Bombardier's International Sales

Global Market Revenues for Multinational Aerospace and Rail Systems

May 31, 2008 Daniel Workman

Canada's world leading plane & train maker has the focus, product & geographic diversification to ride out a U.S. recession, high oil prices & the credit market meltdown.

Headquartered in Montreal, Bombardier is comprised of two similarly sized businesses. The Canadian company’s aerospace and transportation segments serve distinctly different global market clients.

But that's a good thing. Two highly focused yet diversified product categories offset the risk should either industry suffer a prolonged downturn.

From an international trade perspective, the Canadian multinational is somewhat insulated from an anticipated economic slowdown in the United States. More than 100 countries generated company revenues of about US$17.5 billion in fiscal 2008 (ended January 31). That represents an 18% gain from 2007.

Bombardier’s Global Sales in 2008

Listed below are 2008 international sales statistics for the Canadian multinational giant. Each geography's percentage of total sales is shown, as is the percentage revenue change from 2007.

1. United States … $5.6 billion (31.8% of overall revenues, up 17.1% from 2007)
2. United Kingdom …. $1.95 billion (11.1%, up 37.3%)
3. Germany …. $1.2 billion (7.1%, down 20.8%)
4. France …. $1.18 billion (6.8%, up 32.8%)
5. Canada …. $668 million (3.8%, up 19.1%)
6. Switzerland …. $532 million (3%, up 130.3%)
7. Italy …. $507 million (2.9%, down 26.3%)
8. Spain …. $466 million (2.7%, down 20.6%)
9. Austria … $400 million (2.3%, up 183.7%)
10. Other European countries … $1.6 billion (9.2%, up 33.1%)
11. Asian countries … $1.4 billion (8%, up 2.5%)
12. Other Americas … $1.14 billion (6.5%, up 46.8%)
13. African countries …. $530 million (3%, 70.4%)
14. Oceania …. $321 million (1.8%, down 17.5%).

European nations generate about 45% of Bombardier’s total sales. Overall European revenues were up 17.1% in 2008, even though Germany and Italy reduced their contract orders for Bombardier products last year.

Bombardier Aerospace Products & Services

For fiscal year 2008, Bombardier reported aerospace revenues of about US$9.7 billion or some 55% of total company sales.

Bombardier is the world’s leading maker of regional aircraft marketed to airliners that deliver high frequency commercial regional flights. The company is the second-largest builder of business jets generally sold to corporations and high net worth individuals. In addition, Bombardier Aerospace sells aircraft services including 24-hour spare parts and support, aircraft maintenance and aviation training solutions.

U.S. clients accounted for 51% of Bombardier’s 2008 aerospace revenues. Recently, international orders for aerospace products have increased to two-thirds of the company’s total orders received, making Bombardier aerospace less dependent on American clients. Part of this trend is due to an increase in the number of high net worth persons in emerging markets including China, India and Russia who demand their own business jets.

Bombardier Transportation Products & Services

In 2008, Bombardier’s transportation business generated revenues of $7.8 billion or about 45% of total company sales.

Bombardier’s Transportation business is the biggest railway equipment maker on the planet. Bombardier makes passenger rail vehicles, including light rail vehicles and metro subway cars, commuter, regional, intercity, high-speed and very high-speed trains, passenger locomotives, as well as freight electric and diesel locomotives.

While there are some private operators, Bombardier sells its transportation products principally to public sector customers including large national railways, regional railways and freight transporters.

European nations represent about three-quarters of company transportation revenues in 2008. Clients from around 60 countries buy Bombardier’s transportation products.

Bombardier’s Market Outlook for Aerospace Products to 2010

Due to the anticipated slowdown in the U.S. economy, the sole sales driver for Bombardier’s aerospace products is increased demand from such fast-developing international markets as the Middle East, Latin America and Asia-Pacific regions.

International trade prospects for Bombardier’s transportation products are generally much brighter.

Market Outlook for Transportation Products to 2010

The first trend that bodes well for Bombardier rail products is growing worldwide demand for environmentally friendly transportation to fight global warming.

Second, rising oil and gas prices are forcing more people to travel via rail transportation.

So where will the money come from to buy Bombardier's rail products?

Government Spending Fuels Railway Development

Government-controlled operators expect to increase their already high level of public sector spending to replace or modernize their railway equipment and services. In Europe and North America where the average age of the existing rail systems is within 10 years of the 30-year replacement threshold, growing competition among operators as well as high comfort levels demand by rail passengers are acclerating improvements in both safety levels and network capacity. In fact, some large public railway systems are looking to internationalize their operations.

Bombardier's Competitive Advantage in Raising Project Capital

While financial institutions tighten lending requirements following the subprime lending crisis, public spending is not subject to the same borrowing constraints faced by companies in the private sector. Bombardier projects are financed upfront by well-heeled sponsors like the government of China.

Emerging Markets Demand Bombardier Rail Systems

Urbanization, population growth and economic development trends in emerging developing markets like Asia-Pacific will drive high demand for new, high-performance rail equipment for public urban and intercity passenger as well as freight transportation.

These fast-growing countries may well provide the strongest multinational expansion drivers for Bombardier transportation – and Bombardier overall – over the next three years.

The copyright of the article Bombardier's International Sales in International Trade is owned by Daniel Workman. Permission to republish Bombardier's International Sales in print or online must be granted by the author in writing.

Bombardier's rail systems move people worldwide