Airbus, Ottawa negotiated long-term requirements before inking CSeries deal
Sources say some terms were negotiated in advance by the government and Airbus, which include keeping 100 per cent of those employed at Bombardier's Mirabel plant and repaying the recent $372-million federal loan to Bombardier
Airbus plans to buy a majority stake in Bombardier’s CSeries commercial planes, whose future has been in question after U.S. officials proposed a hefty 300 per cent import duty on the jet program.
The two plane makers hope that by working together, they can skirt the duties by building CSeries planes for U.S. customers in Alabama instead of outside the U.S.
But the proposal, which still needs federal approval, has raised questions about whether it will result in job losses in Quebec, where Bombardier is based, and weaken Canada’s aerospace industry.
Economic Development Minister Navdeep Bains promised Tuesday that the Trudeau government would require several long-term promises from Airbus before signing off on the deal.
Sources say those undertakings were negotiated in advance by the government and Airbus, and include keeping 100 per cent of those employed at Bombardier’s main CSeries assembly plant in Mirabel, Que.
Airbus would also keep and even expand production at the Mirabel plant, which is currently running under capacity, while also adding an assembly line in Alabama to meet demand from U.S. customers.
Canada will also become the company’s fifth “home base,” and first outside Europe, to allow Canadian industry to tap into the company’s supply chain, while the CSeries headquarters will remain in Quebec.
The European company will also take over repayment of the federal government’s $372-million loan to Bombardier for research and development of the 100- to 150-seat commercial planes.
“I oversee this process,” Bains said outside the House of Commons, “and I will make sure we get the maximum economic benefit for Canadians.”
But one question remains: how long Airbus will be required to maintain employment and production levels under the agreement, and whether Canada will continue to benefit after that period has expired.
Bains said the government was looking for “long-term production guarantees in Canada” that would run “at least a minimum of 20 to 25 years,” though an official said that was still to be negotiated.
The minister was more guarded about employment levels, though he hoped the deal result in thousands of CSeries planes being ordered and built in Montreal.
“We think the potential sales opportunity in this segment is up to 6,000 over the next 20 to 25 years,” he said.
“So that means there’ll be stable, predictable production opportunities in the Mirabel facility … and that means more jobs, up to 5,000 jobs in that facility.”
Peter Glossop, a foreign investment lawyer with Osler, Hoskin and Harcourt, said most government-imposed undertakings run for three years when a foreign company takes over a Canadian entity.
That means the foreign company can basically do whatever it wants once the time period expires, including cut jobs in Canada.
But shutting down or slashing production at the Mirabel plant could be difficult given its expertise with the CSeries, he said, which could ensure its sustainability over the long run.
“There’s lots of embedded know-how in Canada, so just shutting all that down would be quite difficult,” Glossop said. “These people know how to build them.”