Taxpayers on the hook for Trudeau government’s $372.5 million Bombardier disaster
“We respect the free market and the choices that companies will make. But we also have a responsibility to ensure that the investments we make with taxpayers’ dollars are leading to good jobs and growth”
– March 2017: Prime Minister Justin Trudeau on Bombardier’s decision to extend executive bonuses following Ottawa’s $372.5-million ‘loan package’ for the company’s C-series and Global aircraft
Bombardier’s relationship with the free market paid negative dividends to Canadian taxpayers and workers again last week, as the company announced a first round of 550 layoffs at its Thunder Bay, Ontario train assembly plant for later this fall.
Local union president Dominic Pasqualino said the factory needs contracts, but the best Ontario’s Metrolinx could do, according to Kenora Rainy River MPP Greg Rickford, was order three-dozen more rail carriages.
“We need 360,” said Pasqualino at a press conference to respond to the company’s decision.
Adding insult to injury for Thunder Bay plant workers was that a week before, Bombardier ballyhooed its new train assembly facility in California, to provide rolling stock to San Francisco’s new rapid transit system and other expected projects in the state.
Bombardier’s latest bad news for domestic workers mirrors its “merger” with Airbus in the fall of 2017 that ultimately saw 120 C-Series passenger jets sold at a loss and manufacturing jobs shipped to Airbus’ Alabama digs, Bombardier’s thanks for Québec’s $1 billion ‘investment’ and Ottawa’s $372.5 million.
Conservative senator Leo Housakos unsuccessfully pushed for parliament to do an accounting of that largess and was rebuffed two years ago in the Senate. After hearing about the Thunder Bay, the Québec senator says the buck must stop at whichever prime minister to justify more of the same.
“As a taxpayer, I find it completely disgusting that for decades successive governments, both provincial and federal have pumped billions of dollars to sustain a company that clearly, its management is incapable of making it competitive,” Québec Senator Leo Housakos told The Post Millennial.
“And the only thing we’ve gotten as a result, is a reduction in actual jobs and a reduction of this company being competitive. When corporations …feel they can always rely on security safety nets being handouts from taxpayers, their competitiveness isn’t there.”
Housakos cited Via Rail Canada’s decision in December of last year to go with German firm Siemens to deliver nearly $1 billion in new rolling stock for its Windsor-Québec corridor.
“Why? Because obviously, Siemens was more competitive with a better product at a better price,” he said. “It’s two-fold the problem here; how can we support our Canadian corporations and favour them as we should in our domestic market…when they can’t be competitive?”
Over the last 15 years, Bombardier has built plenty of trains and most of them for overseas markets. In 2005, Bombardier launched its Zefiro high-speed train sets on China’s burgeoning network update and provided similar sets for Italy’s high-speed rail lines. The company has also fulfilled contracts for overground and underground train sets in Singapore and the UK.
Livio Di Matteo, professor of economics at Lakehead University in Thunder Bay says both local and global economics, as well as heightened trade protectionism by our United States neighbour has forced Bombardier’s hand to a certain extent.
“The U.S. market is also important and they’ve upped their ‘buy American’ provisions, so Bombardier is actually investing in plants in the U.S. to get around that and better serve the U.S. market,” Di Matteo said in an interview.
“But there’s a number of issues here. The urban transit business has become more competitive, and other countries internationally can bid on it – even though we’re a fairly urbanized nation, our urban centres haven’t made great strides in urban rail and urban transit as the European cities have done.”
And as Bombardier jettisons more Canadian jobs, there is still that problem of billions of tax dollars, meted out to the plains, trains and buses that the Montreal Economic Institute pegged at $4 billion dollars between 1966 and 2015, not including the C-Series and Global 7000 loan.
“Once again, the government is artificially favouring one company or economic sector, at the expense of other, more cost-effective projects,” said Mathieu Bédard, an economist with the institute, in a scathing indictment of government favouritism toward the company a day after the Trudeau-Bombardier $372.5 million partnership was made public.
“It is taxpayers who involuntarily become investors,” Bédard continued. “They are forced to wager their money on the more or less likely success of risky subsidized projects chosen by politicians and bureaucrats for political reasons rather than economic ones.”
Housakos’ describes the push back he received in the Senate for his Bombardier bucks audit as purely political: “I was fine to look federal dealings with the company from Prime Minister Stephen Harper’s government back to 2011, I supported their amendment…they still blocked it.”
“As far as I was concerned, I wanted to go back to 1986 when Bombardier was given the original handout from the then-Mulroney government, when they gave Canadair to Bombardier for a song and a dance.”
That year, Progressive Conservative Prime Minister Brian Mulroney sold the failing Crown corporation to Bombardier for a purported $200 million eight months after selling de Havilland Aircraft of Canada Ltd. to Boeing Co. for $155 million.
“The government turned over a debt-free company to Bombardier with subsidies at the time, and the most valuable piece of real estate on the island of Montreal,” said Housakos. “So when you sit down and calculate the cost to taxpayers and the benefit to Bombardier, it’s astonishing.”
And while Bombardier more recently needed Airbus to push the C-Series across the proverbial finish line, the company “quietly” reached a settlement with Toronto Transit Commission in April over missing its delivery deadline to fulfill a $1 billion contract for new streetcars.
“Bombardier’s had some issues, even with the TTC over the last year or two in terms of deliveries and things like that. They need to up their game so to speak, if they’re going to compete,” said Lakehead’s Di Matteo.
“I’m an economist. The rule of any company is to make money. I’m not saying Bombardier should be making decisions based on regional development or altruism…Having said that, a company that likes loans and subsidies, there are some obligations there. But it’s not up for Bombardier to enforce obligations, it’s up to the government to enforce those types of obligations.”