by "ttyymmnn" (ttyymmnn)
Published 09/27/2017 at 09:41
by "ttyymmnn" (ttyymmnn)
Published 09/27/2017 at 09:41
Tags: planelopnik
STARS: 6
Or at least fired an opening salvo in a brewing trade war with our poutine-eating brethren to the north.
In the wake of Delta’s decision to purchase up to 125 Bombardier CSeries CS100 airliners from Canadian airplane manufacturer Bombardier, the US Department of Commerce slapped a tariff on the sale of the jets of up to 219% yesterday, alleging that Canadian government subsidies allow Bombardier to sell the jets at unfairly low prices. The decision was spurred by Boeing, who states that Bombardier receives as much as $3 billion in subsidies from the Canadian government that allows them to dump the airliners on the market. The government of Quebec has also made a $1 billion USD investment in the CSeries program, giving it a 49.5% stake. The US government will have to prove, however, that Boeing was actually hurt in the deal between Bombardier and Delta, and that hasn’t happened yet. Delta, for its part, pointed out that Boeing doesn’t even sell any jets in the 100-seat range that they require following the cancelation of Boeing 717 in 2006. Boeing could be playing a dangerous game, though. The Canadian government is firing back, saying that the trade dispute jeopardizes Boeing’s effort to sell F/A-18 fighters to Canada.
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"pip bip - choose Corrour" (hhgttg69)
09/27/2017 at 09:45, STARS: 2
morons, the whole US Govt.
"ttyymmnn" (ttyymmnn)
09/27/2017 at 09:47, STARS: 4
This whole thing about subsidies has been going on for years. Airbus, Bombardier and Embraer all receive subsidies from their respective governments, but Boeing also gets big-time tax breaks. Whether or not those balance out, I don’t know. I think Boeing may be hurting in the long term, but it’s not because of government subsidies. I think they have just lost their way and aren’t producing the airplanes that people want to buy.
"farscythe - makin da cawfee!" (farscythe)
09/27/2017 at 09:50, STARS: 1
caught that on the news last night.... 220% is ridiculous
thats not even pretending to be anything other than a get the fuck out of our market
"djmt1" (djmt1)
09/27/2017 at 09:52, STARS: 2
Well this can only end well. On the bright side I guess people will be less bothered about the “dump” being burned down this time around.
"e36Jeff now drives a ZHP" (e36jeff)
09/27/2017 at 09:56, STARS: 0
I don’t get how this can be done at the behest of Boeing when Boeing doesn’t supply any planes of comparable size.
"Smallbear wants a modern Syclone, local Maple Leafs spammer" (smallbear94)
09/27/2017 at 09:56, STARS: 2
It’s closer to bailout than subsidy. Bombardier is to all intents and purposes broke, and the C-Series taking so long to develop is a big chunk of the reason. Frankly they went over their head to build it. I can’t see them selling for less than they’re worth just because there’s government money involved. They’ve been sucking that tit so hard so long that there’s real danger of them being cut off for good.
I’m pleased that a Canadian company is building something like this... and yeah it kinda pisses me off that Boeing would do this... but come on. You’re hunting a ghost. Bombardier selling something below its value is laughable. The company may have a solid engineering team, but it’s financially a mess. Good luck finding your “proof”. I mean, this is a company that will take money from one Canadian governing body and turn around and gouge another on its products.
"fintail" (fintail)
09/27/2017 at 09:57, STARS: 9
Is anyone tired of winning yet?
"not for canada - australian in disguise" (for-canada)
09/27/2017 at 09:58, STARS: 5
I saw we build a wall. A great big wall. It’ll be a great wall, that’s what my friends, very smart friend of mine, big economist guy, he tells me that we need a wall. And I say “who’s gonna pay for it?” and he replies “the US, of course”. Trust me folks, this wall, gonna be a great wall. We gotta keep these people out folks.
"ttyymmnn" (ttyymmnn)
09/27/2017 at 10:00, STARS: 3
This is the best comment I’ve read in a very long time.
"someassemblyrequired" (someassemblyrequired)
09/27/2017 at 10:00, STARS: 7
Awfully ballsy of Boeing when there’s a $5B Super Hornet order from the Canadian government (likely now dead irregardless of the final result). And a bunch of Dreamliners and 737 Max’s on order by Westjet and Air Canada. Don’t forget the UK is pissed too, Shorts Brothers in Belfast makes the wings. AC’s MAX orders will get cancelled for sure if this stands, or the aircraft pushed to other airlines if they can’t be cancelled. Quebec politics are such that they’ll need to go with the Airbus neos instead, and it’s unlikely AC will even be able to consider another Boeing plane for several generations. Boeing has become rather shortsighted now that the McDonnell Douglas virus has taken hold in management.
"FTTOHG Has Moved to https://opposite-lock.com" (alphaass)
09/27/2017 at 10:01, STARS: 2
Something that hasn’t been clear to me in any of the stories so far: Does this tariff apply to all CSeries jets? It doesn’t really make any sense on the CS100, because Boeing doesn’t even compete in that market. The CS300 and the 737 do overlap, though, so I at least get it for that model - though I do question if the dispute does more long-term harm than good.
"ttyymmnn" (ttyymmnn)
09/27/2017 at 10:02, STARS: 0
I think it’s just an opening salvo in a worldwide assault on government subsidies. I haven’t followed it all that closely over the years, but it seems like every time Boeing loses a deal they cry foul. It seems to be that they should be working harder to build planes that people want to buy.
"ttyymmnn" (ttyymmnn)
09/27/2017 at 10:03, STARS: 1
It’s YUGE!
"ttyymmnn" (ttyymmnn)
09/27/2017 at 10:04, STARS: 0
That I don’t know.
"CB" (jrcb)
09/27/2017 at 10:07, STARS: 1
I wonder what the WTO has to say on such an extreme tariff.
"ttyymmnn" (ttyymmnn)
09/27/2017 at 10:08, STARS: 1
We will see, as this will almost certainly go to some sort of arbitration, unless the US gov’t backs down.
"Smallbear wants a modern Syclone, local Maple Leafs spammer" (smallbear94)
09/27/2017 at 10:08, STARS: 4
Not to mention that there are bigger C-Series versions in the pipes and WestJet uses pretty much nothing but 737's. And that AC has largely switched to Airbus. It would be almost painless (in as much as things costing millions of dollars can be painless) to ditch Boeing altogether.
I think the problem is that Boeing no longer has any real homegrown competition for the airline business. Now they can play the same patriotism card that PanAm used with such success in the 30's... and it’s been a long time since such a tactic could be used effectively. The current political situation is ideal for it.
"CB" (jrcb)
09/27/2017 at 10:10, STARS: 0
Hopefully.
I wonder whatever happened to that ”freedom in the marketplace” that capitalism loves so much.
"cbell04" (cbell04)
09/27/2017 at 10:13, STARS: 1
Isn’t that the same % mark up those hockey lovers have been charging us for there sweet jdm imports after they are done playing with them and they finally become legal in the states? Jk. Let’s tax and tariff our way to greatness..
"ttyymmnn" (ttyymmnn)
09/27/2017 at 10:16, STARS: 1
But that’s Boeing’s point. There is no freedom in the marketplace if one company is being propped up by a government while the other is not. Dumping is not limited to government contracts. It happens all the time, from car companies dumping cars to eliminate long-term competition, or Wal Mart selling products at a lost to get customers into the store. Huge corporations like Wal Mart can absorb the losses for the long-term gain.
Dumping , in economics , is a kind of predatory pricing , especially in the context of international trade . It occurs when manufacturers export a product to another country at a price below the normal price. The objective of dumping is to increase market share in a foreign market by driving out competition and thereby create a monopoly situation where the exporter will be able to unilaterally dictate price and quality of the product. (Wiki)
"FTTOHG Has Moved to https://opposite-lock.com" (alphaass)
09/27/2017 at 10:17, STARS: 1
No worries. I wasn’t asking you specifically so much as expressing frustration that none of the news stories about the tariff that I’ve read made it clear.
"Cé hé sin" (michael-m-mouse)
09/27/2017 at 10:20, STARS: 2
Boeing are worried about the commercial impact of a plane they have no intention of making a competitor for?
Also., Boeing are major exporters. They have rather a lot to lose if they encourage trade wars.
"ttyymmnn" (ttyymmnn)
09/27/2017 at 10:22, STARS: 0
Agreed on both points. To wit:
"Cé hé sin" (michael-m-mouse)
09/27/2017 at 10:23, STARS: 1
Boeing are not exactly averse to taking whatever Government assistance is on offer themselves.
"notsomethingstructural" (notsomethingstructural)
09/27/2017 at 10:23, STARS: 2
The tariff war started with softwood lumber in the spring and boy was that a doozy. Raised the price of cedar (which conveniently I needed to build a deck) almost 30%.
"Cé hé sin" (michael-m-mouse)
09/27/2017 at 10:25, STARS: 3
Bear in mind that Airbus now assemble planes in the US so Boeing are not without local opposition anymore.
"Smallbear wants a modern Syclone, local Maple Leafs spammer" (smallbear94)
09/27/2017 at 10:26, STARS: 0
I didn’t know that.
"ttyymmnn" (ttyymmnn)
09/27/2017 at 10:26, STARS: 1
Hell, I can’t even find anything on the Department of Commerce website.
"ttyymmnn" (ttyymmnn)
09/27/2017 at 10:27, STARS: 0
So, did you buy American cedar? Or pay the tariff? Who, exactly, is being protected here? And where does that tariff money go?
"ttyymmnn" (ttyymmnn)
09/27/2017 at 10:28, STARS: 1
Exactly. I wonder, though, if those tax breaks are equal to the checks that AB and Bombardier are getting from their governments.
"someassemblyrequired" (someassemblyrequired)
09/27/2017 at 10:29, STARS: 1
I wonder if Bombardier might try opening a second line - they have a production facility for Learjets in Wichita.
"someassemblyrequired" (someassemblyrequired)
09/27/2017 at 10:30, STARS: 1
Yeah I think Westjet will stay with the 737, but you never know. It’s a 50 year old airplane, and things have changed.
"Cé hé sin" (michael-m-mouse)
09/27/2017 at 10:32, STARS: 0
Who knows? There’s so much claim and counterclaim going on that nobody’s ever going to agree on a common position.
"notsomethingstructural" (notsomethingstructural)
09/27/2017 at 10:34, STARS: 1
You don’t exactly get to pick where your softwood general purpose lumber is sourced for small residential projects, at least here. The question of who the tariff protects is a good one, because short term the distributors just price the tariff in to all their sales as soon as it hits because the run on domestic lumber will drive prices up until supply can balance it. Long term it’s intended to spur domestic growth because if a board was $29 before and you said as a producer “I can’t make enough money at $29 a board” and the immediate impact of the tariff makes it $35 a board, you might grow your business until it floats down to $32 a board if you sell 30% more.
For planes, good question.
"user314" (user314)
09/27/2017 at 10:35, STARS: 4
Wait, Boeing is complaining about subsidies? Boeing, one half of ULA , is complaining about unfair government subsidies?
"Smallbear wants a modern Syclone, local Maple Leafs spammer" (smallbear94)
09/27/2017 at 10:37, STARS: 1
I don’t think they’d stop flying them, but they might stop going back to Boeing when they need new ones.
But that’s all conjecture, I doubt if this tariff actually stands anyway. At least not in its present form.
"ttyymmnn" (ttyymmnn)
09/27/2017 at 10:42, STARS: 1
Shhhhhh!
"someassemblyrequired" (someassemblyrequired)
09/27/2017 at 10:52, STARS: 1
Yeah hopefully cooler heads will prevail.
"AfromanGTO" (afromangto)
09/27/2017 at 11:11, STARS: 1
Probably a little more. Boeing tends to be greedy.
"AfromanGTO" (afromangto)
09/27/2017 at 11:13, STARS: 1
"haveacarortwoorthree2" (haveacarortwoorthree2)
09/27/2017 at 11:14, STARS: 1
But Boeing wants to sell planes to fly people over the wall. Conundrum ensues!
"Chariotoflove" (chariotoflove)
09/27/2017 at 11:17, STARS: 0
Anybody else think South Park may have been prophetic? Interesting times indeed.
"ttyymmnn" (ttyymmnn)
09/27/2017 at 11:19, STARS: 1
I never watched the show, so, unfortunately, I don’t get the reference.
"Chariotoflove" (chariotoflove)
09/27/2017 at 11:22, STARS: 1
How can an artist be so unschooled in the fine arts? :p
It’s from the South Park movie in which America and Canada went to war.
"ttyymmnn" (ttyymmnn)
09/27/2017 at 11:24, STARS: 0
Who won?
"Chariotoflove" (chariotoflove)
09/27/2017 at 11:26, STARS: 1
I don’t remember. Though I do see a lot of Jukes around so...
"not for canada - australian in disguise" (for-canada)
09/27/2017 at 11:37, STARS: 0
I’m telling you, the wall’s gonna be huge. Thousands of feet high. Many such cases. Puny American planes won’t be able to fly over.
"ttyymmnn" (ttyymmnn)
09/27/2017 at 11:42, STARS: 1
It’s a 50-year-old airplane, but the 737 MAX just took its maiden flight last year. I think Boeing is in a real pickle, of their own making. They’ve done just about all they can with the 737 except make it smaller, and it seems like that’s what people want right now. So they’ve got nothing to offer. They’ve canceled the 757, and can’t seem to stretch the 737 enough to make up for it. So they’ve got nothing to offer in that class either. There is no question that the 737 has had a remarkable run (I’ve got a piece on the 737 coming up in a couple of weeks), but I think Boeing has been resting on its laurels and plagued by indecision. They’re getting left behind. Again.
I am in the middle of watching a documentary about Boeing, which was sponsored by Boeing and is really nothing more than an hour-long commercial for Boeing. Still, they talked about the 247 , an airliner that revolutionized the commercial airliner industry at the time. But Boeing would only build them for United, which was owned by, you guessed it, Boeing, and sold them to themselves for $60,000 apiece. This drove other airlines into the arms of Donald Douglas. He looked at all the shortcomings of the 247 and developed the DC-1 and DC-2, clobbered Boeing, and relegated the 247 to relative obscurity. By comparison, Douglas sold the DC-2 for $80,000 apiece, so even back then, Boeing was getting a favorable deal, albeit with themselves. It seems that history may just be repeating itself.
"Jayhawk Jake" (jayhawkjake)
09/27/2017 at 12:08, STARS: 0
Do people really want the smaller airline?
I wonder if Delta would purchase the CSeries at a higher price point. It seems like Boeing is essentially saying there isn’t a market for that 100 seat plane unless the pricing is aggressively low. Boeing would be better equipped to play a price game than Bombardier if Bombardier wasn’t being held up by the Canadian government.
"Jayhawk Jake" (jayhawkjake)
09/27/2017 at 12:10, STARS: 1
No one. Sadam came up from hell and tried to take over the world, but with Kenny’s encouragement Satan put his foot down and killed Sadam (again). Then Kenny sacrificed himself by asking Satan to reset everything to before the war started. So in the reality after the end of the movie the war never occurred in the first place.
"Jayhawk Jake" (jayhawkjake)
09/27/2017 at 12:15, STARS: 1
Boeing is being protected, theoretically, if they are arguing (quietly) that Bombardier is only getting sales at all because of the subsidies.
Interestingly it could also have implications for Gulfstream and Textron Aviation given that Bombardier is a major competitor in the business aircraft market. It’s possible that Bombardier has significantly discounted Learjets and Challengers in order to compete on price in that market as well, and it would be hard to argue that US based competitors don’t have aircraft that fill those niches.
"Chariotoflove" (chariotoflove)
09/27/2017 at 12:17, STARS: 0
That’s right, I remember now!
"someassemblyrequired" (someassemblyrequired)
09/27/2017 at 12:19, STARS: 1
I think Boeing’s attempts to kill the CSeries is as much an admission as you’re going to get from Boeing that a stretched version would be a 737 killer. And they are definitely resting on their laurels.
"ttyymmnn" (ttyymmnn)
09/27/2017 at 13:03, STARS: 0
Some people do, obviously, or else they wouldn’t be making them. There is clearly a niche for it. There is still a market for 100-seat aircraft.
Smallbear opined here that Bombardier is essentially bankrupt, and is only in business because of help from the Canadian government. Delta doesn’t seem all that much interested in Boeing these days, with their move to the A350 and now the CS100.
"Jayhawk Jake" (jayhawkjake)
09/27/2017 at 13:39, STARS: 1
Your first point is not necessarily true. Bombardier really struggled to find a buyer initially, orders were very soft until the Delta deal. Delta has by far the largest order of the CS100, there are many more orders for the 130-160 seat CS300 which overlaps somewhat with the 737-700.
The CSeries is pretty much a commercial flop, and the program cost billions. If Bombardier wasn’t supported by the Canadian government it seems very likely that this jet would have bankrupted them. The Challenger series sells well and I believe the Globals are doing pretty decent, but that’s not enough to float the CSeries project. I’m not actually sure if they’re producing any Learjets, and driving past their facility you could easily be fooled that Learjet even exists: the ramps are full of Bombardier business jets at their service center and Global test aircraft. the CS100 comes down here fairly often as well.
It’s a shame, really, because the PW1000G engines should be revolutionary.
"ttyymmnn" (ttyymmnn)
09/27/2017 at 13:49, STARS: 0
Thanks for the insight. I am by no means an expert on currents trends in commercial aviation. Ask me what happened 50 years ago. I’m all over that!
"Jayhawk Jake" (jayhawkjake)
09/27/2017 at 15:03, STARS: 1
I’m not an expert on commercial either. I know more about corporate aircraft.
"Grindintosecond" (Grindintosecond)
09/27/2017 at 18:04, STARS: 1
“...alleging that Canadian government subsidies allow Bombardier to sell the jets at unfairly low prices.”
Ahem, a bit of clarity on this one. Once the numbers came out of just how much more efficient this plane would be than a current 737 or Airbus product, both Airbus and Boeing slashed their prices on those products. “Hey don’t look at that plane but over here i can get you a used 737-700 for $10m less than the C-series...eh?, eh?”
That kills sales and Bombardier begins starving for cash because they kind of went in deep to this amazing product, and it is truly amazing; over 25% more efficient. over.... So the Canadien Govt. bails them out a little bit, just like the American banks, and they can survive a bit until their first deliveries begin.
Delta orders them. Looks nice. I’m sure Boeing and Airbus aren’t exactly happy so they complain. US tariffs of 219% follow....Yes some terrible backroom dealing and price fixing by the big two don’t quite do the job of burying a competitor so they get a government to do it? Very shady IMHO.
"Grindintosecond" (Grindintosecond)
09/27/2017 at 18:08, STARS: 0
The C-series flop isn’t quite due to it just being a failure, but there was much more maneuvering done by AB and Boeing to neuter the market offerings. undercutting, leveraging existing deals, etc.
"Grindintosecond" (Grindintosecond)
09/27/2017 at 18:09, STARS: 0
I should see a MAX show up next month. We’ll see what it’s like to operate.
"ttyymmnn" (ttyymmnn)
09/27/2017 at 18:18, STARS: 0
“...alleging that Canadian government subsidies allow Bombardier to sell the jets at unfairly low prices.”
There’s always more to the story, and the paragraph I wrote perhaps suffers from too much condensing. This sort of chicanery on the part of Boeing goes all the way back to the 30s, when they built the 247 and sold them exclusively to United which, not surprisingly, was owned by Boeing.
"Wacko" (wacko--)
09/27/2017 at 20:10, STARS: 0
Should we tell them they can fly around it?