I’m trying really hard to work up some Canadian outrage about the United States Commerce Department levying a massive import duty against airplanes built by Bombardier. Truly. But gosh, it’s hard to muster up much sympathy for Bombardier here. Whatever the merits of their case — and I agree they have some — I just can’t root for them.
Let me walk you through the context here: Bombardier recently signed an order with U.S.-based Delta Airlines for 125 mid-sized C-Series passenger jets. Boeing, the U.S. aerospace giant, claimed that Bombardier was offering the jets at below-market value by subsidizing their sale price with funds directed to it by the Quebec and Canadian governments. This unfair advantage, Boeing claimed, was allowing it to unfairly “dump” planes into the U.S. market, harming U.S. companies and workers.
Boeing doesn’t actually manufacture any passenger planes that are direct competitors to the C-Series. Ian Lee, a professor of international business and strategic management at Carleton University’s Sprott School of Business, joined my morning show on Toronto’s AM640 on Wednesday and speculated, reasonably, that Boeing is eyeing the C-Series more as a potential future competitor, and is responding aggressively to head off that possible threat from what is recognized to be an excellent aircraft.
So that’s the background. Boeing won its judgment, and the U.S. Commerce Department imposed a whopping 219 per cent import duty on the planes. This effectively triples their cost and if fully enacted would almost certainly have the effect of shutting them out of the U.S. market (final implementation of the levy wouldn’t be for months, and there are still other steps in the process where Bombardier can pull out a win or at least mitigate the cost). Bombardier probably will have some success there. And there is certainly a degree of hypocrisy on the behalf of Boeing, which on top of its massive military contracts (a subsidy of a kind) receives direct help from American governments.
So on that front, yeah, sure, good luck, Bombardier. Boeing shouldn’t be permitted to get away with rank hypocrisy and as a believer in free trade, obviously it’s important that every legal avenue be properly explored. And I’m not blind to the broader context here: the current U.S. president has taken a hard line on trade issues, even with close allies and generally fair-trading partners like Canada. Indeed, this ruling against Bombardier came down as Canada hosted the U.S. and Mexican trade delegations in Ottawa for another round of NAFTA talks. It would be preferable to not have U.S. trade delegations stomping all over Canada at this time.
But that’s as far as I’ll go. And I don’t think I’m on my own here. I never want to see a Canadian thrown out of work or punished for success on the global stage, and as torturous as the development process was, the C-Series jets certainly do seem to be a genuine success. But good Lord, Bombardier is just a damned hard company to root for. And they have no one but themselves to blame.
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You may recall from earlier this year that the federal government, and the Quebec provincial government, together came up with a billion-dollar bailout for the company. That was controversial enough. Bombardier didn’t help its cause when it announced, shortly after cashing the cheque, that it was laying off thousands of workers, including thousands in Canada, as it restructured its operations.
The optics were terrible, but the company then shredded whatever possible claim it could have made that it was just making tough business decisions when it announced big executive bonuses. The bonuses were dialled back after a public outcry, but the damage was done. And the damage was particularly acute when you recall that Bombardier, unusually for a global company of its size, is basically privately held by two families. The Canadian taxpayer was putting money right in their pockets even as they were laying off Canadians but cutting themselves big cheques.
Great look, guys. It’s almost like you didn’t need either the bailout or the layoffs!
That’s the national context. For those in my hometown, it’s worse. Bombardier was contracted to provide the Toronto Transit Commission with over 200 vehicles for our streetcar system, and the project has been an utter disaster. Like, books should be written about this. It’s been an absolute comedy of errors from Bombardier, with targets and deadlines being pushed back, then missed again, then revised downward and pushed back, and then missed again. Over and over.
For my readers in Toronto, I need say no more, for my readers outside of Toronto, I can’t begin to explain in what space I have remaining here how bad this has been. Bombardier has absolutely disgraced itself in its failed attempt to build vehicles for the city — which is weird for a company that exists to build vehicles (the rail vehicles are from a different operating division than the planes, I know. I just don’t care.)
It would be funny if it wasn’t so completely unfunny. Best of all, there’s still no real timeline on when we’ll actually get the cars into service. Bombardier says by 2019. No one believes them. No one should.
So, yeah, Bombardier’s got some problems here. It has for a while. But that won’t stop Canadian governments from forking over cash it took from me and you to help it out, even though it doesn’t seem to need the help, largely to keep voters in Quebec, Bombardier’s home province, happy. Failure should have consequences. It doesn’t, for Bombardier. They’ve dodged it at my expense, and that’s outrageous.
The company may well be in the right in its case with Boeing; for the sake of its many employees here and around the world, I suppose I hope it prevails. But that’s it. It’s simply too satisfying to see someone finally take the company on and win. Want me to wrap myself in the Canadian flag and say how angry this makes me? Get me some damned streetcars, Bombardier. Then we’ll talk.
Matt Gurney is host of The Morning Show on Toronto’s Talk Radio AM640 and a columnist for Global News.