October 16, 2017 was the darkest day in Quebec’s economic history. The jewel of Quebec entrepreneurship, Bombardier, was to carry out the most humiliating fire sale that day. He had the audacity to invent the best medium-haul plane in the world. Thanks to the expertise accumulated throughout the Quebec aeronautical cluster, its CSeries aircraft was the most environmentally friendly, the lightest and the quietest on the market. A wonder. But that October day, Bombardier was forced to cede the fruits of its efforts to the European Airbus. For a dollar. It was that or bankruptcy.
A year earlier, and after a thousand difficulties and delays – the cost of production having increased from US$2.1 to US$5.3 billion – Bombardier’s dream of establishing itself as a global player in aviation took flight . The American Delta had ordered 75 copies of its jewel and took an option for 50 others. Bombardier had agreed to a significant discount to raise this first large order – as is the practice for any new aircraft. The important thing was to exist. The first CSeries aircraft to bear the emblem of a major carrier were scheduled to take off from Los Angeles, New York and Dallas in the spring of 2018. Bombardier had just entered the big leagues, carving its way into skies previously owned by -there to the Boeing-Airbus duopoly, in the very country of the American giant.
The assassin entered the scene. Boeing had no trouble convincing Donald Trump’s government to impose a preliminary tariff of 259% on Bombardier planes to put an end to the sale to Delta. The situation was serious, argued its vice-president, Ray Conner, because Boeing was working on a similar plane, the future Max 7. Competition from the CSeries threatened its profitability. Worse, Bombardier’s desire to seize half of the American medium-haul market, he warned, “calls into doubt the very future of the American aeronautical industry.” Big.
The 259% was “preliminary”. This is a common extortion technique in Washington. A lobby is calling for a “preliminary” but immediately applicable price, which will break foreign competitors. Once the damage was noted, the final decision indicated that, all things considered, the price was unjustified. The process has been used repeatedly in the case of lumber. And in January 2018, the four commissioners of the American International Trade Commission unanimously considered that the tariff claimed by Boeing was unfounded and abandoned it.
Punish the attacker
Would Bombardier have had the capacity to wait for this result before committing hara-kiri? Its financial situation was precarious, patience and government funds had been amply stretched. The real answer is that we will never know. With the result that it is the Airbus logo, rather than that of Bombardier, which appears on the now 329 planes sold to Delta, Air France, Air Baltic, Air Canada and others, and which will be placed on the other 600 orders recorded.
The program’s profitability point, Airbus believes, will be reached in 2025. Then the aircraft designed in Montreal could become, says Airbus, “one of the most profitable aircraft in the history of commercial aviation”. For Airbus, obviously.
Boeing’s Max 7 is still not certified and will not enter service until mid-2026 at the earliest.
One thing was certain, however. Boeing’s aggression was not going to go unanswered. The Trudeau government’s Minister of National Defense, Harjit Sajjan, announced that Boeing was not “a reliable partner” and that its products would no longer be on the department’s purchasing list. Justin Trudeau was even clearer: “We will not compromise with a company that insists on putting our aerospace workers out of work. »
So imagine the government’s delight when, five years later, in 2023, an opportunity presented itself to thumb its nose at Boeing and prefer Bombardier. Revenge is a dish best served cold.
The opportunity was great. It was necessary to replace the aging Aurora surveillance planes with 16 new aircraft, a jackpot of 8 billion dollars from the Dominion. Boeing dared to apply, but with an old model at the end of its life, the Poseidon. Bombardier had a militarized version of its Global 6500 business jet on the drawing board. Like the CSeries, the aircraft incorporated the latest technological findings from the Quebec cluster. Obtaining this contract would allow it to enter the global market for these military aircraft, a sweet revenge.
In a spectacular turnaround, Justin Trudeau, his hyperminister François-Philippe Champagne, Jean-Yves Duclos and company decided to ignore the competitive call for tenders process and hand over the lucrative contract to Boeing. The comparative study of the two projects must have detected irreparable defects in Bombardier’s version? There was no comparative process. The federal bosses even refused Bombardier the right to present the project and answer questions from Defense specialists.
Ottawa said the Bombardier plane would not be ready on time, which the plane maker disputes. The only probable reason for this move by Jarnac is that the Bombardier name has become politically toxic in the rest of Canada. Federal ministers, including French-speaking ones, can no longer, even for the sake of form, hear one of his proposals. Across Outaouais, it has become safer to reward yesterday’s aggressor than to support one of your own.
Assassin fans
The assassin’s fans association added new members this week: Prime Minister François Legault and his colleague Pierre Fitzgibbon. All smiles, they welcomed Boeing to their new aerospace innovation zone. They were swooning because the American company is paying 240 million dollars into the adventure, or precisely 3% of the 8 billion contract that Bombardier would, in a normal country, have obtained.
In return, the aircraft manufacturer sets foot in an exceptional technological environment from which it will be able to reap the benefits from within with the financial support of Quebec and Ottawa. During this surreal announcement, the president of Boeing Global, Brendan Nelson, pinched himself, talking about access to a high-quality workforce at our universities. His decision to come to Montreal was “obvious,” he said, in the tone of a wolf receiving an invitation to stay in the fold.
The CEO of Bombardier, Éric Martel, who here plays the role of the lamb chosen for the barbecue, did not find it funny. “We are surprised to see the two governments so strongly prioritize and applaud a foreign multinational which already benefits from important contracts from its country of origin, in addition to having very recently put the aeronautical industry in Quebec at risk. » Introducing your main adversary into the Quebec cluster will make recruiting labor more difficult and more expensive. And it has just exploded the risk that our innovations – which we have been financing for decades to gain a comparative advantage – will pass to the enemy.
MM. Legault and Champagne kept exclaiming, repeating that Montreal is now “the only place in the world to welcome both Airbus and Boeing.” We believe them. It is difficult to find such a high concentration of happy cuckolds elsewhere and in the same place.