate on how much more business the company might get from the U.S. railroad, Navarri said.

Bombardier, which also builds commercial and business jets, has three main train factories in New York and Pennsylvania, with 2,500 of its 29,000 rail-unit employees in the U.S. The company is the world’s second-largest trainmaker by revenue, behind Paris-based Alstom SA.

Bombardier is negotiating details with Kazakhstan’s government after signing a memorandum of understanding in October to supply the central Asian country with about 1,000 passenger rail cars, Navarri said. The order would be valued at more than $1 billion, and if confirmed, would probably prompt the company to build a local factory, he said.

The company is bidding for a contract to build a light-rail network for the southern Russian city of Sochi, host of the 2014 Winter Olympics, Navarri said. In Russia, Bombardier also is submitting an application to supply St. Petersburg with a tram system. He declined to give values for those contracts.

Bombardier’s Class B shares fell 1 cent to C$4.75 at 2:23 p.m. in Toronto Stock Exchange trading. They declined 25 percent last year.

Thursday, January 8, 2009

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