THE BLOG
12/20/2017 10:01 EST | Updated 12/20/2017 10:07 EST

It's Good To See Government Flexing Its Muscle To Boost Aerospace Jobs

We should all welcome the federal government's announcement last week signalling that it wants to continue a mutually beneficial relationship with Boeing.

An F/A-18F Super Hornet strike fighter.
Handout . / Reuters
An F/A-18F Super Hornet strike fighter.

The first priority for any government spending must be to invest in the people of its own country.

We all pay taxes and government fees on the basis that the revenue will be used to benefit our communities in a variety of ways.

This could be health care, education, programs to ensure everyone has access to opportunity, fighting inequity and more.

It also includes the efforts of our government to boost the economy, creating economic opportunity and good jobs. A vital part of that is to ensure such investments and opportunities are shared across the country. Governments must be able to direct investment to serve the needs of their citizens, something our current government has been showing much more interest in doing.

This is a welcome move.

This contract is worth an estimated $15 billion to $19 billion — a welcome injection into the economy.

One particularly big spending item on the government agenda for some time now is the contract to replace the aging CF-18 fighter jets used by our military. This contract is worth an estimated $15 billion to $19 billion — a welcome injection into the economy.

The federal government had been on track to buy 18 Super Hornets from the United States aerospace company Boeing to fill a capability gap while the procurement process proceeds.

Boeing then pushed the U.S. government to impose massive tariffs on Bombardier over federal and Quebec government support for the C-Series jet. The U.S. government responded by imposing duties of almost 300 per cent on sales of the C-Series in that country.

The move prompted Prime Minister Justin Trudeau to say his government wouldn't do business with a company that is trying to sue Canada.

Last week, the Liberal government made good on its warning, with Public Works and Procurement Minister Carla Qualtrough telling a news conference that "bidders responsible for harming Canada's economic interests will be at a distinct disadvantage" when it comes to getting the new contract.

Chris Wattie / Reuters
Canada's Chief of the Defence Staff General Jonathan Vance, far left, speaks during a news conference with Defence Minister Harjit Sajjan, centre, and Public Works Minister Carla Qualtrough in Ottawa on Dec. 12, 2017.

The statement was widely seen as a warning to Boeing to drop its case against Bombardier if it hopes to win future government contracts. It is good to see our government standing up for good jobs and showing such willingness to use its own spending power to do so.

Canada has a long and proud history in the aerospace sector, including the contributions of Boeing. We have developed some incredibly innovative technologies over the decades, and facilities in this country are a vital part of an integrated North American industry. Technology and parts go back and forth across the border as aircraft and spacecraft are developed and built.

Defence aircraft is one of the largest procurements a government can make. Many North American and global aerospace firms invest in Canada.

Thanks to regional offsets, in which governments require the companies from which they procure aerospace products to spend an equal amount in Canada and spread out across provinces, the aerospace sector spans the country. While much of the industry is concentrated in Ontario and Quebec, there are also sizable plants in Atlantic Canada, Winnipeg and British Columbia.

Without regional offsets — that is, without governments willing to use its spending powers to ensure good jobs and economic opportunity for all its citizens — much of that regional diversity would be at risk.

It does signal that any company wanting the contract must consider ways that it can help foster investment in this country.

Modern trade deals, however, put regional offsets and other important industrial policy techniques at risk. The off-again, on-again Trans-Pacific Partnership, for instance, would consider regional offsets to be a barrier to free trade. The TPP would, however, allow some countries in the deal considered to be developing or emerging, such as Malaysia and Vietnam, to use regional offsets.

The move by the federal government last week doesn't go as far as calling for regional offsets in any bid for the big fighter jet contract, but it does signal that any company wanting the contract must consider ways that it can help foster investment in this country. That's a good start.

It's not too late for Boeing to take part in the program to replace the CF-18 and play an even stronger role in Canada's aerospace industry. It has shown a willingness to abide by regional offset programs in the past, and with a review of its current trade actions, could easily boost its role in our defence procurement.

Boeing has been an important part of the aerospace sector in Canada for many years. Its facility in Winnipeg alone employs 1,300 Unifor members, who also contribute to the community and the economy.

The company is a vital part of the economy and a good example of how integrated the industry is, with many of the parts it makes in Winnipeg being sent back to the U.S. for the Boeing 787 Dreamliner and the new 737 MAX.

With last week's announcement, the federal government is now signalling clearly it wants to continue a mutually beneficial relationship with the company. We should all welcome that.

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