Mitsubishi weighs new Canadian engineering design center in Montreal: source

MONTREAL (Reuters) - Mitsubishi Heavy Industries Ltd, is weighing the creation of a new engineering design center in Montreal, a source familiar with the matter told Reuters, in a move fueled by the company’s planned acquisition of Bombardier’s CRJ regional jet business.

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The engineering design center will start with “a couple hundred” workers to support the development of its smaller Spacejet model, the 65- to 76-seat M100 jet, in collaboration with sites in Japan and Seattle, the source added.

“Mitsubishi is considering putting a new development site, an engineering facility into Montreal,” said the source who spoke on condition of anonymity because the talks are private.

“It would make sense, if the CRJ transaction closes, Mitsubishi would have a bigger (presence) in the area.”

Mitsubishi is expected to take a decision, which is not yet firm, in the next few months, the source added.

Mitsubishi Heavy spokesman Dan Lochmann said by telephone from Japan that the company has “not made any decisions yet,” on Montreal, “but the area is certainly one with excellent talent that we would like to make the best use of.”

This week, Mitsubishi Heavy agreed to buy Bombardier’s money-losing CRJ regional jet business for $550 million in cash, in a boost to Japan’s plane-making ambitions, while marking the Canadian plane and train maker’s exit from commercial aviation.

The CRJ acquisition would end production of Bombardier’s aging regional jets in late 2020, but give Mitsubishi access to the Canadian company’s aftermarket sales, engineering expertise and U.S.-based heavy maintenance centers. Mitsubishi would be better-placed to attract Bombardier’s engineers through the Montreal center.

Mitsubishi is trying to certify its 88-seat regional jet, the Spacejet M90, for delivery in 2020 after seven years of delays.

Mitsubishi faces the technical challenge of developing the M100 with a larger, more fuel-efficient engine, while meeting the size and weight rules that would make it attractive in the United States, the world’s largest regional jet market.

Pilot agreements at the largest U.S. carriers restrict planes heavier than 86,000 pounds (39 tonnes) and with more than 76 seats from being outsourced to regional affiliates which are less costly to operate. Some of the agreements set the seating limit even lower at 65 seats.

Although bigger than the M70 jet it replaces, Mitsubishi has said the M100 will save weight by using new materials.

Reporting by Allison Lampert; Editing by Sandra Maler