In February, Chinese railway officials will descend on La Pocatire, Que., a town of under 10,000 nestled beside the St. Lawrence River. From its sprawling plant here, Bombardier Inc. has taken a commanding position in the North American market for mass-transit equipment. At La Pocatire, the company has built everything from subway cars for New York City to double-decker Superliner cars for Amtrak and monorail cars for Walt Disney World. The Chinese are hoping Bombardier can transfer some of this technology to them. Under a tentative joint venture announced during a visit of Canadian Prime Minister Jean Chretien to China last November, Bombardier will help manage China's largest passenger-rail factory. Bombardier believes the agreement, which it hopes to conclude in 1995, will give it a toehold in the world's largest market for mass-transit equipment.

This triumph is just one example of Montreal-based Bombardier's emergence as a global powerhouse. In Malaysia, Bombardier recently won a contract to build a 32-kilometer light-rail system in Kuala Lumpur. In the U.S., Bombardier's 50-seat Regional Jet is helping revolutionize commuter airlines by letting carriers provide economic jet service to small cities. In Europe, where it built the high-tech rail cars that have just begun to haul cars and buses through the Chunnel, "I would put Bombardier in the same league as Siemens, GEC-Althsom, or ABB," says Eurotunnel Chairman Sir Alastair Morton.

All this has helped Bombardier more than triple sales over the past five years, to $3.4 billion in fiscal 1994. And with profits up 157% over the same period, to last year's record $125 million, Bombardier's stock has grown at a compound annual rate of 33%. Fiscal 1995, which ends on Jan. 31, looks even better. In the first three quarters, Bombardier's net income soared 40% on a 12% sales increase. Today, Bombardier ranks, along with Northern Telecom Ltd., "at the top among Canadian multinationals," says Bank of Montreal CEO Matthew W. Barrett.

That's a far cry from Bombardier's early days. When CEO Laurent Beaudoin took the reins in 1966, he was just 27, and the company--with only one major product, the Ski-Doo snowmobile--had annual sales of some $15 million. "I had to learn on the job," Beaudoin recalls. It was a steep learning curve. The company skirted disaster when the energy crisis of 1973 devastated the snowmobile trade. Since then, Beaudoin has made Bombardier a global force in three industries: rail and mass-transit gear; aerospace, including business and regional jets; and consumer products such as snowmobiles and watercraft.

Beaudoin has done it by flouting conventional wisdom. Few gurus would dare suggest diversifying by acquiring a string of nearly bankrupt companies. Yet that's precisely how Beaudoin built his most successful business: the aerospace unit, now the world's sixth-largest producer of civil aircraft. "I give them extremely high marks," says John Zimmerman, president of Aviation Data Service Inc.

Now Beaudoin, who logs more than 500 hours a year in Bombardier's fleet of corporate jets, is vowing to double sales over the coming five years without making major acquisitions. That's an audacious goal, considering that many of its markets--including business jets and snowmobiles--are mature and that the competition can be cutthroat.

SNOW JOB. Bombardier also faces political challenges at home. Beaudoin, the most admired CEO in the province of Quebec, is emerging as a leading foe of Premier Jacques Parizeau's campaign to make Quebec an independent nation within two years. Ironically, Parizeau often cites Bombardier's success as proof that Quebec could do better if split off from Canada. If Parizeau wins an independence referendum later this year, the company might have to convert its balance sheet to U.S. dollars.

But Beaudoin is at his best when dealing with a crisis. His first big one came less than a year after he joined Bombardier as comptroller in 1963. Beaudoin got the job after impressing his father-in-law, Joseph-Armand Bombardier, who had invented the snowmobile. Only nine months after the young man arrived, Bombardier died of cancer. Beaudoin was promoted to general manager, and in 1966 to president, just as the snowmobile craze was sweeping North America.

When the 1973 energy crisis wiped out all but 4 of the 100 snowmobile makers, Beaudoin frantically sought to diversify. The key deal was a contract to make 423 subway cars for Montreal. Today, Bombardier has a third of the North American market for mass-transit equipment and five factories in Europe, where it built the Chunnel cars. "Their manufacturing knowhow is among the best in the world," concedes Wolfram Martinsen, president of archrival Siemens Transportation Systems Inc.

But it wasn't until Beaudoin sought to take Bombardier into aerospace in 1986 that his brilliance in mergers and acquisitions became apparent. His first target: Canadair. Government-owned Canadair was drowning in debt and had only one viable product: the Challenger, a large business jet. The shopworn company looked hopeless, and "we knew nothing about aerospace," Beaudoin says.

Maybe so. But Beaudoin "has an incredible sense of smell," says board member and Harvard business school professor Hugo Uyterhoeven. At Canadair, Beaudoin scented a chance to move into two niches where his company could be a world leader: business jets and regional aircraft.

NOSEDIVE. To round out Canadair's product line, he snapped up three other desperately sick plane makers: Boeing's hemorrhaging de Havilland unit, business-jet pioneer Learjet, and Short Brothers, Northern Ireland's largest employer. Since then, his managers have produced turnarounds at all four by melding them into a competitive whole.

In early 1990, for example, Wichita's Learjet was in a seemingly uncontrollable nosedive. But unlike many takeover artists, Beaudoin didn't sack Learjet President Brian Barents, who had a credible turnaround plan. What Lear needed was money, which Beaudoin provided in spades. That fall, Lear announced it would spend $100 million on a new intercontinental business jet, the Lear 60. In 1992, Beaudoin sank a further $200 million-plus into developing a midsize jet: the Lear 45, due in 1996.

Here's where the complementary acquisitions paid off: The Lear 45 would have cost at least $40 million more if Lear hadn't been able to farm out fabrication of the fuselage to Short and turn over the wing to de Havilland. This helped Lear price the plane at just $6 million, which will help make it "their breakthrough product," predicts Fred George, a pilot and senior editor at Business & Commercial Aviation.

Over the coming five years, "most of our growth will come from such new products," says Beaudoin. In aerospace, he's hoping the Regional Jet (RJ), the Lear 45, the Global Express, and other new products will produce home runs. An $800 million program will develop the Global Express Jet, which could ferry CEOs nonstop from New York to


The Regional Jet got off to a slow start when it first came onto the market in 1992. But now, the 50-seat RJ is taking off fast. In December, Lufthansa's regional carrier--CityLine--ordered eight RJs, pushing Bombardier's backlog to 42. In response, it's upping production to three a month, "and I see no reason why we won't go to even five planes a month," says Robert E. Brown, President of Bombardier's North American Aerospace Group.

ITS OYSTER. That optimism seems justified. Before the RJ, "there was no jet in the 50-seat range with decent economics," says SkyWest Inc. Chief Executive Jerry C. Atkin. With the RJ, SkyWest can break even flying 25 people from Salt Lake City to Rapid City, S.D., vs. the 90 to 100 passengers Delta Air Lines Inc. needed with its bigger jets.

Aside from new products, the other engine of Bombardier's growth is a stronger push into new geographic markets. Last year, 94% of Bombardier's sales came from North America and Europe. But in November, Bombardier cinched its largest Asian contract yet: a $400 million role in Kuala Lumpur's $2 billion light-rail system. Bombardier beat out France's Matra Aerospace Inc.

The memorandum of understanding that Bombardier has signed with the China National Railway Locomotive & Rolling Stock Industry (LORIC) has far bigger potential. Under the joint venture, Bombardier would take charge of LORIC's plant near Qingdao, bring it up to world-class standards, and then begin selling in other Asian markets, in addition to serving China. Some tricky issues remain on the negotiating table, and any payoff is still years away. Still, with a facility in China, "Bombardier would have a substantial lead over its competitors," says Normand Roy, an analyst at Montreal's Levesque Beaubien Geoffrion Inc.

Bombardier also has experience with tricky Latin markets. After the company paid $22 million to buy Concarril from the Mexican government in 1992, it assumed it had a lock on the booming Mexican market. But just six months later, it was beaten out by a Spanish competitor, CAF, in a bid to supply

134 new cars for the Mexico City subway. Bombardier officials lodged a formal protest, which angered Mexican


POLITICAL SAVVY. It was only then that Bombardier hired Miguel Yoldi, a veteran consultant, to run Concarril. Yoldi's advice: "It's very difficult to do business in Mexico if you don't develop a relationship and build trust." Bombardier quickly dropped the legal challenge and began cultivating Mexican officials. Although the peso crisis is sure to slow its projects, Mexico is emerging as one of Bombardier's better prospects.

Bombardier's ability to sort through difficult political situations is what helps distinguish it. The Chunnel battle was one of the toughest. As the Chunnel consortium repeatedly revised the specifications for the cars Bombardier was building, costs soared far beyond the $575 million provided in the initial contract. In mid-1993, Bombardier filed a claim for an additional $600 million. But because the cost of the entire Chunnel had more than doubled, to more than $15 billion, Beaudoin knew Eurotunnel didn't have the cash to meet his claim.

So in late 1993, after arduous negotiations with Eurotunnel Chairmen Andre Benard and Sir Alastair Morton, Beaudoin settled for just $113 million in cash, plus 25 million shares in the Eurotunnel project, then worth some $150 million. Beaudoin says this settlement would allow Bombardier to "break even." But that's assuming the shares, which collapsed after the Chunnel's startup woes, recover to their level of late 1993.

RELENTLESS PACE. This debacle caused Bombardier to lose $70 million in transport gear in the past two years. But thanks to diversification and booming sales of hit products such as the Sea-Doo watercraft, "Bombardier was still able to maintain its record of constantly increasing its net income," says Montreal analyst Roy.

It's Beaudoin who personally steers the company through such turbulent waters. Few executives can keep up with his relentless pace. "He's a workaholic," says Bank of Montreal's Barrett. "He just loves what he does, and he does it 150% of the time." Barrett should know. During a weekend at Beaudoin's "hauntingly beautiful" hunting lodge on an island in the St. Lawrence, Beaudoin "successfully harassed me on why it might be a better idea to have a plane with a Canadian flag on the tail," Barrett recalls. The pressure paid off when Barrett traded in the bank's Falcon 50 for a Challenger.

Beaudoin, 56, who relaxes by playing tennis, riding horses, and zooming through the woods on a Ski-Doo, shows no signs of retiring any time soon. When he does, the succession decision will belong to him and other members of the Bombardier family, who together hold over 60% of the voting shares. Does that mean Beaudoin's son Pierre, who at 32 is managing the division that makes Ski-Doos and Sea-Doos, would automatically succeed his father? Beaudoin insists that's far from guaranteed. But whoever it is, he'll find himself presiding over one of North America's most thoroughly international companies.

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