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Europe's land-bound version of the giant Airbus consortium, dubbed ''Railbus'' by the media, is in the making. It is the proposed merger of the train-manufacturing divisions of Germany's Siemens and France's Alstom. If the European Union competition czar, Margrethe Vestager, gives the new rolling beast her blessing, it will become the world's second-largest industry player, after China's mighty CRRC.

The launch of the Siemens-Alstom joint venture would push Bombardier Transportation (BT), the train division of Montreal's Bombardier, into the distant third position. Will the company keep BT in the game in the hyper-competitive industry? Or will it merge BT with another train maker or even sell it outright? The questions have existential implications for Bombardier.

Bombardier Transportation received a $661-million order for the delivery of these trains to the Netherlands in 2017.

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If the company chooses to sell BT or make it a partner in another train business, Bombardier would shrink considerably.

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Canada's premier technology provider got much smaller in July, when it sold a 50.01% controlling interest in the C Series jet, its flagship aerospace product, to Airbus.

Unloading BT would slash Bombardier's revenue by about half, and leave it with just corporate and regional jets.

But it could be a very opportune time to sell. BT would be coveted by CRRC or any other train maker looking for a manufacturer that can offer products in every category, from high-speed trains to signalling equipment, almost anywhere in the world.

The trouble for Bombardier is that BT is just a caboose compared to its largest competitors. The division had revenue of $8.5 billion (all currency in U.S. dollars) in 2017. But according to data compiled by rail consulting firm SCI Verkehr, BT had a global market share of just 4%, based on sales between 2014 and 2016. The combined share of Siemens and Alstom was 9%. CRRC, formed in 2015 when the Beijing government rammed together two rival train makers, CNR Group and CSR Group, was the leader at 12%. At last count, CRRC had $38 billion in annual revenue and 180,000 employees.

CRRC has a lot going for it: sheer bulk, government backing, access to cheap financing, low labour costs, a stock market listing (in Hong Kong), a full range of products – including bullet trains – and ambitious executives bent on global conquest.

What it lacks is a presence in Europe, the world's most valuable train market.

That’s why BT looks so attractive. In one fell swoop, Berlin-based BT would make CRRC a viable European competitor. BT has seven manufacturing and engineering sites in Germany and dozens more across the continent, a vast ecosystem of suppliers and a big research and development team. The Chinese also need the ever-so-crucial assets that don’t find a tidy presence on the balance sheet – government connections, political savvy and market insight built up over decades that can translate into sales.

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It's an open secret that CRRC and its two predecessor companies have stalked BT. Bombardier said no to an approach in 2015, and that was probably a wise move, because its fortunes have improved substantially since then.

Bombardier is now less hungry for injections of cash. The dire losses from the C Series jet have been stemmed by its sale (Bombardier kept a 31% share, and the Quebec government owns the rest).

Bombardier also raised $1.5 billion in 2015 by selling a 30% stake in BT to the Caisse de dépôt et placement du Québec .

BT’s sales have climbed as well. Its order backlog jumped by 14% in 2017 to a hefty $34.4 billion.

If Bombardier doesn't sell BT, the alternative is the slow-burn approach--buying small train makers with scant pan-European presence or building more market share from scratch. Bombardier might just try to tough it out as competition intensifies. It knows Siemens and Alstom could go through hell in the next few years.

Merging their German and French rail operations and deciding which factories to close will inevitably lead to union battles and nationalistic outpourings from politicians. BT went through a similar hell in the past decade, when it bought German train giant Adtranz from DaimlerChrysler, a messy deal that wiped out BT’s profit margin.

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Eventually, however, a formidable competitor will likely emerge when Siemens and Alstom get their act together. CRRC will also be an enormous threat.

The company will no doubt try to build a European business itself by undercutting rivals on price, as it has done in other markets.

For years, BT tried to merge or form a partnership with Siemens or Alstom.

That option is gone. Here’s betting that BT will ultimately end up – in whole or in part – in CRRC’s hands. BT’s rivals are getting too big for comfort, and the C Series fiasco proved that Bombardier doesn’t do world domination well.

Eric Reguly is an award-winning columnist with The Globe and Mail based in Rome.

Reach him at ereguly@globeandmail.com or on Twitter @ereguly

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