Bombardier C series hit with massive US Tariffs

[DownhillGoat]

Originally Posted by speede5

That's fair, as long as you feel the same way about subsidies for the O&G sector.

I don't think those subsidies are anywhere close to equal though.

I don't have much of a problem with government subsidies for positive outcomes, like job creation, R&D, bringing population in, etc. But like Locke said, they may as well be a Crown corporation.

[Tacopuck]

Originally Posted by speede5

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.

I do, I don't think ANY private business should get any form of subsidy / loan / bailout.

Now me being the pragmatic person I am, I dont believe we will ever get to this point (unions / lobbying / ect..), so I much prefer industry wide subsidies (see O&G / logging) that provide significant benefit to economies, over subsidies to SPECIFIC companies.

But again, the most fair solution to Canadian tax payers and Canadian businesses is that no one gets a subsidy, but instead everyone gets a tax cut across the board with the money that would have otherwise gone to subsidies.

[CaptainCrunch]

Originally Posted by speede5

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.

Its not about wanting Bombardier to fail, frankly it goes beyond mismanagement.

Bombardier has been on the edge of failure forever and continually cries out for government money to survive, its basically become the 10,000 pound monster that continually gets money because if it fails the backlash electionwise is huge so every government allows them to survive with very little change to how they do business.

Now they're getting pushed out of all of their markets, not just aerospace.

Lets be honest, outside of the Delta Deal the C series just isn't selling, it might be a nice plane and it is, but I would argue that its pretty much a bust as a sales product and at the end of the day you have to sell it.

I would expect that if/when Bombardier loses the dumping ruling next week it will go back to the government hat in hand for another cash infusion.

And unlike Oil and Gas companies, Bombardier is addicted to hand outs and bailouts and refuses to change their business models.

[CaptainCrunch]

Originally Posted by billybob123

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.

And I get that, but it has nothing to do with what's currently going on here. It forms nothing in terms of the judgement against.

[Locke]

Originally Posted by kunkstyle

I don't think those subsidies are anywhere close to equal though.

I don't have much of a problem with government subsidies for positive outcomes, like job creation, R&D, bringing population in, etc. But like Locke said, they may as well be a Crown corporation.

At the very least it would give the Government some say in Executive Compensation.

Considering they are so terrible as to require bailouts, their executives seem to be getting a lot of bonuses.

'Failing Business' and 'Performance Bonuses' should probably be Mutually Exclusive. But thats not the world we live in anymore and its not unique to Bombardier.

[billybob123]

Originally Posted by CaptainCrunch

And I get that, but it has nothing to do with what's currently going on here. It forms nothing in terms of the judgement against.

Indeed. I don't know if this will survive a WTO tribunal, sort of like all the trade disputes we've seen between Airbus and Boeing over the years.

Canada could conceivably state that the 737-MAX orders for AC and WS are detrimental to the aerospace industry due to e.g. illegal subsidies to Boeing and that would just set of an ugly trade war.

Sadly, no one wins here.

Delta won't buy more 737s; apparently Boeing offered them second-hand Embraer 190s as the alternative to the CS100.

[nik-]

Their next bailout should require this "family business" mentality at that place to go.

Enough is a enough already.

[Regorium]

Okay, as much as I hate Bombardier getting subsidies, a 220% tariff on them is basically a huge "anti-subsidy" which I'm just as opposed to.

This isn't about them getting gov cash, it's about them basically not being able to do business at all. I think a lot of posters are conflating the two separate issues.

[Locke]

Originally Posted by Regorium

Okay, as much as I hate Bombardier getting subsidies, a 220% tariff on them is basically a huge "anti-subsidy" which I'm just as opposed to.

This isn't about them getting gov cash, it's about them basically not being able to do business at all. I think a lot of posters are conflating the two separate issues.

Well, in this instance they are the same issue. If Bombardier are getting subsidies that their competitors arent the US Government is imposing a tariff to eliminate the un-fairness of that.

But yes, Bombardier basically cant do business. As in the concept of 'Business' they just cant even. They are the 'Wayans Brothers' of international aviation.

[CaptainCrunch]

No I think a lot of posters are saying pretty much what you're saying, there was no doubt that Bombardier was going to take a hit on this, but 220% is punitive.

[Regorium]

Hmmm, maybe I'm characterizing it wrong then. Did they seriously lowball the crap out of the Delta deal? My understanding was that it was market price, and the subsidies were purely just cash infusions for them to keep the lights on/an "investment" in the C-series.

[blankall]

Originally Posted by CaptainCrunch

No I think a lot of posters are saying pretty much what you're saying, there was no doubt that Bombardier was going to take a hit on this, but 220% is punitive.

Bombardier themselves were expecting an 80% hit. What they actually deserve is probably somewhere in between 80 and 220%.

As for the subsidy issue, I think it is necessary in some cases. Major corporations/industries can't just enter and exit the market, as the costs of doing so are in the billions of dollars. This is particularly true of companies that compete in the global sector and who are likely to be replaced by foreign companies.

That being said, what separates Bombardier is that they have a dual class structure, which gives the family 60% of voting stocks. This essentially prevents the private shareholders from making changes, that you would see in a typical failing corporation (IE changes in structure and leadership). If you're running a failing business that is dependent on government aid, you should absolutely not get to retain control and profits of the business. Something has to give here, and I actually agree with the USA in that what Canada is doing is contrary to free trade. Why should a competing US company have to lower their prices to compete with a highly subsidized Canadian competitor who refuses to make any meaningful changes.

[GGG]

Being just received 8.7 billion in subsidies to keep manufacturing in Washington. So this isn't an unsubsidized Boeing trying to compete.

[Hack&Lube]

Originally Posted by GGG

Being just received 8.7 billion in subsidies to keep manufacturing in Washington. So this isn't an unsubsidized Boeing trying to compete.

Boeing doesn't even have any competing products in this range. This is purely a move to keep Bombarier from becoming a viable competitor in the future.

[Locke]

Originally Posted by GGG

Being just received 8.7 billion in subsidies to keep manufacturing in Washington. So this isn't an unsubsidized Boeing trying to compete.

Yes, or is this just playing a game of 'Matching Precedent' Tennis?

Back and forth.

[CaptainCrunch]

Originally Posted by Regorium

Hmmm, maybe I'm characterizing it wrong then. Did they seriously lowball the crap out of the Delta deal? My understanding was that it was market price, and the subsidies were purely just cash infusions for them to keep the lights on/an "investment" in the C-series.

They lowballed the bid.

It was way below assumed cost

https://leehamnews.com/2017/05/25/bo...ompany-claims/

Boeing filed a complaint with the ITC and the US Department of Commerce April 27, charging that Bombardier sold the CSeries to Delta for $19.6m, a price so far below production costs that it constitutes “dumping” under legal definitions.

I read a paper that the actual estimated pricing of the C series that was sold should be between 45 and 63 million per plane.

[Bigtime]

I bet with a little digging you'd find that Boeing lowballed a lot of their 747-800 sales too.

It just goes round and round and round.

[CaptainCrunch]

Originally Posted by Hack&Lube

Boeing doesn't even have any competing products in this range. This is purely a move to keep Bombarier from becoming a viable competitor in the future.

Except when Boeing went to United Airlines with a bid for the 737, Bombardier submitted what they classed as a ridiculously low bid on the C series jet which I would think made Boeing think that Bombardier was trying to not only poison the bid, but they wanted to compete directly with the 737 class. In effect Bombardier entered the 737 class arena and then lowballed the bid.

[blankall]

Originally Posted by CaptainCrunch

They lowballed the bid.

It was way below assumed cost

https://leehamnews.com/2017/05/25/bo...ompany-claims/



I read a paper that the actual estimated pricing of the C series that was sold should be between 45 and 63 million per plane.

Even Bombardier admits they lowballed the bid, hence the statement stating they expected an 80% duty penalty. If the market price actually was in the 60 million range, the 220% duty penalty may not be too far off the mark.

[CaptainCrunch]

Originally Posted by GGG

Being just received 8.7 billion in subsidies to keep manufacturing in Washington. So this isn't an unsubsidized Boeing trying to compete.

And if Bombardier wants to file a claim around that, they're probably free to. But these subsidies have nothing to do with the claim over the Delta and United bids.

those bids are around Bombardier was doing business.

I have my doubts tho that Canada would really want to get into a aerospace trade war with the States on one hand, and the Europeans on the other hand.