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Once again, a domestic government is opening up its wallet to help Bombardier Inc., with news this week that Quebec will pony up $1-billion in financing support for buyers of the company's new C Series transcontinental airliners. Call it corporate welfare if you will, but take solace in the fact that while public dollars may be helping Canada's reigning aerospace champion once again, at least the situation is no worse than anywhere else. That's an improvement over years past.
No doubt, it would be preferable for Bombardier to not rely so heavily on the visible hand of eager governments. But it's a way of life in the global aerospace sector and it's not going to change. Quebec has provided $2.3-billion worth of loans to buyers of Bombardier regional jets since 1996, while the province, along with Ontario, Ottawa and the British governments, have provided various forms of support over the years, including repayable contributions, subsidies and research and development grants. At least Bombardier can claim it is one of only a handful of firms to receive cash under the defunct federal Technology Partnerships program that actually paid back more than it received.
Meanwhile, Canada's export finance arm, Export Development Canada, continues to provide billions of dollars of financing to buyers of Bombardier planes. EDC has lent between $3.1-billion and $6.6-billion since the start of 2011 alone, and export financing, backed by the government of Canada's highly rated balance sheet, is so essential, former Bombardier CEO Paul Tellier once told me, that if it ever dried up "I would go to my board and ask very seriously … whether we should get out of the [aircraft] business."
There's little use getting riled up over this, if we want an aerospace industry and jobs and GDP that go along with it. Across the industry, it's widely acknowledged that government export finance agencies were among the few steady sources of financing for jet buyers. The best we can hope for is that governments at least agree to a level playing field when it comes to supporting their local aerospace champions.
That's something that exists under a "gentleman's agreement" between Canada and other aircraft-producing nations in the Organization for Economic Co-operation and Development, as well as Brazil, home to plane maker Embraer. The deal, finalized two years ago, ended much of the bickering between nations by providing a framework for consistent and transparent use of export credit agencies, defining limits on how much financing they could provide, terms they could offer, fees they must charge and repayment terms that must be honoured. As a result, customer finance incentives have been reduced and the cost of guarantees has gone up, providing an incentive for financially healthy buyers to look elsewhere.
It's not perfect and there are still some differences between export credit agencies that continue to cause tensions, particularly in the U.S. But at least Canada and its peers have shown they're willing to establish some ground rules and play by them. In a business as completely infected by government aid as aerospace is, that might be the best we can hope for.
Sean Silcoff is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights, and follow Sean on Twitter at @seansilcoff .
Sean Silcoff