Bombardier upbeat on train orders
Canadian firm Bombardier Transportation expects to win more train orders in China, despite a sharp fall in the value of railway contracts awarded on the mainland this year.
The vote of confidence in China's railway sector was echoed by General Electric, the largest industrial group in the United States, which has supplied more than 950 heavy haul, diesel-electric locomotives in China and expects more business.
New railway contracts awarded on the mainland plunged 90 per cent during the first half, largely because of the arrest in February of former minister of railways Liu Zhijun amid talk of possible corruption; and the temporary suspension of all new rail projects after a fatal high-speed-rail accident in Zhejiang province in July.
One of the trains involved in the accident was built by Bombardier Sifang (Qingdao) Transportation, a 50-50 joint venture between Bombardier Transportation and CSR, a Chinese state-owned train maker listed in Shanghai and Hong Kong.
'As one of the high-speed train manufacturers in China, Bombardier's reputation was hurt briefly. The stock price of parent company Bombardier Incorporated dropped on the Toronto Stock Exchange immediately after the train accident in China,' said Bombardier China president Zhang Jianwei.
But despite the drop in contract awards this year, the firm has no plans to cut staff or reduce its investments, Zhang said.
The firm has more than 4,000 employees on the mainland, working in three joint ventures and seven wholly foreign-owned enterprises.
Zhang said the company planned to expand its business on the mainland and would be looking at light rail systems and commuter trains.
Bombardier has received 15 railway orders in China so far this year with more contracts expected before the end of the year, Zhang said.
In September 2009, Bombardier Sifang signed a US$4 billion contract to supply 80 high-speed trains to the Ministry of Railways, with deliveries to begin next year. In July last year it won a US$762 million contract to supply another 40 high-speed trains to the ministry.
'The huge drop in rail orders will not affect Bombardier's business for some time, as it has a healthy forward order book,' said David Shipley, managing director of CSRE, a British firm that markets trains in Europe made by Chinese rolling stock manufacturers such as CSR.
In December 2009, Changchun Bombardier Railway Vehicles, a joint venture with Shanghai-listed rolling stock maker China CNR Corp, won an order to supply 246 carriages for a Shanghai metro line. It also has orders for metro cars in Shanghai, Guangzhou and Shenzhen.
To date, Bombardier has delivered 2,000 railway passenger cars to the ministry, Zhang said.
'We haven't changed our long-term strategy in China. The suspension is a temporary measure, and the high-speed rail network will certainly continue to develop in China because railways play an important role in China's economy.'
In December last year GE announced it would form a US$50 million US-based joint venture with CSR to supply high-speed trains and other railway technology in the US.
The revenue, in US dollars, that Bombardier recorded in its last financial year
Firm moved into the rail business in 1970