Bombardier unit signs $4B Chinese train deal

A joint venture led by Montreal-based Bombardier Inc. has been awarded a $4-billion US contract to build 80 high-speed trains for China's rail ministry.

Bombardier's share of the contract is estimated at the equivalent of roughly $2 billion.

The trains will be manufactured at Bombardier's production facilities in the northeastern industrial city of Qingdao, China. Engineering components and project management will be done in China and Europe.

Bombardier has some 3,000 employees in China.

China is currently building more than 6,000 kilometres of high-speed rail lines to create one of the most advanced rail networks in the world.

In 2008, Bombardier signed a deal to deliver 40 trains of 16 cars each to China.

Analysts applauded the move, noting it may help to offset some weakness in the company's business jet division.

"The size of the contract is significant, representing about 20 per cent of the transportation division's total annual revenue," Versant Partners analysts Cameron Doerksen said in a research note.

Calling it an "important win," the contract further positions Bombardier Transportation in the rapidly growing Chinese market and the high-speed rail market in general, Doerksen noted.

The so-called Zefiro trains will have maximum operating speeds of 380 km/h and use energy-saving technology developed by Bombardier that the company claims can cut energy use by as much as 50 per cent.  

The first train is scheduled for delivery in 2012 and the last one will be completed in 2014.

Established in 1998, Bombardier Sifang is a joint venture between Bombardier and CSRSifang Locomotive and Rolling Stock Ltd. It is focused on supplying passenger rail rolling stock for China.

"It's fast to be sure, but competitive rail service demands more than just speed," Bombardier's transportation passengers division president Stéphane Rambaud-Measson said.

"It's about operating efficiency, best-in-class energy consumption per passenger, reliability and rider capacity that exceeds anything else on the rails."

The trains will also incorporate Bombardier's advanced ECO4 energy-saving technology, which was launched last year as part of an effort to establish rail as the most sustainable form of transportation.