MONTREAL – Quebec workers with Bombardier’s CSeries plane program have mixed feelings about the deal with Airbus giving the European aerospace giant a controlling stake in the aircraft, a union representative said Tuesday.
David Chartrand, Quebec co-ordinator for the International Association of Machinists and Aerospace Workers, said the deal means access to a massive market and possibly more jobs.
The agreement, however, also secures a new, final assembly line in Alabama for the CSeries — employing non-unionized workers serving 30 per cent of the global market for the aircraft.
“It is better to build (a plane) for 70 per cent of the market and sell thousands of planes, than build 100 per cent of an aircraft for 100 per cent of the market and we sell no planes at all,” Chartrand said.
Bombardier (TSX:BBD.B) was facing a massive obstacle after the recent decision by the U.S. Department of Commerce to propose a hefty 300 per cent duty on its CSeries jets in response to a complaint by rival Boeing.
The department’s preliminary findings agreed with Boeing that Bombardier benefited from improper government subsidies, giving it an unfair advantage when selling its CSeries 100-to 150-seat jets south of the border.
Bombardier says the deal with Airbus — and the new Alabama assembly line — means the CSeries will be able to be sold in the United States duty-free.
“It becomes a domestic product and, therefore, a domestic product would not have the import tariff apply to this,” Bombardier CEO Alain Bellemare said Tuesday.
The U.S. market represents roughly 30 per cent of CSeries sales, which means Montreal’s assembly line is ostensibly open to serving the other 70 per cent of the market.
“That’s what Airbus seems to be saying, it’s what the Quebec government and Bombardier are saying — (but) I don’t have the details of what was in the agreement that was signed,” Chartrand said.
If Airbus manages to increase orders for the CSeries around the world, that could mean more jobs in Mirabel, Que., he said.
Airbus said the 100- to 150-seat market is expected to represent “more than 6,000 new aircraft over the next 20 years.”
“Let’s say there are 6,000 plane sales that are possible,” Chartrand said. “If Airbus takes 50 per cent to 70 per cent of the market, that could mean an expansion of the Mirabel plant — but that’s the best-case scenario.”
The Quebec government, Bombardier and Airbus all say the deal ensures the primary assembly line of the CSeries will remain in the province until 2041.
A big unknown, however, is what region of the world outside the United States will become the market for CSeries growth.
Moreover, another unknown is what effect the new assembly line in Mobile, Ala., will have on production.
James Darcy, a spokesman for Airbus, said the intention is to expand the $600-million existing facility in Mobile, which opened in 2015, to meet increased demand.
“But bear in mind the deal won’t even reach approval by all the regulatory agencies until the second half of 2018,” he said. “So there isn’t much we can say about production, given how early it is in the process.”
Karl Moore, professor in McGill University’s Faculty of Management, said the deal with Airbus gives the CSeries “credibility,” which will make finding buyers outside the U.S. easier.
“Airbus’ name, reputation, size of their workforce and fleet adds a lot of credibility to the CSeries,” he said. “We don’t have to worry if (the company) will go away and die at some point.”
The fact Bombardier was being prevented from selling its planes in the U.S. due to the potential duties made buyers elsewhere hesitant to purchase the aircraft, Moore said.
Moore said it’s highly likely Airbus will be able to leverage its big international sales and marketing force to sell the CSeries, which means more work for the workers in Montreal.
“They should feel more comfortable about their jobs today than they did yesterday,” he said.
The deal sparked debate in Quebec’s legislature Tuesday, with the opposition Parti Quebecois accusing the Liberal government of “selling the house to save the furniture.”
Parti Quebecois Leader Jean-Francois Lisee said the government should have taken a stake in the entire Bombardier company instead of investing only in the “risky” CSeries unit.
Quebec invested US$1 billion in 2016 for a 49.5 per cent stake in the commercial jet program.
The new deal with Airbus gives Quebec a 19 per cent stake in the plane and Bombardier 31 per cent.
“We preserved the aerospace industry in Montreal,” Quebec Premier Philippe Couillard said.