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 Transportation
Bombardier Aerospace
Bombardier Transportation

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
NOTES
Bombardier’s entry into the aerospace industry began with its acquisition of Canadair in 1986.
Over the past 19 years (it will be 20 years in December 2006), Bombardier has become a world leader in the design and manufacture of aircraft.
Bombardier also provides related services in the regional, business and amphibious aircraft markets.
Flexjet and Skyjet are trademarks of Bombardier Inc. or its subsidiaries.

9. Bombardier regional aircraft
Q100/200
Q300
Q400
NOTES
The CRJ regional jet, the aircraft that led the regional aircraft market revolution is also the most widely sold regional aircraft. More than 1,300 CRJ regional jets had been delivered as at Avril 30, 2006 (1,360).
The CRJ Series aircraft has best-in-class economics in each size range (up to 10% better than Embraer aircraft).
October 28, 2005: announcement that CRJ200 production would be (temporarily) suspended as of mid-January February 9, 2006: announcement that the production of the Bombardier CRJ200/Challenger 850 aircraft platform would restart in mid-April 2006 to primarily meet present and anticipated demand for Challenger 850 business jets.
The Q-Series turboprops, like the CRJ Series jets, is a single family of aircraft. Both provide reduced costs and increased flexibility to customers through commonality savings: crew, spare parts, training and maintenance.
Q is for quiet due to the aircraft’s pioneering Noise and Vibration Suppression (NVS) system.
The Q-Series aircraft delivers the quietest and most vibration-free passenger cabin of any propeller-driven aircraft. The NVS was introduced as standard equipment on new production aircraft in 1996.
Seating
Q100/ to 39 seats CRJ seats
Q to 56 seats CRJ700 up to 70 seats
Q to 78 seats CRJ900 up to 90 seats
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.
NOTES
Bombardier entered into the rail industry back in 1974 with an order for 423 subway cars for the Montéal Metro. Bombardier made a series of strategic acquisitions over the past 30 years. It vaulted to the leadership position in the global rail transportation market with its acquisition of Adtranz in 2001.

12. Bombardier Transportation
Products and Service
Light Rail Vehicles
Metros
Regional and Commuter trains
Intercity and High Speed Trains
Locomotives & Freight Wagons
Bombardier Transportation offers a wide range of passenger vehicles for Metro services, Commuter and Regional services as well as Intercity services. Our goal is to use our core competences of development, marketing, production and customer support to exceed our customers' expectations worldwide.
Propulsion and Controls
Rail Control Systems
Bogies
Transportation Systems
Services

13. Bombardier Transportation around the World
42 Production Sites in 21 countries

14. Bombardier Transportation Worldwide Bombardier - relevant market by geographic region
Other
14% ($ 6.0)
Asia-Pacific 9% ($ 3.9)
Europe 62% ($ 26.3)
North America 15% ($ 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.
2007 YTD
If you know Jim Collins, author of Good To Great, I have an affinity with him because I love Data. Data speaks !!

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. Localisation % of project
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
Localisation % of project

18. Localisation % of project
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.
Localisation % of project
Total project value

19. Localisation % of project
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.
Localisation % of project
Total project value

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 Africa’s 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 US$10 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

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
Bombardier’s 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 05:30 to 20:30

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 months
2010 Football World Cup June 2010
Completion of Phase months
Operating Concession A further 15 years

30. Government’s Implementation Process
Four pillars
Political will & commitment from Government
Viable project (base case design)
Technical
Financial
Legal/Institutional
Funding (for Infrastructure & Operations)
Government’s portion
Private Sector’s 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.

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 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.