Bombardier Inc.’s chief executive has expressed confidence that the deal to sell control of the C Series aircraft division to Airbus Group SE will resolve the trade dispute with Boeing Co.
The agreement with Airbus could see some C Series aircraft assembled at its plant in Alabama. That would skirt duties of nearly 300 per cent that the United States government is threatening to impose on C Series imports because of a complaint by Chicago-based Boeing that Bombardier has received substantial government assistance and is selling the planes at “absurdly low” prices.
“Assembly in the U.S. can resolve the issue,” Bombardier’s CEO Allan Bellemare told reporters on Tuesday during a press conference in Toulouse where Airbus is based. “Airbus is the perfect partner for us.”
In the deal announced late Monday, Airbus will acquire a 50.01-per-cent stake in the C Series division for no cash and incorporate the plane into its product lineup.
The arrangement has won wide backing in the U.K. where Bombardier employs roughly 4,500 people mainly at a plant in Belfast which makes wings for the aircraft. Greg Clark, the Secretary of State for Business, Energy and Industrial Strategy, called the deal a “very big step forward” and said U.K. government would continue to fight moves the U.S. duties. “Not only has Airbus committed to Belfast being the home of the wing manufacturer for the C Series, but they are pointing to the possibility of expanding the output and the order book,” Mr. Clark said Tuesday. He added that the UK government would continue to work with the Canadian government “to ensure the unjustified case brought by Boeing is brought to a swift resolution.”
Labour leaders also praised the deal but some expressed caution that the new agreement could also face legal challenges.
“It’s obviously a good deal and we welcome it in terms of C Series,” said Davy Thompson a local organizer for Unite the labour union which represents most of the Bombardier workers in Northern Ireland. “We believe C Series is there for the long term but we do work on a number of legacy contracts at the Belfast site and hopefully what’s happened today will allow C Series to increase and people to move from the legacy contracts across as they start to dwindle down. They are really coming to the end of their lifespan.”
Mr. Thompson added that while the Airbus deal might allow Bombardier to get around the U.S. tariffs, that battle is far from over. “The reality for us is this was an attack on aerospace by Boeing. It doesn’t stop anybody from using the ITC to go in with what is really a spurious claim, get the right decision for their own company and then you have tariffs imposed and no one can actually appeal it or do anything against until further down the line.”
Ross Murdoch, national officer for the union GMB which also represents some Bombardier workers, said he was concerned that the deal might raise more legal challenges. “It sounds potentially positive,” Mr. Murdoch said. “But there’s already rumblings coming out of America about two companies coming together to try and circumvent tariffs. We hope that both companies have actually taken pretty sound, cast iron, legal advice to make sure they don’t get rid of one legal challenge only to replace it with another.”
Stephen Kelly, the chief executive of Manufacturing NI, said the Airbus deal is “very good news” as it will allow Bombardier to tap into the Airbus sales, marketing and supply chain. But he said it doesn’t end the battle with Boeing. “The deal doesn’t immediately change the challenges in the US market brought about by Boeing’s absurd claim to the US Department of Commerce nor indeed their ridiculous response but the world aviation market is a big place and there are lots of customers needing an aircraft like this,” he said. “Belfast workers were preparing to ramp up their production of C Series wings so whilst nothing in this world is ever permanent, this looks like good news for the short and medium term.”
Boeing officials have already challenged the Airbus-Bombardier arrangement.
“This looks like a questionable deal between two heavily state-subsidized competitors to skirt the recent findings of the U.S. government. Our position remains that everyone should play by the same rules for free and fair trade to work,” Boeing spokesman Dan Curran said in a statement.
Phil Musser, Boeing’s senior vice president of communications, added on Twitter: “If @Airbus and @Bombardier think this deal will get them around the rules…#thinkagain”
For British Prime Minister Theresa May the Airbus-Bombardier deal could ease a political headache. Ms. May’s Conservatives lost seats in the June election and failed to win a majority in the House of Commons. As a result, Ms. May has been relying on support from Northern Ireland’s Democratic Unionist Party, which won ten seats, to prop up her minority government. The Bombardier plant is located in a DUP stronghold and the party has been pushing the government to work to resolve the C Series dispute.
On Tuesday, DUP leader Arlene Foster welcomed the deal and said she hoped it would safeguard jobs in the province. “I’m thrilled there is a bright future ahead following what has been a dark time for staff and management,” she said.
Bombardier has faced a host of challenges over the C Series, which has cost around $6-billion (U.S.) to develop and involved subsidies from the Canadian, Quebec and British governments. Boeing has called the government assistance unfair and alleged Bombardier is selling C Series planes in the U.S. at “absurdly low” prices. The U.S. Department of Commerce agreed and has imposed preliminary duties of nearly 300 per cent on C Series imports. A final decision on the duties is expected early next year.
The Globe and Mail, October 17, 2017