The Quebec government will bail out Bombardier. This could not have come at a more insulting time for the Quebec teachers and public sector servants. While the provincial Liberal government pushes ahead with a program of cuts and austerity, it has no qualms in generously providing a failing company like Bombardier with what can be rightly described as “corporate welfare”. Furthermore, as if that was not offensive enough, the Quebec Liberals are asking the federal government to match their handout to Bombardier with another of its own.

A few days ago, the Government of Quebec announced a $1 billion bailout of the Quebec based aircraft manufacturer Bombardier. It took the form of a joint venture between the government and Bombardier in which the province will own 49.5% of the struggling CSeries business jet program, while Bombardier will hold 50.5%. Quebec Premier, Philippe Couillard, along with the Minister of the Economy and Innovation, Jacques Daoust, have stubbornly defended the deal. They have cited the importance of the aerospace industry for Quebec, pointing to the fact that it provides thousands of well-paid jobs to Quebecers and leads the way in research and technological advancement among Canadian industries.

“What’s more risky, doing it or not doing it?” said Jacques Daoust, as he announced the deal alongside Bombardier CEO Alain Bellemare. “This is 40,000 jobs, with average salaries double the Quebec average. We can’t just let the industry go.”

This bailout is a result of the staggering loss of $4.9 billion that Bombardier posted in the 3rd quarter of this year – $3.2 billion of which came from a write down on the value of its investment in the CSeries program. The program has cost close to $6 billion so far. This is up from an initial estimate of $3.4 billion and therefore is in need of more than $2 billion to see the light of day.

One of the main attractive selling features of the CSeries was its fuel efficiency, but now due to the sharp fall in oil prices, this is not as attractive to the potential clients. In addition, the CSeries jets are almost three three years late from their initial estimated service entry date and the first batch will not be delivered until well into 2016. The delay in the program has given competitors, Airbus and Boeing, time to refit some of their existing air crafts with quiet engines similar to those promised by the CSeries jets. Bombardier has lost valuable time, which, combined with the doubt surrounding the health of its program, has resulted in the company not receiving a single order for the CSeries for more than a year. Even if orders resume in the wake of the completion of the program, Bombardier projects that it will not start seeing a return on its investment until 2020 or 2021!

But it is not only the CSeries program that is having problems. Bombardier has also so far been unable to honour agreements with both the STM (Montreal Transit Authority) and the TTC (Toronto Transit Authority) for the production of metro streetcars. The 468 new metro cars purchased by the STM for $1.2 billion were supposed to begin delivery last year but due to delays, none of these metro cars are in service. The Quebec government was again quick to provide Bombardier with $31.5 million to keep this production going. In Toronto, the TTC has so far only received 10 of the promised 204 new streetcars it purchased for $851 million. The efficiency and competence of capitalism in action!

Corporate Welfare

All major Canadian papers writing on this issue in the last few days have noted that Bombardier has relied on all sorts of government loans and grants since its inception. A glaring example of this is the CSeries program itself. When Bombardier decided to launch the program, it approached the governments of Canada, the United States and the United Kingdom for funds. Bombardier only agreed to launch the program in Canada after it secured a $350 million grant from the federal government, which has yet to be paid back.

It is important to note here that Bombardier is not the only corporation to rely on state support. In fact, when announcing this deal, Couillard openly referenced the bailout of the auto sector in Ontario stating that “I have to remind everyone that the aeronautics for Quebec is as important as is the auto industry for Ontario. A lot of effort was put into supporting the auto industry with difficult times and it’s totally appropriate that we do the same.” This ridiculous example of corporate welfare shouldn’t come as a surprise to anyone. This is in fact standard practice, especially in high tech industries, which require huge investment and involve a high level of risk.

In any case, the bailout of the auto sector in Ontario isn’t a very good example of money well spent. Of the $13.7 billion spent by the Ontario provincial government and the federal government to bailout the auto industry, only $10.2 billion was earned when these shares were sold earlier this year. That boils down to $3.5 billion dollars of taxpayer money lost, buoying up a private company. Not surprisingly, General Motors executives continued to make millions last year. A similar situation has occurred in Bombardier with these failed executives making around $23 million (U.S.) last year alone. On top of this, Bombardier was caught red handed last year funneling hundreds of millions of dollars into tax havens in order to avoid paying taxes in Quebec.

Of course, it could be possible that within a few years, the CSeries may turn a profit. But if we follow the example from the Ontario auto sector bailout, neither the Quebec government, nor the workers will see an ounce of those hypothetical profits. What the Bombardier bailout clearly demonstrates clearly is the true nature of capitalism. There is only one sacred principle guiding the actions of our politicians: save private profit!

Another unsurprising element in this façade is that the chief lobbyist for Bombardier is in fact long time Liberal party member and ex-finance minister Raymond Bachand, who is well known for his dastardly role during the 2012 student strike. One must therefore ask if this in fact direct or indirect control of the provincial government by the private sector?

To make matters worse, there are no strings attached to this deal. There will be no government oversight, no restructuring of the company’s management and no recourse for the province if the investment fails. It is a well-known fact that the difficulties at Bombardier are largely due to failings and bad decisions of the Bombardier-Beaudoin family, which has a strong grip on the company. It is true that Pierre Beaudoin stepped down as CEO a few months ago and was replaced by a non-family member, Alain Bellemare, but this was only a cosmetic change. The company has a dual class share structure in which the Bombardier-Beaudoin family controls 85 per cent of the “A” shares which have 10 times as many votes as the “B” shares. Overall, they have approximately a 54 per cent voting stake in the company.

What is the Solution?

We are faced with blackmail from Bombardier. Shower this private company with billions, or else thousands of well-paid jobs will be lost. Many people are now asking – what then is to be done? Should we simply let Bombardier fail and lose a valuable high tech industry, which provides thousands of quality jobs to Quebecers and Canadians? The answer to this question is of course not.

What we have seen for many years now is a situation in which governments risk public money for private enterprises while these same private enterprises reap all the benefits. Government support has been required time and time again to prop up Bombardier. The   ownership of Bombardier has demonstrated its parasitism and incompetence several times, incapable to meet even the simplest of deadlines and demanding government assistance at every turn.

The experience of the manufacturing sector in Ontario is that in spite of all of the bailouts, most of the factories were closed with hundreds of thousands of jobs lost anyway. With the downturn in the Canadian economy and the general downturn in the world market, things are most likely not getting better anytime soon. The only real lasting way to protect jobs and industry is to demand that Bombardier be nationalized under democratic workers’ control! Only by taking control out of the hands of these parasitic corporate welfare billionaires can we avoid this form of blackmail.

The main issue here is not only Bombardier, but capitalism itself which is incapable of getting back on its feet following the ‘Great Recession’ of 2009. Big corporations and massive financial institutions are failing, and even whole countries’ economies are failing. On a capitalist basis, the future looks very grim.

Capitalism, unlike what its apologists advocate, is incapable of advancing technology and industry much further. Billions are being squandered and hundreds of thousands of jobs are continuing to be lost due to uncontrollable market forces. The consequences for society are very grave. It is time for the main levers of the economy to be removed from the hands of the capitalist class and placed under democratic control of the working masses. Only on a socialist basis will we be able to administer the economy to meet human needs.

The Quebec government needs to cancel the bailout and meet the just demands of the public sector workers. Bombardier can play a vital role in an environmentally sustainable socialist economy, producing trains and buses for a free public transportation network to get us away from the inefficient and polluting car economy. And this would be possible through nationalizing the commanding heights of the economy and integrating it into a socialist plan of production. Instead of using the profits to line corporate pockets, we share the wealth and raise the standard of living of everybody.