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AIAC 2003

Bombardier’s Tellier issues a challenge


October 1, 2007
By Stacy Bradshaw


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198-tellierTHE CANADIAN AIRCRAFT industry has been challenged by one of its newest
but most influential members to do a better job of getting its message
out to politicians and the public. Paul Tellier, chairman of Bombardier
Inc. since he moved over from Canadian National Railways last January,
threw down the gauntlet at the October 6 Aerospace Industries
Association of Canada annual meeting in Montreal.

The
problem was that while the commercial fleet worldwide faces renewal,
aircraft manufacturers and their suppliers were under a "black cloud of
uncertainty" because of the difficulties many prospective buyers have
in securing financing. "To put it bluntly, for those trying to serve
our customers … it seems that our rate of production is threatened by
the financing which is not available to our customers the way it used
to be," Tellier said, noting that buyers have three main options: the
traditional financial institutions, national export credit agencies,
and the aircraft manufacturers themselves. He said that Bombardier is
prepared to carry interim financing for up to 60 aircraft for a total
exposure of US$1 billion and is working with its own suppliers to
explore additional support.

"Private-sector financing has
recently shown some signs of improvement but this source of financing
is not totally adequate because for some of our customers, in order to
get access to this financing, they have put forward some equity. For
some of them, especially the smaller regional carriers, this is quite a
challenge." This summer, the Canadian government announced $1.2 billion
in available financing through the Canada Account and Export
Development Canada (formerly the Export Development Corp.). There was
an immediate outcry about ‘subsidization’ but, as Tellier pointed out,
Canada Account financing is at prevailing market rates. "There is no
degree of subsidization in any way, shape or form!" Moreover, these
loans are to Bombardier's customers rather than to the manufacturer.

"Despite
these facts, these loans are sometimes portrayed in the media as
government handouts to Bombardier in particular and to you in the rest
of the industry," Tellier told his AIAC colleagues. "There is a
troubling perception that has developed around government efforts to
ensure Canada's aerospace industry competes on an equal with our
competitors." Similar financing is accessible to Airbus and Embraer
customers from those corporations' government agencies. The perception,
he said, is that such programs are seen by critics as market-distorting
subsidies.

"We must set the record straight! We owe it to
ourselves, we owe it to our employees and we owe it to the government,
the decisionmakers, who have to contend with public opinion …
Bombardier is one of the top two or three exporters in this country and
therefore is making a significant contribution … not to mention the
80,000 jobs that our industry has created. More than $20 billion of
revenue produced by this industry within Canada – 80% of that is for
export!"