BOMBARDIER AND ALSTOM

:
THE ACELA EXPRESS

BY-
GROUP 4
RITURAJ PANDEY
TANVI KAPOOR
TRIPTI SINGH

They had long term. They also entered the fractional business which provided part ownership and leasing opportunities to individuals and organizations in aircraft. Company’s railway product range included rolling stock such as passenger and freight trains. 6.Alstom 1. In early 70s they increased their activity in railway equipment production. There were serious problems resulting into bad loans of $600 million. 2. As the fractional companies grew. Tilting train technology enabled trains to navigate curves at over 200 kms per hour on on conventional tracks. 4. out of which $300 million were written down. Initially manufactured tracked vehicles for transportation on snow covered terrain. since many parties were involved in decision making including government agencies. oil and gas equipment for energy generation. 3. 3. It has the world’s widest network of motorized snow vehicles. The company is characterized by technological innovation and engineering excellence. Alstom’s TV Train was the gold standard in high speed train travel. They were all industrial products with technical component. shipbuilding and rail equipment. 4. Story of Acela Express- . They purchased a company called Canadair. 2. locomotives and other associative services.About the Company . Alstom’s customers were kind of obsessed with technology. 5. They had a series of mergers and take overs as a result of which they became one of the largest airplane manufacturers with engineers working in factories spread across three continents. About the Company –Bombardier 1. Their market was fraught with complex issues in purchasing. The company was a world leader in tilting train technology with the Pendolino system. which financed consumer loans through US dealers of recreational products and manufactured homes. It was involved in diverse markets such as cruise ships. 5. There was an impressive growth but it did not really materialize into a substantial growth. Alstom operated globally and its activities included production of nuclear. They even entered the airline industry. constantly evolving relationship as customers became comfortable with their technology and systems. They were responsible for the supply of mass transit equipment in major cities across the globe. nuclear plans and train systems. clients grew faster. They kept on adding technological elements to their processing in order to enter new segments and new customer markets. electricity transmission and distribution. Their most troubling venture was creation of Bombardier Capital Inc. power conversion. By 1990 they became world’s leading maker of railcars and snowmobiles and also a key player in the aerospace industry.

Amtrak officials scoffed at the lawsuit blaming Bombardier-Alstom partnership for the delays. 6. There were problems in the first year of operation. Bombardier wanted to use its name for the NEC service but Amtrak preferred to name it Acela Express. However the Acela Express exceeded the expectations of riders by 50% and the performance after first week rose to more than 90%. Bombardier won the contract with its high speed tilt train called ‘American Flyer’ 4. The problems were not limited to single or simple issues. 1996. The train experienced repeated delays and development problems. There were break downs. 7. Amtrak wanted Bombardier to accept financial responsibility for the delays and mismanagement. Technologically the plan was difficult as high speed trains such as TGV ran on highly maintained dedicated tracks with gradual curves. 5. Due to this performance of Acela Express went down to an all time low. Bombardier on the other hand launched legal action claiming $200 million in damages from Amtrak. 8. causing delays and additional cost. 3. Amtrak planned to upgrade the train service in the NEC that stretched from Washington DC to Boston. It was finally launched on December 11. 2. Complications that arose between the companies- 1. 3. 2. Also the media took a lot of interest in the problems of the train. . 74% performance. serious cracks in brackets welded to the power car frame and many more. 1. They joined hands with Bombardier on 15 th march. They claimed that Amtrak had disrupted its ability to produce and deliver the train by failing to upgrade its track in the NEC. Its situation kept on getting worse and many trains got cancelled due to mechanical problems. They even accused US national rail service of providing incorrect data about dimensions of its tunnels on some routes. freezing up of electronic system leading to blockage of trains. Several factors led to the Bombardier-Alstom bid –  Bombardier’s experience with North American railcar construction  Bombardier would be responsible for most of the manufacturing and Alstom would furnish components made in France  The bid price was paramount and Bombardier succeeded well on this score. They withheld $51 million in payments to Bombardier. There were high expectations and a lot of money was spent on advertising. And another $20 million to Alstom. 2000. The notion of creating a dedicated right of way for NEC was beyond feasibility. The American Flyer was about to go into service quickly and was to generate an extra revenue of $180 million every year to help Amtrak to become operationally self sufficient by 2003. They wanted to complete electrification of the line from New York to Boston and purchase a high speed train system that would reduce the travelling time significantly. 4.

The Dilemma and Du Pont’s Analysis of the problem Dilemma –  The series of misunderstanding between the partnership of Alstom and Bombardier. . Bombardier was to be subject to drastic financial penalties if performance goals were not met.  Along with Bombardier there we 2 other protagonists bidding for the project – American ICE and X2000  Amtrak was swayed by the attractive financial packaging of Bombardier more than the technical merit of American Flyer. RECOMMENDATIONS 1. 2002 Amtrak filed a counter suit on Bombardier claiming that it was a victim of mismanagement by the two Bombardier. . They found it better to let Bombardier exploit the TGV technology in order to reduce upfront cost.  Alstom was under financial pressure. On NOV 20. A lot of money and a good financial project are at stake. rather than preparing its own bid. Hence there is scope for getting back to business and make money. Analysis of the situation –  There was strong competition in the NEC corridor by 2 other companies – Siemens and ABB.  The discontinuation of Acela express and the law suit which led to significant negative effects on Alstom’s image and future marketing efforts. Hence they should not break the consortium. 6. And try to be a mediator in sorting out the issue as according to analysis Acela express could have been a great service and it started really well and did well in the early phase.  The technical problems with Acela express that led to sour relationship between Bombardier and Amtrak.  Amtrak’s ability to pay Bombardier had to come from the revenues that were to be generated by Acela Express. Alstom won’t have had a chance to win as a standalone company.Alstom as they failed to met the performance standards. 5.  There were political issues too. As a result Amtrak pulled off all the high speed Acela Express trains from service.