Workers at the Bombardier Q400 factory in Toronto have agreed to the company's request to shift production of the plane's wings and cockpit to low-wage countries, a move that will eventually eliminate 200 jobs.
The workers at the plant originally rejected the request last fall to outsource wing assembly to Mexico and cockpit production to China.
But members of the Unifor local that represents workers reversed their decision after their bargaining committee negotiated more attractive retirement packages from Bombardier Inc. than the aircraft maker offered when it first brought up the idea.
The proposal to shift production arose again in March as Bombardier was in discussions with Ottawa over the federal government joining its Quebec counterpart as a strategic partner in the company's C Series jet program, which is $2-billion over budget and more than two years behind schedule.
The negotiations about taxpayer money for the C Series have put the Montreal-based transportation giant at the centre of a national debate on the merits of governments providing public money to private enterprise – a debate that intensified when the proposal to shift Q400 jobs out of Canada came up again.
Although the jobs the company wants to outsource from its Toronto plant are not related to the C Series program, critics and analysts acknowledged that the move could make it more difficult for the federal government to provide $1-billion (U.S.) in financial support to the company.
Conservative MP Maxime Bernier, one of the few voices in Quebec opposed to financial backing for Bombardier, has said the company's desire to increase Q400 content from outside Canada proves corporate aid is a waste of taxpayers' money.
Bombardier spokeswoman Marianella de la Barrera defended the move, saying Bombardier is committed to Canada and its Canadian assembly facilities.
"We see this as a positive step toward the long-term viability of the Q400 aircraft," Ms. de la Barrera said, noting that final assembly of the turboprop will continue in Toronto. "Bombardier needs to find ways to make its products more competitive for long-term success in a very competitive marketplace."
Since discussions about federal assistance for the C Series program grew more intense earlier this year, Bombardier has gained some breathing room, landing Delta Air Lines Inc. as the largest single customer for that plane and signing a letter of intent for a large order from Air Canada.
The smaller turboprop Q400 is in a different segment of the commercial airplane market and has had a successful history as the workhorse for Toronto-based Porter Airlines Inc. Calgary-based WestJet Airlines Ltd. has made the plane the mainstay of its Encore regional network.
Sales have been surpassed, however, by its main rival, the 600 series produced by Europe-based consortium ATR.
ATR has booked 226 orders for its turboprop in the past two years, more than three times the 65 sales recorded by Bombardier. The Q400 list price of $31-million (U.S.) is estimated to be as much as 30 per cent higher than the price of the ATR plane.
Bombardier has largely failed to persuade customers outside North America to pay more for the plane's extra speed, size and technology, prompting chief executive Alain Bellemare to declare last October, "We need to bring the costs down so we can bring the price down."
During talks about shifting the jobs, Bombardier management told the union that the future of the program at the Toronto plant was in jeopardy if it could not cut costs, said Scott McIlmoyle, president of Unifor local 112.
"The bargaining committee took the position that they needed to do this so the company could look at having our aircraft be more competitive in price with our competitor," Mr. McIlmoyle said.
Shifting the work will leave about 1,400 employees remaining at the plant.
Union members effectively have a veto on outsourcing because their contract contains a so-called work ownership clause that requires the company to negotiate with them before removing work from the plant.
Mr. McIlmoyle said there are enough employees eligible for retirement and an extra incentive of as much as $50,000 means layoffs will not be necessary.
Efforts to outsource portions of the Q400 are part of a five-year plan to make Bombadier's products more competitive and profitable in the long term, Ms. de la Barrera said Sunday. The company has been working closely with the union to find ways of doing this, she said.
Ms. de la Barrera said the aircraft maker is currently in talks with third-party suppliers to manufacture the wings and cockpit. Pending agreements with the chosen suppliers, work will be shifted progressively to the new partners now through 2022, she said.
In addition to the retirement packages, Bombardier is offering workers retraining and opportunities to work on other aircraft assembled at the Toronto factory.
Workers at the plant perform final assembly of the company's Global Express 5000 and 6000 business jets and are scheduled to work on the longer-range 7000 and 8000 models of those jets, which are under development.