Bombardier: Time to Nationalize

by David Bush, Gerard Di Trolio, and Doug Nesbitt

The best solution for Bombardier’s endless financial woes is the one that nobody is talking about: nationalization. It’s time for the Canadian government to stop subsidizing the profits of the transport and aerospace company’s shareholders. The only people to lose in this proposal are Bay Street speculators. The Canadian public on the other hand has a lot to gain. Bombardier has proven that the aerospace and transportation sectors are too important to be left to the private sector.

Aveos workers on Parliament Hill protesting the 2012 closure and outsourcing of Air Canada maintenance operations in Winnipeg, Mississauga and Montreal - in violation of Air Canada's privatization legislation.
Down the road of privatization: Aveos workers on Parliament Hill protesting the 2012 closure and outsourcing of Air Canada maintenance operations in Winnipeg, Mississauga and Montreal – in violation of Air Canada’s privatization legislation. About 1,700 jobs were destroyed.

Since the late 1970s, privatization of publicly-owned industries and services has been happening in countries across the globe. Canada is no exception. Air Canada, CN Rail and Petro-Canada were privatized in the 1980s and 90s. Canadair was privatized and the buyer was Bombardier! Alberta privatized its telecom industry and the consequence was the rise of Telus. Nova Scotia Power was sold off to Emera as a monopoly and the province now has among the highest hydro rates while the Emera CEO pulls in over $4 million per year. Ontarians paid for a toll highway, the 407, to be built which was then privatized. Numerous companies have been partially privatized by selling shares. And Ontario just recently began the sell off of 60 per cent of Hydro One.

Privatization has failed

The vilification of public ownership and the celebration of an efficient private sector has been a bedrock of modern capitalist politics – what is often called neoliberalism.

However, private ownership of key industries isn’t all it’s cracked up to be. Governments around the world have continually bailed out private industries and even bought huge stakes in them.

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During the Great Recession banks in several countries including Great Britain and the United States were nationalized to prevent them from going under and causing an even worse economic meltdown. While US banks were going under, Canadian banks were celebrated as being uniquely stable and prudent. But Canadian banks did have huge investments in the same toxic mortgage assets as American banks. These toxic assets were taken off the balance sheets of Canadian banks by the Canadian Housing and Mortgage Corporation, a federal crown corporation, to the tune of $69 billion. In all, Canada’s “stable” Big Five Banks were bailed out to the tune of $112 billion through government intervention of one sort or another.

At the same time, the federal and Ontario governments teamed up with the US government to help bail out Chrysler and General Motors, buying billions in shares. None of these governments put bailout conditions on the auto companies, such as deals around job guarantees and new investment. In the end, the Ontario and the federal governments sold its shares at a loss of $3.5 billion: a major publicly-subsidized gift to these companies.

These recent experiences show why Bombardier should be nationalized and made to benefit all Canadians. Bombardier is a company which has long lived off the public dime. It is wholly reliant on publicly-awarded contracts and its private jet sales (the latter of which has slowed down).

The green economic transformation

The Canadian economy is at a real crossroads. Depressed resource prices are taking its toll, while a major initiative is needed to transition to a low carbon diversified economy. Ownership of important strategic industries have proven to be a useful tool in transforming economies.

The periods of the most intense economic growth and development in Canada and for most countries have the world always contained at least a strong vein of state planning and direct state intervention. The robust transportation and communications infrastructure that is the bedrock of the Canadian economy were completely developed by the state, either through direct ownership and development, or massive subsidies and bailouts.

World War Two was a prime example of how the Canadian state has directed production and economic organization, transforming the economy in a matter of weeks and months from depression-era civilian production with high unemployment, into full-employment war production.

This time we need to do this for a green transition, not for war. But when it comes to a strategic sector like steel production we are seeing the opposite: the Harper and Trudeau governments are allowing an American corporation loot pensions and wreck the industry. How are we to implement a real green transition plan requiring windmills, solar panels, rail and rolling stock, and other basic infrastructure without in-house steel production?

Public ownership of Bombardier

A publicly-owned Bombardier would allow for a number of important goals to be met. First, it would allow jobs to be saved without subsidizing profits – while a privately-owned Bombardier tries to outsource further jobs while asking for government assistance.

Bombardier strike in Thunder Bay in 2011. Strikes against Bombardier's concessionary bargaining stance also took place in La Pocatiere in 2012 and in Thunder Bay once more in 2014.
Bombardier workers on strike in Thunder Bay in 2011. Strikes against Bombardier’s attacks on pensions also took place in La Pocatiere, Quebec in 2012 and once more in Thunder Bay in 2014.

Second, it would send a message to large corporations demanding government loans and subsidies that they need to actually show something economically beneficial for the economy as a whole, and not just shareholders.

Third, it would help ensure that Canada maintains an advanced manufacturing sector.

Fourth, Bombardier builds vehicles to be used in public transit systems within cities, between cities, and into more isolated areas of the country requiring transportation links. Canada needs to greatly expand its public transportation if it wants to deal with climate change. Since governments are a major purchaser of Bombardier products, a publicly-owned Bombardier can supply public transportation vehicles at a more reasonable cost than the private sector.

A publicly-owned Bombardier is a no-brainer for a Canadian economy that needs to radically reorient itself in a time of climate crisis and disappearing manufacturing. It is also a no-brainer for the labour movement because the green transition is not only going to require a huge number of jobs, but it is about building permanent infrastructure that needs maintenance and service. Higher employment levels will also give workers more bargaining power as well. The private sector has not only failed on the climate change front, but its fixation on profits has continually undermined the wages and jobs that entire communities and regions have relied upon.

It’s time to put the question of ownership back on the table as more people are beginning to question neoliberalism and its role in exacerbating economic inequality and climate change. The question is not whether the government should bailout Bombardier or not, rather the question is why wouldn’t we nationalize it?

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2 thoughts on “Bombardier: Time to Nationalize

  1. Herman Rosenfeld

    Reply

    Excellent and timely piece! Similar demands were woefully missing during the standoff at the Electro-Motive Catapillar and other similar moments. One wishes that the unions involved would approach this in a similar manner.

    Herman Rosenfeld Toronto

  2. Herschel Hardin ‘s book “The Privatization Putsch” (1989) provided an earlier analysis of the privitization process where failing private companies were rescued by governments and once restored to economic health were given back to private interests. The main components of the Bombardier empire were classic examples of this process. Canadair and Dehavilland had been rescued by an earlier federal government to rescue the Canadian aerospace industry, while the Transportation Development Corporation was created by the Province of Ontario to save failing Hawker-Siddleley plants in Kingston and Thunderbay and to maintain the ability of Canada to manufacture rail and subway cars.

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