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Old 09-27-2017, 08:55 AM   #1
CaptainCrunch
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Default Bombardier C series hit with massive US Tariffs

Bombardier hit with a massive 220% Tariffs on C series jets sold in the United States by the US department of Commerce.

This is the first step in what could be a lengthy process as the next step is for Canada to go to the International Trade Commission.

http://www.cbc.ca/news/business/boei...dier-1.4309000

the industry was expecting Bombardier to be hit, Bombardier itself was expected to lose this first round but expected an 80% tariff.

In terms of what did we expect, the optics for Bombardier were bad getting billions in subsidies from the provincial and federal government and then low balling the bid to Delta, in the era of an extremely protectionist US government.

Canada does have ways to fight back on this besides going to the International Trade Commission, and then going from country to country to try and expand Bombardier's market.

As well more ominously, this is only the first decision, the anti-dumping decision is expected next week.

I don't know how Delta's going to react to their purchase getting three times more expensive. I'm expecting that they will either return to the Table with Bombardier and get them to eat a lot of the tariff, or they could cancel out the deal.

the other interesting effect will be if Trudeau corners himself on the Intern fighter jet program and cancels any thought of buying the Super hornet.

Ireland is also freaking out as 4000 jobs are on the line. The May government may also lose the support of the Unionist Party

http://www.independent.co.uk/voices/...-a7970006.html

This is just another piece of bad news for Bombardier as last week they saw their rail business take a crushing blow as Siemens and Alstom merged which almost certainly pushes Bombardier out of the Rail business in Europe.

http://montrealgazette.com/business/...ival-rail-deal

The bottom line is that the C-series jet is now unaffordable in the States and outside of a minor deal with Air Tanzania for two planes, the C-series isn't really selling and its now over budget and late on any deliveries.

Bombardier's stock is down nearly 10% already this morning at $2.05. If Bombardier loses the anti-dumping decision next week the floor might fall out of the company.
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Old 09-27-2017, 09:47 AM   #2
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Nah, like the dairy lobby, the Beaudoin-Bombardier family knows the levers of Quebec and federal cash.

They keep their 1.6 billion net worth firmly in check with dual class shares that don't allow common shareholders from holding their mistakes in management to account.
http://www.canadianbusiness.com/list...ardier-family/

"On 28 Oct. 2015, Bombardier cancelled the Learjet 85 aircraft program due to the lack of sales following the prolonged market weakness. As a result, a $1.2-billion charge was recorded in special items in the third quarter of fiscal year 2015," Part of a $4 billion dollar loss.
http://www.intelligent-aerospace.com...nvestment.html

The Learjet 85 was a engineering bungling nightmare. Nobody was fired from that misadventure and they repeated their mistakes with the CS series.They moved production to Mexico - Querétaro, wanted to develop a carbon AC in a area without engineering or local aerospace talent.
https://www.flightglobal.com/news/ar...jet-85-377665/

Bombardier consistantly overeaches for production and technical goals. For which experienced management failures are never addressed.
https://leehamnews.com/2014/09/15/em...-and-fortunes/
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Old 09-27-2017, 09:50 AM   #3
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The C-Series needed these deals in the US (Delta and Republic I believe) to show just how good an aircraft it is. By all accounts Swiss is very happy with it. It is telling that Boeing has gone to these lengths in regards to the aircraft, they clearly view it as a threat.

It's also worth noting that there were quite a few US Airlines that were advocating in favour of Bombardier (some of them don't even operate one of their types) in this challenge. I can't remember the exact number but a very large percentage of the C Series is made in the US too.

Last edited by Bigtime; 09-27-2017 at 09:53 AM.
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Old 09-27-2017, 09:54 AM   #4
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Good.Hopefully this acts as a catalyst to stop ALL government subsidies / loans / bailouts to Bombardier.

Either they fail, or restructure so they can compete without the aide of the government.
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Old 09-27-2017, 10:02 AM   #5
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Quote:
Originally Posted by Bigtime View Post
The C-Series needed these deals in the US (Delta and Republic I believe) to show just how good an aircraft it is. By all accounts Swiss is very happy with it. It is telling that Boeing has gone to these lengths in regards to the aircraft, they clearly view it as a threat.

It's also worth noting that there were quite a few US Airlines that were advocating in favour of Bombardier (some of them don't even operate one of their types) in this challenge. I can't remember the exact number but a very large percentage of the C Series is made in the US too.
At the same time the sales of the C series pretty much dried up with one minor deal.

they might make a very good plane, but they have trouble actually making it, marketing it and selling it.

I think that one of the reasons why Boeing went so hard is that the C series design could scale up into classes that would compete with something like the 707.

This is Boeing preemptively striking to allow Bombardier to even get a foothold in the US market.

The dumping ruling could be interesting next week, if that goes against Bombardier its a huge hammer blow.

As it stands Bombardier has stated that it won't pick up the cost of the tariffs on the Delta deal, and I have a feeling that Delta will refuse to pick it up either which will probably lead to Delta walking away from the deal.

If Boeing really wants to enter into the midsized passenger market that Bombardier is sitting it, they'd probably open negotiations to buy Bombardier.
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Old 09-27-2017, 10:06 AM   #6
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Are there are also tariffs in place on Airbus products or is the Government only going after Bombardier at this point?
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Old 09-27-2017, 10:08 AM   #7
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Originally Posted by Tacopuck View Post
Good.Hopefully this acts as a catalyst to stop ALL government subsidies / loans / bailouts to Bombardier.

Either they fail, or restructure so they can compete without the aide of the government.
They've had two hammer blows in the last two weeks. first the merging of two rail giants in Europe which will pretty much knock Bombardier out of the European rail market, and now this ruling (the 220% tariff is pretty ludicris but most Analysts stated that they were going to lose this challenge anyways).

Bombardier is effectively having markets ripped away from them, if they lose the dumping ruling next week, they're probably pretty close to done in Aerospace in North America, and Airbus will probably go after them hard in Europe.

With the Rail business in Europe pretty much blocked, there's not much more that Bombardier can do.

Time to either break it up or break it up and sell.
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Old 09-27-2017, 10:11 AM   #8
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Originally Posted by calgarygeologist View Post
Are there are also tariffs in place on Airbus products or is the Government only going after Bombardier at this point?
Only Bombardier, basically because the subsidize to winning bid looked pretty blatant.

I'm betting the Quebec Government is privately freaking out because their bailout was based around buying a 49.5% stake in the C series business.
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Old 09-27-2017, 10:13 AM   #9
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Originally Posted by calgarygeologist View Post
Are there are also tariffs in place on Airbus products or is the Government only going after Bombardier at this point?
Did Airbus get a huge government subsidy and low ball some RFPs?
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Old 09-27-2017, 10:17 AM   #10
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Originally Posted by calgarygeologist View Post
Are there are also tariffs in place on Airbus products or is the Government only going after Bombardier at this point?
Bombardier should basically be a Crown Corporation at this point. We probably could have built 2 CalgaryNEXTs with the cash the Feds have handed Bombardier.
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Old 09-27-2017, 10:20 AM   #11
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Heck all the major aircraft manufacturers have government (and province/state) subsidies of some sorts.

Captain, yeah Boeing was probably concerned that another stretch of the C Series would put it right into competition with the 737 MAX line (the 7 and 8 versions). With all the benefits of this being a completely new aircraft and not just new modifications to what is a very old design (737's and A320 series aircraft).
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Old 09-27-2017, 10:21 AM   #12
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Bombardier should basically be a Crown Corporation at this point. We probably could have built 2 CalgaryNEXTs with the cash the Feds have handed Bombardier.
Bombardier really should have been told to figure their own problems out, broken up and sold the aerospace portion of the business.

But they're a huge voting point for any Federal Party that wants Quebec Votes.

Again the problem with the argument that Boeing doesn't have a competing sized plane (They would compete I think with the larger 737). Is that they see the C Series as a future competitor as its a scalible design, which could represent a future threat to Boeing, so they went hard after Bombardier.
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Old 09-27-2017, 10:22 AM   #13
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Originally Posted by Bigtime View Post
Heck all the major aircraft manufacturers have government (and province/state) subsidies of some sorts.

Captain, yeah Boeing was probably concerned that another stretch of the C Series would put it right into competition with the 737 MAX line (the 7 and 8 versions). With all the benefits of this being a completely new aircraft and not just new modifications to what is a very old design (737's and A320 series aircraft).
I'd be interested in seeing the dollars and percentages, that would help tell if this is a reasonable tariff being imposed.
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Old 09-27-2017, 10:23 AM   #14
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I'd be interested in seeing the dollars and percentages, that would help tell if this is a reasonable tariff being imposed.
It's a heck of a shell game, could be hard to pin down exact numbers. Remember Canada and Brazil have done this dance in the past, with it being Bombardier versus Embraer going at it over similar accusations.
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Old 09-27-2017, 10:25 AM   #15
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Heck all the major aircraft manufacturers have government (and province/state) subsidies of some sorts.

Captain, yeah Boeing was probably concerned that another stretch of the C Series would put it right into competition with the 737 MAX line (the 7 and 8 versions). With all the benefits of this being a completely new aircraft and not just new modifications to what is a very old design (737's and A320 series aircraft).
Absolutely, but the way that Bombardier structured their Bid to Delta was pretty blatent, that's why pretty much all of the Analysts out there stated that Bombardier was going to lose this battle. The surprise was the size of the Tariff, most figured 80%, which would have still been a problem for the Delta deal.

220% is extremely punitive. I would expect that the International Trade Commission will probably agree with the American's that Bombardier was in the wrong but 220% is too punitive. But a protectionist America won't care.
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Old 09-27-2017, 10:31 AM   #16
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Good.Hopefully this acts as a catalyst to stop ALL government subsidies / loans / bailouts to Bombardier.

Either they fail, or restructure so they can compete without the aide of the government.
That's fair, as long as you feel the same way about subsidies for the O&G sector.

So many people in Canada seems to want BI to fail. I don't get it. As a former employee I get that they are mismanaged, it's terrible, but to see them fail would affect so many Canadians and further crush our piece of the pie.
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Old 09-27-2017, 10:36 AM   #17
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It's interesting that Boeing, with its history of scandalous and immoral behavior, is going after Bombardier for 'ethical' business practices.

Clean up your own backyard before you start complaining about others.

Boeing also does not offer any aircraft in the same seating range as the C-Series (though as Bigtime implied, maybe they are worried about upsizing the C-Series?)

Boeing can take a long walk off a short corporate pier.

The links above aren't even all the scumbaggery that Boeing has engaged in. Not sure of this source's trustworthiness, but you can get an idea.

Fata Boeing. I hope the UK and Canada ride them over the coals.
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Old 09-27-2017, 10:39 AM   #18
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Boeing also does not offer any aircraft in the same seating range as the C-Series (though as Bigtime implied, maybe they are worried about
That's exactly what they are worried about. They didn't take airbus seriously and now they are the 2nd largest producer of aircraft. They are doing this to prevent it from happening again.

Really sad. If this kills the aviation part of Bombardier, that's a big blow. Lots of people out of work.
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Old 09-27-2017, 10:41 AM   #19
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It's interesting that Boeing, with its history of scandalous and immoral behavior, is going after Bombardier for 'ethical' business practices.

Clean up your own backyard before you start complaining about others.

Boeing also does not offer any aircraft in the same seating range as the C-Series (though as Bigtime implied, maybe they are worried about

Boeing can take a long walk off a short corporate pier.

The links above aren't even all the scumbaggery that Boeing has engaged in. Not sure of this source's trustworthiness, but you can get an idea.

Fata Boeing. I hope the UK and Canada ride them over the coals.
none of that has anything at all to do with the case at hand though.

Canada has a right to say, we're not doing business with Boeing as does the UK.

This whole thing is about what Bombardier did, and as most industry analysts have said leading up to this decision, what Bombardier did was pretty clear and they were going to lose this from the start.

I would expect that Canada will announce that they won't buy the Super Hornets (Which is good to me for different reasons), but the hyperbole by the Quebec Premiere of not one bolt not one plane is pretty unrealistic as Boeing is basically the single source for most of the things they're talking about.

Boeing protected their market from a possible future incursion and that's within their rights to do so.

But I bet that Lockheed Martin was loving this because it puts Canada in a corner in terms of buying the F-35.
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Old 09-27-2017, 10:43 AM   #20
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Forgot to add that Boeing has in the past been caught in violation of WTO subsidy guidelines.

If anyone wants to have fun reading what the EU considers to be unfair subsidies, this document has a list of them.

Also here is the 'good news' version of subsidies. $8 billion subsidies from Washington State...

Like I said before, fata Boeing.

ETA: this sort of replies to Captain's post above. Boeing has had their scumbaggy hands in as many dirty subsidy jars as any of these other corporations. The protectionist atmosphere that's currently in the USA is definitely not helping!

Also ETA: I also see that several EU claims have been denied by the WTO. Which of course is what should happen here with Bombardier. We shall see.

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