Justin Trudeau won’t be sworn in as prime minister until Wednesday morning, but already he’s besieged by interest groups demanding that he fix every problem under the sun – right now. He’s going to have to learn quickly how to say no.
Trudeau and his new industry minister – whoever he or she turns out to be – can make a good start by not handing a billion dollars to Bombardier Inc. to rescue the failing aerospace company.
The Quebec government has already made clear it will be on the phone to Ottawa as soon as the new government is sworn in, seeking cash for Bombardier. Late last week the province pledged $1 billion (U.S.) to keep the company’s troubled C Series passenger jet program alive. Now it wants Ottawa to match the money.
Trudeau should keep his hand on his wallet and make sure federal taxpayers don’t sink another huge pile of cash into a company that is lurching from one self-inflicted crisis to another. Last week it reported a staggering loss for the third quarter of 2015 amounting to $4.9 billion, more than the whole company is worth. Its stock is down 66 per cent so far this year.
Bombardier’s problems are just getting worse. Here in Toronto we know it as the company that can’t even deliver streetcars on time. It promised to have 73 of the fancy new models on the rails by the end of the year. Now it says it can deliver only 16, and the City of Toronto is suing for $50 million to recoup its extra costs.
But that’s peanuts compared to the floundering C Series project. The planes are three years late and orders are painfully slow. Even Bombardier’s CEO, Alain Bellemare, says the company was “overwhelmed” by all the projects it took on – hardly a confidence-inspiring admission.
Bombardier has become a byword for corporate welfare, having been on the take from Ottawa since 1966. In Quebec it’s also a symbol of French-Canadian economic power and the provincial government can’t be seen to let it fail. But even there, critics are scratching their heads over how the province is handling this latest crisis – putting its money into the shaky C Series project rather than in the company as a whole.
Part of the reason is that the Bombardier-Beaudoin family that controls the company wants to keep it that way, and resists any attempt to loosen its grip on Bombardier even as it accepts more government money. The Quebec government may accept that arrangement, but federal taxpayers shouldn’t.
Others argue Ottawa should bail out Bombardier just as it came to the rescue of the auto industry in 2008-09. The difference is that the auto companies needed government help because they were threatened by a world-wide financial meltdown. Bombardier’s crisis is of its own making, following strategic miscalculations by successive management regimes.
The new Trudeau cabinet will face a lot of political pressure from the prime minister’s home province to throw yet more money at Bombardier, as governments have done for half a century. That would be a bad start. If it really wants to be seen as bringing in #RealChange, it should say no.