Bombardier Inc. (BBD/B)’s new method for making trains will follow its stripped-down approach to designing planes: use simple building blocks to reduce costs.
Bombardier Transportation, whose status as the top train builder is under threat from China, will offer products as “platforms” with far more commonality, said Laurent Troger, president for Western Europe, the Middle East and Africa. That mimics production in the aerospace industry, where Bombardier is the No. 3 planemaker, after Boeing Co. (BA:US) and Airbus Group NV. (AIR)
“This is a significant change in the way you engineer a train,” Troger said in an interview at Bombardier’s plant in Derby, England. The standardization drive will introduce a “catalog of building blocks,” slashing costs yet providing the basis for a vehicle that the purchaser can still customize.
While airlines buying planes essentially get identical aircraft, with modification limited to interiors, train manufacturers often design entirely new models just to win a single order. That’s left Montreal-based Bombardier with about 50 rail plants, including 10 capable of full integration, seven or eight of which are located in Europe, Troger said.
Lutz Bertling, who heads Bombardier Transportation, said he aims to deliver a standardized approach by 2017 under a strategy dubbed “OneBT.” He joined last year from Airbus with a mandate to boost profit. Rail accounted for 52 percent of group revenue in the first quarter, with the backlog reaching a record $38.4 billion.
“The issue today is the level of investment in technology needed to reach an operator’s requirements, which I don’t think can be sustained,” Troger said. “That means we’ll see more proposals from different players based on platforms.”
Bombardier’s Aventra model, which won a 1.3 billion-pound ($2.2 billion) order for London’s Crossrail project, saving the Derby plant from closure after Siemens AG (SIE) scooped an earlier Thameslink deal, brings a new level of standardization, with 65 percent of the train made with basic building blocks.
“It’s like an aerospace program rather than a rail project,” Troger said. “Our ambition now is to generate more Aventra applications in the U.K. and other parts of the world.”
Simply closing plants and concentrating output to cut costs is not necessarily an option, partly because the train market tends to be dominated more by state buyers eager for a slice of production than the airliner sector, and also because of the world’s wildly differing railroad systems, Troger said.
“Planes are flying in the air where the constraints are the same wherever you are,” he said. “The problem with rail is that infrastructure is massively heterogeneous — whether it’s the gauge, power supply, signaling, telecoms, whatever.”
For the same reasons, train factories are less likely to specialize in single processes than are aircraft plants.
“This is a scenario that’s emerged in the aerospace industry and it could happen in trains, but it’s too early to say,” Troger said.
The more realistic aim is for Bombardier’s plants to remain focused on local markets while forming a global engineering network working on foreign contracts even if they’re not directly manufacturing trains for export, he said.
That’s already happening in Derby, where the 175-year-old Litchurch Lane facility has been particularly vulnerable to closure because it’s equipped only to build U.K.-gauge trains narrower than those found in much of the world.
While the plant’s direct exports have been largely limited to South Africa, its engineers are currently working on overseas deals from Switzerland to Brazil, Troger said.
Derby’s future is guaranteed for “years to come” thanks to the Crossrail work, though a rail plant can never be assured for decades, Lutz said in the May 1 interview.
“You will always see an adaptation of the size of our footprint to the opportunities,” he said. “If a dry period gets too long, then you have to take action.”