BUSINESS

Bombardier to begin Morocco aerospace production January in leased premises

09/26/2012 04:33 EDT | Updated 11/26/2012 05:12 EST
MONTREAL - Bombardier says its production in Morocco will take flight in January, but not in the manufacturing facility it is building in Casablanca.

Instead, the Montreal-based aircraft maker will begin its North African operations in a temporary facility, spokeswoman Haley Dunne said.

Bombardier Aerospace president Guy Hachey recently visited Morocco and met with the king.

The company, which bought land earlier this year near the airport in a zone that offers five years of financial incentives, including no taxes, plans to invest about US$200 million in equipment, buildings and start-up costs over several years.

Dunne said details are still being finalized regarding the type of work that will be done and number of employees at the manufacturing facility that will be built in phases.

The new plant is expected to complement Bombardier's existing manufacturing sites and will initially include sub-assembly of simple structures.

The company (TSX:BBD.B) has said it will begin production next year.

"The idea of looking into using a temporary facility is so that we can maintain our schedule," Dunne said.

Bombardier is joining other aerospace manufacturers in setting up shop in Morocco, which has established an aerospace training program and offers many incentives to attract companies.

The company will pay no taxes for five years, 8.75 per cent for another 20 years and 17.5 per cent thereafter.

By the end of 2020, employment at the Moroccan facility is expected to reach about 850.

Meanwhile, Bombardier Transportation announced Wednesday a US$158-million follow-on order from Israel Railways for 72 double-deck passenger coaches.

The order is part of an agreement signed in 2010 when 150 coaches were ordered. The new coaches will be delivered over a year starting in early 2014.

Israel Railways is planning to double the size of its double-deck fleet within three years.

Bombardier manufactures and tests the coaches at its Gorlitz plant in Germany before they are completed in Israel by its partner Matar.

On the Toronto Stock Exchange, its shares closed unchanged at $3.64 in Wednesday trading.