Slap in the face for taxpayers
So what’s the bottom line in the deal that hands control of Bombardier’s struggling C Series airline project over to the European giant Airbus?
Just this: Taxpayers in Canada have sunk well over a billion dollars into the venture for the privilege of subsidizing jobs making planes in Alabama.
This is an amazing deal for Airbus, which gets a controlling share (50.01per cent) in the C Series for an investment of — exactly nothing at all. It won’t even take on any of Bombardier’s debt. What it contributes is its financial and organizational muscle plus a scheme to dodge punitive tariffs imposed on the C Series by the U.S. Commerce Department.
At a stroke, Airbus takes out Bombardier as a potential competitor in the growing market for jets carrying 100 to 150 passengers. And it sets itself up to compete vigorously in that category with the other big global aerospace powerhouse, Boeing.
It plans to do all that by opening up a production line to build the C Series in — Alabama. That gets around the Trump administration’s insistence on protecting American jobs.
But it does it at the cost of moving production south of the border for a plane in which Bombardier has already sunk $6 billion. The Quebec company is also on the hook to cover hundreds of millions of dollars more in potential losses for the project.
Who can doubt that if the C Series finally takes off under the new Airbus management more and more production will be shifted from Quebec to low-wage, anti-union Alabama? Airbus, headquartered in Toulouse, France, and operating globally, will have no allegiance to Quebec or keeping jobs there, which is the reason that the Quebec and federal governments have poured billions in subsidies, loans and outright grants into the company over past decades.
In just the past two years governments have put more than $1.6 billion into the C Series. Quebec invested $1.3 billion in 2015 and last January, the federal government committed $372.5 million, all in the name of propping up high-tech jobs in the province.
No wonder, then, that Quebec’s opposition parties are outraged at this latest surprise twist in the Bombardier story, and rightfully so. Amir Khadir, a member of the province’s National Assembly for the left-wing Québec solidaire, says taxpayer dollars will end up “subsidizing Airbus jobs in Alabama.” That’s about the size of it.
Another opposition leader is calling for the province’s auditor general to tell Quebec taxpayers just what has become of their $1.3 billion, and what the value of the Quebec government’s 19 per cent share in the C Series project is at this point.
That’s a good question. Likewise, Ottawa ought to give federal taxpayers an accounting of the $372.5 million in “financial assistance” it committed to in January. Bombardier has gone to great lengths in the past, including multiple court cases, to keep the amount of public subsidies it receives secret. At this point, though, the minimum taxpayers should expect is an accurate and transparent look at what their investment is worth and how much of it they can expect to get back.
What can be said of this deal is that it may be the best Bombardier could manage given the crippling 220-per-cent duties imposed by the Trump administration, with the threat of more protectionist measures to come.
Better, from Bombardier’s point of view, to salvage some part of the C Series project than to see the whole thing collapse. Certainly, the company benefitted immediately from a 20-per-cent spike in its share price.
But from the point of view of taxpayers who have been called upon again and again to come to the rescue of the company in the name of preserving jobs in Canada’s supposedly vital aerospace sector, this is a big slap in the face.
Taxpayers in Canada have sunk well over a billion dollars into the venture for the privilege of subsidizing jobs making planes in Alabama