Bombardier just received $372 million in loans

[?Impact]

Bombardier just got $372.5 million in loans from the federal government. This is a lot less than it asked for a couple of years ago, and it is a repayable loan. Is this a good move by the federal government? Note that the C-Series order pipeline is looking up (many orders received late last year), so this will allow them to tool up to meet demand. Most of the money however is targeted to the Global 7000 business aircraft program that will be going commercial next year. 

[OftenWrong]

I dunno, my first thoughts were like "What, the hell?"

I heard Bombardier asked for 1 B dollars. Gee, that's a little bit. That's like a whole auto- industry bailout, but for only one company! The CEO seemed real happy to get only 378 M. I guess they went with the old adage, "Ask high, expect Low"?

I certainly hope they pay this loan back. Will reasonable interest be applied?

[Boges]

I hear it's an interest free loan. 

Why are the feds so scared of them? How many jobs in Key-Bec are linked to this silly company? 

 

Edited February 8, 2017 by Boges

[?Impact]

24 minutes ago, Boges said:

How many jobs in Key-Bec are linked to this silly company?

Bombardier has roughly 65,000 employees worldwide (there were over 70,000 at their peak). The two main divisions are aerospace and transportation, with employees divided almost 50/50 between them. About one third of their employees are in Quebec.

[capricorn]

48 minutes ago, Boges said:

I hear it's an interest free loan. 

 

Well then, we can kiss that money goodbye.

[Topaz]

Well, unemployment we lose income, and IF we get the loan back, it seems the right way.

[PIK]

The company is worth maybe 5b, their stock is almost penny stock. And yet we read about all the orders they do and always lose money. I would have stated they get rid of the head honchos and get some new people in there and then we talk money to be paid back with interest.

Edited February 8, 2017 by PIK

[Argus]

Bombardier is and has always been a very poorly run company, controlled by the original founding family. It survives largely due to political patronage and corporate welfare.

Edited February 8, 2017 by Argus

[?Impact]

4 minutes ago, PIK said:

The company is worth maybe 5b, their stock is almost penny stock

Certainly the aerospace and transportation industries have been fairly volatile during recent years and Bombardier is no exception here. It is worth noting however that the market has decided to increase their value by 383% since the beginning of 2016. A lot of that has to do with them overcoming problems with the C-Series, and more importantly winning several large sales.

[PIK]

WTO complaint filed against Canada after $372M loans for Bombardier

http://www.ottawasun.com/2017/02/08/wto-complaint-filed-against-canada-after-372m-loans-for-bombardier

What is this going to cost us?

[PIK]

Wow ,sorry for the big letters, no idea how I did that. lol

[Hard Working Old Guy 68]

They originally wanted a billion.  They've received 1/3.  The other 2/3 will be slowly slid across the table so we don't all get upset at once.

[Moonbox]

On 2/8/2017 at 0:04 PM, Argus said:

Bombardier is and has always been a very poorly run company, controlled by the original founding family. It survives largely due to political patronage and corporate welfare.

That's pretty much all there is to say about this.  Bombardier has been receiving federal subsidies for over 50 years now and it doesn't appear that they've ever repaid even half of that.  Significant portions of that debt has been written off.  

This isn't a case of the company having a bad run and needing some support.  This is systemic corporate welfare for a company that has consistently struggled to be profitable.  It's throwing good money after bad and for the average Canadian, it's bad fiscal policy.  It's textbook poor economics.  

Edited February 9, 2017 by Moonbox

[Bonam]

Bombardier has a pile of problems but it's also Canada's only domestic manufacturer of large aircraft. The company's expertise is fairly unique in Canada and could not easily be replicated by another Canadian company. While the company is a financial sink, maintaining this set of capabilities in Canada has some value for national security, sovereignty, independence, etc. That's probably worth some level of government funding. 

[Argus]

16 minutes ago, Bonam said:

Bombardier has a pile of problems but it's also Canada's only domestic manufacturer of large aircraft. The company's expertise is fairly unique in Canada and could not easily be replicated by another Canadian company. While the company is a financial sink, maintaining this set of capabilities in Canada has some value for national security, sovereignty, independence, etc. That's probably worth some level of government funding. 

I don't want them to go into bankruptcy. What I'd like to see is the family losing control and new management taking over. That is usually what does happen to companies with bad management. The continual bail-outs by both levels of government have, to a certain extent, stopped that normal process from taking place.

[Bonam]

Just now, Argus said:

I don't want them to go into bankruptcy. What I'd like to see is the family losing control and new management taking over. That is usually what does happen to companies with bad management. The continual bail-outs by both levels of government have, to a certain extent, stopped that normal process from taking place.

Yes a change in management would probably be good. 

[Moonbox]

28 minutes ago, Argus said:

I don't want them to go into bankruptcy. What I'd like to see is the family losing control and new management taking over. That is usually what does happen to companies with bad management. The continual bail-outs by both levels of government have, to a certain extent, stopped that normal process from taking place.

I think that this is the pertinent point here.  I don't know how they continue to do it, but somehow the family manages to get hundreds of millions from the federal government every 5-10 years with little/no strings attached.  It's pretty clear by now that the present generation isn't capable of managing it effectively and that new leadership is required.  Taxpayers have sunk over a billion into the company and have nothing to show for it.  

Call me crazy, but I don't think you should be allowed to consistently run your company in the red, fall years behind targeted production and development goals, ask for federal bailouts on a regular basis, and STILL get to maintain full control of your company.  

 

Edited February 9, 2017 by Moonbox

[Derek 2.0]

2 hours ago, Moonbox said:

This isn't a case of the company having a bad run and needing some support.  This is systemic corporate welfare for a company that has consistently struggled to be profitable.  It's throwing good money after bad and for the average Canadian, it's bad fiscal policy.  It's textbook poor economics.

 

I largely agree, but far be it for me to defend the Trudeau government, its no different then Harper loaning billions to automakers. Furthermore, as noted by Bonam, aside from subsidiaries, it is one of the few Canadian makers of fixed wing aircraft......a monopoly created by past governments that allowed Bombardier (always a poorly run company) to swallow-up even more poorly ran Canadian aerospace "giants"..........In large part though, the rot can be traced back to the previous Trudeau government, and its then industry minister Jean Chretien, who nationalized the then sinking Canadair in the 70s, and then repeated the same mistake with de Havilland Canada in the 1980s........

 

Without Canadair and de Havilland, Bombardier would be know as a just a maker of snow machines......

 

2 hours ago, Bonam said:

Bombardier has a pile of problems but it's also Canada's only domestic manufacturer of large aircraft. The company's expertise is fairly unique in Canada and could not easily be replicated by another Canadian company. While the company is a financial sink, maintaining this set of capabilities in Canada has some value for national security, sovereignty, independence, etc. That's probably worth some level of government funding.

 

I agree, much like shipbuilding. It doesn't make economic sense, but it is a strategic industry, and the GoC giving out this corporate welfare is no different then what nearly every other aerospace company receives from their parent country..........with that, a far greater impact on the Canadian aerospace industry is our membership in the JSF program.

 

1 hour ago, Argus said:

What I'd like to see is the family losing control and new management taking over.

 

That would be a start, and like the Government of Quebec, the Government of Canada get a percentage of sales.

 

 

[Derek 2.0]

On 2/8/2017 at 9:07 AM, ?Impact said:

Certainly the aerospace and transportation industries have been fairly volatile during recent years and Bombardier is no exception here. It is worth noting however that the market has decided to increase their value by 383% since the beginning of 2016. A lot of that has to do with them overcoming problems with the C-Series, and more importantly winning several large sales.

 

Bombardier Aerospace was born out of two poorly ran companies, companies that developed the aircraft Bombardier builds, over 30 years ago.........bizjets and short haulers have been a volatile market long before Bombardier Aerospace was born......what is at issue, the family run Bombardier thought investing and taking onn two failing companies, heavily leveraged in these markets, a good idea.

[Moonbox]

16 hours ago, Derek 2.0 said:

 

I largely agree, but far be it for me to defend the Trudeau government, its no different then Harper loaning billions to automakers. 

 

It see your point, but it's actually very different.  First off, the federal and Ontario governments got something like 80% of their money back from the auto-sector bailout (as opposed to the maybe 20-30% we've been paid back by Bombardier).  Had the auto bailout been managed better and had the ownership stake been maintained longer and sold at better market prices, we'd have done even better.  Additionally, Chrysler and GM are widely traded public companies that went through major restructuring and leadership changes during the bailout and the unions had to make concessions as well.

Bombardier apparently gets to just keep following the same failed formula. 

I'm all for supporting and maintaining manufacturing capabilities in Canada.  There will come a time when we're going to have to be more than a resource-based economy and we don't want to be starting from scratch.  That being said, there's no reason to continue supporting failed leadership and failed execution for a major manufacturer.  If we're going to continue supporting Bombardier, we should be getting ownership stake that we can use to implement changes.   

[?Impact]

2 hours ago, Moonbox said:

First off, the federal and Ontario governments got something like 80% of their money back from the auto-sector bailout (as opposed to the maybe 20-30% we've been paid back by Bombardier).

Do you have any evidence to support either of those contentions? I know we lost billions in the GM bailout, so I doubt the 80% claim. I don't have any information in the Bombardier case, but I have seen claims all over the board (ie. people speculating to support their own theories).

[Moonbox]

Sure. FYI, sometimes Google is easier than demanding evidence for super-easy-to-find info. 

 http://www.theglobeandmail.com/report-on-business/canadian-taxpayers-lose-35-billion-on-2009-bailout-of-auto-firms/article23828543/

The Bombardier information is less clear because they go out of their way to block public disclosure of their repayment history (citing it as third-party competitive industry secrets or whatever).  http://www.taxpayer.com/commentaries/more-taxpayer-money-for-bombardier--just-say-no,-mr.-trudeau-22511 is just one source but there are plenty of news sites you can go to as well saying the same thing.   

We know how much we lent Bombardier.  The fact that we're not allowed to find out how much they've repaid is a pretty strong indication in itself that the repayment history is poor.  

 

 

[Derek 2.0]

14 hours ago, Moonbox said:

Bombardier apparently gets to just keep following the same failed formula. 

I fully admit I don't know all the details with the recent deal, I do agree with "a deal" in principle, but wouldn't be the least bit surprised if "this deal" were a "bad deal".

[overthere]

14 hours ago, Derek 2.0 said:

I fully admit I don't know all the details with the recent deal, I do agree with "a deal" in principle, but wouldn't be the least bit surprised if "this deal" were a "bad deal".

First clue to just how crappy the deal is going to be is the government repeatedly calling it a 'repayable loan'.  Is there any other kind? 

 

Its Quebec, its Montreal, its Coderre and it' s the usual Liberal nonsense.  Same as always. 

[Moonbox]

On 2/11/2017 at 0:46 AM, Derek 2.0 said:

I fully admit I don't know all the details with the recent deal, I do agree with "a deal" in principle, but wouldn't be the least bit surprised if "this deal" were a "bad deal".

None of us really know the details.  One of the main reasons all of this stinks so bad is that it's all being kept hidden.  Details, repayments, conditions etc.  We're not even allowed to know how much of taxpayers' money has been recouped.  Personally, I think that if your business is floundering and you need to beg the government for money to stay afloat, you don't get to hide your books anymore.  That's public interest now.