Bombardier’s $1 billion bailout package from the Quebec government has been finalized. The Province now holds 49.5% of shares in the company’s C Series jets. The Bombardier family, however, is retaining their stronghold over the business by refusing to dismantle its dual class share structure – a system designed to give Bombardier family members decisive control over all company affairs. Bombardier is also negotiating a bailout deal with the federal government. In the context of a struggling economy, this corporate welfare will have significant implications for Canadian workers.
Despite getting all this support from the public purse, the company has shown little consideration for its own workers. Earlier this year, Bombardier announced that 7,000 jobs would be slashed (approximately 10 percent of its global workforce). At present, the company continues to pursue another $1 billion bailout with the federal government, while at the same time it is preparing to outsource jobs on its Q400 airliners to China and Mexico. To add insult to injury, Alain Bellemare was rewarded with salary increases that place him in the ranks of Canada’s 100 top paid CEOs. In 2015, he took home compensation of $6.4 million (US).
At the end of the day, it is Canadian workers who will feel the worst effects and be forced to foot the bill of Bombardier’s decisions. The executives at Bombardier have no interest in being held accountable to the Canadian public. Not only has the company been caught hiding its money in tax havens, it also has a poor history of repaying government loans. Over the past 50 years, the company has received over $2 billion in government loans of which only $543 million has been repaid.
Almost immediately following the bailout, Air Canada wrote a letter of intent for the purchase of up to 45 C Series passenger jets. This news was followed by an order from Delta Airlines for 75. For a project that has arrived over two years late and more than $2 billion over-budget, these purchases could be viewed as a major breakthrough for the company and its shareholders.
However, upon closer inspection, the C Series deals may not be such a boon. While there is a shroud of secrecy surrounding the deal, it is said that discounts as high at 75% may have been offered, which means the plane could have been sold below the cost of production. While Bombardier CEO Alain Bellemare hailed the deal as a “win-win solution”, this has done little to inspire the trust of the public. The company is already $8.9 billion in debt and is in dire need of revenue. By offering rock-bottom-bargain prices for their products and then asking taxpayers to cover their costs, the company is demonstrating its weakness.
As Marx once wrote “The executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.” The practice of corporate bailouts certainly illustrates this point. But Bombardier is only the tip of the iceberg. The Fraser Institute conducted a study using data compiled up until 2009 and discovered that Canadians have paid $684 billion in government subsidies over the past 30 years. Although the statistics do not measure the impact these corporate subsidies have had on consumers, it is believed that the benefits are marginal. Right wing governments that plead poverty when the people demand that social services and pensions are funded suddenly have billions to spare when their corporate buddies get into trouble.
The provincial government’s intervention is not protecting the jobs of workers, nor does it give the public a modicum of control or transparency. The Bombardier executives have been handed a no-strings attached bailout and can therefore act without fear of consequences. There is no reason that a single corporation should be allowed to hold the Canadian economy and workers hostage due to problems arising from its own pursuit of profits.
On a capitalist basis, governments are held to ransom by the demands of large corporations in order to avoid losing their business to another country with even more lax labour laws. There is however no guarantee that a company won’t pursue that policy anyways, as their desire to cut costs is a competitive and not a moral concern.
It is unacceptable that a company receiving government money remains free to exploit and fire workers. It is even more unacceptable that such an indebted company still gives millions to its CEO and remains under the control of a hereditary family of billionaires. At the end of the day, the solution to the crisis at Bombardier is to take the company off the hands of the family that have got rich by suckling from the public teat. More than enough has been given in bailouts, tax cuts, preferential loans, and other forms of corporate welfare already. Nationalize the company and place it under democratic workers control and workers management. The accounting books would then be opened to the public, and the firm would be administered for the benefit of society instead of for the profits of the owners and top executives. The workers must be allowed to elect management and representatives on the board of directors on an immediate and recallable basis, who should be paid nothing more than the wages of a skilled worker. This is the only way to ensure that Canadian workers do not end up bailing out the bosses, and that their interests, and those of the broader community, are properly represented.