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Bombardier: May 'bitterly disappointed' as US tariff puts jobs at risk Bombardier: May 'bitterly disappointed' as US tariff puts jobs at risk
(about 9 hours later)
Theresa May is “bitterly disappointed” by a US decision to impose a punitive tariff on exports of passenger jets built by one of Northern Ireland’s biggest employers, Downing Street said. The government has warned Boeing it could lose UK defence contracts over its part in a US move to slap punitive tariffs on rival Bombardier, in a dispute that threatens to sour trade relations between London and Washington.
The US Department of Commerce ruled in favour of Boeing in its legal battle with Bombardier, prompting fears in Northern Ireland that aerospace jobs in the region could be in peril. Defence secretary Michael Fallon stepped up the government’s response to the tariffs, warning that Boeing’s assault on Bombardier “could jeopardise” its chances of securing government contracts.
An interim tariff of of 219.63% has been proposed on sales of Bombardier’s C-Series jet to the US airline Delta. And business secretary Greg Clark joined the chorus of disapproval, branding the tariff, which would be imposed on sales of the C-Series to US airline Delta, “unjustified” and vowing to work with the Canadian government to get it overturned.
The US commerce department has upheld Boeing’s claim that Bombardier was able to offer its C-Series planes to US airline Delta for a vastly reduced price because of illegal states subsidies from Canada and the UK, violating global trade rules.The US commerce department has upheld Boeing’s claim that Bombardier was able to offer its C-Series planes to US airline Delta for a vastly reduced price because of illegal states subsidies from Canada and the UK, violating global trade rules.
Under international rules, unfair subsidies from governments can take the form of grants, loans, equity injections, tax breaks and production contributions, if they give a company or an industry an unfair competitive advantage over foreign rivals.Under international rules, unfair subsidies from governments can take the form of grants, loans, equity injections, tax breaks and production contributions, if they give a company or an industry an unfair competitive advantage over foreign rivals.
In this case, Boeing claims that a US$1bn (£750m) bailout of Bombardier by the provincial Quebec government in Canada in 2015 unfairly enabled the firm to sell its C-Series aircraft in the US at below cost price.In this case, Boeing claims that a US$1bn (£750m) bailout of Bombardier by the provincial Quebec government in Canada in 2015 unfairly enabled the firm to sell its C-Series aircraft in the US at below cost price.
The claim also relates to the Northern Ireland Executive and the UK government, which pledged to invest £135m in a new factory in Belfast where the wings for the C-Series planes are manufactured.The claim also relates to the Northern Ireland Executive and the UK government, which pledged to invest £135m in a new factory in Belfast where the wings for the C-Series planes are manufactured.
In a series of tweets from the official Twitter account of the prime minister’s office, No 10 said: “Bitterly disappointed by initial Bombardier ruling. The government will continue to work with the company to protect vital jobs for Northern Ireland.”In a series of tweets from the official Twitter account of the prime minister’s office, No 10 said: “Bitterly disappointed by initial Bombardier ruling. The government will continue to work with the company to protect vital jobs for Northern Ireland.”
Bitterly disappointed by initial Bombardier ruling. 1/2Bitterly disappointed by initial Bombardier ruling. 1/2
The Government will continue to work with the company to protect vital jobs for Northern Ireland. 2/2The Government will continue to work with the company to protect vital jobs for Northern Ireland. 2/2
Boeing took its Canadian plane-making rival to court in the US, alleging it had received unfair, anti-competitive state support from the Quebec regional government. Bombardier employs 4,000 people at its plant in East Belfast, around 1000 of whom work on the construction of wings and fuselage for C-Series jets being sold to Delta.
Bombardier is Northern Ireland’s biggest hi-tech employer with more than 4,000 workers at its east Belfast plant. In an interim decision, the US Department of Commerce agreed with Boeing’s case that Bombardier had received unfair, anti-competitive state support from the Quebec regional government.
About 1,000 jobs are linked to its C-Series project – the construction of wings and the fuselage for a new series of passenger jets for Delta, for which Bombardier won the contract. Bombardier, which has also received £113m in repayable funding from the UK government, called the decision “absurd and divorced from the reality about the financing of multibillion-dollar aircraft programmes”.
The commerce department said on Tuesday: “Boeing claimed that Bombardier’s C-Series aircraft, part of which is made in Belfast, are being ‘subsidised’, in part, due to a $1bn [£740m] bailout by the regional Quebec government in Canada.” The tariff would more than triple the cost of a C-Series aircraft sold in the US to about $61m per plane, based on Boeing’s assertion that Delta received the planes for $19m each.
Both sides will have to wait until February for a final ruling on the pricing policy to be made by official US agencies, trade unionists said. The duty will only be imposed if the DoC’s final verdict, due in February, does not change.
Bombardier supports hundreds of other jobs in Northern Ireland through its suppliers and has been a major employer in the region for almost 30 years. The decision is a particular blow to Prime Minister May, who has personally lobbied US president Donald Trump to persuade Boeing to drop its legal action, in order to protect jobs in Northern Ireland.
The operation’s immediate future was secured after Bombardier signed a $5.6bn deal last year to provide its new aircraft to Delta Airlines. And Labour’s shadow industrial strategy minister Chi Onwurah lashed out at the apparent failure of the Prime Minister’s efforts
If imposed, the duties would more than triple the cost of a C-Series aircraft sold in the US to about $61m per plane, based on Boeing’s assertion that Delta received the planes for $19m each. “It’s a damning indictment of the criminal negligence and complacency of Theresa May and her government, and a sign of their entire lack of international negotiating skills which bodes really badly for our post-Brexit negotiations,” she said.
Bombardier called the decision “absurd and divorced from the reality about the financing of multibillion-dollar aircraft programmes”. Liberal Democrat leader Vince Cable said: “Do we really believe the US will save us from Brexit with a comprehensive trade deal, when this is how they deal with fair and free international competition?”
Canada’s foreign affairs minister, Chrystia Freeland, reacted angrily to the decision, saying it was “clearly aimed at eliminating” Bombardier’s narrow-body jets from the US market. A UK government spokesperson said: “As the prime minister said last week, we will continue to strongly defend UK interests in support of Bombardier at the very highest level because an adverse outcome risks jobs and livelihoods among the 4,200 skilled workers in Belfast.
The largest union represented at the Bombardier Belfast factory, Unite, expressed its acute disappointment over the decision.
Jimmy Kelly, Unite’s regional secretary in Northern Ireland, said: “Today’s decision in favour of Boeing’s allegations of anti-competitive pricing poses a direct and very serious threat to the 4,500 Bombardier jobs in Belfast and many more dependent on them across our service sector and in the wider supply chain.
“This would cause serious damage to our economy and to our society, which needs a robust economy to underpin our society’s continued political progress and the path to reconciliation.
“Despite this ruling, Boeing’s case is without merit – they suffered no detriment from Bombardier’s success in winning the Delta order. Unite is supportive of the Bombardier defence and we are determined to ensure no fallout in regard to the jobs of our members.”
May had personally lobbied Donald Trump to persuade Boeing to drop its legal action against Bombardier, given the threat to Northern Irish jobs.
Earlier on Tuesday, the Northern Ireland secretary, James Brokenshire, met members of Unite in Belfast. After the meeting, he said: “The UK government believes clearly that the support that we have given through repayable launch investment to the C-Series project is legitimate, is lawful, is within World Trade Organisation rules and therefore that the actions that have been brought around this case are unwarranted.”
A UK government spokeswoman said after the decision: “This is a disappointing interim statement but only the first step in the process. As the prime minister said last week, we will continue to strongly defend UK interests in support of Bombardier at the very highest level because an adverse outcome risks jobs and livelihoods among the 4,200 skilled workers in Belfast.
“Boeing’s position in this case is unjustified and frankly not what we would expect of a long-term partner to the UK – as well as damaging the wider global aerospace industry.”“Boeing’s position in this case is unjustified and frankly not what we would expect of a long-term partner to the UK – as well as damaging the wider global aerospace industry.”
Joe Walters, who is in his 30s and works in material logistics at the Bombardier plant in east Belfast, told the Guardian there were many older workers at the factory seeking to leave the company as a result from the US ruling.Joe Walters, who is in his 30s and works in material logistics at the Bombardier plant in east Belfast, told the Guardian there were many older workers at the factory seeking to leave the company as a result from the US ruling.
Walters said he wanted May and the British government to take a harder line with Boeing to end the dispute with Bombardier.Walters said he wanted May and the British government to take a harder line with Boeing to end the dispute with Bombardier.
“The Canadian government has already stated that it will not do business with Boeing if it continues to try to break Bombardier. The British government needs to be as hardline as that. It’s simple, forget appealing to Donald Trump – he’s too busy trying to kill us all with his contest with North Korea.”“The Canadian government has already stated that it will not do business with Boeing if it continues to try to break Bombardier. The British government needs to be as hardline as that. It’s simple, forget appealing to Donald Trump – he’s too busy trying to kill us all with his contest with North Korea.”
The shadow education secretary, Angela Rayner, called on the government to protect jobs. She stressed that the UK had followed the rules and added that the government “needs to be robust in their defence of that”. Geordie Burnside, a shop steward at the Belfast plant, says the size of the tariff has taken everyone by surprise.
She told BBC Radio 4’s Today programme: “The Bombardier situation is quite a crucial one because these are UK jobs that we depend on, thousands, and actually the government were involved in that contract process and were robust and I think that we have to defend the fact that that contract was awarded and we followed the rules. “I’ve been getting phone calls from early morning asking why the ruling had slapped down such an enormous tariff. They cannot believe the enormity of it or get their heads around it. There have been a lot of tough times at this factory over the last 26 years and we got through. I hope that the company will appeal and the battle isn’t over yet.”
“At times Jeremy [Corbyn] talks about sometimes the global rules don’t benefit UK jobs, but actually we followed the rules, we got that contract fair and square and the government must ensure that we protect those jobs to ensure that we can keep our businesses running.” Trades Union Congress general secretary Frances O’Grady said the US deciison was “grim news”.
“The government must stand up for those workers, and for the Northern Ireland economy. Expressing disappointment is not enough. The prime minister must put genuine pressure on the US government to rethink this decision now.
“This should be a wake-up call to those who view the US as our trading saviour after Brexit. The US slapping huge tariffs on key UK exports is not a good sign of things to come.”