Justin Trudeau is under pressure to bail out Bombardier. Tom Walkom writes that, unless Trudeau breaks with precedent -- like John Diefenbaker -- Bombardier will get its money:
If Trudeau follows the usual pattern, he will comply. Diefenbaker, the only prime minister to withdraw government support from the aerospace industry, is still vilified for his actions.
The standard justification for government support of this particular industry is that every other country does the same. In fact, that’s true.
The Americans subsidize their aircraft manufacturers through defence spending. Brazil does it more directly. Europe’s Airbus Group SE is intimately connected to key governments throughout the continent.
When we bought our CF-18s, we were subsidizing the American aircraft industry. If we buy another American fighter to replace our aging fighters, we'll continue to subsidize the American aircraft industry. So why not subsidize our own?
Some argue that, if we're going to support the industry, we should nationalize it. But we tried that, and it didn't work out well:
The history of the modern aerospace industry in Canada can be traced back to 1974 and the attempt of then prime minister Pierre Trudeau’s Liberal government to fashion a high-tech industrial strategy.
To that end, Ottawa bought Toronto aircraft manufacturer de Havilland. It purchased Montreal’s Canadair the next year.But governments have short attention spans. By 1982, the Trudeau government had reversed course. It now wanted to rid itself of these money-draining enterprises.In 1985, Brian Mulroney’s Conservative government sold de Havilland to the U.S. company Boeing Corp. A year later it sold Canadair to snowmobile maker Bombardier.Both went at bargain basement prices. In both cases, governments assumed much of the companies’ debt.But private enterprise does not guarantee success. By 1992, de Havilland was on the block again. Eventually it was purchased by Bombardier and the Ontario government. True to the new orthodoxy, Bob Rae’s New Democratic Party government put up most of the money in return for a minority of the shares.
A few years later, Queen’s Park quietly sold its remaining stake in de Havilland to Bombardier.
One way or another, Bombardier will get its money.