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Letting Bombardier ‘crash and burn’ would be a disaster for Canada

A plane flies over a Bombardier plant in Montreal, Que., on January 21, 2014.

Christinne Muschi/REUTERS

Condemnation was harsh and predictable when Ottawa wrote a big cheque this month to aircraft maker Bombardier Inc.

Critics derided the $372.5-million interest-free loan as another case of the federal government pandering to Quebec, and worse, handing a gift to two unworthy wealthy families who control the company.

That may well be the gut reaction of many Canadians.

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But there is a parallel narrative here. The federal loan is about shoring up a financially weak company so it can continue to do all the sorts of things this country needs. Bombardier invests heavily in research and development, exports most of what it produces, has a highly skilled and well paid work force, and sustains a vast network of suppliers across the country.

Let's debunk a few myths.

It simply isn't true that the latest loan is solely about helping one province and one company. Two-thirds of the loan amount – nearly $250-million – is earmarked to support the costly development of Bombardier's Global 7000 business jet, which will be built in Toronto. The remainder of the funds are for the C Series, a 100-to-160-seat commercial aircraft, assembled in Mirabel, Que.

It's equally misleading to characterize the loan as a transfer from taxpayers to the Bombardier and Beaudoin families, who control the Montreal-based transportation company. Of course, they'll benefit if Bombardier's stock price recovers. But the immediate beneficiaries of the federal money are the company's 21,000 Canadian workers and its network of more than 1,000 suppliers across the country, including 350 in Ontario.

Critics say the federal government should cut off Bombardier and let the company fail. Forget the business of creating and building aircraft in Canada. Just let it all go, in spite of the billions of dollars in federal and provincial assistance sunk into the company over the decades.

"Time to let Bombardier crash and burn," was the headline on a column in iPolitics, an Ottawa-based political news website.

That would be a disaster for Canada's aerospace industry.

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Bombardier sits at the top of a production, design and engineering supply chain that spans the country, and the world.

The demise of Bombardier and the C Series is exactly what global heavyweights Boeing and Airbus want. These companies have tried for years to kill the aircraft company, because it's muscling in on the fast-growing smaller end of a market dominated by the two best-selling airliners of all time, the Airbus A320 and Boeing 737. Both companies – recipients of gobs of government support in their home countries – are aggressively discounting and making their newest offerings more fuel efficient to lure customers away from the C Series.

Federal Infrastructure Minister Navdeep Bains highlighted the broader stakes for Canada at a recent ceremony in Montreal. "The long-term success of the aerospace sector . . . is very much connected to the success of Bombardier," he said.

Imagine what Bombardier's demise would mean. The company is the single largest corporate R&D spender in Canada. In 2015, it spent $2.3-billion on R&D – nearly four times the No. 2 spender, auto-parts maker Magna International Inc., at $639-million – according to an annual ranking by Research Infosource.

As an industry, aerospace companies account for 30 per cent of all manufacturing R&D in Canada. The sector exports 80 per cent of what it makes, and roughly 40 per cent of that beyond North America. A recent federal study says the industry directly and indirectly contributed $28-billion to GDP and 211,000 jobs in 2015.

There are few industries where Canada can claim to be a global player. Aerospace happens to be one of them. Canada is a leading supplier of regional aircraft, business jets, flight simulators, pilot training and aircraft engines.

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The one consolation for the Trudeau government is that opposition to its Bombardier loan is highly polarized – inside and outside Quebec. Quebec nationalists say the money isn't enough; politicians in the rest of the country argue it's too generous. Even the federal Conservatives, who gave similar loans to the company while they were in power, are crying foul.

Strip away the political posturing, and the Liberals know they are on solid public-policy ground in helping Bombardier.

Doing nothing would be like rolling the dice.

Video: This is the Bombardier aircraft that Ottawa just backed with an interest-free loan
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About the Author
National Business Correspondent

Barrie McKenna is correspondent and columnist in The Globe and Mail's Ottawa bureau. From 1997 until 2010, he covered Washington from The Globe's bureau in the U.S. capital. During his U.S. posting, he traveled widely, filing stories from more than 30 states. Mr. McKenna has also been a frequent visitor to Japan and South Korea on reporting assignments. More

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