Market twists and turns

Bombardier, the small Quebec company that started its life as a snowmobile inventor and manufacturer has become Canada’s love-hate company.  Loved in the East, hated in the West.

When Bombardier chose to get into the aggressive world market of planes, government subsidies became inevitable.

The two airplane manufacturers that dominate the world, Airbus and Boeing, gained their dominance through massive government cash and other supports.

They were not about to give up market share to two small manufacturers, Brazil’s Embracer and Bombardier, without a fight.

Bombardier, with government financial help, created the C Series, an exceptional product that eclipsed any equivalent Airbus models and had no match in Boeing’s aircraft lineup.

User reviews on the C Series were stellar—a “high-tech workhorse” that burns 21 per cent less fuel.

Delta Airlines gambled and placed a large order. They gambled that a small manufacturer would be able to meet production deadlines and stay around for the long-term to provide support and upgrades.

Boeing’s complaint that Bombardier was receiving government support was laughable given how often they’ve been in the public trough.

Their complaint was, of course, opportunistic.

They knew the current President would buy any argument that said “America first”.

Unfortunately for Boeing and the American government they overplayed their cards by placing an egregious tariff on the C Series.

To beat the crippling tariff, Bombardier turned over 51 per cent ownership of the C Series to Airbus in exchange for access to Airbus’ Alabama manufacturing facility, an established customer base, cash flow and long-term viability.

The decision by the U.S. Commerce department cost Boeing and Americans. Their number one competitor, Airbus, now has the much-sought-after-short-haul, fuel-efficient C Series and Boeing has no equivalency.

As well, the Canadian Government removed Boeing’s F/A-18s from the top of its list as the replacement for our CF-18 fighter jets. The jobs gained in Alabama could easily be offset by job losses in Boeing’s fighter jet factories.

It’s yet to be seen but Bombardier, Quebec and Canada may yet be winners in this Airbus deal. I’ve seen many inventors over the years go under because they couldn’t grasp the concept that it is better to have a small percentage in a successful company than 100 per cent in a failed company.

The deal with Airbus keeps and expands jobs in Canada. The C Series has a good chance of becoming self-supporting and profitable.

Even more importantly, the fuel efficiency of this model is another small step forward in saving our environment from ourselves.

The real losers are, we, the flying public.

It’s simple trickle-down economics.

When competition is eliminated, aircraft purchase prices increase, AirBus and Bombardier profits climb and the end user pays higher ticket prices.

Lest we forget, the goal of all corporations is to eliminate competition, increase prices and drive up profits.

by B.P. Schimke

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ECA Review Publisher