Bombardier said it laid off 40 per cent of its workforce in Thunder Bay, Ont., on Wednesday as work dries up in its once bustling train-making facility.
The layoffs will affect 200 workers and will come into effect in two stages — 125 workers will be laid off in Oct. 2020 with 75 more in the second quarter of 2021, the company said.
“In 2019, Thunder Bay had over a thousand people and they were producing historically high number of streetcars for Toronto… and bilevels (passenger cars) for GO Transit. They had a fantastic year in 2019, but both those contracts came to an end at virtually the same time,” David Van der Wee, Bombardier Transportation’s chief operating officer, told the Financial Post.
Bombardier looked to win new contracts in the United States but Van der Wee said the company is hampered by the U.S. Buy America policy, leaving it more dependent on the smaller Canadian market.
Unifor, the labour union, meanwhile, called on all levels of government to secure long-overdue product commitments to secure jobs at the Thunder Bay plant.
“For the past three years, Unifor has urged all levels of government to take immediate and decisive action to secure product orders with the plant in order to protect hundreds of highly-skilled workers’ jobs at this world-class facility,” Jerry Dias, Unifor National President, said in a statement. “With the country headed for a potentially drawn-out economic downturn, it is unthinkable for governments to sit on their hands, allow more layoffs and jeopardize a manufacturing facility that will be crucial to Canada’s post-COVID economic recovery.”
The Bombardier plant is Thunder Bay’s largest private sector employer, and the loss of some of these jobs has already been a significant economic blow to Thunder Bay and Ontario, but so far has been temporary, the union said.
“We need Premier Ford and Prime Minister Trudeau to stop delaying and get the product orders in today. A failure to order public transit vehicles now risks making the damage of these layoffs permanent,” added Pasqualino.
Bombardier is reeling from heavy debt and a changed environment for its aviation and train business amid the pandemic. Its efforts to sell its train business to Alstom SA is also under a cloud after the French company hinted earlier this month it may seek better terms for its US$7.3-billion purchase of the train arm.
It is unthinkable for governments to sit on their hands, allow more layoffs and jeopardize a manufacturing facility that will be crucial to Canada's post-COVID economic recovery
Van der Wee said the transaction is on schedule, despite obstacles securing new contracts in the United States.
Alstom would almost double its size with the cash-and-stock purchase of Bombardier’s rail unit. The deal received European Commission approval at the end of July. Before that, Alstom Chief Executive Officer Henri Poupart-Lafarge told French lawmakers it was “on a good path.”
The deal would complete the breakup of Bombardier and leave the once sprawling firm focused on business jets after it was forced to offload assets to pay down debt. Regional jet, turboprop and jetliner businesses have already been offloaded.
Earlier this month, the company reported a loss after writing down legacy projects at the rail unit, and racking up coronavirus-related costs in both the rail and aviation businesses.
Bombardier blamed the $435 million in charges on engineering, certification and retrofit costs for late-stage projects, mainly in the U.K. and Germany. Over two-thirds of the charge is expected to hurt 2020 free cash flow.
Bombardier’s stock was up 1.23 per cent to 41 cents on Thursday on the Toronto Stock Exchange, but is trading 79 per cent lower than its value at the start of the year.
Financial Post Staff with files from Bloomberg News
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