Evaluation of Alternatives for Bombardier's Front Substructure Decision

Criteria for Evaluation

1. What criteria should Pierron apply to evaluate each of the alternatives? Based on these criteria, what is your evaluation of the various alternatives? 2.

2. What decision would you make and Why?

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It was December 7, 2018  two and half years since the first CS100 (now A220) had been put into service. Demand for the new commercial aircraft had been growing steadily, and Julie Pierron, procurement director at Bombardier Aerostructures (Bombardier), was concerned about the production capacity for the A220 front substructure. Engineers had determined the cost to expand the current production capacity at Bombardier's headquarters in Montreal, Canada. However, the front substructure was a prime candidate for outsourcing, and Pierron wanted to be sure she considered all options before making a final recommendation to the senior management team in two weeks.

Bombardier Inc. a Canadian company, was founded in Quebec by Joseph-Armand Bombardier, who built one of the world's first “snow vehicles” at the age of 15. The company expanded beyond theever-popular snowmobile to create the first Sea-Doo, a personal watercraft for the sport enthusiast, in 1980, and then began creating all-terrain vehicles (ATVs) in 1998. However,Bombardier Inc. sold off its recreational products in 2003 to focus on rail and air transportation.

Bombardier Inc. first entered the rail business in 1970, when it bought Rotax-Werk, an Austrian manufacturer of motorized trams. The company saw the potential of mass transit and began to invest in an expanding portfolio of light rail, commuter trains, street cars, monorails, and trams. In 1986, Bombardier Inc. bought Canadair Ltd., the manufacturer of the Challenger business jet.

Bombardier Inc. then expanded into commercial aircraft with the Canadair regional jet (CRJ) in 1989.By 2018, Bombardier Inc.’s business activities were split between its rail business, with an estimated revenue of about $9.0 bil1ion, and its aviation business, with an estimated revenue of $8.7 billion.

Bombardier Inc.’s Bombardier Aviation had been divided into three interrelated divisions, the largest of which was its business jets division, with estimated revenues of $5.0 billion in 2018.

Bombardier Aerostructures was the engineering and manufacturing group, which made assemblies for Bombardier Inc. and other customers and had revenues of $2.0 billion. The commercial aircraft division was the smallest. All amounts in this case are in US dollars unless otherwise indicated.