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Argh, Bombardier make me angry! They're probably the main contender for showing how Canada still fails to understand the benefit of free market economics. The m

Argh, Bombardier make me angry! They're probably the main contender for showing how Canada still fails to understand the benefit of free market economics. The main problem here is all this stuff is essentially funded by things pulled out of the ground on the other side of the country, but rather than allowing the market to function you have a class of bureaucrats scratching each others backs in order to pass subsidies off to whoever bought them the best lunch last week or gave them a season ticket to the Canadiens. That isn't to say there isn't a market for this kind of thing, but if there was really a market Bombardier could have done it properly, even via the stock market. Too much Canadian business is built around exploiting whatever the government is chucking around that week rather than being sustainable.

terryjsmith 13y ago
Well Porter as an airline is likely making a big bet on this for their downtown airport in Toronto so there is definitely a use-case there. I'm not sure if this is a contingency plan on their campaign to get the runway extended and noise by-laws lifted, but it sure seems like they're hedging their bets on this. * Written from the downtown Toronto airport lounge.
- fidotron 13y ago
  Yes, as they rightly observe the plane does have uses, but if it really had enough, with potential customers to prove it, then they would have been able to get the development cash on the open market. Gambling with other people's money is a lot easier than doing it with your own.
  - afreak 13y ago
    Speaking as a Canadian, I personally would rather funnel money into projects that keep Canadians employed. There is a rather difficult problem with competing against other larger nations in the west (especially our friendly neighbour) who too have large tax subsidies and grants. Canada exports most of its oil refinery to the United States so it can double dip on taxes. It as a result employs Americans in the refineries. Should we stop subsidizing American jobs then?
    - fidotron 13y ago
      The point is the government doesn't know where to best spend the money. Quite why it has so much to spend is the other question, especially in Quebec where there are other rather pressing needs. I don't think many Canadians realise just how many non-Canadian workers they are subsidising as a result of all of this. There is the official logic of training locals in skills that get imported alongside government incentives, however, what seems to happen is you get a mobile group of people that just follow the incentives around from province to province. One thing Bombardier do have in their favour is they are a local entity and the taxes on any profits do return to the system, so I can't fault them on that.
      - afreak 13y ago
        Most Canadians are aware of how Bombardier gets a large amounts of subsidiaries. Subsidisation is a large part of the Canadian economy so if you were to ask any alert person here if Bombardier was getting subsidised, it would range from "probably" to "yes". I am not sure why you're angry unless you're Canadian yourself then I guess you're justified.
        fidotron 13y ago
        Subsidisation is a large part of the Canadian economy, primarily in provinces where the economy is a disaster area. They're not disaster areas that will be fixed by subsidisation; they're maintained and made worse by market distortions of this kind. I'm angry because Canada would be far better off as a whole without this, and the parasitic bureaucracy that sucks the life out of the non-subsidised parts of the system.
      - teamonkey 13y ago
        > I don't think many Canadians realise just how many non-Canadian workers they are subsidising as a result of all of this. The non-Canadian workers are still paying Canadian taxes - Quebec taxes, even. Quebec's government wants its population to grow fast, especially so when they're high-earners. The investment absolutely makes sense from that respect.
  - mbetter 13y ago
    There is no open market for developing airplanes. You might as well say that they should get their development capital from Rumpelstiltskin.
sokoloff 13y ago
Do you think that Airbus gets no subsidy? Boeing? Embraer? The aircraft market is global, and I can't fault Canada for supporting Bombardier in a manner similar to how their competition is subsidized.
- fidotron 13y ago
  Whether other countries choose to subsidise development in a particular industry is irrelevant, and if they choose to essentially export their money then that's up to them. It's not like there aren't plenty of other things these people could be doing. If you reach the level of China style product dumping then you have a trade war situation and things are different, but that's not (quite) what is going on here, though if Boeing or Airbus gained a monopoly it would sure look like that. What is really happening is risks are socialised, profits (if any) are privatised.
  - dotcoma 13y ago
    What do you mean when you "if Boeing or Airbus gained a monopoly"? A duopoly isn't bad enough?
  - Volpe 13y ago
    > What is really happening is risks are socialised, profits (if any) are privatised. Well not quite, given companies pay tax too. Not only that, but large industries like Aerospace spend money on other stuff. I agree it's clumsy, but it isn't as simple as you put it. Seems to me with the level of subsidy Boeing/Airbus/Bombardier receive, why aren't they just nationalised.
    - Mikeb85 13y ago
      To add to this, aerospace companies contribute plenty to the economy, in jobs, scientific research - much more than most other corporations that are of a similar size. And speaking as a Canadian, it's nice that we still do have Bombardier, otherwise those jobs would simply go down south (probably the actual talent too). Canada needs to invest in industries other than resources... And of course Bombardier IS profitable (forward P/E of 9.71 on the stock).
pbreit 13y ago
Without subsidies, there would be no Bombardier. Is that what you would prefer? I'm not sure how it's irrelevant that competitors are receiving subsidies. If it's easier to build with other people's money, isn't that a prudent course?
Amygaz 13y ago
"understand the benefit of free market economics" I think this a case where free market economics would not have produced the sort of improvements and innovations that we see with this new model. You need a lot of stability do pull this of over a long period of time. Stock market doesn't allow that.
gaadd33 13y ago
Are there any airplane manufacturers that don't benefit from some form of government subsidies?

terryjsmith 13y ago

Well Porter as an airline is likely making a big bet on this for their downtown airport in Toronto so there is definitely a use-case there. I'm not sure if this is a contingency plan on their campaign to get the runway extended and noise by-laws lifted, but it sure seems like they're hedging their bets on this. * Written from the downtown Toronto airport lounge.

fidotron 13y ago
Yes, as they rightly observe the plane does have uses, but if it really had enough, with potential customers to prove it, then they would have been able to get the development cash on the open market. Gambling with other people's money is a lot easier than doing it with your own.
- afreak 13y ago
  Speaking as a Canadian, I personally would rather funnel money into projects that keep Canadians employed. There is a rather difficult problem with competing against other larger nations in the west (especially our friendly neighbour) who too have large tax subsidies and grants. Canada exports most of its oil refinery to the United States so it can double dip on taxes. It as a result employs Americans in the refineries. Should we stop subsidizing American jobs then?
  - fidotron 13y ago
    The point is the government doesn't know where to best spend the money. Quite why it has so much to spend is the other question, especially in Quebec where there are other rather pressing needs. I don't think many Canadians realise just how many non-Canadian workers they are subsidising as a result of all of this. There is the official logic of training locals in skills that get imported alongside government incentives, however, what seems to happen is you get a mobile group of people that just follow the incentives around from province to province. One thing Bombardier do have in their favour is they are a local entity and the taxes on any profits do return to the system, so I can't fault them on that.
    - afreak 13y ago
      Most Canadians are aware of how Bombardier gets a large amounts of subsidiaries. Subsidisation is a large part of the Canadian economy so if you were to ask any alert person here if Bombardier was getting subsidised, it would range from "probably" to "yes". I am not sure why you're angry unless you're Canadian yourself then I guess you're justified.
      - fidotron 13y ago
        Subsidisation is a large part of the Canadian economy, primarily in provinces where the economy is a disaster area. They're not disaster areas that will be fixed by subsidisation; they're maintained and made worse by market distortions of this kind. I'm angry because Canada would be far better off as a whole without this, and the parasitic bureaucracy that sucks the life out of the non-subsidised parts of the system.
    - teamonkey 13y ago
      > I don't think many Canadians realise just how many non-Canadian workers they are subsidising as a result of all of this. The non-Canadian workers are still paying Canadian taxes - Quebec taxes, even. Quebec's government wants its population to grow fast, especially so when they're high-earners. The investment absolutely makes sense from that respect.
- mbetter 13y ago
  There is no open market for developing airplanes. You might as well say that they should get their development capital from Rumpelstiltskin.

sokoloff 13y ago

Do you think that Airbus gets no subsidy? Boeing? Embraer? The aircraft market is global, and I can't fault Canada for supporting Bombardier in a manner similar to how their competition is subsidized.

fidotron 13y ago
Whether other countries choose to subsidise development in a particular industry is irrelevant, and if they choose to essentially export their money then that's up to them. It's not like there aren't plenty of other things these people could be doing. If you reach the level of China style product dumping then you have a trade war situation and things are different, but that's not (quite) what is going on here, though if Boeing or Airbus gained a monopoly it would sure look like that. What is really happening is risks are socialised, profits (if any) are privatised.
- dotcoma 13y ago
  What do you mean when you "if Boeing or Airbus gained a monopoly"? A duopoly isn't bad enough?
- Volpe 13y ago
  > What is really happening is risks are socialised, profits (if any) are privatised. Well not quite, given companies pay tax too. Not only that, but large industries like Aerospace spend money on other stuff. I agree it's clumsy, but it isn't as simple as you put it. Seems to me with the level of subsidy Boeing/Airbus/Bombardier receive, why aren't they just nationalised.
  - Mikeb85 13y ago
    To add to this, aerospace companies contribute plenty to the economy, in jobs, scientific research - much more than most other corporations that are of a similar size. And speaking as a Canadian, it's nice that we still do have Bombardier, otherwise those jobs would simply go down south (probably the actual talent too). Canada needs to invest in industries other than resources... And of course Bombardier IS profitable (forward P/E of 9.71 on the stock).

pbreit 13y ago

Without subsidies, there would be no Bombardier. Is that what you would prefer? I'm not sure how it's irrelevant that competitors are receiving subsidies. If it's easier to build with other people's money, isn't that a prudent course?

Amygaz 13y ago

"understand the benefit of free market economics" I think this a case where free market economics would not have produced the sort of improvements and innovations that we see with this new model. You need a lot of stability do pull this of over a long period of time. Stock market doesn't allow that.

gaadd33 13y ago

Are there any airplane manufacturers that don't benefit from some form of government subsidies?