An artist's rendering of Bombardier's C-series jet.
Some time late next year, a 20-tonne crane will lower a set of wings on to a truck at Short Brothers, the Bombardier Inc. airplane factory that sits a stone's throw from the shipyard that built the Titanic.
The wings will make the 14-kilometre journey over the Lagan River and around Belfast harbour to the freight docks and loaded on to a ship bound for Liverpool - a journey made necessary by the absence of a direct shipping link between the island of Ireland and North America. They will be transferred into the hold of another ship that will cross the Atlantic Ocean to Newark, N.J., then loaded back on to a truck for the final leg of the trip to Montreal.
At a new Bombardier plant near Mirabel Airport, the 16-metre-long wings will become a key component of one of the most ambitious projects ever undertaken by a Canadian manufacturer: the aerospace and transportation giant's C Series airplane.
The $3.4-billion (U.S.) entry by Bombardier into the large airplane market has undergone as arduous and circuitous an odyssey as the wings will travel in getting to Canada from Northern Ireland.
After two aborted takeoffs, Bombardier's bid to enter the biggest airplane market is now rolling down the runway and is on target to rise into the air for its first flight in 2012.
"When you go after a new niche in an industry and you want to make something different and be innovative, it takes time and you don't always get it right at first," says Pierre Beaudoin, the company's president and chief executive officer.
The C Series is a daring bet that could vault Bombardier into the major leagues of aircraft manufacturing - or prove to be a costly mistake of company-altering proportions.
The single-aisle plane will boast a new, more fuel-efficient engine and is aimed mainly at older airlines anxious to replace their aging, noisy and fuel-guzzling aircraft with a plane that will chop their operating costs and make their fleets more green. It's also Bombardier's weapon in the battle for one of the key airline markets of the future: China.
The C Series, which could propel Canada into a tiny group of elite countries that build large commercial aircraft, comes as Canada's manufacturing sector is under assault as never before by competitors from low-cost countries.
If successful, the project could provide a blueprint detailing how Canadian manufacturers can win amid fierce global competition.
The Bombardier plan is to let others do the metal bashing, while retaining the work that demands the brainpower - design, innovation and final assembly - at home, taking advantage of Canada's educated work force and its own employees' long experience in putting together airplanes.
This model is Bombardier's only hope of performing a feat that has grounded other airplane makers: muscling in on the formidable duopoly of Boeing Co. and Airbus SAS.
"To be competitive, we have to work with low-cost countries, which we do, and we have investments in low-cost countries, but what makes the product possible is the know-how that we have in Canada," Mr. Beaudoin said.
Bombardier is famous as the company that brought the world the snowmobile when it was founded by Mr. Beaudoin's grandfather, Joseph-Armand Bombardier, in 1959.
Under his son-in-law, Laurent Beaudoin, father of Pierre, the company transformed itself into the third-largest airplane maker in the world. That leap began with its foray into the regional jet market in 1986, a step many judged too risky at the time, but one that played a key role in turning Bombardier into one of the few Canadian companies to become a dominant global player in its sector.
The C Series is the biggest and most complex plane the Montreal-based company has built and it's laden with technical and logistical challenges on a scale few manufacturers have undertaken.
In Belfast, China and several locations sprinkled throughout the Montreal area, 1,700 Bombardier employees are testing new materials, designing parts, honing manufacturing strategies and gearing up suppliers.
The fuselage, a critical part of the plane, will be assembled in Shenyang, China.
In a complex and painstakingly choreographed transoceanic ballet, the fuselages, wings and thousands of other pieces and systems will be shipped to a plant next door to Bombardier's regional jet factory at Mirabel airport for final assembly.
To raise the stakes even further, the plane will come with a new engine and make use of advanced materials, notably in the wings, which will be made from composite materials, trimming weight by 15 to 20 per cent.
Above all, the new plane is extraordinary because it represents Bombardier's first challenge to Airbus and Boeing, two multinational giants with immense financial and technical resources. The world's two biggest aerospace companies are already engaged in the corporate equivalent of a Battle of Britain dogfight - and will turn their guns on any other company trying to join in.
With three years to go before the C Series is delivered to its first customers, the risks are huge for Bombardier.
To become a true competitor to Airbus and Boeing in this niche market, Pierre Beaudoin's company and its global supply chain need to execute flawlessly. Assembling a large piece of the plane in China has to provide more than a cost savings, it needs to give Bombardier an advantage with Chinese airlines.
He acknowledges the hazards. "We're taking some technical risks that need to be followed very closely."
The Company
On a brilliant mid-summer afternoon, Mr. Beaudoin watches intently from the deck of the Bombardier chalet at this year's Farnborough International Air Show as the new Boeing 787 prepares to hurtle skyward.
"This is a very elegant airplane," he said. "I look forward to the C Series taking off like this in an air show a couple of years from now."
If his investment in the C Series plane is successful, Mr. Beaudoin could be showing off his company's new aircraft in 2012 to admiring gazes from the high fliers of aviation who trek to Farnborough every two years.
Riding the regional jet program, Bombardier has propelled itself into the top ranks of global airplane manufacturers in the space of a quarter century. The company perches just one rung short of Airbus and Boeing, which have had the large commercial airplane market virtually to themselves since Boeing gobbled up McDonnell Douglas in 1997.
Bombardier is looking to compete with the giants in the narrow-body segment of that market, which refers to planes with a single aisle.
It's a necessary step.
Bombardier is being squeezed by new competitors in the regional market it effectively created when its 50-seat Canadian regional jet first took to the skies in 1989. Its archrival, Embraer SA of Brazil, is chipping away at the top end of that market with its successful E195 airplane in the 70- to 110-seat class.
Had Bombardier not gone ahead with the C Series, "that could, at the end of the day, mean they were getting out of the regional jet business," says long-time company watcher Louis Hébert, a professor of management at HEC Montréal. "That was really what was at stake."
The narrow-body segment, which includes such workhorses as the Airbus A320 and Boeing 737, is the heart of the commercial airplane market. Although these planes lack the glamour of bigger jets such as Boeing's new 787 Dreamliner or the massive double-decker A380 jumbo developed by Airbus, narrow-body aircraft represent an estimated 60 per cent of all commercial airplane sales.
Replacement demand, growth in emerging markets and the rise of new low-cost carriers are expected to generate revenues of about $1.4-trillion for plane makers in the next two decades, based on sales of about 19,000 airplanes.
Bombardier executives have fine-tuned that forecast. They believe 6,700 planes in the 100- to 149-seat category will be sold in that time frame. And the company's target is bold: It expects to capture half of those.
At prices of $55-million (Canadian) for the CS100 and $63-million for the larger CS300, the sales would translate into revenue of more than $211-billion over the next 20 years. That is about 2.5 times the $86.3-billion in revenue Bombardier - which is also a global leader in rail transportation equipment - racked up in total in the 2006-10 fiscal years.
For Bombardier, the C Series a leap forward from regional jets, business jets and turboprops. The company has spent $150-million assessing the market for 100- to 149-seat aircraft and identifying the technical challenges.
"The C Series for Bombardier is not unlike the 747 was for Boeing," says Gary Scott, Bombardier's president of commercial aircraft. "If you go back to pre-747 times, they were just building single-aisle airplanes and they made this big leap."
When Mr. Scott makes that comparison, he knows first hand what he's talking about. He started his career at Boeing and for 29 years and rose through the ranks to eventually oversee the development of a new generation of the 737.
When he was recruited by Bombardier in March, 2004, the transportation giant was in the throes of a restructuring even as it geared up its first version of the C Series. That was its second attempt to jump into the 100-seat segment. The first, the BRJ-X, was a stretched version of the company's regional jets; that was scrapped in 2000 after Boeing declined Bombardier's offer to form a joint venture for the aircraft.
One of the first things Mr. Scott talked about with Mr. Beaudoin, then head of Bombardier Aerospace, was a five- or six-year program to develop the C Series, with 2010 as the target date for first deliveries.
Outside the aerospace group, however, severe turbulence was buffeting the company. Hired gun Paul Tellier was relieved of CEO duties and departed along with two independent board members in December, 2004, after the company suffered three straight years of losses. Laurent Beaudoin seized the reins again amid a storm of criticism.
Debt rose to $6.1-billion that year, on its way to hitting $6.9-billion in 2005.
But Mr. Scott and the younger Mr. Beaudoin were still convinced there was a niche between 100 and 150 seats that Airbus and Boeing weren't addressing. Bombardier's board gave them authority in March, 2005, to try to sell the idea to customers.
Such an aircraft, Mr. Scott and Mr. Beaudoin agreed, would require game-changing technology to dramatically reduce fuel consumption. Airlines liked the idea of a new plane, but engine manufacturers weren't far enough along in developing a fuel sipper.
"What [the airlines]said is, 'You have a very good airplane and we like having options, but we're looking for a 20 per cent better fuel burn, not a 10 per cent better fuel burn,' " Mr. Scott recalls.
While they were making the sales pitch, airlines were toppling like dominoes into Chapter 11 bankruptcy protection in the United States, including Northwest Airlines, which looked like a prime target for the C Series because a mainstay of its fleet was 150 ancient DC-9 aircraft.
In March, 2006, Bombardier shelved the program. Mr. Beaudoin, however, never lost faith in the plane he had championed for so long, so Mr. Scott and a team of 50 were left to keep the dream alive.
"I've always believed it's a huge market opportunity," Mr. Beaudoin said. "Where I needed to come some ways with my team was whether we could craft a product with unique attributes to really have a competitive advantage."
A key breakthrough came at engine maker Pratt & Whitney, which had been working for years on what is called a geared turbofan engine. It uses a gear system to slow down engine fan speed, which contributes to greater fuel efficiency and reduces noise.
Even that was not enough, however. The wings for the first version of the C Series were made of aluminum because composite technology had not advanced either at Bombardier or in the marketplace, Mr. Beaudoin said. But Bombardier kept doing research and development and Boeing's 787 with its composite fuselage gave the industry more confidence that the advanced material would work on large components.
There's more to the 20-per-cent fuel improvement and 15-per-scent operating cost advantage than the engine, he said. The improvements in performance include the composite wings, the shape of the wings and the shape of the airplane.
With those advances confirmed, Bombardier seized the opportunity of the 2008 Farnborough air show to announce that the C Series was back in the game and would be in the air by 2012. Within the company there were still many questions.
"This was going to be - is - a huge bet and so internally ... there was a lot of homework done, a lot of research, a lot of evaluation, a lot of challenge," Mr. Scott said.
It helped that when Bombardier made the announcement at Farnborough, it also had a customer, German airline Lufthansa. Since then, two more customers have signed up, generating a total of 90 orders.
The marketing campaign is in full gear, touting such features as wide-bodied comfort in a narrow-bodied plane. Compared with the traditional configuration of rows of three seats on each side of the aisle, travellers will be offered rows of two seats on one side of the aisle and three seats on the other side, The seats themselves are half an inch wider than those on an Airbus A319, the shortened version of the A320. The windows are bigger.
The fuel savings, quieter engines and longer range - New York to Los Angeles in the extended range-version - are the key selling points.
Despite these breakthroughs, there were doubts in the market. "I can tell you, the biggest concern everybody had a year ago was: Would it work?" says Bryan Bedford, president and chief executive officer of Republic Airways Holdings Inc., which has signed up to buy 40 of the larger, CS300 version of the plane, an order worth $3.1-billion (U.S.).
As the airline industry fretted about the engine technology and the difficulties of bringing in a clean-sheet airplane on time, Mr. Bedford dispatched his engineers to Pratt & Whitney's test centre in Hartford, Conn., to see how engine testing and development was going. Republic executives visited Airbus, Boeing, Bombardier and Embraer factories.
Their research convinced Mr. Bedford: "We spent well over a year on the analysis and then ultimately concluded that the C Series was enough of a step-function change in terms of technology, capability, fuel consumption, reliability, customer comfort."
The Indianapolis-based company, which operates Republic Airlines, Midwest Airlines, Frontier Airlines and three others, will take delivery of 138-seat planes beginning in 2015.
The biggest attraction of the Bombardier plane, Mr. Bedford said, was lower fuel consumption from the engine and new wing design.
Reducing fuel costs is critical, and becoming more so to more airlines. Southwest Airlines, the largest U.S. airline by market capitalization, spent $3.04-billion (U.S.) on fuel last year, which represented almost one-third of its entire costs.
Airlines are also bracing for more environmental expenses because landing fees at European airports are now based on carbon fees and emissions.
"It's another one of those things that you've got to assume is going to be more and more in focus and thus translated into tangible financial contributions," says Nat Pieper, vice-president of fleet strategy and transactions at Delta Air Lines.
Every $1 change in the price of a barrel of oil represents a $100-million fluctuation in the airline's bottom line, Mr. Pieper noted. That's a key selling point for the C Series.
While the Republic announcement earlier this year gave C Series a strong boost, Bombardier's failure to announce any orders at the Farnborough show in July was regarded as a blow to the project.
Mr. Beaudoin responds to the criticism Bombardier has faced since then by pointing out that airplanes typically sell best within three years of delivery and the plane was still 41 months away from delivery during the Farnborough show.
He and other senior company officials say they are talking with several customers and hope to announce new orders soon.
The Competition
With the jump into the bigger market, the Canadian company will compete head-to-head with the Airbus A320 and Boeing 737 families of narrow-bodied aircraft at a crucial point in the dogfight between the two larger companies.
Those aircraft are two of the most successful airplane programs since a couple of Ohio brothers named Orville and Wilbur Wright powered a 272-kilogram biplane into the air at Kitty Hawk, N.C., in 1903.
For months, the Europe and U.S.-based giants have been debating how to handle the new competition from Bombardier and other players that are poised to enter the narrow-bodied segment. Mr. Scott says the debate within Boeing about what to do with the 737 dates back to his time at the company.
Single-aisle airplanes represent 80 per cent of the planes Airbus and Boeing make, according to an analysis by Rami Myerson, London-based aerospace analyst for UBS Ltd.
The two giants have a few options when it comes to addressing the new competition. They can stand pat with their existing planes; they can buy new, more fuel-efficient engines for their A320 and 737 models, the so-called "re-engining" option; or they can develop completely new versions of the planes.
While the two companies develop their strategies, some customers are holding off buying the C Series. Air Canada has assessed the new Bombardier plane and will decide within a year whether to purchase the new aircraft to add to its fleet of Airbus, Boeing and Embraer large airplanes, president Calin Rovinescu said.
Canada's largest airline won't make that decision, however, until it sees how Airbus and Boeing address the narrow-bodied segment, he said.
Other airlines aren't prepared to wait, and that could provide a boost to the C Series.
Mr. Bedford of Republic Airways says his company ordered the Bombardier planes in part because leases on existing aircraft are up in 2015 and the airline can't delay until Airbus and Boeing offer a new engine or develop a new airplane.
While they fight to continue dominating the narrow-body market, the two giants are engaged in their own cat-and-mouse game in more lucrative segments of the aviation business.
Airbus and Boeing dominate the single-aisle market, but battle only against each other in the wide-bodied segments. And their fight over the wide bodies will spill over into the 100- to 149-seat segment, where Bombardier has made its big bet.
Boeing's multibillion-dollar 787 Dreamliner project has been plagued by supply-chain setbacks. When Mr. Beaudoin watched the Dreamliner take off at Farnborough in July, deliveries were scheduled to begin late this year or in the first few weeks of January, 2011, a huge delay from the original date of May, 2008.
Since Farnborough, that delivery date has since been pushed back again to the middle of the first quarter. At the same time, the Chicago-based defence and airplane maker is facing problems with an updated version of its classic 747. Both are critical programs that demand large engineering and financial resources.
Airbus meanwhile, is scheduled to deliver its response to the 787, the A350, which boasts an impressive order book and is regarded by many in the industry as a superior plane.
Airbus is also stretched for resources, but the A350 is a huge threat because if it works, Boeing will have to respond with a bigger 787 or overhaul another of its wide-body planes, the 777.
"If you're the CEO of Airbus or Boeing, you can say 'I will crush the C Series,' " says Karl Moore, a professor at McGill University's Faculty of Management. "If you go to your board and say you want to crush the C Series, they're going to say: 'Are you insane?' "
That constraint on engineering resources at the two companies could force them to stand still in the narrow-body market and focus instead on wide-body airplanes. Boeing said this week that a decision on whether to put new engines on its 737 has been pushed out to early next year.
While Airbus and Boeing may have some constraints as they decide how to compete with the C Series, they also have some big advantages over Bombardier.
Low-cost carriers, important potential customers because they are growing rapidly, try to emulate Southwest, whose fleet consists entirely of Boeing 737 planes, plus some smaller B717 models it picked up just this week with the purchase of fellow discount carrier AirTran Holdings Inc.
Southwest has tremendous clout on Boeing's 737 decision because it now operates more than 600 of the model. Having just one set of replacement parts for repairs, one set of tools and one set of simulators for flight training is a tremendous cost saving as Southwest has demonstrated.
That means it will be difficult for Bombardier to break into airlines that are sourcing only Airbus or Boeing planes.
It may also be difficult for Bombardier to compete on price, points out Richard Aboulafia, vice-president of analysis at aviation consulting firm Teal Group Corp. in Fairfax, Va.
The economies of scale for Boeing pumping out 400 737 planes a year give it enormous pricing power to fire back against new entrants, Mr. Aboulafia notes.
"Boeing would sell [Southwest]those 737-700s at the marginal cost to produce or perhaps even beneath it," he said.
Mr. Beaudoin maintains that the C Series has an advantage because it's purpose-built for the 100- to 149-seat market. A Bombardier company sales pitch to potential buyers trumpets how the plane is "not stretched, shrunk or reconfigured."
Making The Aircraft
Even if Mr. Beaudoin and his team manage to convince airlines that the C Series will lower their costs and make their fleets more green, his company's big bet still relies on a far-flung global supply chain that includes the Belfast-built wings and the fuselages made in China.
Given the problems Airbus and Boeing experienced with lengthy delays on their A380 and 787 wide bodies - many of those related to supply chain hiccups - few industry observers expect Bombardier to be able to deliver on time.
Bombardier has plenty of experience leveraging global suppliers and bringing it all together with its Global Express business jet program, but the C Series poses some new challenges.
Among those is the use of composite materials for more than 40 per cent of the aircraft. That includes - for the first time on a Bombardier plane - the composite wings from Belfast, which have been pummelled, pierced, poked, prodded and pounded by engineers as they examine what stresses they will be able endure once the plane is in the air.
Testing of several other key components is under way more than a year before the 2012 scheduled first flight of the plane.
"We are going to test all the systems on the ground so the [first]flight is not a test by itself," says Jean-François Tessier, manager of program planning development and customer requirements for the company's commercial aircraft division.
The Bombardier engineers in charge of manufacturing the plane are already in full gear, even though the assembly plant in Mirabel where the plane will be put together will not be built until 2012. A slump in sales of regional jets has opened up space at a hangar next to where that plant will be built, allowing the company to build a test assembly facility and delay the capital expense of a new factory.
In another first for Bombardier, robots will be used to marry the wings from Belfast with the fuselage from China.
The wing-to-fuselage connection for the C Series differs from that of the regional jets. When regional jets are assembled, a fuselage is lowered on to a one-piece wing, then connected with eight or 10 aluminum, titanium and composite fasteners.
For the C Series, the wings will be pushed separately into a box in the fuselage, then fastened.
Test fuselage barrels from Shenyang Aircraft Corp. (SAC) of China are going through pressure testing at another Montreal-area plant that is taking it through three life cycles, each of which consists of 60,000 simulated takeoffs and landings.
The fuselages, plus tail cones and doors supplied by SAC, will make an even longer journey to Montreal than the wings. They will travel across the Pacific Ocean to Long Beach, Calif., then by truck to Montreal.
The choice of SAC to supply the fuselages has raised red flags with aerospace industry analysts.
"There are many people you could have chosen to do the fuselage, Shenyang is not one of them," says Teal Group's Mr. Aboulafia, pointing to the company's lack of experience in building fuselages, a space where Japan-based Mitsubishi Heavy Industry Inc., Spirit AeroSystems Inc. of Wichita, Kan., and Italy-based Finmeccanica are established players.
Shenyang is far from a new kid on the aerospace block - its website boasts a photo of Mao Zedong inspecting the cockpit of a new F5 fighter jet in 1958 - but it's new to the fuselage business.
The choice of SAC was a strategic move, designed in part to help the C Series penetrate the Chinese market.
China already accounts for about 40 per cent of Asia's air traffic and forecasts suggest it will represent 15 per cent of the world aviation market in 15 to 20 years. Bombardier hopes that doing such major assembly in China will give it added sway with Chinese airlines.
Mr. Beaudoin and other company officials showed off two Bombardier planes and the company's Toronto manufacturing plant to Chinese President Hu Jintao earlier this year during the G20 summit.
"A side benefit of going to these different areas, particularly China, is strengthening your presence in the country," Mr. Scott says. "It's not a guarantee that you'll get the business, but people know you and they say, 'Gee, I should buy a Bombardier airplane because part of it's built in China.' "
Now there are 50 Bombardier employees in China working with Shenyang on the C Series fuselage and logistics for delivery.
SAC is just one of the many risks Bombardier has taken on in developing a new airplane with leading-edge materials and by relying on a network of suppliers around the globe. But it's a company that was built on risk and innovation - and the $3.4-billion plane is backed by $700-million in government loans and includes another $700-million of investments by suppliers.
"Part of building a successful world-class company is taking some risk, but they're measured risks," Mr. Beaudoin said.
The view from the boardroom window of Bombardier's Short Brothers operation in Belfast offers evidence of what happens when companies fail to make the leaps that lead to breakthroughs.
Two cranes, named Samson and Goliath, tower above Harland and Wolff, the shipyard that could be considered the Boeing of its day when it built the Titanic in the early 1900s.
Harland and Wolff and Short Brothers were privatized by the British government in 1989 in the deal that gave Bombardier control of the airplane maker.
When Michael Ryan, vice-president and general manager of Short Brothers, joined the aircraft company in 1981 there were about 6,000 employees and roughly the same number next door at the shipbuilder.
Now, the shipyard is down to a few hundred workers.
"When you look out our boardroom - or when the vast majority of our work force leave our main factory - they'll see a business and an operation which is a reminder that you've just got to keep changing and adapting to survive in any business," Mr. Ryan said. "We have to add value and we have to add more value than we did before. It's a lesson and a reminder every single day."