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Bombardier asks suppliers for concessions

Bombardier Inc. has asked suppliers for a break as it endures what is expected to be a long road to recovery in the business jet market with no material rebound expected until 2012, an aerospace analyst said yesterday.

Cameron Doerksen of Versant Partners said the request for price or other concessions from suppliers is a routine part of manufacturers’ efforts to control costs, especially during a market downturn.

"I think that most OEMs (original equipment manufacturers) probably go back to their suppliers pretty regularly even in good times looking for price concessions, but now perhaps there’s a little more urgency," he said.

Doerksen said Bombardier is looking for ways to reduce costs as production rates are reduced to address lower demand.

Bombardier spokesperson Marc Duchesne would only say the company is always trying to get the best deal from its suppliers, who will be delivering fewer parts because of reduced production levels.

 "As a manufacturer, we’re always looking for the best part at the right price and it’s a constant challenge, not only during more difficult times," he said.

Doerksen said he believes aerospace earnings of the Montreal-based company will remain depressed for the next year or so, eliminating any need to rush out to purchase its stock.

"The history of the business jet cycle is that things don’t rebound right away. It’s a long cycle and if this one stays true to form, we’re not going to see a rebound in business jet orders and deliveries for probably a couple of years."