Aircraft-maker Bombardier (BBD-B), as other manufacturers in the past, has gone to Ottawa hat in hand to ask for some $1 billion, reportedly, to match funding of that scale already doled out by Quebec.
Now, generally, there are lots of good reasons to oppose government bailouts of corporations, this one included. Mostly because the government is less interested, and terribly ill-suited, to picking good businesses and more attuned to short-term political outcomes of saving jobs. Or looking like it’s doing that.
They delude themselves when they think they’re helping an industry, or an ailing captain of an industry, with a quick dose of medicine to get it through a crisis.
Band-aids aren’t effective cures for deeper, internal injuries that are obvious in the first when a business considers the government as the closest crisis centre for more funding.
So you could just tell Bombardier to buzz off on that basis alone. There are simply so few circumstances that really require the government to act in saving a particular business.
For example, when we bailed out the auto industry, we still lost billions and the auto makers still closed up some shops.
In these industries – global, competitive, never moreso since signing trade deals over the past few decades – blowing money into a company deemed too big to fail, turns out to be the equivalent of sneezing into the wind and hoping the weather changes. It’s a futile exercise when greater, global forces are at work.
Same goes for Bombardier.
But in Bombardier’s bid to take government money to prop up its ailing aircraft business as it seeks to profit on the C-Series aircraft (which Air Canada has said it will buy) in a market where there are similar and other choices, there is much more to revile. It’s not just the principle of government as terrible steward of business.
Bombardier is controlled via preferred shares by the Beaudoin and Bombardier families. When the government dispenses money to Bombardier, as Quebec has done, it props up those families, who clearly, as controlling shareholders, have not guided the company successfully. Or they would not be seeking funding.
Many recognize the perversion here. That the public purse gets used, as it already was in the mid-2000s for Bombardier, to support a few controlling shareholders in Quebec. So some suggest the government push for the preferred structure to be broken in exchange for state help.
But that view doesn’t go far enough.
We need to see how Bombardier fares on its own. And for that to happen, the families that control it need to fear the bankruptcy of their business. Then they may make hard choices, which might be inevitable anyway.
That won’t happen, at least not now, so long as the government acts nanny and holds out a bottle of milk with typically sweet state-backed financing.
It’s time to be a good parent, Mr. Trudeau, and say no.
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