Canadian Manufacturing

Clamour for federal help for Bombardier builds as firm lays off 3,000 in Canada

The major layoffs came as the company announced the end to its long CSeries sales drought, penning a 45-plane deal with Air Canada

PHOTO: Patrick Cardinal, Bombardier

Bombardier’s CSeries program is finally ready to take flight, following significant delays and cost overruns. PHOTO: Patrick Cardinal, Bombardier

OTTAWA—The pressure on the federal government to pull Bombardier Inc. out of its latest nosedive mounted Wednesday as the struggling Montreal aerospace giant slashed more than 10 per cent of its Canadian workforce.

The gloomy layoff news came with a silver lining, however: Air Canada’s agreement to buy 45 planes from Bombardier’s struggling CSeries aircraft line, with an option to purchase up to 30 more.

Nonetheless, the CSeries—behind schedule, about US$2 billion over budget and with fewer-than-expected buyers—is the primary reason for Bombardier’s request for financial aid from the federal government.

The appeal to Ottawa came as the Quebec government pledged about US$1 billion in October to help complete the CSeries and reassure would-be buyers. Quebec Economy Minister Jacques Daoust said last fall he would ask Ottawa to match that amount.

The Ontario government could also find itself chipping in for Bombardier.

Sources say the Ontario, Quebec and federal governments have been discussing possible financial help from the province, but stressed that nothing had been finalized. They say Bombardier has not yet asked for any assistance from Ontario, where company documents say it employs more than 5,000 people.

Meanwhile, since coming to office, the new Liberal government in Ottawa has been mulling the Bombardier request, which has significant political ramifications in Quebec where most of the company’s 24,000 Canadian workers are based.

The job-cut announcement Wednesday included 2,830 layoffs in Canada—2,400 of which were in Quebec—and 7,000 overall.

“It’s always a sad moment when jobs are lost in this country,” said federal Transport Minister Marc Garneau.

“These are people, these are families and this is an unfortunate moment.”

Garneau, however, did not provide any updates on the status of Bombardier’s request. He repeated the message that the government was still doing its due diligence by examining the manufacturer’s business case.

The federal government’s plan is widely expected to be in its first budget, due late next month.

“It is, after all, a great deal of money … that we are entrusted with from the taxpayer, and we will make a decision in due course,” Garneau said.

On the Air Canada deal, Garneau said he was encouraged by the progress and that Ottawa wants Canada to carry on its tradition of being a global leader in aviation and aerospace. He insisted the government had nothing to do with Air Canada’s decision to buy Bombardier’s planes.

The federal government considers Bombardier an “anchor firm” to Canada’s aerospace industry because it supports a supply hub that employs tens of thousands more workers, according to internal documents prepared for Economic Development Minister Navdeep Bains.

The briefing material was obtained by The Canadian Press through the Access to Information Act.

Ottawa has lent money to Bombardier in the past.

Last fall, Industry Canada said Bombardier had received $1.3 billion in repayable contributions since 1966 and had repaid $543 million as of Dec. 31, 2014. That amount includes $350 million in loans Ottawa gave to Bombardier in 2008 for CSeries-related research and development.

Bombardier CEO Alain Bellemare continued to press Ottawa on Wednesday to come through once again.

Bellemare said that Bombardier may have borrowed about $1 billion since the mid-1980s, but it generated more than $15 billion in government tax revenue over that period.

“You can do the math—that is the reason why countries around the world invest in aerospace,” Bellemare told The Canadian Press in an interview in Montreal.

“I don’t think that Bombardier is sucking money from anybody.”

Once the company starts delivering the CSeries aircraft, it will be in a position to repay any outstanding loans to Ottawa, Bellemare insisted.

Back on Parliament Hill, opposition MPs assailed the government over the controversy—but for diametrically opposed reasons.

NDP Leader Tom Mulcair accused the Liberals of being silent and urged them to step up with assistance.

“If over the last four months we had even the slightest signal from the Liberals, maybe we wouldn’t have lost these 7,000 jobs,” Mulcair said.

And while Quebec Conservative MP Maxime Bernier called the layoffs “very tough news” for affected families, he said over the long term it might make the company more competitive.

The best way to help a company like Bombardier is to lower taxes for all businesses and allow the market to decide its fate, Bernier argued. The Tories are opposed to any direct subsidy for Bombardier, he added.

Bernier, an ex-cabinet minister, was part of the former Conservative government that, along with the Ontario government, bailed out the sputtering auto industry in the wake of the 2008 financial crisis.

Earlier Wednesday, Quebec Premier Philippe Couillard compared that multibillion-dollar lifeline for the auto sector to the Bombardier situation and demanded Ottawa invest in the company.

“If the auto industry has been supported by taxpayer money, which is fine, then the aeronautical industry of Montreal needs also to be supported,” Couillard said in Quebec City.

If the federal Liberals ultimately decide to provide more cash to Bombardier, they could attempt to sell such a contentious decision to taxpayers by highlighting the CSeries’ environmental advantages.

It could also provide political cover.

One of the jet’s selling points is that it burns 20 per cent less fuel than competitors in its class.

Unprompted, Garneau made a point of underlining that feature Wednesday.

“The CSeries is a major advancement in aviation technology and supports our commitment to reducing aircraft emissions,” said Garneau, whose party has made fighting climate change a government-wide priority.

The Liberals could also link Bombardier assistance to new international aviation fuel standards.

Last week in Montreal, the UN’s International Civil Aviation Organization reached an agreement to impose binding limits on aircraft emissions. The proposed rules set new limits for aircraft in production delivered after 2023 and would apply to all new planes delivered after 2028.

with files from Bruce Cheadle, Ross Marowits in Montreal and Keith Leslie in Toronto

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