• $900 Million of Public Money to Aerospace and Military Monopolies
For Your Information
• Excerpts from Mass Media Articles
• Halifax Chronicle Herald Reaction
• Backgrounder from Industry Canada
Strategic Aerospace Defence Initiative: $900 Million of Public Money to Aerospace and Military Monopolies
TML Daily, April 16, 2007 – No. 57
THE federal Conservative Party in power has announced $900 million in new grants and interest free loans to private monopolies in the aerospace and military industries. The program is called the “Strategic Aerospace and Defence Initiative.”
The main beneficiaries of this public money are Canada-based Bombardier Inc., Heroux-Devtek, CAE Inc. and the U.S. military giant United Technologies Corporation and its subsidiary Pratt and Whitney. All these monopolies are deeply involved in designing and producing military equipment and in the training of U.S. and other military personnel especially combat pilots.
Approximately sixty per cent of the Canadian operations of these global monopolies is located in the Montreal region.
TML Daily identifies several issues regarding this announcement and practice of paying the rich, which Canadians should discuss and elaborate within their collectives and with their colleagues, friends and family. These issues are rooted in the following:
• the contradiction between the socialized character of the modern economy and its division into privately-owned competing parts;
• the specific contradiction of the aerospace and other heavy industrial sectors of the economy between the demand of owners of capital for immediate return on their investments and the lengthy time before added-value is realized;
• and the ongoing wars of conquest, occupation and inter-imperialist conflict that are part of the U.S. Empire-building project into which Canada has been annexed.
Issue 1: Public funds are being used to enlarge the private holdings and overall wealth of certain Canadian and foreign investors. No matter what the stated purpose of the public funds and what great things may come out of their private use according to the government announcement, $900 million of public money are being funnelled not into public projects that may benefit all Canadians and in which the public retains full ownership but into certain private projects and holdings, which become part of the ownership rights and power of certain individuals and their private holdings. Paying the rich is a neo-liberal trickledown theory and practice, which asserts that the people gain benefits from creating conditions for certain individuals and companies to become richer and more powerful. Opponents of neo-liberalism contend that public money should be spent to strengthen the public sector and in so doing provide added-value, jobs or social benefits that serve the public good and restrict monopoly right. In this way all public expenditures in the socialized economy aside from transfers to individuals through social programs would be accounted for and stay within the public sector. It should be considered a serious crime to siphon off public money to enrich individuals or companies and enhance their monopoly right and power. The full benefit from public spending should flow to the population in general without prejudice and privilege of social position playing a role. Also, the entire principal including whatever portion is transformed into fixed assets must remain in toto as public property. The corrupting practice of handing public money in the form of interest-free forgivable loans and grants to certain private companies must stop. It has become ludicrous and incoherent that governments instead of claiming added-value directly from centres of production and distribution to meet the needs of society are doing the reverse by paying the rich. Governments are paying tax money collected from individuals to certain privileged monopolies.
Issue 2: With this latest payment of public money to certain rich individuals and monopolies mainly in the Montreal region, the federal Conservative party in power is attempting to buy Quebec votes in the next federal election. The mass media present the practice of paying the rich as a benefit to the people of the particular region where the public funds are destined to flow. The rich of that region are identified with the people and the declared benefits trickling down to the people of the region, usually employment, are said to be reason enough to vote for whatever party is in power and responsible for the scheme. This practice is as corrupt as the sponsorship scandal or any other scheme where the consideration of a public program or spending is not the overall public good but the electoral fortunes of a particular political party and the making of personal fortunes. The monopoly mass media are particularly repulsive on this front as ninety per cent of what they call “politics” revolves around whether a particular government action will result in a good or bad result in the next election for the Party in power or in official opposition. This issue raises the necessity of democratic renewal of the political system and bringing the people to power rather than the major political parties.
Issue 3: The fact that most of the $900 million in grants and interest-free loans is heading for the Montreal region keeps the pot boiling in bad relations between Quebec and the rest of the country. The Conservative Party in power has stoked regional ill will across the country with its refusal to lead on the key question of democratic renewal and the need for a new constitution. Relations between the federal government and the provinces are in constant turmoil with the Premiers of Newfoundland and Labrador and Saskatchewan openly denouncing Harper. The federal government directly interfered in the recent elections in Quebec bringing shame upon itself and the political system.
Beyond general ill-feeling that one region is favoured over another, the particulars of this $900-million transfer of public money to the rich raise a very specific question. Neo-liberalism makes a big fuss about competition in the marketplace. Probably the largest recipient of public money in this case and previously for many decades has been the global monopoly Bombardier, which now has much of its operations outside Canada. Whether this particular transfer of wealth is said to be for research and development in the aerospace industry, it strengthens Bombardier generally in its battle with monopoly competitors in all its areas of business including the designing and building of railcars. It was no coincidence that a U.S. monopoly competitor in the designing and building of railcars, Greenbrier Corporations, at the same time as the un-elected Minister of Public Works Michael Fortier was handing public money to Bombardier, stunned working people of Nova Scotia by announcing the final dismantling of the province’s Trenton Railcar Works and its removal to Mexico. At one time, two thousand workers at Trenton Works made railcars of the highest quality, which of course required steel of the highest quality. In contemporary Nova Scotia, its steelworks are gone and soon its railcar works will disappear as well. This is a big disaster for Nova Scotia and Canada, and will be rightly seen as grossly unjust by the people of Pictou County. The mass media in Nova Scotia have already started a campaign to vilify Quebec as an abstraction and make its demand for sovereignty the problem rather than identify the problem as the outdated constitution and provincial/federal arrangements, and the current political system that allows certain monopolies to dominate and manipulate the state and public treasury for their private benefit. Regional disputes are becoming sharper and this transfer of pooled public wealth to private hands will exacerbate the squabbling. Already Harper and Newfoundland and Labrador Premier Danny Williams are engaged in a nationwide screaming match over equalization payments centred on offshore oil and gas revenues. These issues can escalate into serious conflicts degenerating even into reactionary civil war.
A social consciousness is necessary that poses problems with a broad outlook that upholds the public good as central. Such a consciousness grasps the incoherence of a socialized economy divided into privately owned competing parts that block the development of an all-sided self-reliant economy in all the regions of Canada. Such an outlook recognizes the necessity to restrict monopoly right, stop paying the rich and increase spending on social programs. A modern social consciousness is one that has the courage to face up to the incoherence of a socialized economy divided into privately owned competing parts and to organize to bring an alternative into being. A modern social consciousness is one that participates in a general movement for new federal/provincial political arrangements within a modern constitution and for a socialized economy that is all-sided and self-reliant and without regional discrimination. The Maritimes, Quebec, Ontario, Prairies, BC and other regions of Canada need steelworks and industrial mills and factories with which an all-sided self-reliant economy can be built to meet the needs of the people.
Paying the rich and allowing monopolies to relocate factories willy-nilly inside or outside the country must be stopped, such as those threatened by Greenbrier Corporation, Hamilton Specialty Bar, Stelco and Gildan Activeware in Montreal.
Issue 4: The majority of the funds for research and development announced by Minister Fortier are connected with military use, especially U.S. air power and preparations for war. Pundits now say that the U.S.-led Empire is in an arms race with insurgents!
This call for more arms spending and a bigger military comes at a time when more and more Canadians see Canada’s military as annexed to the U.S. war machine. The people are demanding an end to all military contact with the U.S. Empire-builders. There is a growing movement for an anti-war government and to stop Canadian participation in the war of aggression and occupation of Afghanistan. U.S.-led wars and troublemaking around the globe are at an all-time high and must be stopped and Canadians can play an important role by refusing to have public monies, military forces, finished goods and raw materials especially oil and gas to be used to strengthen the U.S. military. Handing public money over to private monopolies that are actively engaged in military production and war preparations closely connected with U.S. imperialism goes against the public good. Serious consideration must be given to cutting all contact with U.S. military research and development as well as getting out of the aggressive military alliances NATO, NORAD and Canada’s military annexation within U.S. Northern Command.
Issue 5: This transfer of $900-million from the federal treasury to certain monopolies comes at a time when public investment funds are desperately needed for social programs. Public monies are also needed to stem the de-industrialization that is now underway in various regions. Public funds could be used for investment in public industrial development such as in the forestry sector all across Canada, in the steel industry and in specific factories and mills that are slated for closure such as the Goodyear Tire plant in Valleyfield where a call has gone out for a public tire retread and recycle centre, and to stop the collapse of Hamilton Specialty Bar, Stelco and the Trenton Works railcar facility in Trenton, Nova Scotia. Ways and tactics have to be explored to take these industrial works out of the hands of the monopoly wreckers and put them into the hands of the people and government, to become part of an all-sided self-reliant socialized economy serving all regions of the country.
Issue 6: Nine hundred million dollars will flow from the federal public treasury to pay for private particular conditions of production in the aerospace and other military industries, in this case research and development. R & D are necessary features of modern socialized production and a consequence of humankind’s treasure house of knowledge. Monopolies utilize socially educated employees for private gain without directly reimbursing the educational system and society that trained them. Results flowing from company directed and publicly financed R & D are seized by the monopolies and declared their private intellectual property and given legal protection with patents. The guarding of socially produced “private” science is financed and organized in large measure by state legal and security institutions. Both the federal spy agency CSIS and the RCMP engage in industrial counter-espionage on behalf of the monopolies. Of course, the aerospace and military industries and their science and technology are interwoven and crucial for Empire-building. Advanced weaponry is needed to overcome the superior numbers and determination of the oppressed peoples. The Canadian military would not last one day in Afghanistan without superior weapons and U.S. air support. Maintaining military superiority in the air with better fighter planes and missiles is considered crucial for U.S. Empire-building.
The merging of private R & D facilities, government funded projects and nearby public universities, such as the Université de Montreal, further subordinate public education and knowledge to private interests and monopoly right. Public knowledge, science and technology are officially privatized and used to strengthen monopoly control, especially the application of science and technology in production generally and in the particular development of modern weaponry. Monopoly control of R & D blocks the people and even politicians from having any say-so over what is to be researched and developed, over what the society considers scientific problems that are priorities to be resolved.
Issue 7: Certain monopolies have overwhelmed the state and bend it to meet their dictate at the expense of the people and their sovereign rights. In this case, money from the federal public treasury is to facilitate particular conditions of production for certain monopolies in the aerospace and military industries. This policy is an extension of the capitalist state providing commonly useful public works that are general conditions of production within the socialized economy. It is part of the neo-liberal retrogressive trend of public money going towards benefiting particular conditions of production of certain monopolies. This policy is divisive and destabilizing, a source of conflict and corruption. In such a situation, control of political power is crucial for monopolies if they are to survive let alone expand their empires. Violent inter-monopoly conflict for control of the state is inevitable involving forces inside and outside the country.
The predominance of certain monopolies leads to a distortion of the socialized economy in opposition to all-sidedness and self-reliance. The practice of favouring a particular section of the rich at the expense of the general conditions of production, the public good and healthy social and natural environments, is associated with parasitism and decay of the socialized economy.
Issue 8: Little understood and discussed is the contradiction faced by the aerospace and other heavy industrial sectors of the economy between the demand of owners of capital for immediate return on their investments and the lengthy time before added-value is realized. This is not a new problem in Canada as the immense size of the country posed the issue for owners of capital and British colonial empire builders. How was a modern railway system to be financed and built when revenue would be sparse for years? How was electricity to be financed and made available when a market price based on the price of production would cripple industrial users? How were a steel industry and other heavy industrial works to be built when sufficient revenue to cover the price of production would be decades in coming and ongoing maintenance and upgrading require enormous amounts of retained earnings. Especially today when private investors expect constant returns of 10 per cent or more, how can this be in those industries such as steel, aerospace and forestry which require enormous initial investments, ongoing maintenance, and funds for research and development. Without added-value flowing from other sectors of the economy where returns are greater certain sectors would cease to operate. And that is a big problem in a socialized economy that is divided up into privately owned competing parts (see endnote).
Either the funds are moved by the state taking them out of private ownership, pooling them under public control and ownership within the government treasury and investing them under public ownership, or they are taken out of private control pooled in the public treasury and handed back to different private ownership through paying the rich.
Research and development are integral to the particular production processes of modern industry. R & D create added-value but its realization in the sale of commodities may take years if not decades. This is a major problem confronting such monopolies as the Airbus consortium in Europe and its development of a new jumbo jet. Private investors are not willing to wait years or decades for a return on their investments. They want their 10 per cent or more now! The monopoly capitalist system deals with this issue by paying the rich, by providing government funds to cover those years when little or no returns are possible.
For example, during the Stelco steel company bankruptcy fraud, the monopolies effectively in control of the company and the bankruptcy process organized Stelco to take out restructuring loans at over 10 per cent interest. Those loans were provided by allies and another branch of the same company that controlled the bankruptcy process and which later took ownership of Stelco’s stock equity. Meanwhile, the provincial government gave the same Stelco a $150 million mostly forgivable loan at one per cent interest! And now the principal owners of Stelco equity and debt want to destroy the venerable mill in Hamilton to fulfil some secret agenda for the waterfront property under the hoax that the Hamilton mill is old and needs a lot of new investment and is losing money. Yet they have been happily collecting their 10 per cent interest since restructuring and have cheerfully watched their $5 Stelco shares rise to $22 and who knows where once takeover fever starts. What a scam! They should all be stripped of their ownership rights for gross fraud, deception and criminal negligence of a public treasure. A publicly owned and controlled Hamilton steel mill properly maintained and upgraded should be initiated immediately.
Monopolies also use the tactic of transferring production if possible to other regions or countries where working class and government claims on added-value are lower, land is cheaper and regulations more lax.
In a capitalist commodity system the work-time of researchers (compounded by their specialized education) and the associated costs of equipment and facilities form part of the price of production of commodities. When aerospace and military commodities are sold, their market price should include the work-time and associated costs of the R & D. The time delay in realization of the added-value and costs of production should also increase the market price. Monopolies seize the entire added-value emanating from R & D as private property less the amount paid in salaries and taxes. The R & D costs of production are also recouped through the market price. If the market prices reflect the general price of production, the amount received by the particular monopoly would approximate the sum of the costs of production and added-value, including the R & D.
The added-value produced through R & D includes the salaries of researchers, government taxes (paid mostly individually by the researchers through income tax and sales taxes) and the monopoly’s profit. The costs of production, which are the costs of equipment and structures, should be recovered no more no less.
Reports indicate that the monopolies never reimburse the government the full grant or interest-free loan let alone any of the added-value the company may claim as profit, which comes directly from the work-time of the researchers and others involved in R & D (see below). This means the monopolies receiving grants and forgivable loans gain not only the R & D, which facilitates the creation of added-value in direct production, but also their claim on R & D added-value itself, plus the portion of the costs of production that have already been paid from public money.
The issue for investors is their demand for a quick return. They are not willing to wait the interim between R & D taking place and its realization in sold commodities. This time lapse should be a normal part of reinvestment of retained earnings in the production facilities and their improvement. But nothing is “normal” under the dictate of the monopolies where even reinvesting added-value (retained earnings) in production facilities is seen as an infringement and unnecessary drain on the claims of investors. Algoma Steel in Sault Ste Marie is a notorious case in this regard.
The failure to reimburse the government for the full amount given for R & D means an equivalent amount is drained from other sectors of the socialized economy with the excess seized by the aerospace and military monopolies that were paid public monies. If the public treasury assumes the cost of R & D and is not reimbursed after the sale of the commodities, for both the principal and its legitimate claim on added-value as an investor, it means the government is forced to make up the shortfall by taking from its general tax revenue. The government effectively has less revenue to meet its social responsibilities within a modern society.
The presentation of this payment to the rich as good for the people and the socialized economy is disinformation. Among other things it obscures the reality of certain monopolies subordinating state institutions and the public treasury to their private interests to smash their monopoly competitors, harm the people’s fundamental well-being and the health of their society and block the path to progress.
Bourgeois economists partially recognize the contradiction faced by the aerospace and other heavy industrial sectors of the economy between the demand of owners of capital for immediate return on their investments and the lengthy time before added-value is realized. The Conservative Party in power writes in its press release rationalizing its latest pay-the-rich scheme:
“To maintain productivity and competitiveness, A&D firms (aerospace and defence) have to invest in the research and development (R&D) of advanced products and services. Industry characteristics for R&D such as high development costs, long development lead times and long payback periods, combined with the cyclical nature of the industry and the fact that projects are high risk and international in scope, make it difficult for the private sector to entirely fund an R&D project.”
With early capitalism the movement of capital within the economy was more spontaneous resulting in market prices in heavy industry that greatly exceeded their prices of production thus encouraging investment in heavy industry. Without the higher market prices there would have been little investment in heavy industry. This spontaneous feature no longer fully occurs under mature capitalism where market prices are greatly manipulated by global monopolies and the state has fallen under the control of certain monopolies.
Excerpts from Mass Media Articles
Bombardier received $141 million in funding under the previous program in 1997 and has repaid $36 million so far.
Bombardier’s annual report says it has received $519 million from Technology Partnerships Canada and other programs since 1986 when it acquired Canadair, and has repaid $284 million.
The Aerospace Industries Association of Canada welcomed Monday’s news, with chairman Don Campbell saying the new program will require aerospace companies to invest three to four dollars of their own capital for every federal dollar received.
“It’s a risk-sharing partnership that is critical to sustaining the more than $1 billion our companies invest each year in aerospace R&D in Canada,” Mr. Campbell said.
Montreal Gazette (excerpts)
The [aerospace and military] industry has continued to lobby intensively for a new funding agreement to replace the former Technology Partnerships Canada (TPC) program, which expired Dec. 31.
TPC had become the favoured vehicle to fund research and development at Montreal-area aerospace companies.
But the program – which was open to a range of other industries – became embroiled in political scandal once it became clear how little of the taxpayers’ money was being repaid.
Just one example: in 1997, Bombardier received $141 million in interest-free contributions to develop the Q-400 turboprop and to stretch the 50-seat regional jet into a 70-seater.
Ten years later, the company had repaid just $36 million of that amount, under a formula that ties repayments to royalties on the number of planes sold.
Aircraft simulator maker CAE Inc. received $300.6 million in 1997 and had paid back $24 million as of last August. Engine-maker Pratt & Whitney Canada got $691.8 million and had repaid $26 million by that time.
[TPC’s predecessor, the Defence Industry Productivity Program, or DIPP] proved to be a disaster. The program ran from 1982 to 1995, disbursing about $2.2 billion in “conditionally repayable” aid.
By the time it was cancelled in 1995, just 6.5 per cent of DIPP loans had been repaid.
The track record at TPC was just as dismal: a repayment rate of less than six per cent on more than $3 billion worth of loans.
Yet the drumbeat from the industry has been the same: that without federal aid it can’t compete with other nations that heavily subsidize their own aerospace and defence sectors.
[Under the new SADI program] money will be loaned interest-free, there is no set rate of return demanded by Ottawa, and funding will be provided on a case-by-case basis, depending on the level of risk.
Given the sorry history at DIPP and TPC, there’s no reason to be confident that SADI will be any better at spending your money.
The $900-million injection announced Monday for Canada’s aerospace sector – much of which is based in Quebec – has nothing to do with a possible federal election this spring, Public Works Minister Michael Fortier insisted.
“Absolutely not,” Mr. Fortier told reporters at a news conference announcing the Strategic Aerospace and Defence Initiative.
“The industry was looking for a program. The other program lapsed this past December, they needed a program and today [Industry Minister Maxime] Bernier is making that announcement.”
The Strategic Aerospace and Defence Initiative is aimed at developing new products, processes and services.
The program is expected to invest nearly $900 million during the next five years, with the funding earmarked for the country’s aerospace, defence, security and space industries.
The announcement could well give Prime Minister Stephen Harper’s Conservatives a bounce in support in Quebec, where the Tories would like to build on the support they got in the last federal election in January 2006.
Many aerospace companies are based in Quebec, including aircraft manufacturer Bombardier Inc., engine builder Pratt and Whitney Canada, components maker Heroux-Devtek and CAE Inc., one of the world’s biggest providers of pilot training services.
In 2005, Canada’s aerospace sector had sales of $21.8 billion, exports of $18.5 billion and employed 75,000 people.
Mr. Bernier denied the program is similar to previous programs used by Liberal governments that drew criticism from the Tories when they were in Opposition.
Helene Gagnon, vice-president of Bombardier Aerospace, said the program “levels the playing field with other countries where we have competitors.”
Karl Moore, a professor with the Desautels faculty of management at McGill University said, “The Conservatives want to get a majority government and clearly Quebec is a centre pin in achieving that.”
Rewind your political cassette player to the spring of 2005.
With a federal election in the offing, Liberal cabinet ministers Stephane Dion and Jean Lapierre announced a federal aid package of up to $350 million for Bombardier Inc.’s proposed new passenger jet, the C-Series.
“We cannot let our national champions fail,” Dion said at the time.” It would be like cutting off one of our arms.”
Fast forward almost two years, to this week’s announcement by Conservative cabinet ministers Maxime Bernier and Michael Fortier of a five-year $900-million aid program for the aerospace industry.
The location was the same – a National Research Council aerospace lab on the campus of the Universite de Montreal, full of applauding industry officials.
And there was the same scent of pre-election politics in the air as speculation mounted about Tory plans to go to the polls.
As they say in Quebec, plus ça change, plus c’est la même chose.
The language used by Bernier and Fortier was much the same as that used by their Liberal predecessors.
They described the aerospace industry as the pride of Quebec and emphasized the importance of supporting it against global competition.
What had changed, however, was the Conservatives’ attitude to subsidies – the kind of thing the party’s forerunners, the Canadian Alliance and the Reform Party, once routinely denounced as pork-barrel politics.
Their stance was altered after Stephen Harper won power in the last election and pledged to respect the funding agreement for the C-Series signed by the Liberal administration.
Globe and Mail
The new program – called the Strategic Aerospace and Defence Initiative – will earmark $900-million over five years and will be exclusively focused on aerospace and defence, Mr. Bernier said.
The former program, Technology Partnerships Canada, became a lightning rod, attracting criticism from those who disagree with corporate subsidies.
Their arguments were fuelled by the program’s high-profile problems, including an abysmal repayment rate and the involvement of unregistered lobbyists.
TPC fell by the wayside at the end of last year after its mandate wasn’t renewed.
The federal Tories have been among TPC’s harshest critics, even after assuming power more than a year ago.
At a news conference to announce the initiative, Mr. Bernier brushed aside suggestions his Conservative government is cynically resorting to corporate welfare, given that TPC was a frequent target of Tory criticism.
“We have an industry that must remain competitive,” he said. “The risk for the government is minimal and we will get back the full amounts invested.”
The move is also highly political because most of the $900-million will likely go to Quebec, where Stephen Harper’s Tories are angling to win more votes in the next election, expected as early as this spring.
About 60 per cent of the aerospace industry’s annual sales come from Quebec-based companies, such as Bombardier Inc., Pratt & Whitney Canada Corp. and CAE Inc.
Mr. Bernier said a maximum of $225-million a year will be available, down from the previous fund’s $300-million.
Proponents argue that Canada has no choice but to back the sector because leading aerospace countries such as the U.S., Britain and France provide generous support via subsidies and large government procurement programs.
Industry officials welcomed yesterday’s announcement, which had been widely expected.
Industry Minister Maxime Bernier said the government wants Canada’s defence and aerospace industry to attract investment and develop new technologies. “Your success is vital to our economy and it’s vital to all Canadians from one ocean to the next,” he said.
In the past, the Conservative government has said it prefers cutting taxes to create a business-friendly environment over subsidies.
But federal Liberals are criticizing the new funding announcement, saying it amounts to politicking.
“They [the Conservatives] attacked government investment in aerospace as unwarranted government subsidy,” Scott Brison, the Liberal industry critic, told the Globe and Mail.
“And in a pre-election environment, they’re trying to do the same thing. These guys are the patron saints of hypocrisy.
“This sounds like a pre-election, ad hoc drop in the bucket to improve the perception of what they’ve done for aerospace.”
Halifax Chronicle Herald Reaction
If you lost a job in Trenton yesterday, you might want to take a look at a federal announcement made in Montreal earlier this week.
On Monday, Ottawa unveiled a five-year, $900-million investment in the Quebec aerospace sector.
You might call the “investment” a “subsidy,” if you prefer plain English.
In the Montreal press conference, Public Works Minister Michael Fortier directed more federal money to the transportation giant Bombardier and its sister aerospace companies in Quebec.
But Bombardier – like the Trenton plant and its owner Greenbrier Companies of Lake Oswego, Ore. – is also in the business of building rolling rail stock for international markets.
I’m not suggesting that subsidies to Bombardier drove Greenbrier out of Canada – not directly, anyway.
The Greenbrier guys are hitting the rails, and taking the railcars with them.
Still, there’s no denying that Bombardier has played the role of sweetheart to successive federal governments since at least the Mulroney days.
Indeed, you could write a book tracking the hundreds of millions of dollars of government money that have been given to this Quebec-based company. That has placed Bombardier in an enviably competitive international position.
And it helps explain why it was able to announce yesterday that it has secured $560-million worth of new contracts to sell commuter trains to France and the United States.
In Trenton, you’d call this pouring acid in the wounds.
Indeed, if you compare Bombardier’s history against that of the Trenton railcar works, you’d see a Quebec company that has grown to the point where it now employs 56,000 people in its multinational operations.
Alongside that you place a Nova Scotia firm that once employed a couple of thousand people – now employs a couple of hundred, and will soon employ no one.
This is public policy at work, my friends.
Ottawa positioned Bombardier for global greatness, and it has arguably achieved just that.
In relative terms, Ottawa left Trenton Works to fend for itself. And this week its owners decided – wisely, from a corporate perspective – that it could best stay in business by staying out of Nova Scotia.
Premier Rodney MacDonald attempted to throw a few million bucks at the Trenton plant owners – in an effort to entice them to stay here in his overly branded, too quaint province.
But the premier doesn’t run a province rich enough to compete as an international subsidy giant. (In that light, I figure keeping Michelin here represents a minor miracle.)
I wanted to know what Peter MacKay – the MP for the Trenton area and Canada’s foreign affairs minister – made of all this, and I tried but failed to reach him Wednesday.
Trenton poses a minor-key problem for the minister – his critics will suggest that he can’t look after the anchor industry in his own backyard, let alone bring peace to the Middle East.
And Green Party Leader Elizabeth May can again argue, with more emphasis this time around, that Prime Minister Stephen Harper has abandoned MacKay, and that she has a slim chance of defeating the incumbent MP in the next federal election.
This is good fodder for political insiders and pundits.
But the larger, underlying question remains: In a nation in which Ottawa has clearly fostered industry winners by region – energy in Alberta, agriculture in the West, autos in Ontario, aerospace in Quebec – what’s left for us?
So far, the Harper government, like the Martin and Chrétien governments before it, has been more or less content to subsidize our idleness, through employment insurance payments and equalization transfers.
In essence, then, Ottawa is mandating economic growth in the Rest of Canada – and most notably, most recently, in Quebec.
And as anyone in Trenton can tell you today, that’s just not good enough.
Backgrounder from Industry Canada (excerpts)
The Strategic Aerospace and Defence Initiative (SADI)
The Government of Canada has created the Strategic Aerospace and Defence Initiative (SADI) to support strategic industrial and pre-competitive development (R&D) projects in aerospace, defence, space and security (A&D) industries.
This new initiative has been developed with three key objectives in mind: 1) to encourage strategic R&D that will result in innovation and excellence in new products and services; 2) to provide enhanced opportunities for Canadian A&D industries; and 3) to foster collaboration between research institutes, universities, colleges and the private sector.
All Canadians will receive value from SADI’s contributions through the technological and economic benefits that will come from the supported R&D projects. These benefits include spin-offs in diverse sectors of the economy such as nanotechnology and information technologies, as well as the development of collaborative partnerships with universities, colleges and research institutions, creating opportunities for Canada’s youth. Contributions made through SADI in R&D will also contribute to high quality employment opportunities, strengthen Canada’s workforce with talented scientists, engineers and researchers, and leverage private sector investments in R&D.
Challenges Encountered by A&D Industries
To maintain productivity and competitiveness, A&D firms have to invest in the research and development (R&D) of advanced products and services. Industry characteristics for R&D such as high development costs, long development lead times and long payback periods, combined with the cyclical nature of the industry and the fact that projects are high risk and international in scope, make it difficult for the private sector to entirely fund an R&D project.
A&D industries play a role in supporting national security and sovereignty. For this reason, national governments around the globe support their industries through various funding mechanisms (e.g. technology development support, military contracts).
Opportunities for Canada’s A&D Industries
Strengthening R&D and the pre-commercialization of new technologies will help the Canadian A&D industries to remain competitive. R&D forms the basis for the development of new products designed to serve the needs of A&D markets, and also enables firms to establish new processes that lower costs and increase productivity.
In addition, R&D investment in A&D promotes technology development within the Canadian economy, not only in the A&D industries and their supplier base, but also through spin-offs in electronics, nanotechnology and information technology, among others. Previous spin-offs from A&D technologies have been used in medical equipment and automotive applications.
Supporting R&D in the industry also enables Canada to attract global A&D firms and first class scientific and engineering talent. Among the leading industrial investors in R&D in Canada, A&D has the capability and the opportunity to build on Canadian strengths to remain one of the foremost players in the global market.
Specialties of Canada’s A&D Industries
Products and services of the Canadian aerospace, defence, space and security industries include:
– Regional and business aircraft
– Small gas turbine engines
– Flight simulators
– Landing gear systems
– Armoured vehicles
– Military ships
– Space-based robotics and telecommunications
– Remote sensing systems and satellites
– Command and control systems (including secured communications equipment)
– Aircraft and defence electronics
– Environmental systems for aircraft and military vehicles
– Avionic and mission systems
– Maintenance, repair and overhaul services