There might be good reasons for the Trudeau government to turn its back on Bombardier's risky proposition to partner on its troubled C Series jet aircraft. The company's push to relocate the assembly of parts of a different plane to Mexico and China would not be one of them. Raising it seems plain mischievous, further envenoming a politically poisonous file that regurgitates with regional bile.
Bombardier is a convenient punching bag for opponents of government intervention and other detractors with selective memories who see the company as the epitome of crony capitalism. For decades, they say, the Bombardier-Beaudoin family, which controls the company through its multiple-voting shares, has oiled its political connections to build a direct subsidy pipeline from Ottawa.
It's a popular legend in parts of the country, but, like all legends, it's an embellished narrative. There is little evidence that governments have coddled the aerospace sector, and Bombardier in particular, any more than they've regularly come to the rescue of the auto industry or oil and gas sector. Canadian taxpayers lost $3.5-billion on the 2009 bailouts of General Motors and Chrysler, on top of billions in outstanding loans to assembly plants and parts makers. Favourable tax treatment for oil-sands producers has cost Ottawa billions in forgone revenue since 1996.
Yet, maybe Ottawa should favour aerospace over autos and oil. Aerospace is a high-tech sector that employs a disproportionate number (30 per cent) of engineers, scientists and technicians. Qualitatively speaking, these are among the best jobs in the country. Aerospace assembly workers are also more highly skilled and earn more than those in other manufacturing sectors.
Bombardier is Canada's largest corporate spender on research and development, with an outlay of more than $2-billion in 2014 alone, much of it on the C Series airliner.
Of the top 100 companies conducting research in Canada, the leading five aerospace players accounted for a whopping 22.4 per cent of all R&D, according to Research Infosource Inc. Energy companies accounted for 9.5 per cent of spending. The auto sector made up 7.2 per cent, but the bulk of that is attributable to one company – parts maker Magna International. Foreign auto makers conduct little or no R&D in Canada, and employ fewer and fewer Canadians, despite decades of subsidies.
Like any global company intent on staying competitive, Bombardier has built a global supply chain to produce parts in the most efficient way possible. This is not a betrayal of Canadian taxpayers or workers. Its proposal, so far nixed by its union, to shift about 200 jobs involved in the assembly of the wings and cockpit for the Q400 turboprop plane from Ontario to its plant in Mexico and a supplier in China would save more, and better, Canadian jobs in the long run.
As a new Institute for Research on Public Policy study shows, Canadian manufacturers in global supply chains were "larger (116 per cent), more productive (10 per cent), had higher sales per worker (14 per cent) and paid higher wages (6 per cent)" than firms outside such chains.
The C Series, for all its birth pains and Bombardier's poorly executed plan to bring the plane to market, is an achievement in innovation of which Canada boasts too few. Each additional day Ottawa delays a decision about whether to invest the $1-billion (U.S.) in the C Series program that Bombardier is seeking allows competitors Airbus and Boeing to sow doubts about the plane's viability, scaring off potential Bombardier customers. Still, the Trudeau government should drive a hard bargain. Management and governance failures at Bombardier have earned it the right to be leery.
As currently proposed, the prospect of a C Series joint venture between Ottawa, the Quebec government and Bombardier – with a board chaired by long-time Bombardier director Daniel Johnson, a former Liberal Quebec premier with deep family and party ties – does not inspire confidence that the necessary steps would be taken to ensure the independent management of the C Series program and prevent the Beaudoins from calling the shots as they always have.
If Ottawa and Quebec hope to salvage the C Series, much less make a success of it, they need to bring in ruthless aerospace pros unbeholden to Bombardier's controlling family. Bombardier's newish chief executive, Alain Bellemare, may be highly competent, but he still answers to a board of directors dominated by the Beaudoins and their kin.
Like it or not, the C Series is all of Canada's problem now. And time is running out to fix it.