Bombardier's pyrrhic victory

Against all expectations, the US International Trade Commission has thrown out the close to 300 percent tariffs that the Department of Commerce had sought to impose on Bombardier's C-series passenger aircraft.  Victories such as this are rare indeed, and likely to become even more so as Trump's protectionist instincts take hold.

The proposed tariffs were imposed in response to a complaint from Boeing that Bombardier was an unfair competitor because of the extensive public financial support it has received. That may be true, but Boeing's case was weakened rather severely by the fact that it does not produce, and has no current plans to produce, an aircraft in the 100-seat segment that the C-series is designed to serve.  Boeing did not even attempt to compete for the 75-plane Delta Airlines order that Bombardier won, yet quickly moved to claim that the outcome was harmful to it.  Surprisingly, the ITC rejected this, for once ruling on the basis of incontrovertible facts.

Boeing is, of course, playing a long game here.  Having seen Airbus Industrie grow from a minor irritant into an across-the-board competitor, it has no interest in seeing Bombardier do the same.  It is likely to step up its efforts to strike some kind of a deal with Embraer of Brazil, which does produce aircraft that compete with the C-series. It is also likely to continue its efforts to undermine Bombardier in Washington and in the courts.

So, it's all good news for Bombardier and Canada, then? For sure, winning at the ITC is a much better outcome than losing would have been, but the upside is not as great as it might seem. Bombardier was clearly convinced it was going to lose the tariff battle, which is why it decided late last year to give away a large portion of the C-series program to Airbus.  The joint venture is now moving ahead with plans to assemble the C-series jets -- including the all-important Delta order -- at a new plant in Alabama.  The jets already have about 50 percent US content even when built in Canada, and any future orders from US airlines will undoubtedly be directed to the Alabama factory. The benefits of the ITC decision to Canada (and the taxpayers who have kept Bombardier alive) will therefore be very limited.

Canadian union leader Jerry Dias has responded to the ITC decision by asserting that there is no longer any need to assemble the C-series in 'Bama.  He may be right, but there is no prospect of Airbus and Bombardier changing their plans at this stage.  Truly, Bombardier is a company that can't win for losing.