Skip to main content

Laurent Troger, the new president of Berlin-based Bombardier Transportation, says he’s focused on preparing the company for the future as train competition gets fiercer.

Chris Ratcliffe/Bloomberg

While Bombardier Inc. chief executive officer Alain Bellemare is fighting a battle to save the company's aerospace division, Laurent Troger is fighting to keep the other half of the company – the train business – competitive as Asian train companies roll into the market.

Mr. Troger is the new president of Berlin-based Bombardier Transportation, or BT, which is one of the Western world's top-three train makers and had 2015 sales of $8.3-billion (U.S.). He said he feels enormous pressure as train competition heats up, mergers shake up the industry and customers demand the sort of expensive automation that would be found on passenger jets such as Bombardier's C Series.

"The combination is quite an interesting cocktail," he said in an interview last week in Berlin after Bombardier announced its year-end results. "The environment is much more challenging than it used to be."

Story continues below advertisement

The question of whether BT will play the train-consolidation game must obsess company executives, though Mr. Troger, who is 52 and from Paris, insists that any decisions on that front are up to Mr. Bellemare and his senior team in Montreal, not him. Still, as Mr. Bellemare's top train man, it's inconceivable that Mr. Troger would not play a key role in shaping any consolidation strategy.

Last year, when Mr. Bellemare replaced Pierre Beaudoin as Bombardier's CEO, he made it clear that the company was open to consolidation options for BT. At the time, Bombardier also contemplated parking BT on the stock market through an initial public offering. In the end, it choose to sell 30 per cent of BT to the Caisse de dépôt et placement du Québec for $1.5-billion (Canadian), valuing BT at $5-billion.

The Caisse stake was designed to pump liquidity into the parent company, not to block any consolidation moves. Mr. Troger hints that the Bombardier and Beaudoin families, who have outright control of Bombardier through their super-voting A shares, are more likely to be buyers than sellers.

"I know Laurent [Beaudoin] and Pierre and they are passionate about our products," Mr. Troger said. "They like trains, and they came into this business not as short-term investors. This highlights a significant commitment to rail. Nothing we have in our hands should change their minds."

The family members' apparent devotion to BT might explain their decision to turn down a lucrative takeover offer. According to Reuters report published in September, Beijing Infrastructure Investment Co., a state-controlled company that operates metro lines in Beijing, offered to buy as much as 100 per cent of BT.

Citing a leaked letter written to Pierre Beaudoin, now Bombardier's executive chairman, Reuters said the Chinese company put BT's enterprise value (debt and equity) at $7-billion to $8-billion (U.S.). On Monday, the market value for all of Bombardier was a mere $2.6-billion (Canadian), after a one-year decline of 48 per cent.

Consolidation is hitting the global rail industry. The Chinese train companies are on the prowl and also tried to buy AnsaldoBreda SpA, the Italian train company that makes the high-speed Frecciarossa (Red Arrow) trains that were designed and engineered by Bombardier. Last year, Japanese industrial heavyweight Hitachi agreed to buy AnsaldoBreda, though the deal has not closed.

Story continues below advertisement

Meanwhile, a transatlantic merger is under way that will see Wabtec Corp. of the United States buy 51 per cent of France's Faiveley Transport for $1.2-billion (U.S.), creating one of the world's biggest makers of rolling stock. The deal making won't stop there and BT's name pops up as a candidate in almost every rumoured merger.

China's creeping foray into the European train market, the world's largest, will heat up the train game. Mr. Troger said the Chinese recently opened a marketing office in Vienna, from which bids for Eastern European projects, complete with cheap financing offers, will be launched. "This is not a question of when do I expect the Chinese, they are already here," he said.

Mr. Troger does not look like a train man. Appointed in December as the replacement for Lutz Bertling, he is slight, fair and soft-spoken and confesses, "I would not say I am a train guy." But he knows a lot about the software and automation side of the train business and is an expert in the integrated computer systems that allow driverless trains.

He is a systems engineer by training, and his early career was spent in the French navy, developing automatic weapons systems. He was snapped up by France's Alstom Transport, where, in 2002, he led a team that developed the first driverless metro trains, in Singapore. He joined BT 11 years ago, and gained a good reputation as a turnaround man.

Mr. Troger claims he has no idea what future BT faces, but with Bombardier under financial pressure and the competition becoming relentless in the train business, he has no choice but to make BT a stronger performer. "My role is to prepare ourselves for the future," he said.

 

United orders 25 more Boeing 737

Story continues below advertisement

Boeing Co. has won an order for 25 current-generation Boeing 737 aircraft from United Continental Holdings Inc., beating rivals including Canada's Bombardier for the second time in a month, two industry sources said. The deal, which is said to involve the 126-seat 737-700 model, would be worth just over $2-billion (U.S.) at list prices.

Boeing and United Continental both declined to comment.

The follow-on deal with Boeing, first reported by the Wall Street Journal, comes weeks after United agreed to buy 40 Boeing 737-700 jets. Bombardier said last week it was in new talks with United after winning an order from Air Canada for its C Series jet.

Reuters

Report an error Editorial code of conduct
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter