Bombardier beats Alstom to French train order

Canada´s Bombardier Inc. (BBDb.TO: Quote) won a multibillion euro train order for the Paris region on Wednesday, stealing a march over rival Alstom (ALSO.PA: Quote) on the home turf of the French maker of high-speed trains.

Bombardier said the contract to deliver an initial 172 trains is valued at $1.7 billion (1.35 billion euros). Another 200 trains could be delivered to bring the total value of the orders to $3.4 billion.

The decision, announced by the Ile de France region and the state-owned SNCF railways, is expected to prompt a debate on jobs, with some observers saying most of the components for the Bombardier trains will come from eastern Europe where wages are lower than in France where Alstom has its plants.

SNCF Chairman Anne-Marie Idrac said the Bombardier offer was 9 percent below that of Alstom.

Alstom spokesman Philippe Kasse said the group would carefully study the conditions under which the contract was awarded. The tender was launched in 2002 and Alstom said it had a competitive and technically-advanced offer that met all the conditions specified by the client.

Alstom also provides equipment and services to the power generation industry.

The company has regained financial health after a controversial state-backed bail-out in 2004, and in April construction to media group Bouygues (BOUY.PA: Quote) agreed to buy the state´s stake and now holds 24 percent of Alstom.

Alstom shares slipped 0.62 percent to 72.45 euros at 1334 GMT. The contract award to Bombardier had been rumored for at least several months.

Bombardier, the world No. 1 maker of railcars and third-largest civil aircraft maker, has an assembly plant employing 1,600 people near Valenciennes in the north of France — a former mining area where many companies have set up assembly factories such as Toyota Motor Corp. (7203.T: Quote) of Japan and a joint-venture between Italy´s Fiat (FIA.MI: Quote) and PSA Peugeot Citroen (PEUP.PA: Quote).

Bernard Carayon, a lawmaker for the ruling UMP party, called the decision national masochism … masochism that lets us sacrifice our interests to the benefit of our competitors in the name of a dogmatic and very naive liberalism.

What is important is that there will be jobs in France and Bombardier is a good product. I like Alstom a lot but I believe it is good to have a certain competition in Europe, he said.

172 TRAINS, 200 MORE POSSIBLE

The agreement announced on Wednesday covers a first tranche of 172 trains. The STIF regional transport authority and SNCF will each pay 1.05 billion euros for those trains.

The STIF and SNCF estimates for the first 172 trains may include other costs to incorporate the new rolling stock into their networks.

SNCF said there was also an option for a second tranche of 200 trains for the Transilien service.

The president of the Ile de France region, Jean-Paul Huchon said he expected negotiations to start in the coming weeks between Bombardier, SNCF and Alstom about production of the trains. At least some of the train production is expected to take place in France.

The trains will start running from 2009 and before 2015 they will have replaced more than 20 percent of the current trains running on the regional network. The trains in the second tranche could be delivered from 2016.

SNCF also awarded Bombardier an order to deliver 24 AGC grand capacity motorized trains and to renovate 635 double-decker wagons. It gave no financial details.

On a trip to China with French President Jacques Chirac, Alstom Chief Executive Patrick Kron is poised to sign a contract on Thursday to sell freight locomotives in a deal worth over 1 billion euros in total for Alstom and Chinese partners.

Kron had no comment on the Ile de France deal.

Bombardier´s class B shares were off 17 Canadian cents or 4 percent at C$3.95 on the Toronto Stock Exchange o

Fonte: Reuters