Bombardier's C-Series commercial jet takes off on its first flight on Monday, Sept. 16, 2013 in Montreal.Ryan Remiorz/The Canadian Press
Bombardier is moving some of its human resources functions to its operations in Mexico as part of 1,700 recently announced layoffs at its aerospace division.
The Montreal-based company said 10 non-union positions in Montreal will be affected by a shift of the talent acquisition function and some global mobility functions to its lower cost operations in Queretaro.
"Everything we're doing right now is about cost savings so it's about streamlining processes," said spokeswoman Haley Dunne, who declined the provide the potential costs savings.
The laid-off employees were notified of the change this week. Two have been let go and efforts will be made over the next few months to redeploy the other eight elsewhere in Montreal.
Six Mexican employees will take on administrative tasks related to entering data for computerized assessment of job applicants and temporarily relocating workers to sites around the world.
Bombardier builds components of its business and commercial aircraft programs in several countries. This includes the new operation in Morocco and facilities in China and Northern Ireland, where the company is building sections of the new CSeries jet.
Dunne said additional Mexican workers could also be hired for the new global share services operation.
Bombardier (TSX:BBD.B) considered outsourcing the operations to a private company but elected to keep it in-house in Mexico because of costs and to maintain the expertise within the company. Wages in Mexico are substantially lower than in Canada.
While Mexico will handle these functions for all of its global operations, the division's 36,000 employees will continue to receive service about their individual human resources issues within their country of employment.
Bombardier defended the decision to move what the company describes as "work packages" from Canada despite receiving billions of dollars in government assistance to develop new aircraft programs.
"Just because a work package or certain tasks are being transferred to another Bombardier site in another country doesn't mean that we don't have plans to hire and continue to build our workforce here," added Dunne.
Bombardier's Mexican operations have grown substantially since opening in 2006. Employment has increased six-fold to more than 1,800 workers as it has added aircraft work.
Queretaro makes flight controls for the Q400 turboprop, the aft fuselage for all Global business jets, aircraft rudders for the regional jets and Challenge 605, electrical harnesses and components for most Bombardier aircraft, and Learjet 85 fuselage manufacturing and wing assembly.
The union representing workers in Montreal said work has trickled to Mexico from Northern Ireland, Toronto, Montreal and Wichita, but haven't gotten much media attention.
"It's always going to be a concern because we never know how fast it's going to shift. Right now it's trickling but the valve can open any time where big units end up leaving and that creates a lot of job loss," said Dave Chartrand, representative of the International Association of Machinists and Aerospace Workers.
But he said some shifting is expected in a global industry where most of Bombardier's airplanes are sold outside of Canada and to meet local job procurement requirements. Chartrand added that any job losses have been mitigated by keeping value-added and technologically advanced processes in Canada.
Meanwhile, Bombardier says that notice has been given to 70 per cent of the 1,700 positions targeted for layoffs. The positions include 705 in Canada, 457 in the United States and 23 elsewhere. The remaining 515 will be notified by the end of the third quarter.
In Montreal, 300 permanent non-union salaried employees have been identified for redeployment elsewhere within Bombardier or to outside firms. Of these, 215 have expressed an interest in transferring with 140 being selected for interviews for open positions within the company. Hourly and contractual workers are not eligible for redeployment.
Chartrand said 150 temporary unionized workers have been let go but no full-time workers have so far been notified.
He hopes the net impact will ultimately be minimal.
Bombardier announced the layoffs as it tries to preserve cash to fund its costly aircraft development programs. The company's share plummeted after it recently announced weak financial results and reduced its profit target for 2014. The shares lost two cents at C$3.53 in Friday midday trading on the Toronto Stock Exchange.