Mark Collins – Why Delay in Canadian Federal Funding for Bombardier? Ontario Auto Sector

Further to these posts,

If Feds Bail Out Bombardier, Can Ontario Auto Sector be Far Behind?
[Nov. 2015, company wants US$ 1B]

Things Looking Pretty Grim for Ontario Auto Sector–Fed Money (and provincial)?
[Aug. 2016]

and this news story September 13,

Quebec minister urges Ottawa to make a decision on Bombardier

Canadian government officials should “make up their minds” on a financial aid request by struggling aircraft maker Bombardier Inc., Quebec Finance Minister Carlos Leitao says.

Quebec announced an aid package for the C Series program late last year [also US$ 1B], which helped stabilize the Montreal-based company and allowed it to secure sales for the jet [see “Bombardier Loss-Leads CSeries to Delta–Big Time (plus Canadian politics)“], Mr. Leitao said at the Bloomberg Canadian Fixed Income Conference in New York. Quebec finalized the deal in June…

…Mr. Leitao says federal funding would allow the company to start developing new products…

it seems very likely to me that the real reason for Ottawa’s dithering is that the government knows it will have to pony up a lot of cash–along with the province–for the auto manufacturers in Ontario, especially to keep General Motors operating in Oshawa. If it had already given Bombardier its one billion then it would have severely weakened its bargaining position in trying to minimize the goodies for the car companies–money that will almost certainly be needed to avoid big job losses and money that will almost certainly be forthcoming.

The latest:

1) Oshawa’s future at play in talks with General Motors: Unifor has threatened to strike at midnight next Monday [Sept. 19] unless it wins a commitment from the company for more future work in Oshawa.

For auto workers in Oshawa, it’s do-or-die time.

In a city that was once synonymous with General Motors, there’s no promise of any future auto assembly work beyond 2019, so there are real fears production could shut down altogether.

That’s why Unifor, formerly the Canadian Auto Workers union, has threatened to strike at midnight next Monday, unless it wins a commitment from the company for more future work in Oshawa.

“If we don’t nail it now, we’re not going to nail it done, ever,” said Jerry Dias, the union’s national president. “If they are planning on closing Oshawa, then we’re going to have a strike.”

GM officials have long insisted that it won’t talk about new products in Canada until a collective agreement is signed first.

That’s why the union picked General Motors over Ford or Fiat Chrysler as its target to negotiate a contract that will hopefully set a pattern for the other two automakers…

John Holmes, an emeritus professor of geography at Queen’s University, said the union’s strategy to make GM its target is to win government support.

“I do think this is a very important round of negotiations for Canada – there is a lot at stake – including GM’s future in Canada,” he said.

“But I wonder the degree to which the union is making commitments of new products such a central issue . . . whether this is part of the union’s strategy trying to get jobs on the political agenda for the provincial government and the federal government,” said Holmes, who studies the North American auto industry.

Dias acknowledges that the stars appear to be aligning now, given that both Premier Kathleen Wynne and Prime Minister Justin Trudeau understand the importance of auto manufacturing to the Canadian economy [emphasis added, i.e. they better pay up].

“They get it. They are not foolish,” he said, adding that the Stephen Harper government was resistant to investment. “This whole thing about taxpayers’ money going for profitable companies . . . I understand the argument.

“But these companies have options. So we can be puritans, and be holier than thou and not have any jobs. Then we would be fools. There would be no tax base,” Dias said, noting other jurisdictions including Mexico are wooing car companies [more below]…

2) Ottawa changes auto fund to issue grants instead of loans

The federal government has quietly signalled to the auto industry that it is changing one of the key terms of the Automotive Innovation Fund (AIF), which offers financial assistance to vehicle manufacturers and parts makers to invest in existing Canadian plants or open new facilities [website here].

The federal program, introduced in 2008 by the Conservative government of Stephen Harper, offers repayable loans – treated by Canada Revenue Agency as revenue and thus partly subject to tax – to auto makers and parts companies. The Ontario government and many other jurisdictions seeking to land auto investment offer tax-free grants.

Ottawa will change the program so that it offers grants instead of loans, multiple industry sources said.

Auto makers began lobbying for a change in the program almost immediately after it was introduced, pointing out it was one of a series of factors that made Canada uncompetitive in the battle against Mexico and the U.S. South for new investments…

The move by the federal government comes amid negotiations between General Motors Co. and Unifor, the union that represents the company’s hourly paid workers in Canada, that centre on the future of an assembly plant and about 2,400 jobs in Oshawa, Ont.

General Motors of Canada Co. president Stephen Carlisle has said the federal program should offer grants instead of loans and it is one factor among several – including the outcome of bargaining with Unifor – that will determine whether Oshawa will be competitive enough to win new investment [emphasis added, the writing on the factory wall is pretty darn clear, ain’t it?].

By the way Unifor also represents Bombardier’s aviation workers at Downsview, Ontario, where the Q400 turboprop airliner and Global bizjets have final assembly (more here)–and both those programs are having their respective problems, see here and here. So the union would sure love that federal moolah for both the aviation and auto industries.

Poor taxpayers, federal and provincial. Happy corporate welfare bums.

Mark Collins, a prolific Ottawa blogger, is a Fellow at the Canadian Global Affairs Institute; he tweets @Mark3Ds

Mark Collins – Things Looking Pretty Grim for Ontario Auto Sector–Fed Money (and provincial)?

Further to this post last year, the main point of which I think very much still applies (feds are still dithering on money for the aircraft company),

If Feds Bail Out Bombardier, Can Ontario Auto Sector be Far Behind?

note this headline:

Canadian auto industry faces biggest existential threat since 2009 crisis as labour talks begin

How philosophical will Ottawa be about bailout bonanzas? They can’t very well help one industry and not ‘tother without enraging on huge province or ‘tother. Poor politcos. Poor taxpayers.

Mark Collins, a prolific Ottawa blogger, is a Fellow at the Canadian Global Affairs Institute; he tweets @Mark3Ds

Mark Collins – Trying to Keep Bombardier Q400 Turboprop Competitive

Further to this post (with relevant links),

Bombardier Q400 Turboprop Hitting Some Fans Too

a sensible deal has been struck between the union and the company–but the airliner may just be a bit too good for its own sales good (full text subscriber only):

Toronto employees drop opposition to Bombardier outsourcing

Workers at the Bombardier Q400 factory in Toronto have agreed to the company’s request to shift production of the plane’s wings and cockpit to low-wage countries, a move that will eventually eliminate 200 jobs.

The workers at the plant originally rejected the request last fall to outsource wing assembly to Mexico and cockpit production to China.

But members of the Unifor local that represents workers reversed their decision after their bargaining committee negotiated more attractive retirement packages from Bombardier Inc. than the aircraft maker offered when it first brought up the idea.

The proposal to shift production arose again in March [see post linked to above] as Bombardier was in discussions with Ottawa over the federal government joining its Quebec counterpart as a strategic partner in the company’s C Series jet program, which is $2-billion over budget and more than two years behind schedule.

The negotiations about taxpayer money for the C Series have put the Montreal-based transportation giant at the centre of a national debate on the merits of governments providing public money to private enterprise [lots more here] – a debate that intensified when the proposal to shift Q400 jobs out of Canada came up again…

“We see this as a positive step toward the long-term viability of the Q400 aircraft,” Ms. de la Barrera said, noting that final assembly of the turboprop will continue in Toronto. “Bombardier needs to find ways to make its products more competitive for long-term success in a very competitive marketplace.”..

The smaller turboprop Q400 is in a different segment of the commercial airplane market and has had a successful history as the workhorse for Toronto-based Porter Airlines Inc. Calgary-based WestJet Airlines Ltd. has made the plane the mainstay of its Encore regional network.

Sales have been surpassed, however, by its main rival, the [ATR 72] 600 series produced by Europe-based consortium ATR.

ATR has booked 226 orders for its turboprop in the past two years, more than three times the 65 sales recorded by Bombardier [see also here (Asia/Pacific) and here (US)]. The Q400 list price of $31-million (U.S.) is estimated to be as much as 30 per cent higher than the price of the ATR plane.

Bombardier has largely failed to persuade customers outside North America to pay more for the plane’s extra speed, size and technology [emphasis added], prompting chief executive Alain Bellemare to declare last October, “We need to bring the costs down so we can bring the price down.”..

Workers at the plant perform final assembly of the company’s Global Express 5000 and 6000 business jets and are scheduled to work on the longer-range 7000 and 8000 models of those jets, which are under development [more here].

Tough commercial aircraft market, eh?

Mark Collins, a prolific Ottawa blogger, is a Fellow at the Canadian Global Affairs Institute; he tweets @Mark3Ds

Mark Collins – How Convenient: “Ontario minister Michael Chan defends China’s human-rights record”

Further to this June 2015 post,

Spookery in Canada: China, CSIS and…the Ontario Government, Part 2

the Globe and Mail returns to the charge with more excellent reporting:

Ontario minister Michael Chan defends China’s human-rights record

Days after China’s Foreign Minister berated a Canadian reporter for questioning his country’s troubled human-rights record, an Ontario Crown minister defended it.

Michael Chan, the province’s minister of Citizenship, Immigration and International Trade [official webpage here], weighed in on the flap Monday [June 6], arguing in a Chinese-language column that the authoritarian country should also be seen through the perspective of “basic livelihood.”

“The inner meaning of human rights is very broad, but the right to survival and a basic livelihood are important components of human rights,” he tells an unidentified journalist for a blog on the popular Chinese-language website 51.ca and Mr. Chan’s official WeChat page.

Read a translation of the full blog post.

The blog begins with the mention of Chinese Foreign Minister Wang Yi’s controversial press conference in Ottawa last week with his Canadian counterpart, Stéphane Dion. “[Mr. Wang] touched on the issue of human rights and his response led to commentary from all quarters,” a scribe writes. “A journalist interviewed Michael Chan about this, inviting him to share his views on the matter.”

Rather than asking the same questions about where human rights are now, Mr. Chan suggests it is better to examine how they’ve evolved in the past 40 years. “Chinese society has transformed from being about survival to being about development – and in the areas of economy, education, health care, student exchange, migration, travel and quality of life, these 40 years have brought about 1001 changes.”.

On June 1, Mr. Wang dressed down an iPolitics reporter for asking a question agreed to by a pool of journalists about human rights and Kevin Garratt – a missionary jailed for almost two years on charges of espionage. “Your question is full of prejudice against China and arrogant,” Mr. Wang said. “This is totally unacceptable.”..

Jack Jia, publisher of the Chinese News Group, said that the article doesn’t reflect Canadian values. “[Mr. Chan] doesn’t look at how China paid for today’s development.”

Last June, Mr. Chan was the subject of a Globe and Mail investigation, which revealed that the Canadian Security Intelligence Service was concerned the minister had grown too close to the Chinese consulate in Toronto, prompting a senior official to formally caution the province about the minister’s alleged conduct in a 2010 briefing.

The Globe stories also examined Mr. Chan’s performance in various ministerial portfolios, which included lobbying for the controversial Confucius Institute to come to Toronto’s school board, a deal eventually scuppered amid concerns of Chinese government interference with the educational program. His hiring of two staffers known for pro-regime activities was also referenced.

Premiers Dalton McGuinty and Kathleen Wynne have dismissed the CSIS concerns as baseless. Mr. Chan has said that The Globe’s reporting on him is “a blend of innuendo and half-suggestions.”

Mr. Chan is suing The Globe for defamation and has asked that queries go through a lawyer. His ministry spokesman and lawyer declined response. The Premier’s office did not respond to questions.

The minister has held court on Chinese affairs before. On another Chinese-language website last year, for example, the minister praised China’s anti-corruption campaign, which some critics view as a way for the leadership to purge its enemies [see “China: Top Dragon Purging Briskly and Broadly“ and “Top Dragon Now More Powerful than Mao?“]…

As for the feds:

New Government’s Stealthy Diplomacy Promoting Sino-Canadian Relations

Mark Collins, a prolific Ottawa blogger, is a Fellow at the Canadian Global Affairs Institute; he tweets @Mark3Ds

Mark Collins – Bombardier Says Doesn’t Need Federal Bailout

Further to this post (and “Comments”),

Bombardier Giving Planes Away as Ottawa Bailout Looks Inevitable

it still sounds very much as if Ottawa plans to cough up the US$ one billion the company wants even though…

Federal funding ‘helpful but not required,’ Bombardier Inc executive says

If the feds do bailout Bombardier how they say no to–as just one example–General Motors when it demands cash to keep its auto plant in Oshawa going past 2017?

Mark Collins, a prolific Ottawa blogger, is a Fellow at the Canadian Global Affairs Institute; he tweets @Mark3Ds

Mark Collins – If Feds Bail Out Bombardier, Can Ontario Auto Sector be Far Behind?

Further to this post,

CSeries: Bombardier Wants $1B from Feds…

surely the new government will not want to take a big political hit in Ontario, where almost all that industry is–and with the provincial government already holding out very demanding hands (and not supplicant ones given the help the Ontario Liberals gave their federal friends during the recent national election):

Canadian auto sector alarmed by concessions revealed in full TPP text

Greg Keenan, The Globe and Mail

Key players in Canada’s vital auto sector say Justin Trudeau’s government now faces a major decision: whether to seek changes to the massive Trans-Pacific Partnership trade deal – an agreement, the just-revealed text shows, that offers worse-than-expected terms for Canadian vehicle parts makers.

“They’re going to have to take a look at this closely, see what has been negotiated and decide whether they want to pursue renegotiation of any element of the agreement,” said Mark Nantais, president of the Canadian Vehicle Manufacturers’ Association, which represents the Canadian units of the Detroit Three auto makers.

The full text of the wide-ranging Trans-Pacific Partnership accord was finally made public Thursday [Nov. 5], one day after Mr. Trudeau’s government took office…

Mr. Nantais’s group, which employs close to 20,000 Canadians, is unhappy with how Canada consented to eliminate a tariff on imported Japanese vehicles far more rapidly than what was agreed to by the United States. Canada will do it in five years, while the U.S. will take as long as 30…

The deal offers Canadian companies long-sought access to Japan’s massive consumer market, but it would also eliminate tariffs on Japanese vehicles and make it easier for manufacturers to use offshore parts. It would be a boon for low-wage Asian suppliers of parts, but a challenge for Canadian firms.

Canada’s auto parts makers, who employ 81,000, say the text of the agreement shows the local-content protections for vehicle components are significantly skimpier than the former Conservative government had advertised. Former prime minister Stephen Harper had said local-content requirements for important vehicle components would be between 40 per cent and 45 per cent.

But two key areas of Canada’s auto-parts industry will receive less protection than expected. “We got worse terms on key parts than we were originally told,” Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association, said Thursday.

Engine parts and such body stampings as truck frames and metal roof panels will only be required to have TPP content of 35 per cent…

The Ontario Liberal government on Thursday urged Ottawa to deliver auto-sector aid in the wake of the TPP deal, saying it’s worried about the accord despite the market potential it offers…

Ain’t cooperative federalism great, what with all that corporate welfare likely to flow from Ottawa?

Mark Collins, a prolific Ottawa blogger, is a Fellow at the Canadian Global Affairs Institute; he tweets @Mark3Ds