Bombardier Aerospace

[Topaz]

B.A. is looking at Morocco to open business because of production cost. I thought the corp. tax cuts, the Feds have given theses companies was suppose stop companies leaving and keep jobs here in Canada? This not the first company to leave and I don't think it will be the last to leave for cheaper countries. http://ca.news.yahoo.com/bombardier-aerospace-looking-morocco-low-cost-manufacturing-192204235.html

[TimG]

B.A. is looking at Morocco to open business because of production cost.

Bombardier is competing in a global marketplace. What do you expect Bombardier to do if it cant sell its planes because they are too expensive to produce? Close down?

[Cameron]

It's the price companies want to pay for a plane. Canadian employees are expensive to employ and with people wanting to pay nothing for airfare, companies bid furiously for low prices. So they make the parts elsewhere and assemble in Canada (essentially the Q400 out of Toronto).

When you pay your $300 plane ticket to Toronto, you are just adding to the problem.

You say Westjet. Westjet doesn't hire ground staff (baggage handlers). They contract it out at super low prices (In some cases $500 or less for a 30 min turn). Most of those companies (I used to work for one) are crap. Their wages are just slightly above minimum wage. They offer a life of sadness and disparity. That is one of their aces up their sleeve.

[Bonam]

It's the price companies want to pay for a plane. Canadian employees are expensive to employ and with people wanting to pay nothing for airfare, companies bid furiously for low prices. So they make the parts elsewhere and assemble in Canada (essentially the Q400 out of Toronto).

American employees are also expensive to employ, but you don't see Boeing moving the bulk of its production to Africa. A viable domestic aerospace industry is a matter of national security. The US restricts its aerospace and defense contractors from conducting certain kinds of operations in other countries as a matter of federal law. Harper already set a precedent by intervening when an American company tried to buy MDA. He should not be afraid to do so again to retain Bombardier production here in Canada. Bombardier should find other ways to save money or to increase the value of its products to customers.

Edited May 9, 2011 by Bonam

[TimG]

American employees are also expensive to employ, but you don't see Boeing moving the bulk of its production to Africa.

But Boeing is trying to move its work force to South Carolina where wage rates are a lot cheaper.

He should not be afraid to do so again to retain Bombardier production here in Canada.

Bombadier makes planes and trains for civilian use. It has no military or national security significance.

[Smallc]

Bombadier makes planes and trains for civilian use. It has no military or national security significance.

Exactly....and Canada has a very large aerospace industry no matter what happens in this particular circumstance.

[bush_cheney2004]

But Boeing is trying to move its work force to South Carolina where wage rates are a lot cheaper.

South Carolina is in the United States.

Bombadier makes planes and trains for civilian use. It has no military or national security significance.

Almost true....Bombardier has several military contracts for marine engines, small vehicles, and contracted transport.

[TimG]

South Carolina is in the United States.

Canadian companies don't have the option of staying in Canada if they wish to get rid of their union.

[Jack Weber]

Canadian companies don't have the option of staying in Canada if they wish to get rid of their union.

So RTW is about busting unions and driving wages and benny plans down...

That's funny,because I have been told by the "advocates" here that it was all about the "personal freedom of the individual worker"...

Whodathunk something advocated by the NAM and the CATO Institute (among others) was'nt about "individual personal freedom"?

[dre]

Canadian companies don't have the option of staying in Canada if they wish to get rid of their union.

Thats a pretty funny statement. Theres a shitload of non-union private sector jobs being outsourced. I manage IT outsourcing projects that are entirely in the private sector. The labor savings are gigantic, and the savings in facility costs are gigantic as well. A software developer in the US or Canada costs between 50 and 90 thousand. In Manila I can get the same resource for 10-20.

People are always claiming that if we bust unions or bottom-out the business tax rate it will stop offshoring, but in my experience its just plain silly. When I have a choice between a domestic resource that costs 60k and a comparable offshore resource thats costs 15k its pretty much silly to suggest tweaking the tax-rates or supressing labor costs a little bit here is going to matter.

Those jobs are gonna go! Both Boeing and Bombardier. The only jobs that WONT go are the ones that CANT.

[TimG]

So RTW is about busting unions and driving wages and benny plans down.

When unions are given monopoly power over a workplace they insist on a large number of concessions which do not benefit their members and simply expand the power of the union. RTW states eliminate the middle man and ensures that any union is accountable to the people they claim to serve. So in that sense, RTW is about giving workers more choice and control over their lives. The fact that it is also good for the employers is simply a consequence of a union movement that long since lost its way.

[TimG]

A software developer in the US or Canada costs between 50 and 90 thousand. In Manila I can get the same resource for 10-20.

For large ERP projects where most of the work is tedious rote programming then Canadian employees cannot compete. But if you are running a start up where you need employees that can think on their feet then Canadian programmers earn their wages. The trouble is you got to be a top of line programmer to stay employed in Canada.

Those jobs are gonna go! Both Boeing and Bombardier. The only jobs that WONT go are the ones that CANT.

You can't build an economy on jobs that are locked in by government regulation. We have to compete. That will mean our wages expectations will have to come down. The biggest barrier to reducing wages are the public service unions who think they have a god given right to endlessly rising wages paid for by the private sector workers that are earning less and less. Edited May 9, 2011 by TimG

[Bonam]

Thats a pretty funny statement. Theres a shitload of non-union private sector jobs being outsourced. I manage IT outsourcing projects that are entirely in the private sector. The labor savings are gigantic, and the savings in facility costs are gigantic as well. A software developer in the US or Canada costs between 50 and 90 thousand. In Manila I can get the same resource for 10-20.

People are always claiming that if we bust unions or bottom-out the business tax rate it will stop offshoring, but in my experience its just plain silly. When I have a choice between a domestic resource that costs 60k and a comparable offshore resource thats costs 15k its pretty much silly to suggest tweaking the tax-rates or supressing labor costs a little bit here is going to matter.

Those jobs are gonna go! Both Boeing and Bombardier. The only jobs that WONT go are the ones that CANT.

Outsourcing a few software engineers to an office oversees is one thing, building a new manufacturing facility that costs tens of billions of dollars is quite another. In the calculation of whether such a capital investment is worthwhile over some timescale to be considered, a few percent change in taxes or labor costs can make a significant difference.

[dre]

Outsourcing a few software engineers to an office oversees is one thing, building a new manufacturing facility that costs tens of billions of dollars is quite another. In the calculation of whether such a capital investment is worthwhile over some timescale to be considered, a few percent change in taxes or labor costs can make a significant difference.

Youre delaying the inevitable at best. And we arent just talking about a "few software engineers" we are talking about numerous entire industries. Almost no job is safe unless its physically bound to this geographical location (carpenters or mechanics) for example. Production has been hit hard, engineering has been hit hard and accounting and business management is gonna get hit hard too. Its all about labor and facilities costs. Blue collar, white collar... dont matter. I could EASILY replace you with someone just as smart in India or Russia or the Philipenes for a fraction of what you are paid.

[dre]

For large ERP projects where most of the work is tedious rote programming then Canadian employees cannot compete. But if you are running a start up where you need employees that can think on their feet then Canadian programmers earn their wages. The trouble is you got to be a top of line programmer to stay employed in Canada.

You can't build an economy on jobs that are locked in by government regulation. We have to compete. That will mean our wages expectations will have to come down. The biggest barrier to reducing wages are the public service unions who think they have a god given right to endlessly rising wages paid for by the private sector workers that are earning less and less.

You can't build an economy on jobs that are locked in by government regulation. We have to compete. That will mean our wages expectations will have to come down.

The problem is who are you going to compete with? Should workers in Canada have to compete with slaves in a dictatorship that have zero representation? Should trade be a completely open/free or should we as a nation try to be an ethical consumer. I could probably make widgets pretty cheap if I kept my workers in a steal cage... Wheres the line? Is there one?

[Bonam]

Youre delaying the inevitable at best.

How inevitable is it? As we outsource things to other countries, those countries economies develop and the standard of living there increases. . India, China, etc, these are all economies growing far faster than our own, and people there are starting to get used to bigger and better things. The gap narrows over time. As that happens, we find other countries to outsource to, ones that haven't developed yet, Africa and whatnot. Of course, by then India and China will be outsourcing too, so the development will happen much much faster. Eventually, all these countries develop and you run out of places to outsource to. Anything that hasn't been outsourced by then is safe. So "delaying" something may well be a viable tactic, because in the end it won't be so inevitable.

I think this process will be mostly complete by mid century, with all the places that are viable for industry having been pretty much raised up to be pretty expensive and not a huge cost savings, and the few remaining places that have not will be such hellholes of backward misery that no business would want to set foot there.

And we arent just talking about a "few software engineers" we are talking about numerous entire industries. Almost no job is safe unless its physically bound to this geographical location (carpenters or mechanics) for example. Production has been hit hard, engineering has been hit hard and accounting and business management is gonna get hit hard too.

Engineering has been hit hard? Don't really notice, the only thing I ever hear about is how America isn't producing enough engineers, how companies keep having to bring in talented people from overseas because we aren't making enough of them here. And it's true, there are more job postings in engineering around here than people to fill them. And that's during a supposed "recession".

Its all about labor and facilities costs. Blue collar, white collar... dont matter. I could EASILY replace you with someone just as smart in India or Russia or the Philipenes for a fraction of what you are paid.

Well, last job I had was at a national lab. Good luck packing that up and shipping it to India so you can hire people there to work on it

Edited May 9, 2011 by Bonam

[bush_cheney2004]

Outsourcing a few software engineers to an office oversees is one thing, building a new manufacturing facility that costs tens of billions of dollars is quite another. In the calculation of whether such a capital investment is worthwhile over some timescale to be considered, a few percent change in taxes or labor costs can make a significant difference.

True enough....small points on the margin count big, which is why many carriers now perform aircraft maintenance offshore. Canada has the double whammy of higher costs and lower productivity.

[bush_cheney2004]

...Well, last job I had was at a national lab. Good luck packing that up and shipping it to India so you can hire people there to work on it

Even the IT industry is coming full circle on outsourcing to India or the PI. My company found onshore or near-shore resources that are cost effective without language, writing skills, or time zone hassles. The heyday of USA H1-B work visas is also over.

[TimG]

Even the IT industry is coming full circle on outsourcing to India or the PI. My company found onshore or near-shore resources that are cost effective without language, writing skills, or time zone hassles. The heyday of USA H1-B work visas is also over.

Did those onshore resources cost the same as before outsourcing started or have the pay scales come down?

[bush_cheney2004]

Did those onshore resources cost the same as before outsourcing started or have the pay scales come down?

Bill rates are down...way down. Plus many US firms were not getting the quality of a 60K - 90K domestic resource from Bangalore anyway. They required additional and explicit supervision for requirements and technical specifications, and we had to go to an on-shore interface to act as liaison.

[Topaz]

How many of you here could living on 5.00 a hour or $200.00 a week,? So there's no way, Canada can't stop the companies from leaving to Third World countries and so much for corp tax cuts.

[TimG]

They required additional and explicit supervision for requirements and technical specifications, and we had to go to an on-shore interface to act as liaison.

If you have a project with well defined requirements then offshoring works well. If you are developing a new product and need a core team of motivated people you need to hire onshore.

[TimG]

How many of you here could living on 5.00 a hour or $200.00 a week,? So there's no way, Canada can't stop the companies from leaving to Third World countries and so much for corp tax cuts.

You don't need to match the wage rates - the gap simply has to be reduced. Unfortunately, most union shops have not learned to accept this new world and expect wages to actually increase. This is especially true of government unions. This attitude needs to change.

[bush_cheney2004]

If you have a project with well defined requirements then offshoring works well. If you are developing a new product and need a core team of motivated people you need to hire onshore.

The problem is that we couldn't accept their deliverables as-is without additional onshore review and testing, which cut in on the assumed savings while introducing more project risk. The tipping point comes sooner than elementary hourly rate comparisons. In the Philippines, we would use cheaper resources in the QA space with an Accenture business model, only to find that testing was signed off without being completed just to make hard dates. This meant more trips to Luzon, additional checks, and rework that wouldn't have otherwise been needed. Turnover is high as well.

Time to market often means that requirements are half baked and fluid, and we found that the offshore resources were inherently inflexible and less agile, even with solid change management tools. The headaches just became too much.

[fellowtraveller]

They offer a life of sadness and disparity.

Why would you expect an employer to provide a life along with a job? Baggage handling is unskilled labour and should be paid accordingly.