The Canadian aerospace industry just got shafted -- again. And Donald Trump got what he wanted. Tom Walkom writes:
The latest chapter of this ongoing saga began in April when American aerospace giant Boeing formally complained to the U.S. Commerce Department about Bombardier’s proposed sale of 125 C Series jets to Delta Air Lines.
Charging that the project had been improperly subsidized by the Canadian and Quebec governments, Boeing asked that an 80 per cent tariff be slapped on any C Series plane entering the U.S.
The Trump administration was more than agreeable. It imposed a preliminary tariff of 300 per cent, thereby making the Canadian-manufactured jet virtually unsalable in the lucrative U.S. market.
So Bombardier went to Airbus, which owns a plant in Alabama:
For Airbus, the arrangement is sweet. In return for letting Bombardier use its Alabama plant, it gets just over 50 per cent of the C Series project for free. It doesn’t have to pony up a cent.
Nor does it have to absorb any of Bombardier’s sizable $8.7 billion debt, much of which was incurred developing the C Series.
For Bombardier too, this is a good deal. By moving assembly from Canada to the U.S., it avoids the 300 per cent tariff and keeps the Delta sale alive. As well, it gets to locate its American production in a so-called right-to-work state that promises cheap wages and is vehemently anti-union.
While it no longer controls the C Series, Bombardier does get to keep a 31 per cent stake in the project for at least 7.5 years. And it can take advantage of Airbus’ global reach to market the jet.
And Donald Trump gets the jobs required to assemble the aircraft. Something to keep in mind during the current NAFTA negotiations.