Donald Trump promised to put American workers and companies first, but now it appears he has created a monster new competitor for one of America’s leading firms — Boeing.
It was announced today that Canada’s Bombardier and Europe’s Airbus (both Boeing competitors) have agreed to join hands in a strategic alliance to manufacture, market, and support Bombardier’s C Series jets, a move the Wall Street Journal is saying “could be the biggest shake-up of the commercial jetliner business in 30 years”.
Airbus will acquire 50.1% of the C Series line, while Bombardier retains 31% and the Quebec government, which invested heavily in Bombardier, gets the rest. This is a win for Bombardier as they have been struggling to sell the C Series due to the company’s shaky financial state, and Airbus gets control of one of the most exciting new air-frames for the medium range market, which will basically blow Boeing’s 737 out of the water.
Driving the deal is the fact that Airbus has manufacturing capacity in the USA, which will allow the C Series to be manufactured in America for American clients, thereby circumventing the proposed punitive duties recently announced by the Trump administration.
Will this not create jobs in America, a prime directive of the Trump platform? Yes, but in fact something like 50% of the C Series jobs were in the USA in any event due to the transnational nature of the Bombardier supply chain (the engines for the C Series are made in USA). So, Americans may or may not gain a few jobs working for Airbus, but these will presumably be greatly offset if the C Series becomes a big success at the expense of Boeing, as seems more likely now. Boeing will sell far fewer 737s if the Airbus C Series becomes a big hit.
Will this “make America great again”? We will have to wait and see. Bombardier has 350 orders for the C Series but sales slipped in the past year due to uncertainty if the company would survive. Now that Airbus effectively owns the C Series, airlines around the world can step up and place orders, knowing the product will be supported by one of the largest aircraft manufacturers in the world. Bombardier is hoping to sell 3,500 C Series jets in the coming 20 years.
For a head-to-head comparison of the C Series and the 737, click this link from Forbes: Compare C Series and 737
Business Insider has a great overview of Boeing’s folly here: Business Insider on how Boeing Screwed Up
Bombardier has not said how this move will affect jobs or workers’ pensions in Canada, but Airbus has agreed that all C Series planes not destined for the US market will continue to be made in Canada. Presumably Bombardier stakeholders will benefit, especially if Airbus is successful in pushing C Series sales to a whole new level. Bombardier did the hard work of creating the prototype and bringing it to market; now Airbus can bring it to a full market roll out. This looks like a win/win for both companies, and a big lose/lose for Boeing. They will not only sell fewer 737s in America, they will also face a much stronger competitor worldwide.