The Bombardier Story

The story of the company that was founded by the inventor of the snowmobile

In 1942, Joseph-Armand Bombardier invented the snowmobile and founded his company to manufacture them. From its humble beginnings as an entrepreneurial company in rural Quebec, led by an enterprising inventor, Bombardier Inc. has emerged as a global leader in the transportation industry. This book tells the fascinating tale of this remarkably well managed company that has enjoyed spectacular growth in its chosen markets through strong leadership and management strategy, succession planning, strategic diversification, and turnaround and acquisition artistry.

• The fascinating story of the world's largest rail manufacturer for both railway and subway
• Reveals why Bombardier Inc. is a multi-faceted global company yet nobody knows their name
• Written by Larry MacDonald the author of Nortel Network

The Bombardier Story shows how invention and entrepreneurship, management and leadership, smooth succession planning, and turnaround and acquisition built this global powerhouse.

Acknowledgments ix

A Brief History of Bombardier Inc. xi

Preface xix

Introduction: The Rise of a Corporation 1

A Meteoric Rise 1

The Architects of Success 6

Bombardier Today 8

Part One 13

Chapter 1: Joseph-Armand Starts a Company: The 1940s and 1950s 15

Humble Beginnings 15

The Bombardier Snowmobile 16

Inventions and Innovations 25

Chapter 2: The Ski-Doo Adventure: The Golden Age of the 1960s 34

The Family Takes Over 34

A Marketing Renewal 39

Ski-Doo Fever 42

Vertical Integration 46

The First Sea-Doo 49

Part Two 53

Chapter 3: Diversify or Die: The 1970s 55

A Challenging Decade 55

Taking a New Turn: Rail Transportation 59

The Montreal Subway 61

The Acquisition of MLW-Worthington 67

Chapter 4: The Deal of the Century: The New York City Subway (1982) 73

A Golden Opportunity 73

A Contested Victory 78

The Tools for Success 84

The Royer Way of Doing Things 86

The BMS 91

A Major Breakthrough 97

Tempest in a Teapot 101

The Value of Proven Technologies 104

A Welcome Boost 107

Chapter 5: New Frontiers: Transportation in the 1980s and 1990s 110

The North American Market 110

Full Speed Ahead 112

A Rocky Start for the LRC 114

The Vagaries of High-Speed in America 117

The Disney Monorail 124

The Acquisition of UTDC 125

Capturing the European Market 129

The Chunnel Odyssey 133

Taking Over by Storm: From Talbot to Adtranz 137

Part Three 143

Chapter 6: Aerospace Takes Off 145

A Bold Move 145

Early Attempts to Diversify: The Automotive Sector 149

The Acquisition of Canadair (1986) 151

Good Things Come in Threes: Shorts, Learjet, and de Havilland 156

Portrait of a Turnaround Artist 165

Power in Numbers: Synergizing Operations 171

Chapter 7: Revolution in the Sky: The Move Toward Regional Jets 176

The Rise of Airline Hubs 176

From Challenger to CRJ 179

A New Captain Steers Aerospace Group 186

Bombardier Takes Off 192

Dogfight in the Clouds 196

Inside the Pro-ex Saga 201

An Affair of State 205

Government Support 208

Chapter 8: Spreading Its Wings 216

The Global Express Business Jet (1991–1996) 216

Diversification Delivers 225

Part Four 229

Chapter 9: Two Turbulent Decades at Valcourt 231

The Ski-Doo Loses Speed 231

Pierre Beaudoin and the Return of the Sea-Doo (1988) 233

Extreme Snowmobiling and Innovation 238

Acquisition of Outboard Marine Corporation (2001) 241

Chapter 10: Lessons in Strategic Governance 244

The Éminence Grise 244

Decentralization 248

Management Tools 253

An Evolving Structure 256

Chapter 11: Handing Over the Reins 259

Robert Brown Takes Charge 259

The Impact of September 2001 264

Tellier Joins Bombardier 265

An Unexpected Comeback 270

Pierre Takes the Helm and CSeries Aircraft Takes Off 273

Laurent Beaudoin’s Legacy 276

Endnotes 279

Index 293

Larry MacDonald is a business journalist who writes for The Globe and Mail, Canadian Business, MoneySense and other publications. He is also the author of two other books, Outperforming the Market (ECW Press, 1998) and Nortel Networks (John Wiley & Sons, 2000).

In the early 1970s, the Ski-Doo snowmobile accounted for over 90 percent of Bombardier’s revenue (one model was so popular that Canada Post even produced a commemorative stamp). But the rest of the 1970s were stormy times for Bombardier as rising energy prices, a maturing snowmobile market, and major economic forces sent the entire industry into a downward spiral. The Bombardier Story describes how close to ruin the company came, and how it survived.

This near-collapse ensured that the company would never again depend so heavily on one sector. Diversification became a key strategy and led to a move into the manufacture of rail equipment, even as most other North American firms in the industry were withering away in what was deemed to be a declining industry. The Bombardier Story recounts the decisive turning point—the $1 billion “deal of the century” in 1982 to provide over 800 subway cars to the city of New York. It was the breakthrough that launched Bombardier into the big leagues, but it was hard won, arousing the first of many controversies over government assistance.

Next came the diversification into aircraft manufacturing. A key ingredient in the upward climb was the “bet-the-company” decision to develop the Canadair regional jet, a pioneering aircraft that many industry analysts at the time thought was a foolhardy initiative. Bombardier not only proved them wrong, but revolutionized the air travel industry with this new jet.

The Bombardier Story is one of inspiring entrepreneurship, as well as outstanding leadership and management. The company has enjoyed phenomenal growth in its chosen markets through product innovation, strategic diversification, exemplary succession planning, and an amazing knack for acquiring ailing companies and making turnaround successes of them.

A fascinating cast of dedicated leaders has guided the company over the years. First, of course, was Joseph-Armand Bombardier, the passionate inventor-industrialist who turned a humble garage into a major manufacturing company, and his invention, the Ski-Doo snowmobile, into a household name. Then came the son-in-law, Laurent Beaudoin, whose career plan never included joining the family business, and who led the company for forty-five years, putting it on a fast-growth trajectory.

Beaudoin steered the company through the golden age of snowmobiles, the 1973 oil crisis, challenges from aggressive competitors, and moments of uncertainty. And, most notably, he led the company to achieve an extraordinarily ambitious plan for diversification. Along the way he was assisted by able lieutenants, including Raymond Royer and Robert Brown. Laurent Beaudoin and his team were able to show the world that a Quebec company can become a globally respected multinational, can be successfully passed down from generation to generation, and can achieve true sustainability.

Today, in the CSeries era, there is a new generation of leadership under CEO Pierre Beaudoin, Laurent’s son, who oversees a multinational corporation of two major groups, with $17.7 billion in annual revenues in 2011, over 65,400 employees, and where the entrepreneurial spirit on which the company was founded still thrives.