02/03/2014 05:18 EST | Updated 04/05/2014 05:59 EDT

Cement industry 'furious' at Quebec's funding of Bombardier project

The Bombardier family’s plan to build a $1-billion cement plant in the Gaspé peninsula is coming under fire from critics.

Among them are taxpayer groups, which point to the big pot of government money underwriting the project.

Quebec taxpayers are lending project leader McInnis Cement $250 million for the project, and another $100-million will come from provincial investment fund Investissement Québec. In addition, McInnis Cement will get a 10-year tax write-off on capital spending and a preferred price on electricity, in part because it will create permanent jobs at the cement plant.

Quebec’s Gaspé region has 16 per cent unemployment, and the project holds out the hope of 2,300 jobs during the construction phase and 200 once it is in operation.

The plant is being built in the community of Port-Daniel-Gascons and is backed by the Beaudoins, the family that founded aerospace giant Bombardier.

Project expected to bring 400 jobs

Christian Gagnon, CEO of McInnis Cement, says the plant will eventually result in 400 jobs in the cement business, including people involved in distribution operations. He calls the project "highly competitive" and environmentally sustainable.

Asked why he needed government money, Gagnon said startup projects are high risk.

"The Beaudoin family is taking a huge amount of risk to go into that,” he said in an interview with CBC's The Lang & O'Leary Exchange. "It is much more difficult, a venture like that, when it’s a totally new venture from the ground up than buying something that is a going concern. So. the difficulty to put together a financial arrangement to do all of that is what is behind it."

Gagnon says his critics, who include the rest of the cement industry, have old and inefficient plants and are afraid of the competition.

Michael McSweeney, CEO of the Cement Association of Canada, said there is already an excess of capacity in the cement industry in Quebec.

"In four cement plants [in Quebec] today, we have about 3.7 million tonnes' capacity," McSweeney said. "Last year, 1.7 million tonnes that was produced in Quebec was consumed in Quebec, and 700,000 tonnes went to the U.S. That leaves unused capacity of about 1.3 million tonnes​."

The McInnis plant would have capacity of 2.2 million tonnes per year by 2016 and would be competing with existing cement producers for the same customers in the U.S. northeast, where construction is expected to pick up as the U.S. economy recovers.

"The Cement Association of Canada is furious, angry and indignant that the Quebec government would be giving almost half a billion Quebec tax dollars to a private-sector company," McSweeney said. 

He accused the ruling Parti Québécois of buying votes with jobs in the Gaspé region at the expense of other parts of Quebec.