Bombardier to build in Casablanca

MONTREAL — Bombardier Aerospace says it has bought land near the airport in Casablanca’s free zone that offers five years of no taxes and other financial incentives for a manufacturing facility set to open next year.

The Montreal-based aircraft manufacturer said Monday it signed a deal with Moroccan property holding and management company Midparc Investment S.A. for the land in a free zone in Nouaceur.

Midparc is owned by a state financial agency and three private industrial companies specializing in aeronautics and electronics fields.

Bombardier Aerospace president Guy Hachey said the selection of the site for the manufacturing facility is “an important first step” in establishing the world’s third-largest aircraft manufacturer in the North African country.

“The site met our stringent requirements and high standards and we look forward to the start of the construction and production of the first Moroccan-built Bombardier aircraft components,” he stated in a news release.

Hachey said it hopes the long-term relationship will serve as a catalyst for the aircraft industry in Morocco.

Bombardier (TSX: BBD. B) joins other aerospace manufacturers in setting up shop in Morocco, which has established an aerospace training program and offers many tax and financial incentives to attract companies.

The company will pay no taxes for five years, 8.75 per cent for another 20 years and 17.5 per cent thereafter.

On its website, Midparc boasts about low wages being one of Morocco’s advantages. It said the average monthly wage is $327 U.S., lower than in Tunisia and Turkey, 10 times lower than Spain and a quarter of what’s earned in South Africa.

It wasn’t immediately clear how Bombardier wages will compare to this average.

Midparc said free-trade agreements with Morocco offer investors free duty access to 55 countries with more than one billion consumers and 60 per cent of the world’s GDP.

Morocco also offers training subsidies and financial aid from a government fund for new capital goods.

Bombardier didn’t disclose the purchase price for the 10-hectare piece of land, but said it plans to invest about $200 million U.S. in equipment, buildings and startup costs over the next eight years.

Construction of the plant will take place in phases starting in 2012. The Midparc free zone is an industrial gated community, with just one main entrance and constant video surveillance.

“We’re on track to begin production in 2013,” spokeswoman Haley Dunne said in an interview.

Bombardier has about one dozen employees temporarily working to establish the facility in Morocco.

Capabilities at the new plant, which will complement Bombardier Aerospace’s existing manufacturing sites, will initially include sub-assembly for simple structures. Details on the type of components to be manufactured are being finalized.

By the end of 2020, employment at the Morocco facility is expected to reach about 850.

Bombardier said it selected Morocco because of competitive manufacturing costs, low shipping and transportation costs and proximity to Europe.

On the Toronto Stock Exchange, Bombardier shares gained five cents at $3.96 in afternoon trading.

Source: http://www.montrealgazette.com