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Bombardier Thanks Canada For $1 Billion Bailout By Firing 7,000 People

February 17, 2016

Bombardier Thanks Canada For $1 Billion Bailout By Firing 7,000 People

Back in October, Quebec put taxpayers on the hook for a $1 billion bailout of planemaker Bombardier, which was having one hell of a hard time creating a buzz around its CSeries commercial jet program.

Bombardier has been around for nearly 8 decades and employs more than 40,000 people in the province. The company’s role in the provincial economy is “incalculable,” Quebec’s Economy Minister Jacques Daoust said last year. “How can I let them go?” he asked.

For its money, Quebec would get a 49.5% stake in a new business that will own the assets and liabilities of the CSeries commercial jet program, which isn’t exactly going well. In exchange, the company promised to manufacture the aircraft in the province for at least 20 years. “How confident is Quebec that this will fan out for the economy and taxpayers? That’s what we don’t know,” Paul Boothe, a former senior Canadian official who was the federal government’s lead negotiator with the domestic units of GM during bailout talks in 2009 said at the time.

Well, now we do know. On Wednesday, Bombardier announced it’s cutting 7,000 jobs as part of a “global workforce optimization.”

“Impacted positions are mostly based in Canada and Europe,” the company said this morning, after reporting results that missed estimates on both the top and bottom line. Here’s the breakdown:

So obviously that sounds bad, but don’t worry because the job losses will be “partially offset” by hiring in “certain growth areas.” Like the CSeries program. Which is “growing” so fast that the company had to take a $1 billion bailout from the provincial government to shore it up.

“Production rates for some models have been modified,” Bombardier goes on to say, in an attempt to explain the layoffs, “due to macroeconomic conditions.” For those who don’t read a lot of quarterly reports, that’s a polite way of saying this: “demand is really, really soft.”

…click on the above link to read the rest of the article…

Bombardier’s strange chokehold on the public purse

November 3, 2015

Bombardier’s strange chokehold on the public purse

In today’s lexicon, government ‘investment’ means spending your money on someone else

Bombardier's new, much-delayed CS300 aircraft made its first test flight in February, but some investment analysts are wondering if the longer, narrow-bodied jet has missed its moment.

Bombardier’s new, much-delayed CS300 aircraft made its first test flight in February, but some investment analysts are wondering if the longer, narrow-bodied jet has missed its moment. (Christinne Muschi/Reuters)

Has anyone noticed how the word “spend” vanished at some point from the political vocabulary?

Governments simply don’t spend anymore, they “invest” on behalf of grateful taxpayers who put up the capital.

The political appeal of this semantic shift is obvious: “investing” has a virtuous ring; it implies prudent choices and a handsome return.

Put it this way, you might actually pay someone to invest your money, but do you really want anyone else spending it?

As for “bailout,” well, that term is about as politically acceptable nowadays as a racial slur. You bail out the weak and incompetent. You invest in winners.

So, this week, Bombardier is — once again — a “winner.”

“This will be a profitable transaction for everybody,” declared Quebec’s minister of the economy, Jacques Daoust, as he confirmed his government’s decision to “invest” $1 billion in the floundering airplane maker, which has been hemorrhaging money and missing delivery deadlines.

In addition, Daoust made it clear he expects “everybody” to include Canada’s new prime minister, Justin Trudeau, just as soon as he officially takes possession of the federal vault this week.

“I can assure you,” said Daoust, that upon learning the name of Trudeau’s new industry minister, “I’ll get his or her phone number and put in a call.”

Daoust is counselling a nice round “investment” figure for Ottawa, too. Say, another billion or so.

Trudeau hasn’t made any commitments, but Daoust’s message is pretty clear: You won with Quebec’s help, and it’s time to help Quebec.

…click on the above link to read the rest of the article…

Bombardier investment launches Quebec into battle with aerospace giants: Don Pittis

October 30, 2015

Bombardier investment launches Quebec into battle with aerospace giants: Don Pittis

Is challenging Boeing and Airbus a savvy investment or a waste of taxpayer cash?

Fred Cromer, president of Bombardier Commercial Aircraft, presents Swiss Airline's new Bombardier CS100 aircraft. But delays in readying the CSeries for passenger service allowed giant competitors Boeing and Airbus to get a head start in selling into the same niche.

Fred Cromer, president of Bombardier Commercial Aircraft, presents Swiss Airline’s new Bombardier CS100 aircraft. But delays in readying the CSeries for passenger service allowed giant competitors Boeing and Airbus to get a head start in selling into the same niche. (Reuters)

In some ways it feels like throwing good money after bad.

The same day that Canada’s leading transport manufacturer, Bombardier, announced $5 billion US in losses, Quebec taxpayers have invested more than $1 billion of their own in the company.

And despite a backlash from many Quebecers who think there are better things to do with a cool billion, the Quebec government may have made a smart investment in its future. But as Bombardier goes head to head with the world’s biggest aircraft makers, there’s no question it is a gamble.

In the short term it is a certainty that keeping Bombardier’s aircraft development program alive will be good for Quebec’s economy, specifically in terms of jobs.

“The government’s stepping in because there’s about 17,000 to 18,000 Bombardier jobs in Quebec,” says McGill University’s Bombardier-watcher Karl Moore. “When you look at the tier-two suppliers, there’s probably about 40,000 people in Quebec who make their living from Bombardier.”

Lots at stake

CSeries interior

The CSeries is the biggest commercial airline Bombardier has made. It will have to go head to head with new aircraft just released by Boeing and Airbus that use the same quiet engine. (Bombardier )

But as usual with such investments, if it were merely a question of a few years’ worth of  jobs, there might be a cheaper way to inject that money into the Quebec economy. There is much more at stake.

…click on the above link to read the rest of the article…

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