MONTREAL – A unit of the European aerospace giant that owns Airbus plans to create more than 150 jobs in Quebec after it bypassed Ontario to assemble the centre fuselage for Bombardier’s newest and largest business jets.
Aerolia, a subsidiary of EADS, said the jobs will be created at two sites yet unchosen as it supplies a key component of the Bombardier Global 7000 and 8000 jets that will be assembled in Toronto.
The provincial government is providing $15 million, including a $5-million grant, towards the $82.4-million project in the Montreal area.
Aerolia will begin its development efforts by mid-2013. Production of the first sub-assemblies will take place in Aerolia’s sites in France and Tunisia.
The work will later be transferred to Quebec for full assembly.
Bombardier (TSX:BBD.B) is the world’s largest manufacturer of business jets and the third-largest maker of passenger gets overall, after Airbus and Boeing.
The EADS Group, which includes Aerolia and Airbus and numerous other companies in the defence and aerospace industry, employs 133,000 people worldwide. Aerolia has 2,900 employees around the world and $1.18 billion of sales.
Aerolia Canada was established a year ago and its design office in Montreal employs 100 engineers to design the centre fuselage.
“The announcement of the construction of an assembly plant in Quebec formalizes a major, ambitious and exciting step forward, thereby giving concrete form to the industrial chapter of our contract with Bombardier,” stated Christian Cornille, CEO of Aerolia.
“This new site will give an impulse to the exploration of new markets and new customers.”
One of the sites will be dedicated to 20 engineers, the other to assembly of the fuselage by 130 employees for the business jets that are slated for delivery starting in 2016.
Quebec Economic Development Minister Sam Hamad thanked Aerolia for choosing his province over Ontario.
“This is a major strategic project for Quebec’s aerospace industry,” Hamad said.
In 2011, the province’s aerospace industry employed 42,000 workers and had $11.7 billion in sales.
Cornille said the choice of Quebec over Ontario was the result of a process that lasted more than a year.
“This choice was one of quality and entry into the supply chain in Quebec,” he said at a news conference.
Cornille also pointed to Quebec’s financial commitment as an important part of the decision.
The position in Quebec aligns Aerolia with Bombardier and establishes it as a base of operations in North America.
The Ontario government wouldn’t say what, if any, financial incentives it offered in the bid to win Aerolia’s commitment.
A spokeswoman for Economic Development Minister Brad Duguid said Ontario remains committed to attracting investments in the aerospace sector that employs more than 22,000 people, and improving its competitiveness.
“However we also have an important responsibility to ensure accountability with taxpayers’ dollars,” said Brianna Ames.
“We look forward to continuing our relationship with Aerolia and will continue to work with the company in assisting them in establishing strong partnerships with Ontario companies as they develop their Canadian supply chain and grow their North American market.
“We are confident that Aerolia will be working with key Ontario suppliers.”
Bombardier will build the aircraft’s rear fuselage at its plant in Mexico, which already produces this section of the Global 5000 and 6000.
The aircraft’s interior will be finished in Montreal before being delivered to customers.
The 10-seat Global 7000 is slated to enter into service in 2016, a year ahead of the Global 8000 which can carry up to eight passengers.
The current Global models list for between US$49.1 million and US$57.5 million.
The new versions will sell for more than US$65 million at list, although planes are usually sold at discount.
Bombardier has delivered 450 Global jets, which include 5000, Express, Express XRS and 6000 models.
The Global 7000 will be the largest aircraft on the market, while the 8000 will offer the longest range, able to connect Hong Kong and New York non-stop.
Bombardier announced a production rate increase for the planes due to sustained demand for its largest corporate planes, even during the recession.
However, it doesn’t disclose the actual production rate for its individual aircraft.
In addition to very wealthy individuals, Bombardier has sold Globals to operators such as VistaJet of Switzerland and Bershire Hathaway’s NetJets.