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Bombardier Inc. is telling its aerospace workers in Northern Ireland that it is in "serious financial crisis," as the company seeks deep concessions that it says are critical to its survival.

In a one-page summary of a contract offer handed to unionized workers in Belfast on Thursday, the Montreal-based plane maker paints a grim picture of its financial health and tells employees that it needs to cut costs at the city's manufacturing site 20 per cent by 2017.

"Bombardier is in a serious financial crisis, threatening the future viability of the organization," the company says in the summary, seen by The Globe and Mail. "We all have a responsibility to contribute towards cost reduction. This is critical to our survival."

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Bombardier is Northern Ireland's biggest manufacturing employer. About 5,500 workers there assemble the wings for the C Series airliner and also build parts for other Bombardier aerospace programs such as engine nacelles.

Even if it is a bargaining tactic, the alarming depiction of the company's financial health and the threat of impending doom if workers don't act are unusual for a Canadian company to make in writing during labour negotiations. They also stand in stark contrast with the reassuring tone Bombardier chief executive officer Alain Bellemare struck in media interviews after its third-quarter results were reported.

With a $1-billion (U.S.) investment pledge from Quebec and more money coming from the sale of a minority stake in Bombardier's train business, Mr. Bellemare has said he feels confident that the company has enough cash to complete its current plane development programs, including the C Series jet and Global 7000/8000 business aircraft.

"Things are starting to turn" to the positive, he said on Oct. 29. "I feel good about where we are."

Mr. Bellemare has implemented a formal cost-reduction plan across Bombardier operations, but he has never publicly characterized labour agreements as problematic. He has said Bombardier was pushed to the wall as a direct result of trying to develop too many products at the same time that its cash intake was shrinking significantly. The C Series aircraft, the company's big bet to drive revenue over the next 20 years, has been the biggest drain on resources.

In what union officials said was a final offer by Bombardier, the company is asking workers in Belfast to accept a three-year deal with pay freezes over the first two years and a 2-per-cent wage hike in the third. Bombardier also wants employees to work an extra hour on Friday starting in 2016.

Davy Thompson, a spokesman for the Unite trade union representing Bombardier's Belfast workers, declined to comment because the offer was being put to a vote. He told BBC News earlier in the day: "We know the company has, for some time, been struggling in terms of finances. Really, it comes down to a decision of the work force as to which way they want to go with it."

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Bombardier spokeswoman Haley Dunne confirmed that the company has been in talks with its unions on cost reductions for the Northern Ireland operations. She declined to explain why it chose to depict its financial situation in such dire terms.

David Chartrand, Quebec co-ordinator for the International Association of Machinists and Aerospace Workers, which represents 4,700 Bombardier aerospace employees in the province, said he was not surprised by the language used.

"We were 15 months in bargaining and for 15 months they were telling us they had no money," Mr. Chartrand said, adding that his Bombardier members earlier this month voted 92 per cent in favour of a new a four-year pact that includes a wage freeze in the first year and a 1.5-per-cent wage hike in the second year offset by increased employee pension contributions.

"People have come to the conclusion that things are not that good right now" at Bombardier, he said. "They all believe that things are going to get much better. They all believe in the C Series. But when the cash ain't there, it ain't there."


Private-finance interest strong in Bombardier Transportation

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The identity of the new investors in Bombardier Transportation – public shareholders or private funds – will be revealed within weeks as the train company's Canadian parent rushes to bolster its finances to avoid a liquidity crisis.

Bombardier Inc. must decide whether Bombardier Transportation (BT) will raise money through an initial public offering or a private placement. While Bombardier announced in May that an IPO would be pursued at BT, people close to the company said that interest from potential private investors has been strong.

If BT opts for the non-IPO route, the identity of any private investors would be revealed immediately.

Bombardier would not comment.

They said the interest is coming from institutional investors, private equity funds and hedge funds. Theoretically, rival train companies could invest in BT, but are unlikely to do so since only a minority position – perhaps 20 per cent to 25 per cent – is being offered. Bombardier has said repeatedly that it has no intention of giving up control of BT, even though Chinese rail companies have offered to buy the whole company, presumably at a hefty value.

The apparent strong interest in a private deal suggests the IPO option, while still officially on the table, is becoming less likely by the day. In interviews given in late October, Bombardier CEO Alain Bellemare appeared to be leaning toward private placement. "We like the private placement option," he said. "You have pros and cons in each. We will see what we can do on the private placement, and then in the next few weeks we will decide."

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A private deal would avoid the costs of running a stock market company and might place a higher value on BT which, along with Siemens of Germany and Alstom of France, dominates the global train market.

The BT sale is designed to shore up Bombardier's liquidity as it seeks buyers for the slow-selling C Series jet airliner, which is to enter commercial service in 2016 after a two-year delay and a $2-billion (U.S.) cost overrun.

Last month, the Quebec government said it would invest $1-billion (U.S.) in the C Series in exchange for a half interest in the project. Bombardier is also lobbying the federal government for support.

When the government decides whether to give aid to Bombardier, it will take into account any possible trade challenge that might arise as a result, Prime Minister Justin Trudeau said on Thursday.

"We will ensure that any decision taken is in the best interests of Canadians based on a strong economic case, but concerns about international impacts I'm sure will fold into any decision we take in a responsible manner," the Liberal leader said when asked by a reporter about possible trade action.

The Canadian Taxpayers Federation launched radio ads that decry any taxpayer-funded investment in, or bailout of, Bombardier. "Giving scarce tax dollars to big corporations is wrong, period," said CTF federal director Aaron Wudrick. "It does not 'protect good jobs;' it merely perpetuates an endless cycle of handouts and encourages other businesses to seek similar favours."

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- Eric Reguly with files from Reuters

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