Boeing woke up to a rude surprise on Tuesday. The Chicago-based corporation thought they had gotten the Trump Administration to stymie their competition from Quebec-based airplane manufacturer Bombardier through a monumental 300 percent tariff. But instead, the French Canadians tossed the ball to Toulose, France-based Airbus, which will manufacture and sell the same planes out of Alabama. No foreign-made planes, no tariff, no basis for Boeing to lodge a formal complaint. Quelle horreur!
First off, Boeing’s initial complaints made no competitive sense. Boeing told the U.S. Department of Labor that it was unfair for Bombardier to have sold Delta Airlines 75 jets from its new C Series, which carry 110-130 passengers each. Boeing doesn’t even make a similar model that can compete with the C Series, so it’s essentially trying to force Delta to buy planes that are bigger and more costly than they want.
The basis of Boeing’s complaints originate in deep hypocrisy. Boeing alleged that Bombardier engaged in price dumping by agreeing to sell their planes for almost $14 million below their cost price, which they could do because of government support to build the C Series. Indeed, Quebec gave Bombardier $2.5 billion in 2015. That sounds like a lot, but it doesn’t even reach the scale of Boeing’s $12 billion in assistance from Washington state! If aerospace companies never received financial assistance from governments, few large commercial aircraft would ever be built. But still, we shouldn’t let Bombardier get away with that, should we?
Boeing’s aircraft sales are eight times larger than Bombardier’s today. Taking legal action shows Boeing doesn’t like market capitalism. They just want the dominant market share. Meanwhile, Boeing’s actions may hurt its sales in Canada, which is now looking to cancel its orders of Boeing’s super hornet fighter jets and buy from Australia instead.
You might think that our national political leaders would be ecstatic over Tuesday’s announcement that Airbus was taking more than 50 percent ownership of Bombardier’s C Series and would be building a second production line in the United States. That’s more jobs in the U.S. — just what we want. But it’s all quiet in D.C.
There is a problem for Washington state in all this. It is not that Boeing’s 737 line is threatened, as that is designed for a different niche of flight and seating. It is that Airbus is planning to build the C Series assembly line in Alabama. That’s a long way from Everett. Puget Sound has the best and highest concentration of aerospace talent, intellectual capital, machinists and engineers in the world — many of whom are unemployed, because Boeing has cut 16,000 jobs in our state in the past three years. Alabama doesn’t offer anything close.
Yet we still have that little law, pushed through in a two-day special session in 2013, giving Boeing a $12 billion tax break from 2004 through 2040. While that law was written at the behest and urging and threats of Boeing, it is tailored to benefit any aerospace company, and would also apply to companies such as Airbus, which might intend to construct new facilities for “manufacturing superefficient airplanes.”
That moniker certainly fits the C Series, which is more efficient (and comfortable) than Boeing’s offerings. Its seats are wider. Its overhead bins are bigger. Its windows are larger. With its composite construction and engines from American manufacturer Pratt and Whitney, it’s a good deal for airlines, using 20 percent less fuel than the 737. That’s superefficient!
Rather than just sit and watch Airbus put together its new C Series assembly in Alabama, our elected officials, the machinists union and the engineers union, SPEEA, could figure out a package for Airbus in our state.
Here in Washington we have the facilities, the personnel, the training pipeline and the popular interest. By law, we would offer the same tax incentives that we hand out to Boeing. But there would be a difference. While Boeing uses those tax incentives to ship jobs out of Washington, Airbus would use those tax incentives to actually create new jobs in our state. If our leaders really want to bring good jobs in aerospace to our state, they’d stop just doing Boeing’s bidding. But do they have the political will?
Originally published in the Everett Herald