Bombardier Looking to Turn Things Around


Bombardier, the struggling Canadian train maker recently received $1 billion dollars from the government of Quebec and is looking to use the money to make a dramatic comeback in much the same way as General Motors did after the U.S. government bailed it out in 2009.

Key Differences

When the U.S government agreed to bail out GM there was some very significant strings attached, the most important being that GM had to declare bankruptcy first. This meant that a lot of the stakeholders in the company were left high and dry with the shareholders losing their shirts and bond holders, despite having a stronger call on the company’s assets, also taking a significant loss.

Bombardier is looking for a different kind of deal and has the support of the Quebec economy minister, Jacques Daoust. Both the company and Mr Daoust are looking for a federal cash injection that does not require Bombardier to declare bankruptcy, thus avoiding the enormous loss of goodwill that GM suffered from its stakeholders in the aftermath of its bailout.

Is a Turnaround Achievable?

GM’s remarkable comeback was due, in part, to elements that were put in place before the government stepped in such as a vastly improved product line and manufacturing efficiencies. Despite the fact that GM was losing out to foreign competitors it already had the tools to turn things around, but was just short of cash.

With Bombardier, the situation is different as the company is drastically underperforming its key competitors and does not have the competitive advantage that GM enjoyed when it received its bailout funds. The other tricky point is that the company and the Bombardier/Beaudoin family that own it are not looking for a change in leadership at this time either. Without some kind of major reshuffle in the organization, it seems a bit implausible that even with the extra $1 billion dollars the company can make the same kind of comeback that GM has enjoyed.


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