Boeing seeks anti-dumping probe over Bombardier's C Series

[teacher]

This is rich coming from Boeing who has been dumping product and subsidizing their commercial division through bloated military contacts for decades. Why do you think AC went Boeing? Their price came in ultra low ball. Boeing's just out gunned with their heavy vintage aircraft with new engines.

The solution seems simple. Cancel the Super Hornet purchase and slap the 737 Max order with a counter Tariff if this results in bogus penalties. I think Boeing is just hoping Trump read the headline and loses his mind on Twitter.

Boeing seeks anti-dumping probe over Bombardier's C Series

QILAI SHEN/BLOOMBERG
DAVID LAWDER AND ALWYN SCOTT
WASHINGTON AND NEW YORK
REUTERS
3 HOURS AGO
APRIL 27, 2017

Boeing Co on Thursday asked the U.S. Commerce Department to investigate alleged subsidies and unfair pricing for Canadian planemaker Bombardier's new CSeries airplane, adding to growing trade tensions between the United States and Canada.

The petition against Canada's new competitor to the Boeing 737 aircraft came just days after the Commerce Department imposed duties averaging 20 percent on imports of Canadian softwood lumber, saying that the product's origin from public land amounted to an unfair government subsidy.

On Wednesday, U.S. President Donald Trump told Canadian Prime Minister Justin Trudeau and Mexican President Enrique Pena Nieto that he intended to begin renegotiating the 23-year-old North American Free Trade Agreement, after White House officials said Trump had been considering an order to withdraw from the pact.

For subscribers: Trump ready to renegotiate NAFTA after calls from Pena Nieto, Trudeau

Boeing said in its petition that Bombardier, determined to win a key order from Delta Air Lines Inc after losing a competition at United Airlines, had offered its planes to the airline at an "absurdly low" $19.6-million each, well below what it described as the aircraft's production cost of $33.2-million.

"Propelled by massive, supply creating and illegal government subsidies, Bombardier Inc has embarked on an aggressive campaign to dump its C Series aircraft in the United States," Boeing said in its petition.

Boeing's similarly sized 737-700 model has a list price of $83.4-million, with the new 737-MAX 7 priced at $92.2-million. Sales discounts from list prices are typically 40 per cent to 50 per cent in the industry.

In April 2016, Bombardier won the Delta order, its biggest yet, for 75 CS100 jets, worth an estimated $5.6-billion based on the list price of about $71.8-million.

In its complaint against Bombardier, Boeing argued that the C Series program would not exist without hundreds of millions of dollars in launch aid from the governments of Canada, Quebec and Britain, or a $2.5-billion equity infusion from Quebec and its largest pension fund in 2015.

Quebec Economy Minister Dominique Anglade said in a statement that her government would defend "the commercial partnership concluded with Bombardier" for a $1-billion injection in the C Series.

Boeing also took a shot at European rival Airbus SE , which it accuses of benefiting from similar "unfair" government subsidies in a long-running dispute before the World Trade Organization.

Bombardier is "taking a page out of the Airbus strategy book" by trying to muscle into the U.S. market with cut-rate pricing, Boeing charged.

A Commerce Department spokesman said the petition would be given "a thorough review" and further comment was premature.

Commerce Secretary Wilbur Ross has taken action in recent weeks to protect the U.S. steel and aluminum industries from foreign competition, launching national security investigations that could lead to import restrictions.

An investigation could lead to duties on the Bombardier aircraft to offset any below-cost pricing or any subsidies deemed unfair.

In a statement, Canada's government objected to Boeing's allegations and noted that the C Series has many U.S. suppliers, including for engines, and supports thousands of U.S. jobs.

"The Government of Canada will mount a vigorous defense against these allegations and stand up for aerospace jobs on both sides of the border," it said in the statement.

Bombardier's chief executive conceded the company had been "aggressive" on pricing in order to win, and sources familiar with the deal pegged the discount closer to two-thirds off the nominal list price.

Bombardier said in a statement that it was reviewing the petition and said it structures its dealings to ensure compliance with all relevant laws.

The request for anti-dumping measures was also addressed to the U.S. International Trade Commission, an independent U.S. trade body that will review any decisions by the Commerce Department.

https://beta.theglobeandmail.com/report ... ndmail.com&

[fish4life]

I'm pretty sure I read that United got the 737's from Boeing for 25 mill each so based on list prices they are doing more of a dumping.

[complexintentions]

I guess after years of accusing Embraer of similar tactics Bombardier is going to find out what it's like to have the shoe on the other foot.

Looks good on 'em. And I'm thinking Boeing will have a sympathetic ear in Washington.

[sanjet]

A testament to the product that bombardier has made, the smart move was delaying service entry to ensure most of the engine bugs were cleared prior to delivery. Airbus is learning their lesson with their A320 NEO and rushing service entry.

Since a few C-series are flying regular service, they have beaten all design specs and the airlines are loving them.

I'm sure more orders will be expected specially if fuel prices stabilize around 55-57$ per barrel this year.

Boeing is panicking. This petition won't pass, specially considering they don't even have a similar aircraft to compete with.

[teacher]

I'm pretty sure I read that United got the 737's from Boeing for 25 mill each so based on list prices they are doing more of a dumping.

Exactly. I heard from a reliable source that they were 40% of list price.

The wild card is Trump deciding to go scorched earth because of some deliberatly timed press release.

[tailgunner]

The biggest difference between Bombardier and the other major three (A,B,and E) is Bomardier's lack of any military type of program. Boeing is being fed with hundreds of Billions of dollars through their DnD programs. See: the 767 tanker award.
What Bombardier and the Canadian government should have done was " purchase " a few new State aircraft, like a few Globals, etc. Overpay massively...and voila there is your support a la every other manufacturer and nation. It seems so easy....
Ps. I would also immediately cancel the Super Hornet purchase. if Canada needs an "interim solution", we should immediately begin negotiations with Dassault, or Eurofighter...It also needs to be announced with great fanfare on CBC and CNN.
Cheers.

[sanjet]

It seems so easy....
Ps. I would also immediately cancel the Super Hornet purchase. if Canada needs an "interim solution", we should immediately begin negotiations with Dassault, or Eurofighter...It also needs to be announced with great fanfare on CBC and CNN.
Cheers.

An article supporting a Canadian company on CBC? LOL

[Rockie]

I'm pretty sure I read that United got the 737's from Boeing for 25 mill each so based on list prices they are doing more of a dumping.

Exactly. I heard from a reliable source that they were 40% of list price.

The wild card is Trump deciding to go scorched earth because of some deliberatly timed press release.

Only until someone waves another shiny bauble in front of his face or asks about his electoral college win or the size of his inauguration crowd, then he'll immediately lose track and interest.

Really though, what does Boeing stand to gain by this?

[sanjet]

Really though, what does Boeing stand to gain by this?

If there is rumored orders to be finalized, this will delay it as no airline will sign deals unless they are sure about the financial impact of this petition.

[Rockie]

Really though, what does Boeing stand to gain by this?

If there is rumored orders to be finalized, this will delay it as no airline will sign deals unless they are sure about the financial impact of this petition.

Yeah I can understand that. But delay, not prevent, so it amounts to mischief rather than actually changing a company's equipment strategy. Sort of like a dog barking just because it likes barking.

[TheStig]

I'm pretty sure I read that United got the 737's from Boeing for 25 mill each so based on list prices they are doing more of a dumping.

If I'm not mistaken that order was announced before Air Canada and Delta signed their C Series deals, back when Boeing's plan was to suffocate the C Series by dumping new 737NG's before the production line switches to the MAX. A month or two back United cancelled that order, you'd have to think the performance of the newer CS, the market stability provided by the AC & DL orders, and the rumoured discounts Bombardier is providing had to factor in that decision.

Now, United is shopping again, so what's the new plan for Boeing? As has been mentioned look towards the sympathetic (protectionist) ear in Washington. Does the POTUS has any speeches in Renton coming up?

I absolutely can't stand my taxes being poured into Bombardier, but I understand it. Can anyone here justify giving $400 million dollars a year in subsidies to the big three automakers? Aerospace manufacturing, much like Auto manufacturing has become totally addicted to subsidies, and if they don't get them here they'll get them elsewhere. I'd be fine with them getting them elsewhere, our elected officials and their constituents seem to feel otherwise.

EADS is completely intertwined with European governments, Boeing earns about half of its profits from defence programs. What should the long term plan be for a publicly traded (albeit privately controlled) company like Bombardier with a product like the C Series be when faced with competitors like the Chinese built COMAC C919 in the next 10-20 years? This may be the last commercial aircraft designed and built in Canada, an Avro Arrow of today, I'm cheering for it's success and can't wait to see it with a rondel on the tail.

[confusedalot]

So a country of 35 million people, and henceforth, resources much smaller than the giants, should get into the game of aviation prestige.

US makes planes
EU makes planes
China makes planes
Russia makes planes
Japan makes planes
Brazil makes planes
and so many others

all of the above have a much higher GDP than Canada.

yet, there are many nations who do not make subsidized planes.

Image trumps pedestrian issues. So I see that prestige is the top priority of our nation. Even if it costs.

Other unglamorous domestic issues that need attention, who cares. The unglamorous list is somewhat populated, and there they will stay.

I dunno, not worth the layout, but what do I know.

[teacher]

Boeing’s protectionist push would be felt by consumers and carriers across the world
MIKE NADOLSKI

Special to The Globe and Mail
Published Wednesday, May 03, 2017 4:06PM EDT
Last updated Wednesday, May 03, 2017 4:06PM EDT


Mike Nadolski is vice-president, communications and public affairs, at Bombardier.

Boeing’s recent petition seeking to impose a tariff on C Series aircraft sold in the United States is an unfounded assault on airlines, the travelling public and innovation in the aerospace industry. This protectionist ploy may help enhance Boeing’s bottom line and dominant market position, but if it prevails, the harm to the industry and consumers will be felt far and wide.

We at Bombardier did not expect Boeing to welcome the C Series. We were, however, very disappointed that Boeing would make so many false claims in its petition to the U.S. government. We have an obligation, on behalf of our customers, the flying public and the tens of thousands of jobs that depend on the C Series in Canada and the United States, to set the public record straight.

As a starting point, Boeing alleges Bombardier sold C Series aircraft for $19.6-million (U.S.) apiece. This is wrong. It is nothing more than a back-of-the-envelope guess that is millions of dollars off the mark. In fact, buried in Boeing’s filing, it discloses that this alleged “price” is based on an affidavit from a Boeing executive, with no firsthand knowledge of any price actually paid for any C Series aircraft.
Boeing also suggests that Bombardier sold the C Series to Delta at an unusual discount. This is wrong and it is ironic given that Boeing famously sold hundreds of its new 787 aircraft at steep discounts, including planes sold into Canada.

Boeing also incorrectly claims that its aircraft compete directly with the C Series. Boeing’s claim is contradicted by the company’s own executives, who publicly stated that their 737 Max family does not include an aircraft that actually competes with the C Series model selected by Delta. Indeed, Boeing did not even participate in the competition at Delta.

Airlines base purchasing decisions on a number of factors, including superior design. For Delta, the C Series’s superior design was a critical factor. As Delta’s then-CEO said after the selection, “Let’s be blunt about it – Bombardier created a better piece of technology than the other guys.”

Boeing’s attempt to set up artificial market barriers for the C Series should be seen for what it is – an attempt to force carriers to buy less efficient planes with configurations airlines do not want and with economics that do not deliver maximum value.

Finally, Boeing’s petition brazenly distorts the government investments in Bombardier. It is well known that all countries with major aerospace industries provide support for their local companies. There are clear rules governing the boundaries of this support, which Bombardier and its government investors have scrupulously followed. Boeing, on the other hand, has a record of noncompliance, and the WTO has repeatedly found that Boeing benefited from massive illegal subsidies supporting the development of its new aircraft.

At Bombardier, we believe that open and fair competition serves a very important role in pushing the industry to innovate; to design and build aircraft that are more efficient, more reliable and more environmentally friendly. We would prefer to compete in the marketplace on the basis of our superior aircraft, and will demonstrate that commitment in the U.S. government’s proceeding.

The C Series represents significant advances in commercial aviation. Its development and production represent thousands of high-skilled jobs in Canada and in the United States. We are proud of our employees, investors and suppliers who have worked together to bring this plane to the marketplace, and we look forward to delivering the C Series to our many existing and future customers.

http://www.theglobeandmail.com//report- ... e34887431/

[Black_Tusk]

Wow, straight to the point with quite a few jabs at Boeing.

[TheStig]

I'm a bit surprised this hasn't been a bigger topic of discussion here, it's certainly becoming a big deal in the news cycle and the business world. I've never been a big fan of the Super Hornet interim fighter solution nor the federal Liberals handling of almost everything they've done. However, with the Trump administration re-opening NAFTA Bombardier vs. Boeing is going to be very prominent in the public view, and as much as I hate to see politics getting in the middle of military procurement the Super Hornets could play a valuable role in Canada's bargaining. What do you guys think? Is this the right move for Canada to make given the current political climate?

Canada’s government warned Thursday it could cancel a planned $2 billion purchase of 18 Super Hornet fighter jets from Boeing because of U.S. Department of Commerce anti-dumping investigations against Canadian plane maker Bombardier.

http://www.seattletimes.com/business/bo ... y-dispute/

http://www.reuters.com/article/us-boein ... SKCN18F1UL

[Black_Tusk]

The trade war is only just getting started.

[2R]

They need a Punch Dickens Type of problem solver to get it done .

[Gino Under]

Sadly, Canada isn't likely to be anything more than "the mouse that roared" in this dispute.
Being 1/10th of the U.S., not as brash, not as assertive as the U.S. and certainly not as pro-Canadian as our pro-American neighbours are, I expect this trade war will only end in tears for Canada, Canadian aerospace, and Bombardier.

Maybe it's time to reconsider the Eurofighter.

Gino Under

[Old fella]

I think there is “behind-the-scene" glee amongst the Trudeau Government as this continuous spat may allow them to get out of this Boeing SH procurement stop-gap measure in which many defense experts and procurement specialists say isn’t necessary and a waste of money on the overall fighter jet replacement program. Trudeau may be forced into another look at the F-35 but such musings will more than likely be post 2019.

[LittleNelly]

I think there is “behind-the-scene" glee amongst the Trudeau Government as this continuous spat may allow them to get out of this Boeing SH procurement stop-gap measure in which many defense experts and procurement specialists say isn’t necessary and a waste of money on the overall fighter jet replacement program. Trudeau may be forced into another look at the F-35 but such musings will more than likely be post 2019.

I think you are exactly right. It wasnt a coincidence that the government threatened to cancel the super hornet procurement in response to Boeing's complaint very shortly after a senate report labelled the SH purchase as a political purchase and should be cancelled. Looks much better politically to cancel it to "defend" bombardier versus admitting that they were wrong to begin with.