It's also a major people problem in Greece. Government intervention or enforcement is hindered when politicians are afraid to take the right measures I think.
Hey brother can you spare a $billion to bailout Bombardier?
- Thread starter rafterman
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It's also a major people problem in Greece. Government intervention or enforcement is hindered when politicians are afraid to take the right measures I think.
I tend to agree with you Barnacle.
The government doesn't get back a dollar for a dollar when we're talking about return in the form of payroll taxes.
Bombardier is not totally a bomb, but let's hope they can establish sound product lines with international appeal.
Probably not as much as you think. About two thirds of their workforce is outside Canada.
Over 20K aerospace employees in Canada, figure 75K each (low estimate I think) so if you take the total tax burden of Canadians of about 65% including all forms of taxation, you get about $975M/year. Then you add all the associated companies, all the taxes the company pays, (that is just aerospace BTW not including Transport.
Fuck me... I can't believe I'm going to say this but...I agree with... noooooo I can't say it..... Ceiling Cat and nottyboi
Fair enough, but this thread is about a bailout of the C-series project specifically.
Only about 2,000 BBD Canadian employees are allocated to the C-series currently with potential for around 4,500 at peak production levels if they ever get to projections years from now. Your math would include Canadian aerospace employees involved in business jets, regional jets, turboprops and services which cumulatively is the bulk of the aerospace division.
With negative returns, how certain are we that they will continue being a going concern?
(I agree to support high tech industries, but I need more convincing arguments that the government will get their money back. I wouldn't want the worse alternative - welfare payments).
The Cseries is what is putting a massive strain on BBD and really hurting its liquidity. The reason they structured the deal this way is for several reasons. To assure people ordering the Cseries their deposits are "segregated", to avoid further dilution on the already tanked stock (Caisse is a big owner) and c to allow flexibility of adding partners to Cseries if BBD sees fit to do so .
Their stock has performed poorly, but they have been marginally profitable and there is visibility to positive cashflow in the not to distant future...but nothing is guaranteed. Aerospace is a high risk high reward business. The feds have decided a long time ago it is a sector they want to build in Canada, and it has been extremely successful quite frankly, this is a bump in the road for sure, but it could result in unprecedented growth and success for this sector.
The government always gets their money back. The Bomber deal with the government is not something a bank would be interested in. If the government put the money in a mutual fund it would probably do better, the main objective of the loan is to safeguard jobs and tax revenues.
Here is a extreme and ridiculous example of how the government sometimes hands out money. GM took a $220 million loan for its Boisbriand plant north of Montreal. Under the terms of the agreement GM paid no interest and would not start to pay back the loan till a later date. A few years later in 2002 the plant closed. GM is expected to start to pay back that interest free loan in 2016 and finish paying the loan by 2025.
The Bomber deal suddenly does not look so bad.
Ya but Ceiling Cat, GM is a multi-national conglomerate that can repay the loans of a local subsidiary that may have gone out of business (or has guaranteed those loans).
And getting your money back indirectly in the form of taxes is not really a repayment of that loan. Who's tracking if they collected a billion back in payroll taxes? Do they actually do that economic analysis?
(I agree though that it's still better than straight welfare).
While "getting rid of the union" is not going to happen, ever, I would agree that concessions from the aerospace workers would definitely be in order. Wages should be cut, no more overtime pay - you need to work minimum 40 hours per week and 50 if so requested at the regular rate, reduced benefits. I'd be all in favour of that. (The alternative is no job.)
Then again, the plane is not in production (I don't think so at least), so a good chunk of those working on the project are probably salaried professionals - engineers, technicians, etc. I don't know if they are paid OT or not. (Probably not.) For that matter, as "professionals" are they even in a union??
All the richest nations on the planet engage in this, please show me one example that does not....
I am not aware of any defaults by BBD. If they were loaned money, they are still paying interest and abiding by the conditions of the loans. They have paid back a great number of loans in the past and no govt has lost money betting on the Bommer yet.
So they have paid back the $350mln in repayable loans related to the C-series?
I would find that hard to believe since they have had to suspend dividends on common shares to conserve cash and have had to do a significant share issue at depressed prices just to shore up working capital. Unlike public bondholders, I doubt the govies would make public if BBD was behind on their repayment schedule.
http://business.financialpost.com/n...ns-in-federal-aid-bombardier-veers-off-course
They are compliant with the terms of the loan, why would they repay that loan when the project is not yet complete and still burning cash? That would be absurd....
