Fraser Forum

Requiem for the C-series—Airbus now owns 50.01 per cent of Bombardier’s airliner dream

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National pride is a funny thing. We’re supposed to get a boost from the accomplishments of people we have never met simply because they share our citizenship. Taking pride in your own accomplishments I can understand, even if doing so too obviously is gauche—as Don Cherry advises, celebrate your goals modestly. But taking pride in other people’s accomplishments has always seemed a little weird to me.

Still, this year’s Nobel Prize went to an economist, Richard Thaler, whose work is based on the assumption people aren’t always rational. And even a traditional, rationality-based economist understands people do sometimes become fully invested in their fellow citizens’ activities. I’ve spent enough hours alternately anguished and elated over various Team Canada tribulations and triumphs to understand that.

So even an economist who doesn’t believe in interventionist industrial policy can feel a little sad at the demise of Bombardier’s C-Series airliner dream. The C-Series does live on, for the moment, at least. But it’s now 50.01 per cent owned by Airbus, the European aerospace consortium. Anyone who lived through the 1995 Quebec referendum knows that an extra fraction of a per cent can make all the difference. Canadian sweat and know-how will still go into the C-Series but all the key decisions about it, including whether to keep it in production for the long run, will now be made elsewhere.

Had Bombardier made a success of the C-Series and joined Airbus, Boeing and one or two others as big players in the world airline market, I’m betting almost all Canadians (some even in spite of themselves) would have felt a little surge of national pride. We would have shown that “we”—or some of our fellow citizens—had the right stuff for competing in a tough but also glamorous high-tech sector.  

The practical question, to be crassly economic for a moment, is what’s pride worth? Every billion dollars of assistance represents $28.57 per Canadian man, woman and child. How much would you personally be willing to pay for the warm feeling that overcame you as you strapped yourself into a C-Series jet and thought “this is my country’s airplane?” For pay you already have already, and pay you would have had to continue to do, to keep Bombardier in the international airliner game. (“I may have been appalled by Boeing and the Commerce Department’s complaint,” wrote Forbes columnist Richard Aboulafia, “but… Canada, Quebec and the UK may have set a new record for market distortion with all their C-Series support.”)

For the increasingly rare “typical family” of four, the cost per billion dollars of assistance is $114.28. Bombardier and its corporate allies would tell you there are more benefits than simply pride in terms of spillovers and multipliers. But spillovers, like mist, are always hard to get a handle on. And multipliers are chronically over-estimated—money not spent on Bombardier wouldn’t have been buried in a salt mine instead. In the hands of taxpayers it would have gone to other economic uses, providing value and jobs in other industries and activities.

National pride is real, but like most real things has limits. Some reviews say the C-Series is an excellent airplane. Good for the C-Series, good for Bombardier and now good for Airbus. But if small companies’ excellent airplanes are to make money in the world market, those small companies, which Bombardier is compared to Airbus and Boeing, need tons of help. Yet tons of help make it easier for other countries’ companies to exercise protectionism, as the United States and Boeing did. That Catch-22 is a fact of life for a small country, as stubborn as the fact of gravity when it comes to designing a wing or engine.  

In deciding how much national pride we can afford, it only makes sense to take into account the realities of the world politico-industrial complex we’re trying to compete in. Facing up to unpleasant facts should never be a hit on our pride. In fact, we might even take pride in finally doing the sensible thing.

 

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