emita

1
emita Case Study Gautrain Project

• July 2007

2
emita Case Study Gautrain Project

• Who is Bombardier?
• Project Background.
• Why South Africa?
• The Future.

A competitive edge based on cheap labour is
quickly eroded by new technology. - Alvin
Toffler, Futurist
3
An Introduction to Bombardier Transportation
4
Bombardier
Bombardier Aerospace
Bombardier Transportation
www.bombardier.com
5
Bombardier

• Corporate office based in Montréal, Canada.
• Workforce of some 56,400 people worldwide as at
  January 31, 2007.
• Revenues of 14.8 billion US for fiscal year
  ended January 31, 2007.
• More than 96 of revenues generated outside
  Canada.
• Listed on Toronto Stock Exchange (BBD).

6
Overview
Bombardier a diversified company
Transportation 44
Aerospace 56
Breakdown of revenues by business segment
year ending 31 January, 2007
7
Bombardier
Bombardier Aerospace
Bombardier Transportation
8

• Bombardier Aerospace is a world leader in the
  design and manufacture of innovative aviation
  products and services for the regional, business
  and amphibious aircraft markets. It also offers
  Flexjet fractional ownership, Skyjet aircraft
  charter and management, technical services,
  aircraft maintenance and pilot training.

Bombardier Aerospace
Flexjet and Skyjet are trademarks of Bombardier
Inc. or its subsidiaries.
9
Bombardier regional aircraft
Q300
Q400
Q100/200
CRJ200
CRJ700
CRJ705
CRJ900
CRJ200, CRJ700, CRJ705, CRJ900, Q100/200, Q300
and Q400 are trademarks of Bombardier Inc. or
its subsidiaries.
10
Bombardier
Bombardier Aerospace
Bombardier Transportation
11
Bombardier Transportation

• Bombardier Transportation is the global leader in
  the rail equipment manufacturing and servicing
  industry. Its wide range of products includes
  passenger rail vehicles and total transit
  systems. It also manufactures locomotives,
  propulsion and controls and provides rail control
  solutions.

12
Bombardier Transportation

• Products and Service

Light Rail Vehicles
Locomotives Freight Wagons
Regional and Commuter trains
Intercity and High Speed Trains
Metros
Propulsion andControls
Rail Control Systems
Services
Transportation Systems
Bogies
13
Bombardier Transportationaround the World
42 Production Sitesin 21 countries
14
Bombardier TransportationWorldwide Bombardier -
relevant market by geographic region
Other 14 ( 6.0)
Asia-Pacific9 ( 3.9)
Europe62 ( 26.3)
North America15 ( 6,2)
calendar year 2006 in billions of dollars
15
Bombardier Transportation is growing

• In 2006, Bombardier captured more than 30 of the
  global rail market, including more than 50 of
  the commuter - rail market segment.

16
Localisation Expertise

• Bombardier Transportation is the market leader in
  more than just railway products and systems.
• We are also the world leader in localisation for
  the rail industry.
• Our experience at integration of local suppliers
  and development of local industry is unmatched by
  any other supplier.

17
Types of Localisation

• Level 1
• Product designed and project - managed by
  Bombardier Transportation.
• Utilisation of existing factory in local country.
• Use of local suppliers.
• Final assembly and testing carried out by local
  manufacturer on a sub-contract / licensing
  agreement.

Total project value
18
Types of Localisation

• Level 2
• Formulation of a joint venture / strategic
  alliance.
• Product designed by Bombardier Transportation.
• Project management split between Bombardier
  Transportation and local partner.
• Use of local suppliers.
• Manufacture of carbodies by local partner.
• Final assembly and testing of vehicles by local
  partner.

19
Types of Localisation

• Level 3
• Set up a Local Company.
• Product designed by Bombardier Transportation.
• Project management by Local Company.
• Use of local suppliers.
• Manufacture of carbodies by local company.
• Final assembly and testing of vehicles by local
  company.

20
Examples of where has localisation been achieved

• Level 1 - Romania
• Bucharest Line 2 project
• Level 2 - China
• Guangzhou Line 2 project
• Level 3 - India
• Delhi Metro RS2

21
Gautrain Project Background
22
South Africa The Powerhouse of Africa

• Gauteng
• Is less than 2 of South Africas surface area.
• Is responsible for 47.7 of all employee
  remuneration in SA.
• In 2005 its 2.8 million households generated 35
  of the country's household expenditure, spending
  R302 billion (24 billion).
• Is responsible for 50.4 of all company turnover
  in SA.
• Accounts for some 33 of GDP of South Africa.
• Accounts for about 10 of Africa's GDP and is the
  fourth largest economy in Africa.
• Has the most developed infrastructure in Africa.
• Has an estimated population of 8,8 million.
• Attracts over 52 of the seven million
  international tourists who come to South Africa.

23
Project Structure PPP Public Private Partnership
Bombela - Concessionaire
Electrical mechanical systems including rolling
stock
Civil works, stations
Black Economic Empowerment
Private
Public
24
Gautrain Project - Key Success Factors

• Market Knowledge.
• Market Presence and Track Record Bombardier has
  executed a number of successful projects in South
  Africa.
• Local Knowledge Bombardier Transportation SA
  (Pty) Ltd.
• Patience and Staying Power South Africa is
  evolving fast.
• 2010 World Cup was a major driver the right
  timing.
• Good legal Financial Framework in South Africa.
• Local Partnerships leverage competitiveness.
• Hard work.

25
Gautrain Project - Key Challenges to Success

• Timescale a major multi-faceted project
  completed in 54 months will be a huge
  accomplishment.
• NIPP National Industrial Participation Program
• All Government Projects with an import value of
  more than US10 million have to do offset trade /
  investment of 30 of the import value.
• Socio Economic Development Black Economic
  Empowerment Affirmative Action.
• South African Foreign Exchange Regulations.
• Local Taxation.
• Local labour relations and availability of Skills.

26
emita Case Study Gautrain Project
27
(No Transcript)
28
Technical specifications of the Train

• Reliability, Safety and Security paramount.
• International Standard Gauge.
• Maximum speed 160 km/h.
• 24 modern state of the art trains
• Bombardiers standard Electrostar product
  platform.
• Fully customised for the Gautrain Project.
• Different seating for commuters and air
  passengers.
• Frequency every 10 to 30 minutes.
• Operating hours 0530 to 2030

29
Project Timescales

• Pre-Qualification 2002
• Bid September 2003
• BAFO (Best And Final Offer) January 2005
• FBAFO (Further BAFO) March 2005
• Preferred Bidder July 2005
• Effective Date (Commercial Close) 28 September
  2006
• Completion of Phase 1 44 months
• 2010 Football World Cup June 2010
• Completion of Phase 2 54 months
• Operating Concession A further 15 years

30
Governments Implementation Process

• Four pillars
• Political will commitment from Government
• Viable project (base case design)
• Technical
• Financial
• Legal/Institutional
• Funding (for Infrastructure Operations)
• Governments portion
• Private Sectors portion
• Community acceptance buy-in
• Socio-economic benefits
• Power of expropriation

31
Current status

• Month 10 of the Project.
• Honeymoon period.
• In Preliminary or Detailed Design mostly.
• Procurement is underway.
• Civil Construction has begun.
• They have started on the 15 km tunnel.
• Gauteng Province is pleasant to deal with.
• Too early for Lessons Learned yet.

www.gautrain.co.za
32
Business Setup in the Local Office (85 staff)

• We run the business in South Africa as we do in
  Europe.
• Bombardier is a strong process - driven project
  Company.
• Top Management has international Bombardier
  experience.
• Strong emphasis on local people with local
  knowledge in Middle and Senior Management.
• Language is English, corporate culture is
  Bombardier, flavour is South Africa.
• IS infrastructure as in Europe.
• Time Zones North America, UK, South Africa.

33
Why South Africa?
34
Why South Africa?

• Bombardier is a Global Player with few
  competitors. We monitor all International
  Projects in all countries all the time.
• We are active in South Africa.
• Government Spending Program Gauteng Blue IQ.
• Right timing - 2010 World Cup.
• Viable Project in its own right.
• Economic Growth.
• Excellent Financial Banking System in place.
• Sophisticated investors.
• Sound Infrastructure.
• Small market.
• Infrastructure Development is ongoing.

35
The Future
36
The Future for Bombardier in South Africa

• The Powerhouse of Africa.
• The Gateway into Africa.
• Government Development Planning Program.
• This Project establishes the credibility of
  Bombardier in the local marketplace.
• Expect sustained Economic Growth.
• Excellent Financial Banking System in place.
• Sound Infrastructure.
• Infrastructure Development is ongoing.

37
Challenges

• Crime Political Stability.
• International Perceptions.
• Sustainability of the business.
• Skills Retention in the country.
• Continued Economic Growth necessary for long-term
  Projects.
• Government Projects NIPP.
• Private Sector SE, BEE, AA.
• Low Cost competitors from the East dumping.

38
Thank you.
www.bombardier.com