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Bombardier: Tariff Row or Marketing Opportunity?

by John Brian Shannon

An increasingly protectionist United States has suddenly announced a 219% tariff on Bombardier passenger aircraft.

Bombardier Aerospace, headquartered in Montreal, Canada, also employs some 4000 people in Northern Ireland who produce a significant percentage of the components used in the C-Series passenger jets (CS 100 and CS 300) that have recently entered production.

Switzerland has already taken delivery of some of their C-Series jets, with others to be delivered in the coming months. Airlines from Germany, Finland and other European nations have indicated huge interest in these modern and fuel-efficient airliners, and China has told the company they will take as many planes as Bombardier can produce.

Bombardier C100 passenger aircraft

Bombardier CS100 passenger aircraft. Image courtesy of BombardierAerospace.

There isn’t a better commercial aircraft in the 100-150 seat market in the world today.

And if that sounds like advertising copy, it’s because the aircraft the C-Series competes against were originally designed in the 1970’s (Boeing 737) and 1990’s (Airbus) and early 2000’s (Embraer) and although those aircraft lines have received numerous upgrades over the decades, from an engineering point-of-view nothing beats starting with a clean sheet.

This allows designers a free hand to use the latest composite materials, fully digital electronics instead of digital-over-analog, and 100% CAD/CAM design and manufacturing instead of only part of the process being CAD/CAM (Computer Aided Design/Computer Aided Manufacturing) all of which means there are no engineering compromises.

When you have the best plane on the market in that particular segment, one that boasts the quietest takeoffs and landings (significantly quieter) and the best fuel mileage, and the lowest maintenance cost per mile — high tariffs in one country means you simply sell the same number of aircraft per year — but you sell them to different countries.


China can’t get enough commuter aircraft from all sources it seems, and its own fledgling passenger aircraft manufacturer is geared towards truly excellent jumbo jet airliners. The country needs almost 7000 new aircraft over the next 20-years.

Boeing Forecasts Demand in China for 6,810 Airplanes, Valued at $1 Trillion (Boeing)

Good news for Bombardier! China becomes the world's first $1 Trillion aircraft market.

All good news for Bombardier there! The company should easily score 1/3 of all single aisle passenger jet sales in China over the next 20-years. And if they can’t, the entire executive staff of Bombardier should be exiled to Antarctica for life. Yes folks, opportunities like this don’t come along once-per-decade, nor even once-per-century.

Just in case you’re counting along at home; If the company receives 1/3 of all single passenger jet sales in China over the next 20-years, it would need to deliver 6-jets per day to China.

(That’s China alone! India, the Middle East, Indonesia, and other nations all have rapidly growing markets for world-class single aisle passenger jets featuring low noise and exceptional fuel efficiency)

The future couldn’t be brighter for Bombardier and its clients. A missed deal with the United States might in retrospect turn out to be the best thing that ever happened to the company. Instead of thinking ‘regional’ — it’s now time to think ‘global’ — thanks to the U.S. Commerce Department.

Trade war, schmwade war! In the 21st-century, the name of the game isn’t getting into fights with your competitors, it’s about out-succeeding them.

Remember your pilot’s etiquette now; Always dip your wings ever-so-slightly (in respectful salute) every time you pass your competition! 😉


Related Articles:

  • U.S. Department of Commerce Issues Affirmative Preliminary Countervailing Duty Determination on Imports of 100- to 150-Seat Large Civil Aircraft From Canada (Commerce.Gov)
  • Britain’s Theresa May issues warning to Boeing over Bombardier trade dispute (The Globe and Mail)
  • UK government threatens retaliation against Boeing in Bombardier tariff row (The Guardian)
  • Boeing Super Hornet jet purchase likely to become 1st casualty in possible trade war (CBC)
  • Bombardier flying high after handing over first C-Series jet to SWISS (Financial Post)
  • On the book of Bombardier vs. Boeing, skip to Chapter 19 (The Globe and Mail)
  • May Says Boeing Undermining Ties With U.K. Over Bombardier (Bloomberg)
  • Bombardier Nears $1.25 Billion C Series Deal With Air Baltic (Bloomberg)
  • Bombardier C-Series Marketing Brochure (BombardierAerospace)
  • U.S. imposing 220% duty on Bombardier C-Series planes (CBC)
  • How Canada’s fight with Boeing began in Washington (CTV)
  • Bombardier BDRBF:US OTC (Bloomberg)

 

Northern Ireland and the ‘Soft Border’ Option

by John Brian Shannon

Thanks to the dedication of thousands of people, the problems that plagued Northern Ireland for decades have all but disappeared. While we mourn those lost during ‘The Troubles’ we must move forward and provide the best possible future for the people of Northern Ireland and the Republic of Ireland.

The best way to continue to move forward is for a ‘soft’ border between Northern Ireland and the Republic of Ireland so that the free movement of people and unimpeded trade may continue along the 310 mile border.

Many people on both sides of the border meet for tea, travel across the border to shop, or are employed on the other side of the border and it would be unfair to require these people to face a regular border crossing twice daily. And a hard border would definitely hinder trade, which trade is a vital part of the local economy along both sides of the divide.


A dedicated ‘Commonwealth and Ireland’ line at UK ports of entry

The smartest thing the Home Office UK Visas and Immigration department could do is to create a separate queue line at all UK ports of entry and mark it “Commonwealth and Ireland” so that people from Commonwealth countries or from the Republic of Ireland have a dedicated and streamlined entry into Britain.

In this way, goods and people can move much more efficiently between those jurisdictions.

If it sounds like I want to favour people from Commonwealth nations, you’re right. If it sounds like I want to favour people from Northern Ireland who may decide to fly to Britain, you’d be right. And if it sounds like I want Republic of Ireland citizens to easily travel to any part of the UK, you’d be right in that assumption.


Special Treatment at UK ports of entry: A ‘Nexus Card’ for frequent travelers between Ireland and any UK port of entry

Here in North America, citizens who cross the U.S. / Canada border can apply for a Nexus Card or an Enhanced Driver’s Licence — either of which dramatically speed border crossing times for holders of those cards — and not incidentally, also lowers wait times for the people in the non-Nexus lineups because fewer people (or vehicles) are traveling in that particular queue — it’s a bonus for frequent travelers in North America.

Such a streamlined customs experience should be extended to all Irish citizens as a courtesy — and for the Republic of Ireland in exchange for their help in patrolling and securing the soft border with Northern Ireland.


The UK Government (UK.gov) Paper on Northern Ireland and Ireland

Stormont is the seat of the Northern Ireland Assembly and is located in Belfast, Northern Ireland.
Stormont is the seat of the Northern Ireland Assembly and is located in Belfast, Northern Ireland. Image courtesy of visitbelfast.com

“The UK government pledges to protect the Belfast Agreement and Common Travel Area in new position paper published August 16, 2017.

The Government has today published a comprehensive paper which outlines the UK’s position on addressing the unique circumstances of Northern Ireland and the land border with Ireland.

The position paper — which has been published ahead of the August negotiating round — states that the Government will protect the Common Travel Area (CTA) and associated rights for UK and Irish citizens, and put upholding the Belfast (‘Good Friday’) Agreement at the heart of its Exit negotiations.

The paper also puts forward proposals on avoiding a hard border on the movement of goods — making clear the UK’s position that there should be no physical infrastructure at the border — and plans to preserve the wide range of institutional cooperation between Northern Ireland, Ireland and Great Britain including for the energy market.” — From the UK.gov website


Trade Between the UK and the Republic of Ireland

Billions of pounds sterling in trade crosses between the UK and the Republic of Ireland and a significant amount of it is spent in the small and medium-sized business (SME) trade. Keeping the border open, yet enhancing security will be a challenge for both the UK and the Republic of Ireland, but with good will and some visionary thinking it shouldn’t be too difficult to get an agreement that benefits the largest number of people.

Brexit - Ireland and UK trade
Brexit – Ireland and UK trade in numbers. Image courtesy of cso.ie

A Soft Border between Northern Ireland and the Republic of Ireland is in everyone’s interest

For as long as the Republic of Ireland remains a member of the European Union it’s in everyone’s best interests to keep the soft border arrangement and to work together to enhance security on both sides of that soft border by any reasonable means.

If that means having facial recognition technology and vehicle license plate readers at all government buildings and properties, ferry terminals and international airports in Northern Ireland and Britain, it’s a small price to pay to preserve and enhance security for the EU, for the Republic of Ireland, and the UK including Northern Ireland.

The soft border between Northern Ireland and the Republic of Ireland must work for citizens of each country, for small (and large) business, and it must ensure a high level of security for both the EU and the UK. This is one Brexit negotiation that must succeed for the benefit of all.

This Week in Brexit: What Scotland Lost

by John Brian Shannon

Congratulations to Prime Minister Theresa May for working out a ‘confidence and supply’ agreement with Northern Ireland’s Democratic Unionist Party (DUP) to allow the present minority Tory government to continue in office.

Theresa May strikes ‘confidence and supply’ deal with DUP

And congratulations to DUP leader Arlene Foster for negotiating so well on behalf of her jurisdiction, thereby gaining £1.5 billion in additional infrastructure and other funding.

That’s a ‘Win-Win’ for the Tories and for the Democratic Unionist Party — and more importantly (sorry, Theresa and Arlene!) it’s a ‘Win-Win’ for residents of Northern Ireland.

Theresa May signs ‘£1.5 billion’ deal with the DUP

Infrastructure in Northern Ireland is in bad shape and the funding appears at an opportune moment, as there comes a point when it becomes cheaper to tear down a bridge (for example) than to pay ever-increasing maintenance costs.

The same is true for all infrastructure. Whether roads, bridges, hospitals, schools, airports, or the underground infrastructure that carries water to homes and businesses, all of it has a ‘best before’ date where leaving vital infrastructure spending for too long can cost more than the savings of not doing the work.

The Conservative/DUP deal: what it says and what it means

Of course, £1.5 billion isn’t going to fix it all. But I wouldn’t be surprised if two years of successful DUP ‘confidence and supply’ support gets the residents of Northern Ireland additional infrastructure spending allocations, courtesy of DUP leader Arlene Foster and Prime Minister Theresa May.

And why not? Arlene Foster prevented a divisive and perhaps extended Parliamentary crisis — one that would’ve prevented much good from being done in the United Kingdom.

Speaking of which; See how infrastructure spending is increasing in Northern Ireland, and how it isn’t in Scotland? Not only additional spending, but PM May and DUP leader Foster also negotiated more devolved powers for Northern Ireland.

NOTE to Nicola: It’s great to have a particular ideology, but when it costs your jurisdiction £1.5 billion in the form of missed infrastructure funding, it’s time to review what you think you’re accomplishing!

Loss of opportunity is also a metric by which UK leaders must be measured — it certainly is for heads of government everywhere else — and not as much as it should be, but it’s still an important marker of successful leadership.

Nicola Sturgeon of Scotland’s SNP missed the boat. Arlene Foster of Northern Ireland’s DUP didn’t. And UK Prime Minister Theresa May begins to look like a bit of a deal-maker, which can only be viewed as a good thing as we head into Brexit. Well done, Theresa!


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