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US Dept of Commerce slaps 220% tax on Bombardier c series

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US Dept of Commerce slaps 220% tax on Bombardier c series

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Old 2nd Oct 2017, 01:18
  #121 (permalink)  
 
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China is reportedly in talks to buy into Bombardier - Business Insider

This was a couple months ago but look for a new push into China with the U.S. tariffs.
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Old 2nd Oct 2017, 19:59
  #122 (permalink)  
 
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Just follow the Lazy B business model. (and Mercedes Benz, Toyota, et al)

Get a Southern State to give you $Billions in tax breaks and build a new facility for you.
Have the parts built worldwide and shipped there.

Do final assembly and call it "Made in America". I am sure that 90% is not manufacturered in Canada anyways.

Problem solved.
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Old 2nd Oct 2017, 20:23
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Good idea, it worked for Airbus !
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Old 3rd Oct 2017, 00:47
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Do final assembly and call it "Made in America". I am sure that 90% is not manufactured in Canada anyways.
What is much more important than the detail manufacturing and assembly jobs is who owns the Intellectual Property! IP has more value than assembly, today. Just look at Apple!
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Old 3rd Oct 2017, 09:13
  #125 (permalink)  
 
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The C-series involves fuselage components built in China, wings build in the EU (Northern Ireland) and electronics built in the US. And that's just off the top of my head
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Old 3rd Oct 2017, 20:31
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Don't forget the engines too... Built in the USA.
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Old 4th Oct 2017, 08:05
  #127 (permalink)  
 
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Talk about shooting yourself in the foot.

So the finacial aid provided by Quebec is protecting US jobs (as well as in China, EU and, of course, Quebec)
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Old 4th Oct 2017, 08:34
  #128 (permalink)  

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But if the electronics and engines are built in the USA, aren't they also shooting themselves in the foot?
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Old 5th Oct 2017, 00:31
  #129 (permalink)  
 
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Some clarifications regarding the suppliers from China and US, also about the Quebec's billion.
A company SACC in Shenyang has been a long-time supplier of fuselage components for Bombardier’s Q400 turboprops, but it was unproven in the type of composite parts the CSeries use. Bombardier has repatriated the mid-fuselage work for the CSeries from SACC to its plant in Belfast. However, Bombardier could expand its activities at China's Shenyang Company, but I guess it could be related to possible deals to be announced during a visit of the Prime Minister Justin Trudeau to China.
https://ca.reuters.com/article/busin...CN1C117U-OCABS
The current reality: C Series is made up of 55% components from US suppliers. This is why imposing tariffs on the C Series will negatively impact over 22,000 high-skill jobs in the USA. Over half of the C Series is produced in the US...
https://www.airinsight.com/us-manufacturing-impact/
Actually, Quebec’s Bombardier bailout isn’t as crazy as it sounds. The Canadian province receives a 49.5% stake in a limited partnership formed with Bombardier for the CSeries program, and a 20-year commitment to keep Bombardier's operations in Quebec. The deal also includes the transfer to the new limited partnership of thousands of employees, vendor contracts, and clients along with the assets and intellectual property of the design, manufacturing, and marketing of the CS100 and CS300 planes.

Last edited by _Phoenix; 5th Oct 2017 at 00:55.
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Old 6th Oct 2017, 21:40
  #130 (permalink)  
 
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make that 300%

WASHINGTON (Reuters) - The U.S. Commerce Department on Friday notched up proposed trade duties on Bombardier Inc CSeries jets to nearly 300 percent, affirming Boeing Co’s complaint that the Canadian company received illegal subsidies and dumped the planes at “absurdly low” prices.

The decision underscored the defensive trade policy of U.S. President Donald Trump, and could effectively halt sales of Bombardier’s innovative new plane to U.S. airlines by quadrupling the cost of the jets imported to the United States.

The Commerce Department proposed a 79.82 percent antidumping duty on Friday, on top of a 219.63 percent duty for subsidies announced last week.
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Old 6th Oct 2017, 23:37
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It was suggested elsewhere that a Canadian based leasing company could assume the aircraft slots currently assigned to Delta and then lease them to Delta. Not much the Commerce Department could do about that.
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Old 7th Oct 2017, 00:50
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Currently Delta leases 191 aircraft. Should not be a problem to lease them as you noted.

Last edited by underfire; 7th Oct 2017 at 01:02.
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Old 7th Oct 2017, 09:43
  #133 (permalink)  
 
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I see that the tariff is now proposed to increase to about 300%. This is based on Delta receiving a reported 75% discount on the list price. I understand from insiders that the average agreed discount is around 50%, (Don't ask me why manufacturers quote such high list prices.) Furthermore, as in many industries there are discounts for early purchases. Apart from trying to establish a line this reflects the fact the early operators will incur higher debugging costs as it takes a while for a product to mature. 50% is a high discount for this but not unprecedented.

There is another way of looking at it. Environmentalists claim that aviation is under taxed (although if you look at it as a proportion of low cost ticket on a budget airline you would may well argue otherwise). It is certainly true that some subsidies have been gained via the military procurement/research route). Is proposing tariffs a good way of taxing aviation for Government's requiring revenue, particularly as the idea comes from within the industry itself?

A lot of airfares are sold at marginal cost, that is a very low rate. (This is particularly true where there are low fixed charges such as taxes and airport passenger charges.) Could you argue that offering low fares is dumping? Well an economist who understands marginal costing would disagree and it they are popular with passengers, but it is exactly the same argument. Think of fares prior to deregulation - and bucket shops, dubious affinity charters and the like.

The problem, particularly in America but unfortunately spreading globally, is that the game isn't just producing a better product more efficiently but using other means such as legal action to secure an advantage often against agile competitors. Trump, before he became President, was the classic example of this. I really hope that everything blows over and that tariffs are imposed because the loser will be aviation industry.
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Old 7th Oct 2017, 11:04
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BBC reports an additional 80% today.

Further tariff of 80% imposed on import of C-Series plane - BBC News
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Old 7th Oct 2017, 11:16
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Read post #130
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Old 7th Oct 2017, 11:24
  #136 (permalink)  
 
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Originally Posted by ExXB
Talk about shooting yourself in the foot.

So the finacial aid provided by Quebec is protecting US jobs (as well as in China, EU and, of course, Quebec)
This is a major reason why Canadian federal and provincial government assistance to Bombardier has been highly controversial in Canada. Like the B787, the C-Series is a global product. I think Boeing's strategy really is to force Bombardier to sell out to Boeing, which in the past has owned a major chunk of what is now in Bombardier. Boeing's chances of succeeding are very good, given the current NAFTA situation, especially if it allows the Liberals in Canada to drop a hot potato while facing a resurgent Conservative Party. Obviously all tariffs will vanish once Boeing succeeds. The C-Series and its future developments will fill out the bottom of the narrow-body market, while the 797 fills out the "mid-market". Say bye-bye to the 737 and its limitations.
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Old 7th Oct 2017, 12:02
  #137 (permalink)  
 
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Boeing have never "under sold" a single 737 to any carrier. Never ever ever.

Bearing in mind the actual list price is about 130% of the what the company actually wants to sell it for.
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Old 7th Oct 2017, 13:40
  #138 (permalink)  
 
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I am sure that 90% is not manufacturered in Canada anyways.
Probably true, however the most important parts of the aerospace production chain are the high value Intellectual Property components, like: business strategy, design, engineering, final assembly and marketing, all reside in Canada.

Unlike the Canadian automotive industry where it's largely 'build-to-print' with minimal local IP content.
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Old 7th Oct 2017, 22:00
  #139 (permalink)  
 
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Surely this is mostly a shot across the bow aimed at China.
Canada is a convenient 'whipping boy' target, there are plenty of US/Canada back channels to ensure that the right message is received there.
What matters is that other countries now have to factor in possibly insane tariffs when considering commercial aviation ventures.
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Old 7th Oct 2017, 22:09
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Originally Posted by Peter47

A lot of airfares are sold at marginal cost, that is a very low rate. (This is particularly true where there are low fixed charges such as taxes and airport passenger charges.) Could you argue that offering low fares is dumping? Well an economist who understands marginal costing would disagree and it they are popular with passengers, but it is exactly the same argument. Think of fares prior to deregulation - and bucket shops, dubious affinity charters and the like.
I don't think that a low airfare which is transient revenue can be compared to the capital cost of an aircraft which remains as an asset to the purchaser for probably a decade and will then be resold.
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