Boeing takes off on a flight of hypocrisy against Bombardier
The row between the planemakers has become political
Print edition | Business
| OTTAWA
There was an earliest post on this blog about plans for Boeing to move jobs from Seattle, WA here to Mesa when the World Trade Organization was about to rule on subsidies from the State of Washington that might get taken away, and looking to either/or the City of Mesa or State of Arizona to provide "incentives" to land more jobs here.
Now there's more to deal with in international competition in the markets, the question of tariffs and subsidies and trade/finance blocks in global regions and domestically - where resolving some of the problems depends on whom Trump chooses to appoint [and get approved by Congress] for vacancies on the Security & Exchange Commission where Patriarch Partners owner Lynn Tilton has been under investigation for six years, and for seats on the board of the Ex-Im Bank. . . that's all a mash-up in some ongoing details farther along in this post.
First, back to the article in The Economist:
“WE WON’T do business with a company that is busy trying to sue us.” So said an uncharacteristically stern Justin Trudeau, Canada’s prime minister, alongside his British counterpart, Theresa May, in Ottawa on September 18th. The two had teamed up to take on Boeing. The giant American aeroplane-maker is pressing Donald Trump’s administration to impose duties on commercial jets made by Canada’s Bombardier. Boeing says its smaller rival is using Canadian government subsidies to sell aircraft to Delta, an American carrier, at below cost price. . .
Few in either country question that Bombardier has had vital financial support from the Canadian and British governments . . . It was not until 2016 that the aircraft’s future seemed assured, when Delta ordered 75 units. Boeing then accused Bombardier of dumping the jets into America at “absurdly low” prices and asked the Commerce Department to impose countervailing duties. A preliminary ruling is due on September 25th. . . Naturally, Boeing itself got billions of dollars of help (in the form of military contracts) to get off the ground back in the 1950s and 1960s. . . Boeing has reasons to guard against Bombardier. First, it fears encirclement by state-subsidised aircraft makers—not only Airbus and Bombardier, but ambitious state-supported Chinese and Russian producers. . .
If Boeing gets its way, about 3,500 jobs will be threatened in Quebec, where Canadian politicians are wary of stirring up separatist sentiment, and a further 4,500 in Northern Ireland, where Bombardier is the largest private-sector employer. Mrs May’s Conservative government is propped up by the ten MPs from the province’s Democratic Unionist Party; Bombardier lies in east Belfast, the party’s heartland.
Canada has also threatened to cancel a likely $5bn order of military jets from Boeing if the American company prevails against Bombardier; Britain could follow its lead. Several airlines, fearing less competition among planemakers, are unhappy with Boeing’s behaviour and privately threaten to shun its jets if it continues to bully its smaller rival. This may be the trade case that ends up costing Boeing much more than it has to gain.
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Online research suggests that one of the issues for industry supporters of the Export-Import Bank is urging action on three nominees stalled in The Senate.
If export financing isn't available, the project doesn't stop. You just find an export credit agency in another country - when that happens the supply chain leaves the United States and finds a home in that country.
At the same time Ex-I'm Bank is caught in the crossfire of conservative groups like The Heritage Foundation and "Tea Party" activists who say the government should not be involved in export credit financing.
60 other nations do that. Trump has given mixed signals . . .
JOC.com-Sep 18, 2017
Industry supporters of the US Export-Import Bank (Ex-Im) are urging quick ... that Eximbank helps small US companies as well as large ones such as Boeing, ...
> Why Governments Shouldn't Treat Companies as 'National Champions'
Boeing, with its proven record of slopping at the government trough, is another example of government favoritism. In fact, the Export-Import Bank is sometimes referred to as ‘Boeing’s Bank.’ A study released two years ago by the non-profit organization Good Jobs First showed that over the previous 15 years, Boeing was one of five triple dippers – companies that received funds from three sources: state subsidies, as well as federal grants and tax credits, and federal loans, loan guarantees and bailout assistance. At $13.4 billion, Boeing had received far more state and local subsidies than any other company. But what has this huge subsidy actually bought for Americans? The aerospace giant has been pruning staff for over a year, sharply cutting jobs in its home base of Seattle and in South Carolina. . .
Canadian and U.S. governments enable Bombardier and Boeing in their addiction to corporate welfare. Even worse than the direct dollar cost are the indirect costs: Corporate welfarism distorts investment, shifting capital in the markets based not on value but on government favoritism. It prompts more capital to go to big companies with a foot in the government door, drying up capital needed by start-ups and SMEs. It encourages businesses to invest in lobbying government rather than developing new products. And it undermines the process of creative destruction that drives the creation of wealth.
The Take-Away:
Governments should not treat companies as national champions for a simple reason – they aren’t. Bombardier does not champion the interests of Canadians, any more than Boeing champions the interests of Americans. They champion the interests of their investors, as they should. Governments need to champion the interests of their people. The best way to do that is to refrain from lobbing subsidies to some favored companies, and encourage an open marketplace for all of them.
Blogger Note: Allan Golombek is a Senior Director at the White House Writers Group
> Ex-Im Bank Cronies: 0
Pro-Market Advocates: 1
Pro-Market Advocates: 1
After the Export-Import Bank’s charter was reauthorized at the end of 2015, it was still unable to function at its full crony potential. The bank needs a quorum of its board if it wants to approve loans larger than $10 million, but it currently only has two members instead of the three needed. I would like to see the Bank fully dead, but since that doesn’t seem to be in the cards right now I am pretty content with this current state
Read more at: http://www.nationalreview.com/corner/451146/ex-im-bank-cronies-defeated-export-import-bank
> Trump picks wrong side in battle over 'Bank of Boeing'
There's a battle looming over the "Bank of Boeing," with President Donald Trump squaring off against the business community, including some Illinois-based companies.
The "Bank of Boeing" is what critics sneeringly call the Export-Import Bank of the United States, a federal agency that provides low-cost loan guarantees that help companies, including Boeing, expand and compete internationally.
Trump wants the Senate to approve former congressman and Ex-Im Bank nemesis Scott Garrett as president of that federal lending agency.
The reality is the bank serves an important public-private purpose that helps the economy.
One of its main functions is providing U.S.-backed guarantees on higher-risk loans to global buyers of big-ticket items from U.S. manufacturers. The bank makes business loans, provides insurance and makes sure firms selling overseas are paid promptly.
That translates into jets from Boeing, heavy equipment from Caterpillar or parts from any number of Illinois-based companies and suppliers employing thousands of people.
Trump was critical of the Ex-Im Bank during his campaign. Yet earlier this year, at the prodding of bipartisan and pro-Ex-Im Bank forces, he voiced a change of heart and vowed to revive the bank.
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