The head of the Canadian Chamber of Commerce has added his voice to calls from the business community for financial aid from Ottawa to help struggling Bombardier Inc.
In an open letter released to The Globe and Mail Tuesday, Perrin Beatty and Michel Leblanc, chief of the Metropolitan Montreal Board of Trade, say the federal government “MUST invest in Bombardier” and argue that the resulting losses from a shutdown of Bombardier’s C Series new-jet program would “cost Canadian taxpayers more than the assistance being called for.”
Navdeep Bains, the federal Minister of Innovation, Science and Economic Development, said on Tuesday the government is still studying the “business case” for an investment.
“The company made an official offer to the government for an investment on December the 11th, and we’re making sure that we look into that and make sure we continue to do our homework.
“We want to make sure we advance the public interest, but at the same time, it’s very important that we look at the business case, that we do the due diligence.”
Sources have said the company is seeking a $1-billion (U.S.) equity investment in the C Series program as a risk- and profit-sharing venture between partners.
Quebec has already committed $1-billion to the C Series, which is about $2-billion over budget, more than two years behind schedule and posting sluggish sales.
“It is time for the federal government to announce its support for Bombardier and invest the US$1-billion needed to give our world aerospace leader the edge it needs,” the letter signed by Mr. Beatty and Mr. Leblanc says.
They argue that the company pays about $370-million (Canadian) in federal taxes annually, with an additional $334-million in income taxes from Bombardier employees as well as tax revenues from over 1,000 Bombardier suppliers across the country.
“If Bombardier shuts down the C Series program for lack of cash flow, 2,200 jobs will be lost. The resulting losses would cost Canadian taxpayers more than the assistance being called for.”
The authors cite what they say are the positive outcomes of the federal government’s injection of $10.8-billion to bail out the troubled auto sector in 2009.
“We are at a crucial stage in the commercialization of the C Series. This is not the time to abandon the project, when the goal is within reach.”
Last week, Bombardier president and chief executive officer Alain Bellemare said – as the company announced plans to slash 7,000 jobs over a two-year period and posted disappointing quarterly results – that a “partnership” with the federal government “is very important to us.”
Support from Ottawa would represent a “strong endorsement” of the C Series and provide “additional financial flexibility” to the company, which has access to $6.5-billion (U.S.) in liquidity, he said.
Also last week, Air Canada signed a letter of intent for as many as 75 C Series planes and Quebec and Ottawa played a role, with Quebec agreeing to drop a lawsuit against the airline in return for C Series heavy-maintenance work while the federal government made a commitment to easing legislation governing the carrier.