Skip to main content

A technician works on an airplane at the Bombardier production facility in Mirabel, Quebec, Canada, on Thursday, March 7, 2013.Patrick Doyle/Bloomberg

Bombardier Inc. chief executive officer Alain Bellemare is bringing in an expert in manufacturing efficiency to help him revamp the Montreal-based company's operations as it struggles with some aerospace programs that analysts say are barely breaking even.

Mr. Bellemare named Jim Vounassis as Bombardier's new vice-president of operations strategy starting June 15, the company said in a statement Wednesday. It's an all-new position and comes as plane and train maker struggles to bring its new C Series airliner to market and win orders for its existing stable of regional and corporate jets following its first annual loss in nearly a decade.

The appointment signals that, after hiring new senior executives to sell planes as well as hiring consultant Plane View Partners to advise on commercial aerospace strategy, Mr. Bellemare is turning his sights to the company's shortcomings at the factory and supply level. As part of his new responsibilities, Mr. Vounassis will conduct a detailed review of Bombardier's operations, the company said. He'll also lead a plan by Bombardier to improve profitability and operational performance in both its train and plane divisions.

Critics have questioned for months the logic of building planes while making little money on them. Bombardier's CRJ regional jet and Q400 turboprop programs in particular are operating on a little-to-no-profit basis as new orders come in sporadically, Canaccord Genuity analyst David Tyerman said.

"I would say there's a problem," Mr. Tyerman said. "Either they're really not doing a very good job in the plant or they're not able to sell enough to offset the overhead costs or they're having to sell them at discount prices… The fact is, the combined pair are break-even right now. And this is five years into an economic recovery." Mr. Vounassis most recently worked at oil field services company Baker Hughes, based in Houston, Texas, where he led an overhaul of the company's manufacturing and supply base. Before that he was at aircraft engine maker Pratt & Whitney, where he worked with Mr. Bellemare. At Pratt, Mr. Vounassis steered the company's strategic sourcing and developed a lean inventory-management system.

"This is just another opportunity – and one they really have to take advantage of – in order to get their margins up," said AltaCorp Capital analyst Chris Murray. "When you look at the margin performance in both commercial and business aerospace, they're certainly lagging a number of their peers. And the whole supply-chain issue is certainly part of that conversation. It's not the whole story but it's an important facet."

In its latest profit outlook, Bombardier said it expected to tally a 7-per-cent margin on earnings before interest and taxes for business aircraft in 2015 while its commercial passenger aircraft posted negative EBIT of about $200-million. The company's corporate aircraft margins are barely one-third those of rival Gulfstream, Veritas Investment Research estimates.

"Jim Vounassis is recognized for his ability to increase manufacturing flexibility and to optimize cost," Mr. Bellemare said in a statement, adding his experience will be invaluable as the company re-evaluates its operations to improve production efficiency and eliminate waste.

Bombardier runs 10 production and engineering facilities for its plane-making business around the world, notably in the Montreal area and Mexico. Its rail equipment unit, based in Germany, has 38 similar sites.

With files from Bertrand Marotte

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe