HN Gopher Feed (2017-10-17) - page 1 of 10 ___________________________________________________________________
Airbus buys majority stake in Bombardier CSeries passenger jet
business
69 points by protomok
http://www.cbc.ca/news/business/bombardier-airbus-c-series-1.435...___________________________________________________________________
Zarathust - 2 hours ago
"Buys" is a strong word for "gets for free". From the
article:Bombardier Inc. announced Monday it has sold a majority
stake in its CSeries passenger jet business to European aerospace
giant Airbus for no cost.
panzer_wyrm - 2 hours ago
Isn't the proper term gift?
nv-vn - 1 hours ago
No. The cost just wasn't monetary. If I understand correctly,
Airbus gets the CSeries and Bombardier no longer has to make a
profit out of their debts. So basically Airbus paid for CSeries
by taking on CSeries' debts. Also, Bombardier still owns stake
in CSeries, so any profit from CSeries is still positive for
them. Since Airbus can provide the manufacturing in the US,
this seems like a net profit compared to the alternative.
Zarathust - 42 minutes ago
This is incorrect. Airbus does not share existing debt, but
may contribute up to 300M per year to new debt for the next 3
years.From the article: "Airbus is not assuming any debt as
part of the deal."
slavik81 - 2 hours ago
This is a clever resolution to a dispute that was going to hurt
everyone involved. There was quite a scary trade war brewing.
astrodust - 2 hours ago
There's been one simmering ever since the original free trade
deal in the 1980s. If it's not softwood lumber it's potatoes or
airplanes.
simlevesque - 2 hours ago
What makes you think this is a resolution ? I've followed this
story closely and I think it's far from the end of the dispute.
ChuckMcM - 1 hours ago
This is an interesting hack. According to sources Airbus gets 50.1%
of the Class C jet's "business", in exchange for building them in a
pre-existing plant in Alabama so that they are immune to the 300%
tariff that the US was planning to impose (considering to impose?)
on them.The hack allows Bombardier to recoupe its design costs by
selling planes. They will no doubt get less margin selling them
through Airbus but it is better that having to flush that
investment down the tubes.
tareqak - 1 hours ago
It might benefit Bombardier and their investors, but if the C
series jet was going to be manufactured in Canada by Canadian
workers, this ends up harming those (potential?) jobs in favour
of American workers who previously never had any sort of
relationship with Bombardier.To me, the whole situation is a
schoolyard example of "having your cake and eating it too".
sf_rob - 1 hours ago
The alternative may have been "having no cake" since they would
not be profitable without successfully fighting the 300%
tariff.
tareqak - 1 hours ago
I actually agree. To clarify my position further, I am
specifically accusing the United States and Boeing as the
ones who are trying to "have their cake and eat it too" in
this matter.
cloakandswagger - 1 hours ago
Is there something inherently wrong with looking out for
your own best interests? Or in this case, the best
interests of your country?
Silhouette - 31 minutes ago
Ethically and legally, probably not. Protectionism has
been around forever, and any government obviously has a
responsibility to its own people to act in their
interests.But economically and in terms of good foreign
relations, definitely. Closing the gates in such an
overtly hostile way to foreign businesses competing with
your home grown ones hurts international trade, and
ultimately that can end up badly for everyone over the
long term, even if it brings some short term benefit.
UnoriginalGuy - 58 minutes ago
So by extension you'd be happy if the EU imposed a 300%
tax on Boeing imports? Even if it meant Americans lost
jobs.That's what this attitude results in: trade war.
andy_ppp - 55 minutes ago
Yes, the whole point of free trade means that we can buy
the best mobile phones or the best computer chips or the
best washing machines.Without free markets you end up
having worse products win which is bad for everyone.
wrnu - 1 hours ago
It seems like only the planes bound for US airlines will be
manufactured in the US.
ChuckMcM - 56 minutes ago
This is, I think, the key feature. While the US does consume
a bunch of planes, it is by no means the only market. What
Delta did for Bombardier was to give them a 'light house'
customer[1] to show the world that this plane was worth
considering.[1] The 'light house customer' metaphor was a
favorite of Chris Bennet's at NetApp. They were a customer
that if they adopted your product, others in the same
business would see your product as a "safe harbor" and would
be willing to buy your stuff too. The unwillingness to be
'first' in an industry where one plane represents a big chunk
of capital is strong.
inferiorhuman - 11 minutes ago
I figured that Swissair was that lighthouse customer.
They've had very positive feedback for the C-series, which
is quite impressive for a brand new model. Honestly I
doubt Delta would've even considered the C-series if they
were to be the first major customer.
jpollock - 14 minutes ago
My expectation is that C-series jets for the US market would be
produced in the US, planes for Europe are probably better
produced in Canada to make use of the Canada/EU FTA.From the
article: "a second assembly line for the 100- to 150-seat plane
will be set up at Airbus's facility in Mobile, Ala., so the
plane can be sold in the United States"By the way, I'm
convinced that a big reason that small car manufacturing has
moved to Mexico is the list of free trade agreements they have.
netsharc - 47 minutes ago
A Guardian article https://www.theguardian.com/business/nils-
pratley-on-finance... says:> Arch-rival Airbus has swooped from
the wings to grab majority control of the C-Series and proclaim
that the 300% tariffs can be side-stepped via the simple remedy
of conducting the final assembly of planes destined for US
customers in Alabama.So, how much of a final assembly counts as
final assembly? I remember a story of how Chinese shirtmakers
circumvented tariffs against Made in China shirts: they sent
the body of the shirt and sleeves to Hong Kong, workers in Hong
Kong sewed the sleeves onto the shirt, slap "Made in Hong Kong"
on it, and problem solved...Apparently I'm not the one asking
this question: http://www.chicagotribune.com/business/ct-biz-
airbus-bombard...> "There is a legal question of how much of
the parts and components and value-added needs to actually
happen in the U.S. for tariffs to no longer apply," said Chad
Bown, a senior fellow with the Peterson Institute for
International Economics. "You can't just fly an airplane to
Alabama and say it's made in America."
usrusr - 25 minutes ago
When in doubt, apply the magic of cross-site IP licencing to
coax the value-add distribution into whatever shape
necessary.
[deleted]
bookbinder - 3 hours ago
For a split second I read "Airbus" as AirBnB and I was like
"whaaaaaat?"
bookbinder - 1 hours ago
Looking at the negative score my comment received, I now
remember, why I stopped visiting HN. (No sense of humor allowed.)
joelrunyon - 3 hours ago
I read it this way too. Seems my brain is working on auto-
complete...
swasheck - 3 hours ago
damn you, autocorrect!!
chinathrow - 2 hours ago
And Boeing issuing statements like it's
kindergarten.https://twitter.com/Boeing/status/920373843142864896
Silhouette - 18 minutes ago
So the C Series doesn't actually compete with Boeing (because
they don't currently make any aircraft aimed at the same market)
and yet Boeing are trying to rub salt in the wound here.That
doesn't seem like a smart move when these events threaten
thousands of Bombardier and supply chain jobs in Canada and
Northern Ireland and when you're also hoping for billions in
business selling military aircraft to both the Canadian and the
British governments in the near future.
valuearb - 1 hours ago
Boeing is a bunch of idiots, the C series didn?t compete with
them at all. A company like Boeing that gets massive government
contracts and depends on free trade shouldn?t be shitting on free
trade.
jonknee - 7 minutes ago
> A company like Boeing that gets massive government contracts
and depends on free trade shouldn?t be shitting on free
trade.Opposed to all the other airliner manufacturers that
don't get government contracts? From the article:> The Quebec
government invested $1.25 billion in exchange for a 49.5 per
cent stake in the CSeries last year. The federal government
also recently provided a $344-million loan to Bombardier, which
struggled to win orders.And of course Airbus is partially owned
by France, Germany and others. Everyone in this story has deep
government ties.
amunicio - 1 hours ago
I would not characterize Boeing as idiots... More like
paranoids.Boeing is scared of having a third competitor. The
commercial jet industry's costs of entry are huge and act as a
very big barrier for newcomers. The C series, if successful,
would have acted a stepping stone to get into bigger planes and
pave the way for a real competitor.Airbus buying the C series
is in a way a small victory for Boeing. It leaves the market as
a duopoly and sends a strong signal that no third competitor
will be allowed. At least until the Chinese government
subsidizes a homegrown competitor with huge military tanker
contracts.
strictnein - 2 hours ago
A good friend worked at Bombardier until recently and I got the
full sales pitch and walkthrough of a model of one of these planes
a couple of years ago at an overseas airshow. They were really nice
and had some innovative features. Unfortunately, this was a big bet
by Bombardier and it failed. "They are fucked" were his words, when
I asked him about it today.Not sure where people discussing this as
a US vs CA or that this is somehow a win are getting those ideas
from.
addicted - 2 hours ago
Sounds like Airbus is getting parts of Bombardier for cheap and
Bombardier is getting the clout to fight Boeing and the US's
patently obvious, possibly illegal, trade protectionism.And this
should further endear Canada to the EU over the US, and probably
make the Brits also happier about the EU (The British jobs were
most at risk).I am no expert but that's what it looks like to me.
Nice move if so.
strictnein - 2 hours ago
This was Bombardier's attempt to get into the game with the big
boys, and it's mostly failed. This isn't a good thing for them.
hodder - 1 hours ago
.
notfromhere - 1 hours ago
Markets see Bombardier shedding a bad investment. Bombardier
sees a big strategic failure
plandis - 2 hours ago
What? Boeing?s claim is that Canada illegally subsidized
Bombardier which seems to be true. But yes it?s the US?s fault
that happened
mvc - 1 hours ago
Oh please. If you think Boeing don't get subsidies from the US
government I have some land to sell you in
Florida.https://www.upi.com/Boeing-receives-983M-contract-for-
aircra...
athenot - 2 hours ago
We're just more clever at subsidizing Boeing in ways that don't
look like a subsidy.For example, the Air Force bid that was
about to be won by Airbus got re-spec'd in order to match the
requirements with what Boeing happened to provide (number of
engines, iirc).
noir_lord - 1 hours ago
250m a copy, it'll never fly, I'll take 300.TBH it's not that
clever, it's just that the US can use it's out-sized economic
might to force smaller countries to accept it.
vanattab - 1 hours ago
I believe athenot is referring to the KC-X program in which
Airbus definitely got
screwed.https://en.wikipedia.org/wiki/KC-X
valuearb - 2 hours ago
Boeing doesn?t even sell anything in Bombardiers class, they
aren?t competitors.And as a US taxpayer i?m all in favor of
foreign governments subsidizing my travel with cheaper commuter
jets.
knz - 1 hours ago
> And as a US taxpayer i?m all in favor of foreign
governments subsidizing my travel with cheaper commuter
jets.The C series are also very quiet (marketed at 4x smaller
footprint/up to 20db reduction). Airports are/were quite
excited about what these new aircraft mean for residential
noise mitigation (billions across the US).
simlevesque - 2 hours ago
> And this should further endear Canada to the EU over the
US,That's a great thing. As canadians, we are learning that we
can't count on the US to act in good faith so this is a nice
thing. We should strive to be less and less dependant on our
neighbor.
valuearb - 2 hours ago
Except that Bombardier wouldn?t be giving up a big chunk of the
company so cheaply if not for this ridiculous trade ruling.
drzaiusapelord - 2 hours ago
This is fairly predictable. With a hostile Trump administration
towards Canada, we're losing influence with Canadians so they will
continue to cozy up with Europe.Not sure what Trump's endgame here
is other than alienating once allies and economic partners. Trump
went instantly to nuclear and Trudeau was forced to respond in
kind. This is what happens when diplomacy is little more than
namecalling and 'my way or the highway.' The USA isn't this
unstoppable juggernaut everyone must bow down to and accept being
bullied from. Europe, China, Japan, Russia, Brazil, Turkey, etc are
all vying for influence and will take advantage of our every
misstep. Europe certainly did today.
[deleted]
KSS42 - 1 hours ago
CSeries Production for US market will be in USA.Trump gets to say
that he brought jobs to USA.
[deleted]
gok - 8 minutes ago
A shrewd move by Airbus. It's likely they could have gotten the EU
to enact a large tariff against the CSeries in Europe too, but
instead they're getting a 737 MAX 7 competitor for free and getting
to avoid political fallout in the process.
pmilot - 3 hours ago
This is pretty big news for people living in Qu?bec, as the Qu?bec
government invested heavily in the C-Series last year. At the time,
the move was criticized as a big gamble and an irresponsible
handling of taxpayer's funds because the C-Series' success was far
from guaranteed and there were legitimate concerns about
Bombardier's leadership.With this move by Airbus, the government's
stake in the project was reduced from 49% to 19%. I'm no economist,
but it seems that the crisis was avoided?
Cyph0n - 2 hours ago
According to the article, Airbus bought the stake "at no cost".
Unless I'm misunderstanding something, shouldn't this be a loss
for Quebec?I guess the Airbus/Boeing duopoly is here to stay.
Bombardier looked like a promising future competitor... They
still have their rail business, so all is not lost.
Doctor_Fegg - 2 hours ago
It's possible that Bombardier Rail may be absorbed by a merged
Siemens/Alstom - the dust hasn't settled yet.
forapurpose - 1 hours ago
> shouldn't this be a loss for Quebec?Agreed. It's a loss for
Quebec, Bombardier, Canadian workers (who lose jobs to
Alabama), Canadian taxpayers, and most importantly, for free
trade and free markets - this will only establish anti-
competitive policies as an accepted norm, a dangerous
precedent.Not that anyone cares about economics any more; it
all seems political.
danmaz74 - 42 minutes ago
Looks like only final assembly will be moved to Alabama, and
only for the jets destined to the US...
gsnedders - 1 hours ago
The rail business, Bombardier Transportation, is headquartered
in Berlin, and as one of the sibling comments says, may yet get
sold off. Undoubtedly, the money eventually flows back to
Bombardier's headquarters but it is primarily a European
division.
jeffrey_t_b - 6 minutes ago
> I guess the Airbus/Boeing duopoly is here to stay.Comac is a
promising competitor, too, and are explicitly targeting the
bread-and-butter size classes of Airbus/Boeing.
jeffrey_t_b - 2 hours ago
It seems like Airbus paid nothing for this (maybe taking on some
of the manufacturing expenses?).See:
https://www.cnbc.com/2017/10/16/airbus-teams-up-with-bombard...It
certainly isn't a payday for the Quebec government, but I suppose
that 19% of something is better than 49% of nothing. One can
_still_ criticize the irresponsible handling of taxpayer money
AND now (if the manufacturing part is true) the benefits of the
original buy-in will not go to Canadian factory workers.
gsnedders - 2 hours ago
> It seems like Airbus paid nothing for this (maybe taking on
some of the manufacturing expenses?).The company they now own
50.01% pays the manufacturing and sales costs, so they're
taking on that.
trhway - 2 hours ago
>the move was criticized as a big gamble and an irresponsible
handling of taxpayer's fundsgiven the US [unsurprisingly] imposed
300% duty as a counter measure to the perceived government
subsidies, i think the more smart thing would be to buy from
Bombardier some military hardware (doesn't matter that it doesn't
produce it - it could have bought some very small military
contractor) at high-high prices like everybody else does -
US/Boeing, EU/Airbus, etc..
forapurpose - 1 hours ago
> the US [unsurprisingly] imposed 300% duty as a counter
measure to the perceived government subsidiesNot to pick on the
parent statement, but it brings up what I think is an important
point: Let's not take these claims by the US government at face
value. The US very well may have imposed the duty to help a US
company, and used the rest as justification. Economic
isolationism/nationalism is an explicit policy of the US
government.
guiomie - 2 hours ago
"Bombardier Inc. announced Monday it has sold a majority stake in
its CSeries passenger jet business to European aerospace giant
Airbus for no cost." ... Does "for no cost" mean for 0$? I guess
this means the Quebec Government was diluted, thus is the crisis
really avoided?
AnimalMuppet - 1 hours ago
It might mean "for no loss", that is, for what it paid for it.
No cost to the taxpayers.Note well: I do not know if that is
the correct interpretation.
guiomie - 1 hours ago
The guardian seems to add more details:"If Airbus?s plan
works, it?s ingenious. It will get a 50.1% stake in the
C-Series without paying a penny and will collect some cheap
warrants on Bombardier?s
shares"https://www.theguardian.com/business/nils-pratley-on-
finance...
AnimalMuppet - 1 hours ago
Ah, that seems to rule out my interpretation.