Tellier Calls It Part Of The "New Economy"
Bombardier President and
Chief Executive Officer Paul Tellier (right), wants government
policy-makers and industry stake holders to develop a comprehensive
Canadian aerospace policy.
"If the Canadian aerospace industry is to survive with the
reputation of excellence it has gained worldwide with continued
benefits to our economy, the Government of Canada and all stake
holders will have to join together to establish the basic tenets of
a comprehensive aerospace policy," Tellier told the Vancouver Board
Tellier said he was encouraged by one of Paul Martin's recent
speeches, in which the next Prime Minister focused on the "new
economy," including transformative technologies. "There is a need
for the industry to make a collective case to be considered a
transformative technology and a major component of Canada's
industrial, scientific, trade and economic policies," argued
Securing aircraft financing is the most immediate challenge
facing Canada's aerospace industry, Tellier said.
"The recent downturn in the airline industry has put commercial
air carriers in dire financial straits," continued Tellier. "With
the continuing weakness in the airline sector, airlines have parked
large parts of the fleets of widebody and narrowbody jets. And
great numbers of financial institutions have decided to get out of
the aircraft financing business altogether, because they have seen
so many non-performing loans on their larger aircraft."
"Meanwhile, most of these same airlines have turned to regional
aircraft on routes that would not be profitable with larger
aircraft. This has created a market anomaly: a product with strong
demand with no available financing to support its purchase."
Describing Export Development Canada (EDC) as a bridge between
support provided by commercial banks and what exporters need to
succeed in international markets, Tellier said "an increased
participation of EDC would represent a clear win-win situation for
the following reasons:
- EDC does not subsidize
Bombardier nor its customers since it operates like a business,
collecting interest on its loans and premiums for its insurance
- EDC's aerospace portfolio has a non-performing rate of 1.6%
compared to a non-performing rate of 8.6% for the overall
- EDC can also make money through sharing incremental fees as
compensation for increased exposure on certain aircraft financing
- Export financing is common to the whole industry including
Airbus, Boeing and Embraer.
- EDC's customer financing ensures the sustainable success of the
Canadian aerospace industry."
In the event that Bombardier could not secure financing for its
customers, Mr. Tellier said it "would have to cut back production
immediately which means significant cuts for the Canadian aerospace
industry." He added "a production cut of just 50 aircraft
represents over 4,000 person-years of unemployment across
Tellier called upon the whole Canadian aerospace industry to
tell its compelling story across the country in support of a
comprehensive policy. He added that in due course, Bombardier would
put forward its own proposals to that effect.
Speaking in Vancouver at a Board of Trade luncheon, Mr. Tellier
also emphasized Bombardier's presence in BC through the SkyTrain
and the West Coast Express, which play an important role in Greater
Vancouver's public transportation system and have impacted the
dynamic growth of the city.
Mr. Tellier described Canada's transportation industry in
general as one of the country's major economic assets and praised
the federal government for its export development and technology