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Bombardier negotiations continue, compensation timeline for ION delivery delays still up in the air

This comes as the company has announced the sale of its Transportation Division
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ion train
An ION train heads toward Mill station. Mark Pare/KitchenerToday

Waterloo Region will be largely untouched by Bombardier's latest business venture: the sale of their Transportation Division to rail transport giant Alstom. 

That includes negotiations that are taking place between the Region and the company around compensation for delays delivering LRT trains.

Those conversations are happening in good faith, according to David Van der Wee, Chief Operating Officer for Bombardier Transportation in the Americas.

"We're having very open and frank discussions, but they're also very productive," said Van der Wee in an interview. "We are actually, as we speak, working through the details of how that is all going to happen."

As far as specifics, Van der Wee couldn't give a timeline for when negotiations would be finished, or what's being discussed. 

"It's up in the air, there's no timeline," he explained. "I have regular conversations with the representatives of the Region of Waterloo. It's all good faith, it's progressing well, but I would not be in a position to give you a specific timeline." 

Van der Wee also added that these sorts of negotiations between Bombardier and municipalities are rare.

So, there's no effect on the negotiating process as a result of this sale, and there also won't be a huge impact on how the Region gets new LRT trains.

"I've been very intimately connected with the Region of Waterloo and this project, this project is very near and dear to my heart," said Van der Wee. "I can absolutely promise you that there is zero impact for the Region of Waterloo, for the administration, for the users of transit."

Succinctly, the biggest change we could see is that the name "Bombardier" would not show up on future purchases.

"When an acquisition like this happens, the actual product that you use doesn't go away," explained Van der Wee. "That product, that design, that production method, that supply chain that supplies all the parts to build the train, that still exists. It exists today, and it will exist tomorrow. The fact that it exists under a Bombardier name, and perhaps, after 12 to 18 months, it will exist under the Alstom name, doesn't really change a lot for the end customer. So, in terms of, 'are we going to have access to spare parts, are we going to be able to buy new vehicles should we wish to do so one day,' the answer is absolutely, yes."

So, is the rail industry in trouble? Is that why Bombardier is getting out of the business?

Quite the opposite, according to Van der Wee. 

He said the rail industry has been going well for years, outpacing GDP and growing rapidly. It also provided a great foundation to grow their business.

As far as why Bombardier is selling the division, then, the answer to that comes from Chief Executive Officer of Bombardier Inc. Alain Bellemare.

"Including expected proceeds from previously announced transactions, Bombardier would have between $6.5 and $7.0 billion of pro forma cash on hand, putting the company on a brand-new footing to address its $9.3 billion of debt," Bellemare said in a release.

David Van der Wee explained that there's other advantages to getting out of the rail business, as it enables them to focus on their Business Aviation division.

With that being said, he also clarified that nothing is certain as of yet.

"There is an agreement, an understanding to have a purchase of the Bombardier Transportation [division] by Alstom, but by no means is this done," said Van der Wee. "We are confident that process will be successful, and will emerge as one entity at the end of that. So, what does that mean? It means for the next 12 to 18 months, it's business as usual."




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