Bombardier Inc said its aerospace division plans to invest about US$200 million over eight years to set up a new manufacturing facility in Morocco, a move by the Canadian planemaker to cut production costs.
Bombardier said it had signed a memorandum of understanding with the government of the North African country, which is trying to develop an aerospace industry and has already attracted France’s EADS and Safran .
Much of Bombardier’s commercial and business jet production takes place in Canada, where high labor costs and a strong Canadian dollar have raised production costs. The company also has manufacturing plants in the United States, Northern Ireland and Mexico, Reuters reports.
Setting up a facility in Morocco is “consistent with their strategy to improve their cost structure overall,” BMO Capital Markets analyst Fadi Chamoun said.
The Moroccan plant, which is scheduled to start production in 2013, will work on simple plane parts such as floor sections and panels, and is not part of a specific plane program, Bombardier spokeswoman Haley Dunne said.
The new facility, which is expected to employ 850 workers by the end of 2020, will not result in reductions of staff elsewhere, she said.
Bombardier has recently started beefing up its presence in emerging markets such as India and China, having earmarked these as big growth areas for its planes, especially as Europe and the United States hit economic turbulence.
Wednesday’s announcement coincides with the Dubai Airshow this week where Bombardier unveiled the flight deck of its new C-Series plane and received a tentative order for 10 of the single-aisle jets.
Bombardier’s shares were 4 Canadian cents higher at C$4.35 on the Toronto Stock Exchange on Wednesday afternoon.