Late September, the U.S. Department of Commerce hit Bombardier,
Canada’s major aircraft maker, with a nearly
220 per cent tariff on its new line of planes.
Which was later hiked another 80 per cent.
The amount—totally absurd. But the hit?
It’s just another in a long line of disputes over how the aircraft
manufacturing industry handles government funding.
This totally exorbitant tax came about because of Boeing, a U.S. manufacturer.
Boeing filed a complaint over Bombardier's new line
of CSeries jets.
The Montreal-based company has a deal
to sell up to 125 of these jets to Delta Air Lines —again a U.S. company.
Boeing is basically pointing fingers and claiming that Bombardier sold
the planes well below market value.
Something it was able to do thanks to
—what Boeing—is calling unfair subsidies from Canadian governments.
And the U.S. Department of Commerce agreed
hence the hefty tax.
Although Bombardier is Canada’s major aerospace manufacturer
Boeing earns eight times as
much on aircraft sales.
In the grand scheme of things, Bombardier is no match.
So, why pick on the little guy?
Realistically, the CSeries jets are good.
They’re spacious, fuel-efficient
environmentally friendly
and they’ve got Boeing scared.
Boeing’s already had to
reluctantly share the U.S. market with Europe’s Airbus
and they do not want to give up another piece of it.
But, of course, a company can’t just...say that.
Government subsidies have been put at the centre of this whole spat
so, let’s break those down.
Now, on the one hand, you could look at Boeing
as the pot, to our kettle in this situation.
Every major aircraft manufacturer receives some form
of government support—including Boeing.
This support could be through a lot of avenues:
military contracts,
grants
interest-free loans.
According to Good Jobs First,
Boeing has received about
14.4 billion U.S. dollars in subsidies to date.
Not to mention, 73.7 billion U.S. dollars
in government-assisted loans.
In dollar amounts, Bombardier’s support is
a fraction of what Boeing rakes in.
What Boeing is taking issue with are the
kinds of subsidies Bombardier has.
In 2016, the Quebec government gave
Bombardier one billion dollars U.S. to
support the creation of its floundering CSeries program.
But the province didn’t just give it funding
like it would give a subsidy.
Quebec made a partnership with Bombardier.
In exchange, the province took an almost 50 per cent stake in the CSeries.
On the one hand, it makes sense that
Quebec wants to support one of its province’s biggest industries.
But analysts point out that a government involving itself in commercial business
is pretty murky water.
Not to mention, it’s a sly move for Bombardier, since
that support at such an early stage for that program eliminates a lot of risk.
That’s the issue Boeing in the U.S. have.
But to be honest, some Canadians aren’t
thrilled with Bombardier’s constant government bailouts either.
There have been plenty of opinion pieces and grumblings about it.
Even satire suggesting Sears consider a name change.
Since 1966, Bombardier has received
five billion dollars from the federal and Quebec governments.
Yet despite the taxpayer funding, Bombardier has still carried out massive layoffs,
seen projects delayed and given executives cushy bonuses,
which the company only cut back after a public backlash.
You can see why folks would be torn on the
government pumping so much cash into the company.
If anything, decades of feuding
over aerospace subsidies should be an indicator that
taxpayer money
and airplanes
are a toxic mix.