Boeing versus Bombardier: A threat to the North American aerospace industry

Piece signed by Michel Leblanc, President and CEO of the Chamber of Commerce of Metropolitan Montreal, and published in La Presse+.

On September 26, the U.S. Department of Commerce will hand down its preliminary decision about Boeing’s complaint against Bombardier. This is the first step in a long process. Billions of dollars are in play. The consequences of the final decision will be felt in the aerospace industry in both Canada and the U.S. The stakes are high.

The dispute is over a Delta Airlines order for 75 Bombardier aircraft. According to Boeing, Québec and Canadian government support for the C Series gives Bombardier an unfair advantage.

A decision against Bombardier would have disastrous consequences in Canada, as well as in the U.S. The company could be forced to pay significant countervailing and anti-dumping duties. Such a penalty would shut down the American market for the C Series. Not only would Bombardier be affected, but so would its ecosystem of businesses, many of them in the U.S. and Great Britain.

Bombardier: a business pillar in Canada AND the U.S.

There is no doubt about Bombardier’s contribution to Canada’s economic growth. The company generates annual economic benefits of over $12 billion for the country. Its activities create over 21,000 jobs in Canada, the majority of them in Montréal. Its exports total $9.1 billion per year. More broadly, the aerospace industry is responsible for 70% of the country’s R&D spending.

What is less well known is that the company’s economic footprint in the U.S. is equally important. Over the past five years, Bombardier and its suppliers have generated estimated economic benefits of US$14 billion. With close to 7,000 employees in 17 states, Bombardier’s presence is essential to the economy of certain states. This is the case for Kansas and West Virginia, where the company has over 2,000 employees.

So it is no surprise that a number of senators and members of Congress felt the need to write to American authorities to ask them to intervene on this case. 

Preserve free trade and trade relations between Canada and the U.S.

Every country supports its economic flagships. It is only natural that our governments do the same. This is not the first time government support for Bombardier has been criticized by competitors. However, by being addressed directly to the United States Congress rather than the World Trade Organization, Boeing’s complaint has taken on a political character.

The dispute goes well beyond Bombardier. Congress’s decision could be interpreted as anti-free trade and complicate NAFTA renegotiations.

Given the economic importance of the aerospace industry for both countries and the benefits generated by these major aircraft manufacturers, it is in everyone’s interest that Boeing withdraw its complaint and work with the Canadian government and Bombardier to find common ground and provide an appropriate response to this trade dispute.

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