Bombardier Inc. is defending its plan to outsource more work on its Toronto-built Q400 turboprop aircraft to manufacturing sites outside Canada, saying its goal of cutting costs on the aircraft has nothing to do with its billion-dollar aid request from Ottawa.
But federal lawmakers questioned the wisdom of offering the company a big bailout if it is stripping away local jobs.
“Bombardier is a global company and we have to take advantage of opportunities to grow our business and market presence on a worldwide basis,” Bombardier commercial aircraft spokeswoman Marianella Delabarrera said.
“So yes, that does include revisiting supplier contracts and in some cases even working with our unions to find ways to make our aircraft programs more competitive. And this is exactly what we’re doing with the Q400.”
The comments come after The Globe and Mail reported the details of a recent proposal Bombardier made to its unionized manufacturing staff in Toronto to shift assembly of wings and cockpits for the Q400 turboprop to facilities in Mexico and China. Bombardier is trying to get production costs of the slow-selling plane down so it can reduce its price and make it more competitive against products made by rival ATR, the market leader. Ms. Delabarrera confirmed exploratory talks with union officials on the Q400’s competitiveness are continuing but she declined to discuss specifics.
Observers note that the optics of Bombardier’s proposal, which would eliminate about 200 jobs at the suburban Toronto plant, are bad for the company at a time it is seeking a $1-billion (U.S.) investment from the Canadian government for its new C Series jet program. The issue was raised in both the Ontario Legislature and House of Commons on Monday.
Conservative MP Maxime Bernier, one of the few voices in Quebec against a bailout, said Bombardier’s desire to boost Q400 content built overseas proves corporate aid is a waste of taxpayer money.
“While the federal government is preparing to provide $1-billion in financial aid to Bombardier, Bombardier is preparing to send even more jobs abroad,” Mr. Bernier said during Question Period. “It’s not fair to force small entrepreneurs to pay taxes to fund subsidies to a corporation like Bombardier.”
NDP Leader Tom Mulcair took the opposing view, saying the Q400 issue highlights the necessity of exacting local job protection in any deal with the Montreal-based plane maker. “Our aeronautics industry needs help, nut not to the detriment of workers and their families.”
Prime Minister Justin Trudeau vowed to protect good jobs in the aerospace sector, saying that’s why his government is taking its time with a proper analysis of the billion-dollar aid request.
“In essence, what we all want is to protect the good jobs of Canadians in the aeronautic industry and other industries,” he said in the House.
The government has hired U.S.-based investment bank Morgan Stanley to help advise it on a possible investment, sources told The Globe and Mail last week.
The head of the union representing Bombardier workers at the Q400 plant in Toronto says he realizes the turboprop made there is being beaten in the market, but outsourcing wing and cockpit assembly to Mexico and China is not the best way to fix that issue.
“The lazy solution is always just to offshore,” Unifor president Jerry Dias said Monday. “There’s no simple solution to a complicated problem.”
He said the company, the union and governments need to get together to find a solution that reduces costs to make the Q400 more competitive. He said there has been no detailed discussion among all the parties about moves the union can make to cut costs while retaining the wing and cockpit assembly jobs in Toronto.
The union’s contract requires Bombardier to win approval of union members before drastic changes such as shifting production can be made. Union membership in Toronto defeated a proposal in October that would have provided retirement incentives for about 200 workers in return for the union permitting the work to be shifted.
Bombardier employs about 1,000 people manufacturing the turboprop plane, which won 26 new orders last year, compared with 76 for the competing ATR plane built by a European consortium. Final assembly for the Q400 is done in Toronto, and that’s not in question, according to Bombardier. Components for the aircraft are also made at existing facilities in Mexico and China.
Asked whether the federal government should provide aid for Bombardier if it shifts jobs overseas, Mr. Dias said they are two separate issues. The company’s request for an investment in the C Series is about joining the Quebec government in supporting the troubled plane program, which is more than two years behind schedule and more than $2-billion overbudget.
“There’s no question the [federal] government needs to help Bombardier,” he said. “We’re talking about a valuable industry.”
Brad Duguid, Ontario’s Minister of Economic Development, said his officials contacted Bombardier after reading The Globe’s story to see whether it has plans to do more outsourcing. While he said he recognizes that there’s a “constant drive” from aerospace firms globally to keep their operations as cost-effective as possible, he cautioned Bombardier about looking to Mexico for a solution.
“Bombardier has had some recently challenging experiences in their [rail equipment] with sourcing to Mexico, where they have had poor-quality product come back, which impacted one of their contracts,” he said. “So, it’s something that I think companies need to think twice about.”
With a report from Jane TaberReport Typo/Error
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