US Dept of Commerce slaps 220% tax on Bombardier c series
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There, fixed that for you.
The recent decision on softwood lumber imports from B.C. tells a story. This US government is anti-NAFTA and is trying to provoke a trade-war.
It's all about the lobbying, executive bonuses and campaign contributions.
The recent decision on softwood lumber imports from B.C. tells a story. This US government is anti-NAFTA and is trying to provoke a trade-war.
It's all about the lobbying, executive bonuses and campaign contributions.
The US spends $25 billion a year subsidising its farmers so that they can sell on world markets at below the cost of production.
Punitive tariffs should be placed on US agricultural products in retaliation until subsidies are removed and the products are offered for sale at a fair price based on the cost of producing them.
Everything they complain about other countries doing, they do themselves.
Punitive tariffs should be placed on US agricultural products in retaliation until subsidies are removed and the products are offered for sale at a fair price based on the cost of producing them.
Everything they complain about other countries doing, they do themselves.
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Not really. Under WTO rules, countries are allowed a certain amount of "trade distorting" subsidies for agri products. This is called the "amber box" limit.
Countries may also provide additional "minimally distorting" subsidies. These "de minimis" subsidies are not counted towards the "amber box" limit.
In the late 1990s / early 2000s, US agri subsidies did hit $25 billion per year, but "only" about $18 billion of that were considered "trade distorting" subsidies. That's well below the WTO amber box limit of around $21 billion per year at the time.
Since 2001, the US amber box WTO limit is $19.1 billion. However, currently US agri subsidies are way down, to only about $4 billion per year in amber box subsidies, far below the WTO limit.
As a comparison, in the same late 1990s/early 2000s timeframe the EU spent roughly €50 billion in amber box subsidies, more than double the US. But currently the EU provides only about €6 billion per year, so like the US also a sharp decline and well under EU's WTO limits.
Most countries in Asia, Latin America, etc (even Canada) have no right to complain. China, India, Thailand, Brazil, etc., are currently spending hundreds of billions $ of subsidies above their amber box limits.
So if anything, the EU and the US could ask the WTO to impose punitive tariffs on Asian and Latin American countries. But of course, the EU and the US routinely violate other WTO rules, so it's not in anyone's interest to start a massive trade war. (Trump excepted).
Countries may also provide additional "minimally distorting" subsidies. These "de minimis" subsidies are not counted towards the "amber box" limit.
In the late 1990s / early 2000s, US agri subsidies did hit $25 billion per year, but "only" about $18 billion of that were considered "trade distorting" subsidies. That's well below the WTO amber box limit of around $21 billion per year at the time.
Since 2001, the US amber box WTO limit is $19.1 billion. However, currently US agri subsidies are way down, to only about $4 billion per year in amber box subsidies, far below the WTO limit.
As a comparison, in the same late 1990s/early 2000s timeframe the EU spent roughly €50 billion in amber box subsidies, more than double the US. But currently the EU provides only about €6 billion per year, so like the US also a sharp decline and well under EU's WTO limits.
Most countries in Asia, Latin America, etc (even Canada) have no right to complain. China, India, Thailand, Brazil, etc., are currently spending hundreds of billions $ of subsidies above their amber box limits.
So if anything, the EU and the US could ask the WTO to impose punitive tariffs on Asian and Latin American countries. But of course, the EU and the US routinely violate other WTO rules, so it's not in anyone's interest to start a massive trade war. (Trump excepted).
Air Canada took delivery of the carrier’s first re-engined 737 with little fanfare on 1 November (below), except for a tweeted acknowledgement of the event by the Star Alliance carrier.
Understandably, it seems Air Canada is too embarrassed to publicise the import of Canada's first 737-Max (duty and dumping tax-free) other than with a very modest tweet! And, don't forget the large numbers of 787-8's, -9's and 777-300 ER's heading across the border this year and next.
Those dullards in Seattle forget that Canada buys much more value in aerospace products from the USA, than they purchase from us.
But of course, the EU and the US routinely violate other WTO rules, so it's not in anyone's interest to start a massive trade war. (Trump excepted)
Truth is, the Emperor has no clothes. The sycophants from Seattle and Chicago who hang around the royal courts of DC have sacrificed the credibility of a great company.
So sad!
Last edited by twochai; 4th Nov 2017 at 21:23.
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Your arguments are as inconsistent as those of your government
I hear Air Canada will have a media blitz when the 737 MAX actually enters into commercial service. And just last week Air Canada's CEO publicly stated that AC looks to firm up orders for 48 more 737 MAX earlier than expected -- as well as additional CSeries orders.
Although on that front, what's slightly more interesting is the LOI for 31 CSeries placed by an "unnamed European airline" a few days ago (we can all probably guess who).
The problem for Bombardier is that they can sell 30 aircraft per month, every month, for the next 10 years -- and still not get their investment back from the CSeries program.
Umm, "my" government is the same government as yours.
The problem for Bombardier is that they can sell 30 aircraft per month, every month, for the next 10 years -- and still not get their investment back from the CSeries program.
Which is precisely the fundamental problem with civil aerospace projects, the payback period is so very long. The benefit to society as a whole, however, is enormous when such projects are eventually successful.
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Well remember that Bombardier will only get 31% of any CSeries future profit, since the majority of the profits now will go to Airbus instead. It's tough to make the ROI when your business case has been cut to 1/3rd of its original value.
And even assuming the program "breaks even" in 2020, Airbus can simply buy out part or all of Bombardier's shares sometime in 2024 or 2025 depending on when the deal closes.
That means Bombardier potentially only has 4 or 5 years to recoup its investments in CSeries while only earning 31% profits during that time.
It's clear that the "sale" to Airbus was a de-risking move from Bombardier -- effectively dumping a troublesome asset for $1 -- aimed primarily to limit liability rather than to realize future profits.
And even assuming the program "breaks even" in 2020, Airbus can simply buy out part or all of Bombardier's shares sometime in 2024 or 2025 depending on when the deal closes.
That means Bombardier potentially only has 4 or 5 years to recoup its investments in CSeries while only earning 31% profits during that time.
It's clear that the "sale" to Airbus was a de-risking move from Bombardier -- effectively dumping a troublesome asset for $1 -- aimed primarily to limit liability rather than to realize future profits.
PK:
Don't forget the writedowns Bombardier has already absorbed on the C Series programme. They may well be cash positive by 2020, if they can get their running costs down quickly.
Don't forget the writedowns Bombardier has already absorbed on the C Series programme. They may well be cash positive by 2020, if they can get their running costs down quickly.
Thread Starter
I presume that published and audited accounts in Canada for Limited Companies are the same as in other mainstream countries, and need to state the revenues for each year, and identify any future risks. Although a year behind, you should be able to work out the various revenue streams fairly straightforwardly.
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No need to go that far.
Let's assume the CSeries will be sold at an average of $30 million per unit -- reportedly what Air Canada paid for the CS300 and much higher than Boeing's $19.1m number.
And we'll even be generous in assuming a 6% unit margin, which is higher than Airbus or Boeing's unit margin.
Since Bombardier will now only get 31% of any profits, that means Bombardier's profit per CSeries sold is only around $550k.
Bombardier has sunk more than $5.4 billion into the program so far, which means (simplistically) they need to sell close to 10,000 (!) aircraft just to get their investment back.
That's double the entire projected 100-150 seat market segment for the next 20 years! Even Bombardier's most optimistic assessment projects only 3,400 CSeries deliveries over 20 years. How many can they sell in the five years between 2020 and 2025 when Airbus can buy out the program?
Yes there are other revenue streams (parts, maintenance contracts, training, etc.) but there are also other costs (e.g., Bombardier is on the hook for up to $750 million in further CSeries investment over the next 3 years).
The numbers are far from adding up for Bombardier. Not to mention that they are $10B in debt largely due to the CSeries, with almost ~ $1 billion maturing in 2019.
I haven't crunched the numbers for Airbus, but I suspect the program's economics aren't so good from their perspective, either. The CSeries acquisition was more of a strategic move rather than a purely financial one.
Let's assume the CSeries will be sold at an average of $30 million per unit -- reportedly what Air Canada paid for the CS300 and much higher than Boeing's $19.1m number.
And we'll even be generous in assuming a 6% unit margin, which is higher than Airbus or Boeing's unit margin.
Since Bombardier will now only get 31% of any profits, that means Bombardier's profit per CSeries sold is only around $550k.
Bombardier has sunk more than $5.4 billion into the program so far, which means (simplistically) they need to sell close to 10,000 (!) aircraft just to get their investment back.
That's double the entire projected 100-150 seat market segment for the next 20 years! Even Bombardier's most optimistic assessment projects only 3,400 CSeries deliveries over 20 years. How many can they sell in the five years between 2020 and 2025 when Airbus can buy out the program?
Yes there are other revenue streams (parts, maintenance contracts, training, etc.) but there are also other costs (e.g., Bombardier is on the hook for up to $750 million in further CSeries investment over the next 3 years).
The numbers are far from adding up for Bombardier. Not to mention that they are $10B in debt largely due to the CSeries, with almost ~ $1 billion maturing in 2019.
I haven't crunched the numbers for Airbus, but I suspect the program's economics aren't so good from their perspective, either. The CSeries acquisition was more of a strategic move rather than a purely financial one.
It seems that Airbus aren't taking on any of the debt. Which is very nice for Airbus. What Airbus brings to the program is more "certainty"; that should result in lower parts prices, an even more solid sales effort, package deals with other Airbus aircraft, you name it.
And most importantly, Airbus brings manufacturing capacity (in the US too, which now might turn out to be useful). There's no point selling thousands of C Series and securing cheaper parts deals if they cannot be assembled.
Airbus themselves have effectively said that their intent is to go big with the C Series around the world. The opening of an assembly line in Mobile was decided before the imposition of the trade tarif; they simply want to make lots more C Series than Bombardier could manage all by themselves. If that all works, the C Series pie will be a lot bigger than originally planned and Bombardier's slice of it should be good for them.
And most importantly, Airbus brings manufacturing capacity (in the US too, which now might turn out to be useful). There's no point selling thousands of C Series and securing cheaper parts deals if they cannot be assembled.
Airbus themselves have effectively said that their intent is to go big with the C Series around the world. The opening of an assembly line in Mobile was decided before the imposition of the trade tarif; they simply want to make lots more C Series than Bombardier could manage all by themselves. If that all works, the C Series pie will be a lot bigger than originally planned and Bombardier's slice of it should be good for them.
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And most importantly, Airbus brings manufacturing capacity (in the US too, which now might turn out to be useful).
So why did they embark on such a programm? Totally underestimated the cost and then threw more good money after bad?
With today's relatively low oil prices, it's hard to justify spending $10m premium for each CSeries compared to its less fuel-eficient alternatives, unless an airline can get steep price concessions from Bombardier/Airbus, receive government subsidies, or can operate in niche markets.
Jet Jockey, there's a process. I don't know if I am surprised at the outcome or not, but I do recall being puzzled at why Boeing tried to shoot a silver bullet on that one. If you look at the defense sector, Boeing has been in a variety of bad odor for (for example) a tanker project that keeps slipping .... I guess they figured "can't hurt to try." *scratches head*
But here on PPRuNe, particularly on R&N, we get a lot of hand wringing and rubbish.
But here on PPRuNe, particularly on R&N, we get a lot of hand wringing and rubbish.