Canada, Quebec And United Kingdom Ante Up

Bombardier announced Friday that it has signed letters of intent with the governments of Canada, Quebec and the United Kingdom for development of the new CSeries family of aircraft. The company also announced site selection for the production of the 110-130 seat airframes. Not everyone is happy with the announcement.

Bombardier kept the work close to home, with the selection of Montreal in Quebec, Canada for the final assembly location of the CSeries. Bombardier's Belfast plant in Northern Ireland is the preferred site for the development of the wings, engine nacelles and composite empennage structures.

Bombardier Aerospace reviewed proposals from over a dozen sites in Canada, the United States and Europe, and eventually cut it down to a short list of offers from Quebec, Ontario, New Mexico and Northern Ireland.

"This is a very significant milestone as we progress in our discussions with customers and risk-sharing partners before our Board considers a launch decision," said Pierre Beaudoin, President and Chief Operating Officer, Bombardier Aerospace in a statement. "We would like to thank all the governments who took part in this selection process. Their interest clearly demonstrates their support of the CSeries aircraft program and the substantial economic benefits it will generate for the chosen locations."

The company says that Montreal was selected as the final assembly site location because of the governments' competitive partnership offers, and the favorable economic and manufacturing context. A labor agreement reached last March with Bombardier Aerospace employees in Quebec was also a key factor in the decision.

Bombardier estimates CSeries development costs will reach $2.1 billion US, which it will share with suppliers and partner governments, each for one-third of the total amount.

The governments of Canada, Quebec and the U.K. will together invest a total of approximately $700 million US. Canada is throwing in $262.5 million, while Quebec's contributions will be $87.5 million.

The U.K. is contributing $340 million to the effort in launch investment and financial assistance. These investments to support the research and development for the CSeries will be repayable by royalties on aircraft sold. Prior to the official launch of the program, Bombardier seeks firm commitments from potential customers and suppliers.

Embraer Executives and US Trade officials seemed perturbed by the announcement.

"Our position on this issue is clear. We are opposed to subsidies for the development and production of large civil aircraft," said Richard Mills, a spokesman for U.S. Trade representative Robert Portman.

He said that the World Trade Organization had found that Canadian financing of Bombardier violated trade rules in the past and that the United States will closely study the latest funding and "continue to follow the matter as it develops." according to The Globe and Mail.

Canadian Industry Minister David Emerson acknowledged that giving money to Bombardier could make Canada vulnerable to a possible challenge from the WTO.
 
"My own feeling is it's time Canada toughened up," Mr. Emerson said. "There's no doubt that there are trade risks out there," he told reporters outside the House of Commons.

FMI: www.bombardier.com