Bombardier was without any doubt the biggest business story in the country this past week and will continue to dominate the headlines until a decision is reached by the Canadian government on whether to once again provide financial assistance to a company that has gone from being one of the pride and joys of “Quebec Inc.” to a languishing stock that has made some question the very viability of its future. The Air Canada C-Series purchase order came as a positive piece of news that was almost immediately entirely dampened by the Company’s announcement of massive layoffs. For some, this is proof that the Company cannot compete in an open global market and should be allowed to fail. For others, it is the result of inequitable government support for certain industries (the auto industry bailout of a few years ago is most commonly cited) and not others. One thing that everyone agrees on…these are very complicated political issues that the Prime Minister and his staff have had on their desks since the day they moved into the office. While Quebec may insist that another cash injection into Bombardier is a non-negotiable necessity for the continuation of the country’s aerospace industry, Alberta and Saskatchewan are just as quick to claim that more jobs are being lost in the oil patch than in the aerospace industry and that to direct more funds to Quebec than to Alberta is patently unfair and would demonstrate the Government’s poor understanding of Western Canada’s energy sector. One political projection seems logical…if the Trudeau government does not provide any further assistance to Bombardier, the Province of Quebec will most certainly not be a willing partner in the Energy East pipeline proposals, once again demonstrating the complex political consequences of government assistance programs in our country.
Like many stories in the news cycle that seem to rise to the fore out of nowhere, this latest chapter in Bombardier’s corporate existence is actually nothing new and is consistent with the company’s economic and political positions of the past few decades when the old Ski-Doo manufacturer founded back in 1949 began to transition into its new role as the nation’s largest manufacturer of aircraft and other commercial transportation products. When then CEO Laurent Beaudoin came to the Empire Club twenty years ago to speak about “Competing in the Twenty-First Century: Our Challenges”, his speech was filled with references to the need for government subsidies in the development and manufacturing of aircraft. Here is a quote from that very important 1996 speech:
“Eliminating all government support in one fell swoop before our competitors’ governments do the same would stall our industry’s growth in Canada and channel our aerospace investments to other countries. Canadian government leadership in this area should not mean that we naively expect other countries to stop overnight supporting their aerospace industry just because Canada would have chosen to do so. The Canadian government has shown restraint and thoughtfulness in the way it ensures Canadian aerospace is not crippled before a global ratcheting down of government support takes place (…)
In the long run, successful firms do not become internationally competitive because of government money. Indeed, as I mentioned before, three-quarters of our business already receives little or no sector-specific support. These sectors aren’t subsidized in Canada or abroad. They are level playing fields, and, as I have shown before, Bombardier can be a winner under those conditions.
There are many success stories in the audience today. Canadian companies are winners in the global arena when the rules of the game are fair for all players.
But the success of Canadian companies in world markets will not ensure the prosperity of Canada if we don’t keep our politics from doing permanent damage to our economy (…)
But, whether pragmatic necessity carries the day may well depend on the decisions of governments outside Quebec, both federal and provincial. These governments can and should act, on some of the issues that have been sources of tension in Quebec and elsewhere in Canada. We must call upon our store of pragmatism, goodwill, and openness to new ideas to resolve our national challenges.”
Monsieur Beaudoin was already presenting to the Canadian public twenty years ago many of the very issues that Canadians debated this past week around their dinner tables, but there remains one overarching question which at the end of the day is one of the most difficult questions our government has before it, at least as far as this issue is concerned: we all agree that Canadian companies are winners in the global arena when the rules of the game are fair for all players, but is this achievable and-even more fundamentally-what does it mean? What seems fair for some is outrageous to others in our ever-partisan world, so achieving a universal sense of fairness in a nation as complex and difficult to manage as Canada may in itself be a pipe dream. One thing is certain…Canadians from all regions will be watching Bombardier with renewed interest in the coming months, and questions around subsidization of one sector of the economy over another will no doubt continue to play out in our national media.