Sept. 14, 2017, © Leeham Co., Montréal: Bombardier officials conceded Tuesday that they are likely to lose the price dumping complaint filed by Boeing with the US Department of Commerce.
This is the phase in which DOC determines if tariffs (penalties) should be imposed because Bombardier sold its CS100 to Delta Air Lines at a price so low it constitutes dumping under US law. Boeing is asking the department to impose a tariff of 79%, the difference between the sales price estimated by Boeing (which Bombardier and Delta dispute) and the production cost. Boeing cited LNC’s cost estimate, which was made before BBD wrote off several billion dollars of the program and cut costs through a financial restructuring.
Boeing ignored the well-known fact (which itself experiences) that production costs for early orders exceed sales price. DOC seems unlikely to make this distinction, based on filings reviewed by LNC.
A preliminary decision is expected Sept. 25.
BBD is already looking ahead to the next phase, when DOC will take up the “injury” portion of the two-part investigation.
This portion assesses the alleged injury Boeing suffered, or may suffer, due to the price dumping. This phase will extend into next year. Boeing is also seeking a 79% tariff against Bombardier for this.
Fred Cromer, president of Bombardier’s commercial unit, said Tuesday that Boeing’s complaint is without merit—hardly a surprising position—but that by pursuing the complaint, Boeing threatens US jobs. Fifty percent of the C Series value comes from US suppliers supporting 20,000 jobs, he said. Over the life of the program, this means $30bn to the US economy.
All Boeing is doing, Cromer said, is attacking competition and innovation.
“Its complaint is focused on a category of planes (the CS100) it doesn’t produce,” he said. “There were campaigns they weren’t invited to participate in because they don’t produce airplanes on the sector.”
Cromer said Bombardier is looking beyond Sept. 35 “where you are actually proving damages. I believe over the course of the action, we will come out on top and participate in the US market.”
Separately, it was revealed Tuesday that Bombardier now hopes to delivery about 30 C Series this year rather than the 35-36 that’s been guided.
The company needs to hurry up. It needs to deliver 19 aircraft in the next 15 weeks to hit the 30 mark. Given continued supply chain issues, some observers believe BBD will fall short of even 30.