Andres Friedman, Supply Chain

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Bombardier Aerospace Mexico US-Mexico Aerospace
Industry Workshop

• Andres Friedman, Supply Chain
• Chihuahua, October 2006

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Agenda

• Bombardier Overview
• Bombardier Aerospace Mexico
• Creating the Bombardier Mexico Aerospace Cluster

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Bombardier Overview

• Corporate office based in Montréal, Canada
• Workforce of some 60,000 people worldwide
• Revenues of 14.7 U.S. billion for fiscal year
  ended January 31, 2006
• Net income of 249 million for this fiscal year
• More than 95 of revenues generated outside
  Canada
• Shares listings at the Toronto Stock exchange.

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Revenues well-balanced across our 2 divisions
Breakdown of revenues by business segment
Transportation 45
Aerospace 55
As at January 31, 2006
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Revenues well-balanced geographically
Breakdown of revenues by geography
Other 5
Asia-Pacific 9
United States 39
Europe 41
Canada 6
As at January 31, 2006
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Manufacturing facilities span the globe
Australia Austria Belgium Brazil Canada Czech
Republic Denmark France Germany Hungary India
Italy Mexico Norway PeoplesRepublic of
China Poland Spain Sweden Switzerland United
Kingdom United States
Presence in more than 21 countries
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Products and Services Rolling Stock
Light rail vehicles
Metros
Commuter trains
Regional trains
FLEXITY Outlook (Linz, Austria)
MOVIA - Guangzhou Metro Line 2 (China)
EMU M-7 (New York, U.S.A.)
Double-Deck Coach (Germany, Denmark, Israel,
Luxembourg)
Intercity trains
High-speed trains
Locomotives
Interregional trains
Voyager DEMU (U.K.)
Electrostar EMU (U.K.)
ICE 3 EMU (Germany/Netherlands)
TRAXX F140 AC (Switzerland)
FLEXITY, MOVIA, Electrostar, TRAXX are
trademarks of Bombardier Inc. or its
subsidiaries. Trademarks of third parties.
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Other Products and Services
System
Signalling
Services
Monorail (Las Vegas, U.S.A.)
Fleet Management (London, U.K.)
Wayside Equipment
Propulsion and controls
Bogies
Mitrac TC 1000 Traction Converter for Medium
Power Application
MITRAC is a trademark of Bombardier Inc. or its
subsidiaries.
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Overview-Bombardier Aerospace

• Corporate office in Montréal, Canada
• Workforce of approximately 27,000 people
  worldwide
• Revenues of 7.9 U.S billion for fiscal year
  ended January 31, 2005
• Revenues of 1.8 U.S.billion for the third
  quarter, ending October 31, 2005
• Products and services
• Business aircraft
• Regional aircraft
• Fractional ownership programs
• Pilot and maintenance training
• Aircraft maintenance, technical support, and
  spare parts services
• Component manufacturing for third parties
• Aircraft interior completions

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Bombardier regional aircraft
Q300
Q400
Q100/200
CRJ200
CRJ700
CRJ705
CRJ900
Q100/200, Q300, Q400, CRJ200, CRJ700, CRJ705,
CRJ900 are trademarks of Bombardier Inc. or its
subsidiaries.
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Bombardier business aircraft current production
models
Learjet 40 XR
Learjet 60 XR
Learjet 45 XR
Global Express XRS
Challenger 605
Bombardier Global 5000
Challenger 300
Challenger 850 Challenger Corporate Shuttle
Solutions
Bombardier Global 5000, Learjet, Challenger, and
Global Express are trademarks of Bombardier Inc.
or its subsidiaries.
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Bombardier amphibious aircraft

• The world's most productive firefighting aircraft
  in service
• The Bombardier 415 can also be configured for a
  wide range of multi-mission capabilities
• Search and rescue
• Maritime patrol
• Law enforcement
• Environmental control

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Bombardier Aerospace Organizational Matrix
President
TECHNOLOGY
QUALITY
COST
BA

• Benefits of Decentralization
• Enhance customer and specific program supplier
  interfaces
• Localized logistics activities
• Increase accountability

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Overview-Bombardier Aerospace Manufacturing
Facilities / Plants
Mexico
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Commodity Based Structure

• In order to increase market synergy, consolidate
  purchasing volume and create world leader
  expertise, the organization reflects a commodity
  based structure.

Supply Chain
Commodity groups
1
2

• Strategy Business Development
• Data Management
• Business Development and Project Management
• Training Employee Development

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3
Cross-Commodity Groups
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5
Contracts Cost Analysis

• BU Focal

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Agenda

• Bombardier Overview
• Bombardier Aerospace Mexico
• Creating the Bombardier Mexico Aerospace Cluster

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Presence of Bombardier in Mexico

• Bombardier Aerospace was looking for a major
  initiative in light of achieving its cost
  reduction goals
• Having a company owned facility in Mexico which
  captures advantage of low cost base, add
  manufacturing flexibility and mitigate risks
• A new facility offers an opportunity to introduce
  new manufacturing techniques to further enhance
  competitiveness
• Mexico has made Aerospace a priority for
  industrial development

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Bombardier Mexico Site Selection

• Out of 22 cities considered detailed due
  diligence was carried on 4 key locations
• Querétaro was selected as the best operational
  site for Bombardier Aerospace
• Final selection was based on the following
• Federal Government and Querétaro State are strong
  business partners with a vision to develop the
  Aerospace Industry
• Development of Educational System for Aerospace
  trade workers
• Willingness of DGAC to harmonize Aerospace
  regulations with other major countries (FAA,
  Transport Canada, )
• Querétaro climate, vitality of local economy and
  growing population
• Land adjacent to the Querétaro airport facility
  (longest runway in Mexico)

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Geographic location of Bombardier Mexico
Manufacturing Centre (MMC)
Located in Querétaro state, Querétaro, 215km
north-west of Mexico City
Querétaro
.Queretaro
.Queretaro
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Bombardier Mexico Manufacturing Centre -
Permanent site FY2007

• Bombardier Mexico Manufacturing Centre permanent
  site is adjacent to the existing Querétaro
  International Airport (4,000,000 sq-ft)
• New airport opened in Dec 2004
• Longest runway in Mexico

Bombardier Mexico Manufacturing Centre
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Bombardier Mexico Manufacturing Centre -
Permanent site location
Mexico - Querétaro Aerospace Cluster

• International Querétaro Airport
• Bombardier Mexico Centre
• 2  International Supplier Parks
• Aerospace School
• Infrastructure area

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BA SHORT TERM HARNESSES AND MA STRUCTURES -- SITE
LOCATION --
Bombardier Mexico Manufacturing Centre -
Temporary building

• Bombardier Mexico Manufacturing Centre temporary
  site located in industrial park of El Marques,
  Querétaro
• Production activities started in April 2006

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BA Mexico Centre - Temporary building - Photo
Gallery
Bombardier Mexico Centre Electrical activities
Bombardier Mexico Centre Structural activities
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Agenda

• Bombardier Overview
• Bombardier Aerospace Mexico
• Creating the Bombardier Mexico Aerospace Cluster

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Developing the supplier park is of strategic
importance to Bombardier

• Bombardier Aerospaces vision for the Mexico
  Manufacturing Centre is to become a centre of
  excellence for
• the manufacturing and assembly of wire harnesses
  
• the final assembly of selected structural
  components
• Bombardier sees the Mexico Manufacturing Centre
  as a strong pillar of its industrial network, and
  a key way of achieving its cost saving targets
• For the Mexico Manufacturing Centre to capture
  its full potential, having a local supply base is
  critical however the biggest potential for
  Bombardier lies in developing its Queretaro
  partners into becoming suppliers to all
  Bombardier sites
• Bombardier wants to attract local network of
• suppliers for structural parts (machined, sheet
  metal, composite, surface treatment, hardware, )
• service providers (Third Party Logistics)
• other non-competing OEMs, Bombardier Tier 1s
  and their suppliers

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Critical success factors of the Supplier Park
Strategy

• Integrated with Bombardiers overall sourcing
  strategy
• Developing Long-term strategic suppliers
• World class, cost-competitive, quality, delivery,
  technology
• Global footprint
• Focused on Win-Win
• An attractive business plan for the Supplier and
  BA
• Innovative and focused on long-term success
• Critical mass can be created by pooling demand
• Work on a common sub-tier supplier strategy with
  major tier 1s
• Leverage existing suppliers in Mexico

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Benefits to install in the Aerospace
International Park

• Fully Infrastructure site
• Park strictly dedicated to Aerospace
• Buildings financing by Real Estate Developer
  selected by Bombardier - Advantageous financing
  predetermined
• Preferential Lease Rate
• Freedom to select you own design and construction
  company
• Government sponsored Aerospace Training Center
  (which will support the needs of the entire
  Mexican Aerospace Industry)
• Local presence of the Direccion General de
  Aeronautica Civil (DGAC), Mexicos civil aviation
  authorities
• Start-up services
• and others

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Creating the Bombardier Mexico Aerospace Cluster

• For additional information, do not hesitate to
  contact
• Andres Friedman
• Senior Analyst / Analyste principal
• Supply Chain - Strategy and Business Development
• Chaîne d'approvisionnement - Stratégie et
  développement d'affaires
• BOMBARDIER AEROSPACE
• 400 Cote-Vertu W. - Dorval, QC, Canada H4S 1Y9
• Tel [phone] - Fax [phone]
• andres.friedman_at_aero.bombardier.com

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Questions / comments?