Is Boeing really committed to Canada as much it claims? I hope not
I don’t know about you, but I’m getting tired of those Boeing commercials where the aerospace giant (headquartered in Seattle, Washington, U.S.A.) tells us how committed it is to Canada.
The ads began shortly after the U.S. International Trade Commission made a preliminary determination that Bombardier had sold 75 of its C-Series airplanes to Delta at a steep, subsidized discount—so steep, in fact, that if the finding is confirmed next year, Delta will have to pay a 300 per cent tariff on the planes. Boeing is committed to Canada, it seems, except for any parts of the country that depend on Bombardier’s aerospace division for employment and income.
But the ads are annoying for another reason. I don’t know if I’m a Boeing shareholder. I may be through my ETFs or pension plan, though university pension plans are increasingly picky about whose stock they buy. But if I were a Boeing shareholder I wouldn’t want Boeing to be committed to any place, not even Seattle. I want the firms I own to be completely footloose. I want them to be constantly scanning the globe for better, cheaper ways of doing what they do. (I also want them to be constantly reconsidering whether what they do is what they should keep doing.) People can have commitments to places. Most of us have deep affection (though some deep antipathy) for where we were born, raised or live now. But for a business, such emotionalism is pure self-indulgence—if we can think of a firm having a “self,” that is, which I also don’t want to do.
As a Canadian I have my own emotional commitments, obviously. I hope that more often than not Boeing, and others like it, will look at this country and, after thorough due diligence, decide Canadians’ abilities, advantages and aptitudes fit into their business plans best. But “business” is the operative word. If we aren’t up to the task commercially, some mega-company deciding we get the contract anyway because of its “commitment” to us does us no good at all, except maybe in the shortest of possible runs. In the long run, however, a company that plays favourites in this way won’t and shouldn’t survive to help us.
I do understand these views involve a certain naiveté. A large part of Boeing’s commitment to Canada—in fact, I suspect all of it—is a result of Canada’s commitment to Boeing (i.e. its purchases of military and other aircraft from the company) and its threat, following the ITC preliminary decision, not to spend $4 billion buying more Boeing fighter jets to tide over the RCAF until a completely new model is available.
Speaking as a citizen now, rather than a might-be-Boeing shareholder, I put zero value on any commitments we buy from firms. How do we buy commitments? We pay $X for whatever we buy that’s actually of use to us and then $Y is added to the contract price to cover whatever extras and add-ons we want in terms of jobs and subcontracts in Canada. I hope nobody out there thinks companies just add the input purchases—the “set-asides”—out of the goodness of their hearts. (Talk about naiveté!) We pay for them with $Y.
The smart thing would be to pay $X for our airplanes, if $X is a good price for them, pocket $Y and use it for the best possible purpose available, which studies of the efficiency cost of taxation suggest is income tax cuts. If that leaves our suppliers of airplane parts out in the cold, good! If their industry is sustainable only because Ottawa overpays on its equipment purchases, do we really want it for the long run? We would be better off instead letting those resources find uses where they can actually stand on their own feet, without having to be subsidized in this way.
I’m sure Boeing’s communications department is tracking the reaction to its “commitment” ads. I hope it finds most Canadians like them as little as I do and reduces the annoyance value of our airwaves by pulling them.