Boeing seeks U.S. anti-dumping probe vs. Bombardier
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Boeing seeks U.S. anti-dumping probe vs. Bombardier
Escalation from Boeing:
Full article: Boeing seeks U.S. anti-dumping probe against Bombardier jet | Reuters
REUTERS -- Boeing Co on Thursday asked the U.S. Commerce Department to investigate alleged subsidies and unfair pricing for Canadian planemaker Bombardier's new CSeries airplane, adding to growing trade tensions between the United States and Canada.
The petition against Canada's new competitor to the Boeing 737 aircraft came just days after the Commerce Department imposed duties averaging 20 percent on imports of Canadian softwood lumber, saying that the product's origin from public land amounted to an unfair government subsidy. ...
Boeing said in its petition that Bombardier, determined to win a key order from Delta Air Lines Inc after losing a competition at United Airlines, had offered its planes to the airline at an "absurdly low" $19.6 million each, well below what it described as the aircraft’s production cost of $33.2 million.
"Propelled by massive, supply creating and illegal government subsidies, Bombardier Inc has embarked on an aggressive campaign to dump its CSeries aircraft in the United States," Boeing said in its petition.
The petition against Canada's new competitor to the Boeing 737 aircraft came just days after the Commerce Department imposed duties averaging 20 percent on imports of Canadian softwood lumber, saying that the product's origin from public land amounted to an unfair government subsidy. ...
Boeing said in its petition that Bombardier, determined to win a key order from Delta Air Lines Inc after losing a competition at United Airlines, had offered its planes to the airline at an "absurdly low" $19.6 million each, well below what it described as the aircraft’s production cost of $33.2 million.
"Propelled by massive, supply creating and illegal government subsidies, Bombardier Inc has embarked on an aggressive campaign to dump its CSeries aircraft in the United States," Boeing said in its petition.
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Good for Boeing.
Why waste time with a WTO hearing. They're busy with an Airbus hearing anyway. Since Trump seems to be willing to club Canadian trade and NAFTA, why bother with the WTO when Trump can do your dirty work.
Canada won't stand up to the US anyway. Turdo doesn't have the will or the fortitude. Dairy, soft wood, now aircraft.
Now we'll hear it, Bombardier should be shut down, cut off, and allowed to go out of business for their insensitivity to the needs of Americans.
Shame on Bombardier. Shame on Canada. Shame, shame, shame.
Wait, weren't Boeing approached by Bombardier last year about the C series?
Something about a sale? Investment? Missed opportunity?
I guess Boeing's business practices must be above reproach.
What was I thinking?
Willie
Why waste time with a WTO hearing. They're busy with an Airbus hearing anyway. Since Trump seems to be willing to club Canadian trade and NAFTA, why bother with the WTO when Trump can do your dirty work.
Canada won't stand up to the US anyway. Turdo doesn't have the will or the fortitude. Dairy, soft wood, now aircraft.
Now we'll hear it, Bombardier should be shut down, cut off, and allowed to go out of business for their insensitivity to the needs of Americans.
Shame on Bombardier. Shame on Canada. Shame, shame, shame.
Wait, weren't Boeing approached by Bombardier last year about the C series?
Something about a sale? Investment? Missed opportunity?
I guess Boeing's business practices must be above reproach.
What was I thinking?
Willie
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Bombardier Inc rejects Boeing’s claim of ‘predatory pricing’
Bombardier Inc rejects Boeing’s claim of ‘predatory pricing’ as rival seeks to ban CSeries from crucial U.S. market
Ross Marowitts, The Canadian Press | April 28, 2017 12:34 PM ET
More from The Canadian Press
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Bombardier and Ottawa say they will defend against complaints that the plane-maker is ‘dumping’ its CSeries jets in the U.S. market at below cost.
MONTREAL — Bombardier and the federal government have rejected Boeing’s claim in a complaint filed with the U.S. government that its Canadian rival has dumped its new CSeries commercial jet into the United States at below cost.
“Bombardier structures its commercial dealings to ensure compliance with the laws and regulations of the jurisdictions in which we operate, including those issues raised by Boeing,” the Montreal-based aircraft manufacturer said in an emailed statement.
The world’s third-largest airplane maker said it spends about US$3 billion annually with U.S. suppliers and employs about 7,000 people in dozens of facilities in both rail and aerospace across 17 states.
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The Seattle-based competitor said Thursday that it petitioned the U.S. Department of Commerce and the U.S. International Trade Commission for investigations into subsidies and pricing of the CSeries.
It is also seeking an order to be issued against the sale of the plane in the important American market.
Economic Development Minister Navdeep Bains said the government objects to the allegations and vowed to mount “a vigorous defence.”
“We are confident that our programs are consistent with Canada’s international obligations,” he said in a statement.
Bombardier shares fell as much as 5.45 per cent Friday at midday.
Boeing said it asking the Trump administration to act “to end Bombardier’s illegal and unfair business practices before it is too late to prevent significant harm to America’s aerospace industry and thousands of good-paying aerospace jobs.”
The aerospace giant said the threat against its suppliers will only grow as Bombardier increases the annual production rate of the CSeries to between 90 and 120 airplanes by 2020.
It said more than US$3 billion in government subsidies so far have allowed Bombardier to engage in “predatory pricing” for an aircraft that competes directly against its 737-700 and 737 MAX 7 airplanes.
Boeing claimed Bombardier has sold CSeries planes that cost US$33 million to produce for less than US$20 million each and at prices below what it charged in Canada.
“It’s selling the aircraft in the U.S. at prices that are millions lower than those that they’re charging in Canada, which is the very definition of dumping,” Boeing spokesman Daniel Curran said in an interview.
Boeing joins Brazil, which filed a similar complaint with the World Trade Organization at the urging of rival manufacturer Embraer.
Delta Air Lines will become the first U.S. CSeries carrier after placing a firm order a year ago for 75 CS100 aircraft valued at US$5.6 billion. It also has options for 50 more planes and can covert some of the aircraft to larger CS300s.
Air Canada followed by ordering 45 CS300s for US$3.8 billion at list prices, plus options for 30 more planes.
Airlines typically pay much less than list prices and early buyers of new planes usually get low prices.
The latest challenge against Bombardier’s largest aircraft came just days after the U.S. imposed preliminary duties of up to 24 per cent on softwood lumber imported from Canada.
Ross Marowitts, The Canadian Press | April 28, 2017 12:34 PM ET
More from The Canadian Press
.
Bombardier and Ottawa say they will defend against complaints that the plane-maker is ‘dumping’ its CSeries jets in the U.S. market at below cost.
MONTREAL — Bombardier and the federal government have rejected Boeing’s claim in a complaint filed with the U.S. government that its Canadian rival has dumped its new CSeries commercial jet into the United States at below cost.
“Bombardier structures its commercial dealings to ensure compliance with the laws and regulations of the jurisdictions in which we operate, including those issues raised by Boeing,” the Montreal-based aircraft manufacturer said in an emailed statement.
The world’s third-largest airplane maker said it spends about US$3 billion annually with U.S. suppliers and employs about 7,000 people in dozens of facilities in both rail and aerospace across 17 states.
.
The Seattle-based competitor said Thursday that it petitioned the U.S. Department of Commerce and the U.S. International Trade Commission for investigations into subsidies and pricing of the CSeries.
It is also seeking an order to be issued against the sale of the plane in the important American market.
Economic Development Minister Navdeep Bains said the government objects to the allegations and vowed to mount “a vigorous defence.”
“We are confident that our programs are consistent with Canada’s international obligations,” he said in a statement.
Bombardier shares fell as much as 5.45 per cent Friday at midday.
Boeing said it asking the Trump administration to act “to end Bombardier’s illegal and unfair business practices before it is too late to prevent significant harm to America’s aerospace industry and thousands of good-paying aerospace jobs.”
The aerospace giant said the threat against its suppliers will only grow as Bombardier increases the annual production rate of the CSeries to between 90 and 120 airplanes by 2020.
It said more than US$3 billion in government subsidies so far have allowed Bombardier to engage in “predatory pricing” for an aircraft that competes directly against its 737-700 and 737 MAX 7 airplanes.
Boeing claimed Bombardier has sold CSeries planes that cost US$33 million to produce for less than US$20 million each and at prices below what it charged in Canada.
“It’s selling the aircraft in the U.S. at prices that are millions lower than those that they’re charging in Canada, which is the very definition of dumping,” Boeing spokesman Daniel Curran said in an interview.
Boeing joins Brazil, which filed a similar complaint with the World Trade Organization at the urging of rival manufacturer Embraer.
Delta Air Lines will become the first U.S. CSeries carrier after placing a firm order a year ago for 75 CS100 aircraft valued at US$5.6 billion. It also has options for 50 more planes and can covert some of the aircraft to larger CS300s.
Air Canada followed by ordering 45 CS300s for US$3.8 billion at list prices, plus options for 30 more planes.
Airlines typically pay much less than list prices and early buyers of new planes usually get low prices.
The latest challenge against Bombardier’s largest aircraft came just days after the U.S. imposed preliminary duties of up to 24 per cent on softwood lumber imported from Canada.
Of course Bombardier should be "cut off", if by that you mean cut off from direct taxpayer loans. And if my money is going to continue to be used to prop the company up then the company should be re-structured such that it's shares (and BoD) aren't controlled and manipulated in the current way. After all, is Bombardier a real public corporation or is it still a family business, albeit wearing corporate clothes?
It's ironic how the 5 year graph of Bombardier's share prices looks exactly like an unstable non-precision approach...
It's ironic how the 5 year graph of Bombardier's share prices looks exactly like an unstable non-precision approach...
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Wait, weren't Boeing approached by Bombardier last year about the C series?
Something about a sale? Investment? Missed opportunity?
Something about a sale? Investment? Missed opportunity?
There was never confirmation that Bombardier approached Boeing. If they did, that might actually be even more damaging to Bombardier, as Bombardier might have divulged some very confidential financial info to Boeing (manufacturing costs, margins, etc.) -- enabling Boeing to make a very strong case to the US Dept. of Commerce using Bombardier's own financial data.
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re cutting off Bombardier, as long as they pay the loans back then no harm. I don't believe there is any airline out there that has not benefited from Government subsided loans etc.
Don't forget, Boeing owned Canadair for a while - and it turned out to be a huge money pit (IIRC, the total write-off was in excess of $1 Billion US, and that was 30 years ago when the dollar was worth a whole lot more).
Hummm, sounds oddly familiar to the current Bombardier experience with Canadair
I suspect if Bombardier approached Boeing after Boeing previous experience with the aircraft portion of the company, they would have been laughed out of the room...
(or perhaps chased out with pitchforks
)
Hummm, sounds oddly familiar to the current Bombardier experience with Canadair
I suspect if Bombardier approached Boeing after Boeing previous experience with the aircraft portion of the company, they would have been laughed out of the room...
(or perhaps chased out with pitchforks
)
I sincerely doubt BBD ever went to Boeing. Airbus, yes, they speak the same language, sort of.
tdracer. Getting in the room would have been amazing, unless they intended to laugh the Montrealers out after getting the financials. I also doubt Montreal would release any data. Heck, they don't release data internally.
GF
tdracer. Getting in the room would have been amazing, unless they intended to laugh the Montrealers out after getting the financials. I also doubt Montreal would release any data. Heck, they don't release data internally.
GF
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Trudeau 2.0 cancels F-35 and orders a few super hornets, Boeing thanks him by doing this? School boy is so far out of his league it's almost laughable, if it were not our money. Nice hair tho....
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I'm sure Boeing understand they have to pick their battles and this appears to be one of them they need to pick. They don't have an answer for the C series and aren't likely to have one in the near term. The NG isn't it and I think they've finally realized that as well. Their best customers (with pricey backlogs of aircraft) are falling into hard times. That could put into peril their delivery of previously ordered 777s, which must be a serious financial concern for them.
Boeing has to do what it has to do because, business is business. Let's not pretend Boeing is the only one with scruples in all this.
Willie
Although the Middle East accounted for 10% of air traffic last year—much less than North America, Asia or Europe—its carriers make up 27% of the combined widebody backlog of Airbus and Boeing. To drill down further, the region has an even larger proportion of the backlog for what are Airbus’s and Boeing’s more exposed programs: the Airbus 380 and Boeing 777-300. Nearly 50% of the A380 backlog is from Middle Eastern airlines, most notably Emirates, which has already moved to defer six of its A380 deliveries into 2018. Airbus also was unable to convert Iranian interest in the A380 into an actual order. As a result of the Emirates deferral, Airbus is likely to lose money on the A380 program this year.
The 777-300 backlog has a broader customer base, but there are still delivery slots to be filled before the program makes way for the 777X. The Middle Eastern carriers comprise 32% of the 777-300 backlog. Aside from the Turkish deferrals, we have not seen any Middle Eastern 777 push-outs, but that remains a possibility. Longer term, Middle Eastern airlines are also critical to Boeing’s plans for the 777X. This stretched version of the 777 is due to enter service in late 2019, and the Big Three make up 77% of its 235 orders.
- Aviation Week
The 777-300 backlog has a broader customer base, but there are still delivery slots to be filled before the program makes way for the 777X. The Middle Eastern carriers comprise 32% of the 777-300 backlog. Aside from the Turkish deferrals, we have not seen any Middle Eastern 777 push-outs, but that remains a possibility. Longer term, Middle Eastern airlines are also critical to Boeing’s plans for the 777X. This stretched version of the 777 is due to enter service in late 2019, and the Big Three make up 77% of its 235 orders.
- Aviation Week
Willie
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In another thread, I had written that (as far as I knew) the $1.5 Billion investment Caisse made into Bombardier Transportation was made under commercial terms and therefore is not an example of ""corporate welfare" (or subsidy).
However, as part of the latest anti-dumping complaint, Boeing alleges some interesting details about the transaction -- based on Bombardier's own financial reports. E.g., as part of the deal Caisse received warrants convertible to 100 million Bombardier Class B shares, but those warrants were actually commercially worthless because the exercise price was far above market value at the time.
And allegedly the Caisse deal included provisions to severely limit Caisse's potential profit while fully taking on the risks -- provisions a normal commercial investor would never agree to. I had previously written about this type of provision in relation to the Quebec government investment, but I didn't know the Caisse deal was structured in a similar way.
Having looked through the (redacted) formal complaint, I think overall Boeing makes a fairly strong case, and obviously to a receptive administration. Bombardier's biggest issue might be the alleged price difference between the Air Canada deal (CS300) and the Delta deal (CS100).
The CS100 and CS300 have 99% parts commonality. According to Boeing's calculations, the CSeries cost around $33 million to manufacture. Air Canada paid about $30 million per CS300 but Delta was offered the CS100 for just $19.6 million. These numbers are roughly in line with analysis I've seen in the press (Leeham News, etc.)
Hence the complaint is not just about "subsidy" but about "dumping", i.e., selling to foreign markets at "predatory" prices far lower than normal home market prices.
However, as part of the latest anti-dumping complaint, Boeing alleges some interesting details about the transaction -- based on Bombardier's own financial reports. E.g., as part of the deal Caisse received warrants convertible to 100 million Bombardier Class B shares, but those warrants were actually commercially worthless because the exercise price was far above market value at the time.
And allegedly the Caisse deal included provisions to severely limit Caisse's potential profit while fully taking on the risks -- provisions a normal commercial investor would never agree to. I had previously written about this type of provision in relation to the Quebec government investment, but I didn't know the Caisse deal was structured in a similar way.
Having looked through the (redacted) formal complaint, I think overall Boeing makes a fairly strong case, and obviously to a receptive administration. Bombardier's biggest issue might be the alleged price difference between the Air Canada deal (CS300) and the Delta deal (CS100).
The CS100 and CS300 have 99% parts commonality. According to Boeing's calculations, the CSeries cost around $33 million to manufacture. Air Canada paid about $30 million per CS300 but Delta was offered the CS100 for just $19.6 million. These numbers are roughly in line with analysis I've seen in the press (Leeham News, etc.)
Hence the complaint is not just about "subsidy" but about "dumping", i.e., selling to foreign markets at "predatory" prices far lower than normal home market prices.
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Adult behaviour
I reiterate, dude, grow up.
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Not a good article. He confuses subsidies with dumping.
Selling at a discount (or even at a big loss) is not dumping. Dumping is differential pricing between home market and foreign markets.
Did Boeing sold 787s to Air Canada at a steep discount vs. those sold to United? No. If anything United likely got a better deal.
Did Bombardier sold CSeries to Delta at a steep discount vs. those sold to Air Canada? Allegedly yes.
Selling at a discount (or even at a big loss) is not dumping. Dumping is differential pricing between home market and foreign markets.
Did Boeing sold 787s to Air Canada at a steep discount vs. those sold to United? No. If anything United likely got a better deal.
Did Bombardier sold CSeries to Delta at a steep discount vs. those sold to Air Canada? Allegedly yes.
This is funny. No corporation in the history of mankind has benefited from more corporate welfare in the form of tax breaks and over-inflated government procurement contracts than Boeing. I'd call it a case of pots and kettles but there is no other pot like the one Boeing swills from.
Kewbick, Chicago wages cheaper than Seattle? Have you been smoking something?
There were a number of reasons for moving the headquarters out Seattle - some of them less than 'honorable'. But saving on office wages wasn't one of them.
There were a number of reasons for moving the headquarters out Seattle - some of them less than 'honorable'. But saving on office wages wasn't one of them.
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Boeing never owned Canadair - that was DeHavilland, Toronto. Bombardier bought DeH from Boeing. BTW when I worked at the Lazy B back in the 70s, they were reported as receiving 12.5% of all the costs of running their Seattle area plants from the USAF just to keep the facility running in case it was needed for War Production. Any discussion of CSeries pricing should include that it has significant US content - engines, APU & Avionics are all American.
Boeing never owned Canadair - that was DeHavilland, Toronto. Bombardier bought DeH from Boeing.
BTW when I worked at the Lazy B back in the 70s, they were reported as receiving 12.5% of all the costs of running their Seattle area plants from the USAF just to keep the facility running in case it was needed for War Production.
