Bombardier Inc., the world's third- largest commercial aircraft maker, said it gave a contract to China's Shenyang Aircraft Corp. to make parts for its Q400 planes, as it moves some production to low cost countries.

The companies signed an agreement covering fuselage sections at the Farnborough International Airshow in the U.K. yesterday, according to a short statement posted on Montreal-based Bombardier's Web site, which didn't give any further details. Li Changsan, a spokesman for Shenyang Aircraft, a unit of China Aviation Industry Corp. I, declined to comment today.

Bombardier is moving production to low cost countries, as the strength of the Canadian dollar has hurt its margins, the company's aerospace chief, Pierre Beaudoin, said on July 17. Shenyang already makes parts for other planes for Bombardier, which is also building a US$200 million plant in Mexico.

Shenyang Aircraft will start supplying fuselage sections for the Q400 turboprop in 2008, Flight International said on its Web site, citing President Li Fangyong.

The Chinese company is replacing Mitsubishi Heavy Industries Ltd., which ended production because of capacity constraints, Flight said, citing Bombardier Vice President Jean Seguin. Tokyo- based Mitsubishi Heavy is making wings and fuselage sections for Boeing Co.'s 787 aircraft.

Shenyang Aircraft and Bombardier had also agreed a partnership for the CSeries, the planemaker's proposed regional jet, which was shelved in January, the report said. Bombardier expects the partnership to be revived if the plane goes into production, the report said, citing Beaudoin.

Shenyang Aircraft already makes parts for Bombardier's Q100, Q200 and Q300 models, according to the Canadian company's Web site.

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