Bombardier Transportation & the Adtranz Acquisition

Topics: Rail transport, Public transport, Commuter rail Pages: 8 (2395 words) Published: January 27, 2009
Pierre Lortie = newly appointed President & Chief Operating Officer of Bombardier Transportation (BT), headquartered in St. Bruno, Quebec BT = one of 3 major operating groups of Bombardier Inc. (BBD), headquartered in Montreal, Canada. BBD = one of the world’s largest manufacturers of passenger rail cars BBD recently completed acquisition of Adtranz from DaimlerChrysler, headquartered in Berlin, Germany Acquisition would expand BT’s revenues & geographic scope; increase BT’s competencies in propulsion systems & train controls; complete its product portfolio Before deal is solidified BT requires regulatory approval of the European Commission (EC) – lengthy process Lortie began a thorough review of work accomplished & the planning efforts of the 2 companies undertaken to ensure efficient integration (including one-to-one meetings w/his senior management team) BT was organized into 5 geographically-based operating units- North America, Atlantic Europe, Continental Europe, Mexico, & China – and one functional unit, Total Transit Systems (focused on turnkey projects) Adtranz was organized around product segments and functions Structure & allocation of responsibilities between the 2 companies. The organizational structures were incompatible. BT’s management team in Europe was not involved in the discussions & reviews w/Adtranz Lortie had his 1st meeting w/Rick Dobbelarere (VP of operations, BT-Atlantic Europe), and was presented w/questions regarding how BT & the senior management team would set priorities while waiting for EC approval:

*Do we wait approval before taking steps toward the potential integration of Adtranz? *Should we focus planning on improving product quality/reliability of Adtranz equipment w/existing customers? *Should we start to institute personnel changes w/in BT in anticipation of the merger, if so, @ what pace?

*Do we focus on revenue growth or cost-cutting?

II.Bombardier Company History
Joseph Bombardier, in 1936, used his garage to develop his B7 prototype (today’s snowmobile) By 1940, he had built a factory which had capacity of 200 units 1942 he incorporated his biz as L’Auto-Neige Bombardier Limitee (ANB), began receiving orders from Canadian government for specialized all-track vehicles for use by the armed forces during WWII; allowed him to refine his manufacturing process & develop competence in government relations 1950’s - Technological advances in improved tracking, high-performance synthetic rubber 1959 ANB introduced one passenger snowmobile, called the Ski-Doo (Cdn$900); sales sky rocketed. 1964 he passed, he left his Cdn$10 million company to his son, Germain 1966 Germain passed the presidency to 27-yr old brother in law, Laurent Beaudoin 1967 company name changed to Bombardier Limited

1969 company went public w/intention of utilizing funds to vertically integrate & increase its manufacturing capability B/w 1966-1972 BBD grew along with the market for snowmobiles Under Laurent Beaudoin’s leadership: company expanded to U.S. market, new product launches, and utilization of aggressive marketing initiatives to drive the business 1970 acquisition of Lohnerwerke GmbH, based in Austria. Lohnerwerke’s subsidiary, Rotax, was a key supplier of engines for Bombardier Ski-Doo snowmobiles as well as a tramway manufacturer = FIRST ENTRY INTO RAIL BIZ Mid 1970s – slow in snowmobile industry, as a result, the largest of the 6 remaining manufacturers was BBD A.Bombardier Begins to Diversify

CEO of Bombardier, Laurent Beaudoin, decided to diversify products in order to minimize cyclical risks & ensure long-term survival BBD made strategic acquisitions in transportation – supplied local transit authority of Montreal w/423 subway cars. Further contracts followed this success – supplied 36 self propelled commuter rail cars to Chicago, 21 locomotives & 50 rail cars to Via Rail Canada, 117 commuter cars to New Jersey Transit...
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