Nov. 20, 2017, © Leeham Co.: The European Union is now getting involved in the Boeing-Bombardier trade dispute. See here and here.
The EU has taken Bombardier’s side. Although the UK previously weighed in with BBD because the wings are produced in Northern Ireland, the EU hadn’t become involved. Now it has, filing briefs with the US Department of Commerce.
Why now?
It’s because Airbus agreed to acquire a majority stake in the C Series program.
Now Boeing faces the potential wrath of the EU in addition to Canada and the UK.
Boeing officials were prepared for reaction from Canada and the UK and the possibility of losing military sales, according to Wall Street aerospace analysts who talked with them (and who talked with LNC).
But according to an Aviation Week article, Boeing was surprised (“shocked” is how AvWeek described it) by the BBD-Airbus deal. Boeing’s focus was the prospect of Bombardier making a deal with China’s COMAC. Indications that Airbus, having rejected a deal in 2015, seemed not to have been in the picture.
The UK newspaper, The Independent, wrote, “If the EU ultimately imposes painful tariff counter-measures against Washington – or threatens them – it’s possible the US might back down.”
Canada’s Financial Post wrote, “Bombardier’s ties to Europe have strengthened in the last month since the company announced French aerospace giant Airbus SE will acquire a majority stake in the CSeries program. Part of the deal involves shifting production of U.S.-bound CSeries jets to a facility in Alabama, a move that could potentially allow Bombardier to avoid the crippling tariffs imposed by the U.S.”
Boeing sniffs at this and asserts the Mobile (AL) C Series production plant will never be built because, the company claims in a filing, it “makes no economic sense” and there isn’t sufficient market in the US to support it. In any event, Boeing claims, the mere existence the propose plant is simply to circumvent the tariffs. US law allows tariffs to be imposed for circumvention. Bombardier, Airbus and observers note that trade laws are intended to support US jobs and investments in the US, which the proposed C Series plant will do.
But Boeing may have some ‘splainin’ to do, to famously quote Ricky Ricardo in the popular 1950s TV series I Love Lucy.
In its original complaint filing April 27, Boeing in a footnote takes note of the presence of the Airbus Mobile assembly plant and acknowledges in so many words that this produces US-made airplanes.
“Boeing notes that Airbus has opened a final assembly facility in Mobile, AL, which may be used in the future to produce Aircraft in the United States. Until Airbus does so, however, it should not be treated as a domestic Aircraft producer. Accordingly, Boeing has treated scheduled Airbus deliveries of Aircraft to U.S. customers as scheduled deliveries of non-subject imports….”
By Boeing’s own reasoning, if the Airbus Mobile plant produces US-made airplanes, so will the C Series plant.
Generally, I let Reader Comments appear as they are written and without my own comment, unless there is a specific question directed to Leeham News or on a topic that I think a reply will add to the discussion.
Sometimes Readers email me directly.
This last week produced a couple of comments that just had me laughing.
In an email to me:
Category: Airbus, Boeing, Bombardier, CSeries, Pontifications
Tags: Airbus, Airbus Mobile, Boeing, Bombardier, C Series, C Series Mobile, US Department of Commerce
A major reason for the EU only getting involved in the Bombardier dispute now relates to the British decision to leave the European Union. Normally a member state would ask the EU to act on their behalf when a major industry is under threat. The UK government chose not to do so for the Bombardier wing factory in Belfast, because that would imply the UK lacks influence without the EU. This was an argument of the losing side in last year’s referendum
Further to FF’s comments, for this case, based on what Scott has written above about the conversations with certain Boeing officials he and Wall Street aerospace analysts had, along with the Aviation Week article, it does indeed seem as though the UK lacks influence without the EU.
Be interesting to see if any politicians in the UK will react to this, and if so, how?
It isn’t lacking, it is different. Can’t see how it can be anything other than significantly reduced (perhaps even eliminated entirely) in this sort of heavyweight tussle but in other circumstances the UK may be more nimble and/or flexible than the EU could be and therefore the results different.
@Woody:
Interesting take. It means selective participation by the UK in the EU economic regime, i.e. UK is part of the EU in this but not in that….
Of course there are precedence in the form of EURO vs GBP and Schegen immigration & custom….
Don’t all EU members wish to enjoy nation-specific special treaty privileges similar as the U.K…..
I think that, if Brexit does actually happen and it is not via a sort of ‘pre-pack’ that EFTA would offer, any arrangement must be involve specific approaches to the various agencies/agreements etc, consistent with what the various parties can agree re the EU pillars.
What I was thinking of more is simply that overburdened/overcomplicated bureaucracy is sclerotic. The main point about the EU’s Lisbon Treaty was to address such problems. But it remains an unwieldy, slow and inflexible organisation in comparison with its competitors. Hence the practical drive that goes with the (dominant) ideological drive toward ‘more Europe’ and a single State.
The UK, now no longer an inroad to EU decision making, lost US respect.
Without BREXIT This attack probably would not have happened.
I doubt that completely. Had Boeing waited until the UK had actually exited the EU (if this in fact happens) then it would make sense, but Boeing didn’t. They brought the case while the UK is full and continuing member of the EU and so Brexit is irrelevant.
The key is Boeing’s failure to anticipate Airbus’ purchase.
Yes, that has been argued by the (Brexit) loser camp and IMHO as dishonestly as has been too much of the argumentation (on both sides) in the Brexit debate. Let it go. The point if interest is that (now spurred directly by the interests of a flagship EU industrial giant and not in solidarity with a recalcitrant UKG) the EU has gone in to bat for Bombardier.
From the UK, there is every appearance that Boeing, doubtless in coordination with elements in the US administration, has made a monumental misjudgment, the possible ramifications of which I sincerely hope that we, all of us, never live to see.
The move to produce CSeries in Alabama for sale to US-based customers (combined with c.51% by value of the CSeries parts being US-made) gives ample room for USG to nullify the effect of the punitive duties recently imposed on CSeries sales as imports with no loss of face.
In such an event, the only party that may be left limping is Boeing. It seems to me that Boeing’s strategy is entirely underpinned by its belief there is only an insignificant market for aircraft of the lift and range the CSeries has – which is why it has not developed any competitor to the CSeries. If it is right in that assumption, then Boeing will walk away laughing too. However, by reading the runes so far uncovered, it looks (including now to the Boeing senior management) that this has been a most serious miscalculation, the effects of which will cost the company dear. Where truth lies will unfold in due course but my thinking is Boeing have been reading the evolving market in this sector wrongly for the last decade and that is ground lost that will never be won back. We shall see.
I think it should be changed a bit from the above.
Boeing fully understands that the 737-8 market area is threated by the C Series and the C has a very bright future, that’s what scared them and then they started to make stupid decisions.
Its killed the F-18 orders to Canada and going forward Canada is going to take other equipment. If I was Canada it would be an open competition other than the fact Boeing can’t win.
I suspect we will see Grippen fill that F-18 slot.
I think the LEAP engines (particularly on 737) are Maxed out (pun intended) they do not have the upside growth that the future PIPs for the GTF have.
C Series of course has GTF.
Boeing needs to move back to Seattle, get out of that Ivory Tower in Chicago (though Chicago is a good place to dump the management, local homeless shelter would be good)
Problem is that F-18s are not supposed to be a major order but rather a top up stopgap until the F-35 is finally, if it ever will be, ready.
Buying Gripens or some other aircraft means all the maintenance/training costs that would be associated with a purchase of a new type of aircraft.
Why should Canada still order F-35 at all? Lockheed Martin is also an US company. The duties in question were not imposed by Boeing. The duties were imposed by a political US court.
Grippen because you can maintain them yourself and not at the huge lumbering expanse of the F-35 debacle.
They could maintain F-16s themselves…
F-16 is a previous generation, the Grippen is latest.
It also non US and I would not blame Canada for going that rout.
Rafael and Typhoon also possible but they are also hugely expensive aircraft.
Grippen seems to be the low cost aircraft that can do the job Canada needs it for.
Just an opinion, but with Embraer making in the American soon I could see a BBD – EMB – SAAB work out.
Canada is already preparing to aquire Australia’s old F-18s as a stopgap. Agree that it will
“Boeing needs to move back to Seattle”
It still has a huge presence in Seattle, all the commercial aircraft execs are still at ‘the racetrack’ at Tukwila. The numbers in Chicago are tiny by Boeing standards and are connected to the Boeing global business and other North American military and space divisions.
dukeofurl:
yes but that is where the stupid decisions are made and out of touch.
Your comment begs the question: “When is the Boeing board of directors going to step in and make a decision on the future technology of the corporation whose shareholders they represent?!” Are these nincompoops as passive as the Board of Directors of GE that allowed the last CEO to invest in fossil fuels at a time when the whole World outside of the USA has looked to new sources of energy?! For gosh sakes Electric is in the name of the company. Solar, electric vehicles, etc…
Yes
Sometimes we all laugh at what is written. I laughed at LNC’s explanation of lift, among others. Force exhibits the properties of a vector which means lift exhibits the properties of a vector. Please remember that.
But, the first amendment, freedom of speech. LNC do allow challenge, and that is to your credit
To address the article. My view is Airbus need to ramp up production because it is clearly costing them sales. A majority stake, or takeover, will incease the supply chain. So, in my view, the decision of Airbus is strategic not tactical. This means, I don’t think they will be interested in pursuing Boeing. I think they will let it die, if they can
Sorry Phillip, you are only talking about a mathematical method to describe a real world effect.
Thanks for the background info Scott. Like many, I had suspected that Boeing had miscalculated on this issue, but you have been able to provide some of the “thinking” that went with their decisions.
Even with Airbus and the EU, it should prove to be quite interesting how this one goes. I don’t seeing Boeing themselves just rolling over on this one, and based on their comments and reactions so far, this still, for now, seems to be the case.
Scott, my personal opinion/observation is that you try to be impartial but tend to judge Boeing more harshly, probably because of how close Boeing is to you.
It is a shame that so many people feel the need to shoot off at the “mouth”, often without justification and with little or no regard to others.
At worst Scott is neutral, he may hammer Boeing a bit harder.
I am all for that. AS red blooded (are there any other kind?) Americans, we hold our country and companies to higher standards.
Sadly those are standards set long ago, but they are still there.
These “comments” are intended to put some pressure on Scott & Bjorn to be “balanced’ next time and avoid unnecessary observations about a preferred OEM , or take on the other one to compensate.
In general these suggestions / advises tend to work somewhat. It’s not all black & white. Always use little helpers though. In general pampering / excluding journalists with the same goals is widely used too.
The weight of skilled independent commentaries like Leeham news.com is no longer underestimated by the marketing departments.
LNC is based in Seattle, I think they may have some people based in Europe.
If people wanted to hear Boeings side of every story they just read Aviation Week, so the “Alt_Boeing” view has to find an outlet somewhere ! Plus the US based media has acess to more ‘leaks’ in the States compared to Europe
You are the first I see saying this about AV, but I can’t say I don’t recognize it somewhat, unfortunately 😉
Judge yourself:
http://aviationweek.com
Wow yet another publication in the tank for Boeing, will it ever end?
@keesje:
“These “comments” are intended to put some pressure on Scott & Bjorn to be “balanced’ next time…”
But why need to apply pressure when the balance is already intrinsic with these 2 gentlemen(whom BTW, I already highly regard) every time rather than “next time”?
Unless of course those “comments” are originated fm PR teams(or proxy, cheerleaders, patriots, etc.) of any specific manufacturer working under a diff agenda in which objective+realistic assessment of any product, process or company is irrelevant…..
“…avoid unnecessary observations about a preferred OEM”
Who decide “unnecessary”? Are we talking about some kinda internet police re aerospace/airline industry?
I only know subtle censoring by crowd is bad especially for a high quality site full of access to industry insider info/details like leehamnews.com
************
Scott, Bjorn, I may not agree with everything in your articles all the time but I beg U not to change your existing writing style/approach about this industry and especially pls disregard comments “intended to put some pressure on U to be more “balanced” next time” or whenever.
My take is it depends on which hat Scott is wearing at the time. The reporter/analyst hat or the editor hat.
I read the blog for reporter/analyst Scott. So, the technical and commercial side, the info, insight, intelligence etc that Scott offers (all much appreciated Scott) and the debate that follows. Feels entirely impartial to me.
When it comes to editor Scott (eg disputes with employees at Boeing or the party political – Trump in recent times – as opposed to company political) I’m less interested. Not disinterested, as they impact the commercial side, but less interested. This part does feel somewhat partial but, where Boeing is concerned, more like frustration (like you would be for a family member or friend who you wish would get their act together) than ‘bashing’. The only partiality that comes to me right now and that felt like a bash was actually against Airbus over the Li battery issue.
I have to say I am very interested in the Editorial end.
Kind of a cross check on my own thinking, I wish it were different but its virtually 100% in regards to Trump.
tend to judge Boeing more harshly,
Boeing management regularly provides easy targets, don’t they?
fish in a barrel or the gang that could not fly straight?
They get somewhere despite themselves.
No argument there
And Airbus doesn’t?
Its ebbs and flow.
My take is that overall, Airbus is far more involved in what is good for the participating countries as far as employment and maintaining a high tech edge goes.
Boeing (and many US Bossiness) would (and some do) shuck it all to Zimbabwe (or China or etc) if it could.
Complete greed money driven vs a more balanced view of equal parts company, employees and shareholders that create a stable country and economy.
Hi Scott, on a side note:
it seems your resources on the right side of the screen could use some refreshment. E.g. The great “A320neo B737MAX Marketshare” is no longer active since 2 years.
One of the reason to go to leehamnews.com used to because it had many good links too.
E.g. a great newbee that tends to do some xls work making his case and feels free to give his opinion: https://plus.google.com/110285755603480308773
Are there more useful / entertaining new sources we could suggest for Leeham ? Or delted from the current list?
One I would encourage readers to access is the Aero Turbo Blog.
He has a good write up 0n the 777x and A350 as well as other good engine information.
http://aeroturbopower.blogspot.com/
Agree. It’s hardly possible these days to add / see any comment to this blog which makes it less interesting IMO. You have to use a profile that isn’t there etc. Can’t contact the blogger, an unfriendly system.
I finally saw that the Emirates order had 60 options (All things 787)
Boeing is right: it makes no economic sense, unless it’s to court favor with Delta for a future Airbus order. I read elsewhere (don’t remember where) that the line would be built and staffed by Bombardier employees. If that is true can they then export from Mobile; and, if so, are they eligible for EXIM bank financing?
Just because Boeing says it makes it so? This from a company that spent 32 billion or so on the 787!
Did Charlotte make economic sense?
If the C takes off big time as it should, then the second line makes complete sense. The equipment is there, they just to add a shed on the side in Mobile.
Yes its a long term investment.
All the rest is going to get hashed out as there is not even a clear answer (i.e. court ruling) on the basics to start with let alone the rest of it.
The past. Todsy, the market wants Airbus but not Boeing.
I am neutral, many will say otherwise. But as a child it was Boeing even though I’m British. Boeing need to crack carbon, otherwise they will be left behind.
The second half of this article I’ve nothing except contempt for, Scott Hamilton. Name and shame, who gave you the right to do that. God. Shame on you.
@Phillip:
1. Nobody has a sense of humor anymore. I thought the exchanges were funny.
2. It’s my right. It’s my blog and my column.
Right on, Scott. If P (or anyone else does not like what you write, they are free to read elsewhere. P moaning here that that he does not like what you write (or the way you write it?) is simply discourteous.
I though your post was insightful, pretty well balanced and with a good sense of humor (sic) 😉 A pity that all do not have your knack with words.
I’m happy for you, for I find what you and your side kick write always funny for it does talk up Boeing/GE and does talk down Airbus/RR
Just to make clear that it isn’t just you and your side kick who have rights. So we are all happy and we all agree your column/blog is just a laugh
Glad to entertain, Philip. Have a nice day.
@Scott Hamilton:
“2. It’s my right. It’s my blog and my column.”
A very simple & basic concept in which unfortunately, some folks here refused to accept and instead want to takeover as their own thru applying pressure fm their comments….
@philip:
Saying this:
“the market wants Airbus but not Boeing.”
and then this immediately:
“I am neutral”
in the same breath is gutsy & daring @ the same time.
Just a fact, regardless of how often you talk up Boeing. I think it is just sour grapes that Airbus is doing so well. Lets address some of the bias:
The A350-1000 MTOW may be increased from 308 to 316 tonnes allowing an additional 8 tonnes of fuel. LNC says that will increase the range by 400nm. On a linear scale its 575nm against a documented mid-weight fuel burn of 6.8 tonnes (see FlightGlobal). So the additional 8 tonnes of fuel as a penalty of 30%, according to LNC. I accept it isn’t a linear scale but, but a penalty of 10% is excessive. But lets use 10% anyway, the range increase is 520nm, not 400nm.
That kind of down grading only applies to Airbus never to Boeing. Indeed Boeings numbers are always upgraded.
To give another example. LNC compared the fuel burn of the A330-300 and A330-900 over a mid-range sector. According to LNC its The A330-300 would burn 54 tonnes and the A330-900 49 tonnes. That’s a 9% reduction in SFC against 12% as declared by Airbus. So LNC downgraded the performance improvements by 25% for the purpose of its analysis.
But it is the grand statements that I find laughable. The comparison of the 787-10 and A350-900 is an example.
‘It’s all about surface area and volume’, parphasing the words of LNC. So the 787-10 is better. Well there is a range drop off of 1200nm miles between the 787-9 and 787-10. Being kind that is 14 tonnes of fuel. Remove 4 tonnes for passengers, the OEW increases by 10 tonnes from 129 tonnes for the 787-9 to 139 tonnes for the 787-10. So the OEW weight of the 787-10 is 3 tonnes higher. But LNC says its lower.
An OEW weight increase of 10 tonnes is to be expected if the stretch isn’t straightforward. It cost Airbus 12 tonnes to stretch the A350-900 into the A350-1000. The stretch of the 787-10 wasn’t straightforward. Wiki giveS insight: Bending moments had to be addressed, meaning significant structural reinforcement was necessary. Not according to LNC, for that would mean the OEW is higher
Indeed the comparison of the 787-10 and the A350-900 was grand statement after grand statement. Another example. LNC: “Over by many years of analysing aircraft” … then paraphasing … ‘barrels and panels/frames are no different’. Well there are only two aircraft in existence, the 787 uses barrels, the A350 uses panels/frames. So how many have LNC compared over the years if there are only two aircraft in existence?
Through grand statement after grand statement LNC talk down the A350 and talk up the 787.
The best example of grand statements came sometime ago when LNC compared the GENX and the Trent 1000. Paraphasing, ‘the airflows cannot be altered’, referring to the development of the Trent 1000 TEN.
Well RR changed the IPC from a declining line/axial line compressor to a rising line compressor. For those who don’t know. A declining line/axial line compressor means the outer radius declines and the inner radius stays constant along the axis. A rising line compressor means both the outer and inner radius rise along the axis, the inner radius rising more than the outer radius
But LNC know different, the airflows can’t change. Well they did, the Trent 1000 TEN is a different animal, and far better than the GENX.
And so on, I do get bored with it, talking up Boeing and talking down Airbus. But it makes no difference, the market is speaking, so I do laugh at the bias.
Have a nice day!
Hi Phillip,
here some comments on your “facts”;
Re A350-1000 and 8t of additional fuel. You need a flight performance model to evaluate the increased induced drag of carrying those 8t extra until they are burned during the last 450nm (you get 450nm extra from this 8t of fuel).
Re A330-300 vs -900. You need to learn some aircraft mission basics. Range increase from an efficiency increase is measured on the max range (so the efficiency increase can work the max time). For a 5000nm mission, you stay at 9%.
You need to do your 787-9 vs -10 a bit better before being so sure of yourself. You are totally off on the OEWs. And how can you compare the stretch of the 787-9 to -10 with the A350-900 to -1000. The 787-10 stretch stays at the same MTOW, wing planform, landing gear and engines when all these items change significantly between A350-900 and -1000 (MTOW +13% vs 0%, Wingarea +4% vs 0%, MLG from 4 to 6 bogie vs the same, Engines +3.7% mass vs 0%).
I don’t know what you refer to re “the airflows cannot be altered”, I know perfectly well the changes to the Trent-1000TEN core.
You should perhaps do you analysis a bit more thoroughly before such blanket statements. Right now they hit you more than us.
P. S.
I do like LNCs understanding of lift and drag. Mr Navier and Mr Stokes would find it very funny, but then Mr Newton would also find it very funny.
The bias is at it most obvious when their work is used to talk up Boeing and talk down Airbus
Phillip, so what has happened this year?
@Geo
If your talking about sales, Airbus have ran out of slots. The Indigo MoU makes clear that the majority of A320/A321s will be deliverd in 2025/26 after the rate as been increased to 60/month and possibly more.
The Indigo deal is showing just how daft it is getting; specifically, Indigo will recieve most of their airplanes in 7 and 8 years time. If Airbus could produce them they could sell them. Exception, the A380.
Airlines are buying Boeing because they can’t get Airbus.
Airbus will increase production. Daft not to. The airlines are falling over themselves to buy Airbus.
The numbers won’t be that far apart this year, even though many have said it will be a good year for Boeing and a bad year for Airbus.
I think the C series will start contributing. Not a bad year this year. But next year a very good year because the airlines now know it has the necessary support
My interest is American Airlines. LNC suggested that the US carriers were no longer interested in the A350. Two have now declared, one hasn’t. Will American Airlines give up their slots. Doubt it. If they do they walk away from long haul; the Middle East operators will crush them one way (hub and spoke), A350 operators, including US operators, the other way (point to point).
You can’t get an A350 even if you were willing to sell your children. Expect production to increase.
@Fhern
“Flight performance model”. As you keep telling everybody, it’s your model. It’s unique to LNC. Yes it is unique to LNC.
To pick up on just one point. The 12% SFC reduces to 9% SFC on reduced sectors. Please look up the definition of SFC.
Your talking about something else. CASM does reduce from long to short sectors. The principal reason is the reduced fuel load required to cover the sector. But the fuel burn still represents a 12% reduction in SFC not 9%.
A good example is the Trent 1000TEN. RR claims a 3% better SFC over shorter sectors reducing to 2% over longer sectors. The principal reason is climb performance. The Trent 1000TEN has more power than the GENX. It is a slightly bigger engine. So in cruise the performance differential comes down just a bit. In climb, the GENX doesn’t have the lungs, so it burns fuel to get up there. So the performance differential goes up a bit.
So I do accept there are minor variations in SFC, but your numbers are big, very big, for Airbus; 30% penalty, 25% penalty far, far too big. You must think Airbus are idiots
Add another example to my list. You say the A330-900 will approach a range of 7000nm when the MTOW increases to 251 tonnes. Airbus says at least 7200nm. So again the 30+% penalty. At least 7200nm please, perhaps better. Don’t invent your own numbers.
Please don’t keep lecturing everybody on aeronuatical engineering. Mr Navier and Mr Stokes are turning in their graves. So is Mr Newton.
It is your model. It isn’t a standard. Your model favours Boeing!
With regard to fixed airflows. Recover it from your archives. We had a ding dong battle
@Fhern
I will add this. The OEW of the A350-900 is 134.7 tonnes, minium (see Wiki). I admit if you are SIA add 10 tonnes. But lets use Airbus instead of SIA. The OEW of the 787-9 is 128.8 tonnes (see Wiki). That number is Boeing not SIA. Difference, 6 tonnes. The 787-10 is an 18ft stretch. To do that with a 6 tonne differential. Well the 1200nm drop off in range said Boeing didn’t. It cost them 10 tonnes
But use your own numbers, for your numbers are right and everybody else’s numbers are wrong, and they do favour Boeing, [edited as a violation of Reader Comment rules].
Hello philip,
Below is an excerpt from Mr. Fehrm’s bio, perhaps you could similarly share your educational background and work experience in aeronautical engineering and aviation? Who has been sufficiently impressed with your knowledge in the field of aeronautical engineering or aviation to award you a degree or write you a paycheck in these fields?
“He has a background as an aeronautical engineer and Fighter pilot from the Swedish Air Force where he flew the Draken and worked on the Viggen and Gripen programs. After leaving the Air Force he worked at SAAB with the Gripen program in the area of counter-measures.”
By my reading, Mr. Fehrm’s messages have not asserted that everyone else’s numbers are wrong, rather they have argued, convincingly in my reading, only that your numbers are wrong.
@AP_Robert
I have a degree in aeronautical engineering (Manchester) and then went on to have a career in CAD, computer aided design, (Cambridge) before I retired. I’m not going any further because I’ve the right to enjoy the remainder of my life in private.
I suggest you read Wiki before having a go at me. Wiki aren’t always right, but it is far better than this [edited as a violation of Reader comment rules]. Equally, if Wiki get it wrong in the end pier review corrects it.
This brings be to @Anton. @Anton wanted to know why Wiki said the Trent 7000 was 750Kg heavier than the Trent 1000. Just some American trashing RR. It will be corrected in time through pier review
Unfortunately, it is usually Americans who resort to this behaviour or those under their employment
@AP_Robert
P.S.
I have noticed you do appoint yourself the judge. LNCs numbers are right my numbers are wrong. Are you good enough?
OK, Everyone (and most particularly Philip): this has gone far enough.
We welcome intellectual comment debating the issues and whose numbers are right or wrong in a civil manner. Reader Comment rules are extensive and specific. I draw special attention to Nos. 2, 10 and 11 of what’s not permitted in Reader Comments.
Philip has crossed the line into questioning motives, integrity and hurling insults. In reviewing Philip’s posts dating to 2015, one of his first posts was to insult Bjorn’s background–and Philip hasn’t let up since.
Given his two years of violating Reader Comment rules, per Reader Comment rules, Philip has been banned from future comments for 30 days. If Philip wishes to confine his comments in the future to issues, he may apply for reinstatement sooner.
The rest of you: refresh your memories.
Hamilton
@Transworld:
“If the C takes off big time as it should, then the second line makes complete sense. The equipment is there, they just to add a shed on the side in Mobile.”
I recall a few wks ago, Alain Bellemare said new investment re CSeries FAL establishment in Mobile will be off-set by local state incentives following the exact model as what Airbus got there earlier…..
Of course, he may be lying, telling the truth or somewhere in between….
Wanna bet that said shed might be a bit oversized for a little C-Series sized aircraft?
Bet on it being built for the mainline cash cow rather than the much discussed (in these pages) CS500, since that’s the one the one that they really fear.
I don’t see what leverage the EU has to “threaten” the US. With the Airbus/Boeing WTO cases basically being stalemated (“you don’t impose and I won’t”) doing so could instead spark retaliation. IMO the EU would be best to stay out of this one and not issue ultimatums since these could easily backfire and start a counter-tariff war. From what I’ve read BBD shot themselves in the foot not responding to the allegations with cost information so even if the initial accusation was incorrect the lack of response dictated their loss. Best not to put the entire Airbus portfolio at risk with such a move. As far as the Mobile plant, I think the distinction is that it wasn’t setup specifically to avoid a tariff, the CS production there is.
Pls correct me, but isn’t it the other way around? Boeing interferred, using DoJ to block a hardly competing product & it backfires big time !? Shooting themselvces in the foot.
http://www.businessinsider.com/boeing-bombardier-complaint-canada-airbus-2017-5
Hello TD,
Regarding: “With the Airbus/Boeing WTO cases basically being stalemated”
It is only the case that these cases are stalemated if one regards one side having 22 billion USD in subsidies remaining in dispute, and the other side having 800 million USD of subsidies remaining in dispute, as being a stalemate. The quote below is from the Seattle Times article at the link after the quote.
“Last year, Boeing saved a total of $242 million from the total package of state tax incentives, including B&O tax credits for property leases and investments in pre-production equipment and a sales and use tax exemption.
However, these other tax incentives are no longer an active part of the WTO dispute panel’s remit. It’s only the $800 million Boeing has saved from the B&O rate reduction that is still in dispute.
This compares with $22 billion in Airbus launch aid — government loans used to fund development of new airplanes — that remain in dispute following the corresponding ruling last September in the parallel WTO suit against the EU.
That case, filed more than a year before the case against Boeing, is closer to an endpoint.
Bob Novick, former general counsel to the U.S. Trade
Representative and now outside counsel to Boeing, said the appeal in that case against the EU should be decided this year, after which the U.S. government can begin the process of taking retaliatory trade measures.
“The U.S. is headed for the right to retaliate,” said Novick. “It’s coming very soon.”
If the Washington state B&O tax reduction is found to be out of compliance after the appeal, “We’ll take a hard look and see what we need to do,” Boeing Vice President John Demers said in an interview.”
https://www.seattletimes.com/business/boeing-aerospace/wto-upholds-ruling-against-washingtons-tax-reduction-for-boeing/
That is just one newspapers opinions. As is the case in most of these things, you get wildly divergent opinions what the various rulings mean. Airbus CEO says the Washington subsidies impacted more then 100B in deals so retaliation can still be massive.
Mark: Its the latest assessment from WTO
As of now the corporate welfare is allowed.
Of course that may change, as I have often though of the ICOJ, the WTO is an employment agency for people who can’t find a job.
So the longer this spirals out the longer a career they all have and contribution of zero.
Help yourselves. But not me. The market speaks. They want Airbus but not Boeing.
Naming and shaming. Scott Hamilton, add me to the list. Nothing but contempt.
Yes dear, we heard you the first time. Now change the record; this one has a crack in it.
@Kerensky:
“Yes dear, we heard you the first time….”
That repetition in such short duration is the ultimate funny thing /laugh on this site.
The commentator probably won’t rest until every article/column/blog by Scott in the future begin or align with: “The market speaks. They want Airbus but not Boeing.”…..
Laugh of the day Kerensky, thank you
Dear philip,
would you happen to know what the orders numbers for this year are?
The “special relationship” was predicated on the UK having a seat at the table at the EU. Now the UK is just like a more distant Canada…..without natural resources.
Not true. It long predates the EU/EC/EEC and is actually more to do with a relatively common ‘world view’ tied by intelligence and military cooperation. That said, a UK outside the EU may well mean a reduced ‘special relationship’.
Up until now, the US doesn’t seem to be indicating that they see the “special relationship” in a different light, even if they weren’t listening about Shorts and the C-Series.
Ahh, but the US does not speak with one voice.
Many fingers in the pie.
Have to see if and when there is official (non Boeing) ruling and action, then its challenged, overturned reinstated etc.
I suspect a call is being made to Boeing to back down or see a huge tariff placed on 787 which has been dumped in to Europe for YEARS. I am sure Airbus would love to be compensated for the BILLIONS in profits this dumping cost them in profits and sales.
So they have been selling 787s for a lower price in Europe than the US?
Of course, but that is different, unless Europe of individual states have laws that they then use.
Too many are attempting to interject integrity into this, Boeing and many US corporations as we all have seen have none (financially institutions amongst the worst)
Happy to destroy the US economy if they can make a buck.
Boing unlike a bank is stuck with actually having to make something or they can’t pull the shenanigans.
Interesting times.
I knew we had lost it when a candidate for the Presidency (Romney) had an offshore bank account and nobody batted an eye.
BTW does Boeing have a European aircraft plant…NO. Does Airbus have a US aircraft plant YES…Checkmate Boeing. I am sure Airbus would quite happing trade all its US A350 and 330 orders for all the European 787 and 777 business. And the US cannot really touch the A320 business while Europe can put tariffs on 737 until Airbus is compensated.
Lets see if other countries have the stuff on the books to do it and someone acts on it first?
Yes it was odious of Boeing, but that’s what they do and are.
Its for the riff raff to not be on welfare, Corporations are different (just ask them) don’t you realize they have shareholders to make happy and CEOs to give millions to?
Our job as surfs is to do all the work and pay all the taxes so they can live in the lap of luxury.
Boeing want to control the competition. With America First, he saw a good opportunity to succeed by using politics. Boeing negotiated with Bombardier and the Government of Canada for an agreement on the problem. Boeing as withdrawn from the negotiations. He knew that a Commerce Department regulation on their behalf was going to be promulgated. EU understood that if he did not get involved in the file. Any American company will be able to eliminate the foreign competition by raising implausible arguments and having the support of the American government. Boieng raised an international political problem. He may pay the cost. And do not forget that the final decision is not made. Maybe the cause is going to be canceled and Bombardier will not have to build an assembly line in Alabama.
Translated with Google.
You forget that Airbus owns 50.01% of the C series now.
That part is a done deal.
Actually, @TransWorld, I think the Airbus-CSeries deal is pending regulatory approval.
Mark from Toronto is very naive or is not well inform. The A320 or every Airbus product line is very much high in US content. Some are more than 50 percent. The US aerospace industry is so much bigger and diverse than EU due to the massive US government need for equipment.
That is my point A320 family will still be tariff free due to US content and final assembly. A330 and 350 are pretty high on Euro content esp absent a US engine choice for Neo and XWB.
Agreement between EU and US means both sides airliner deliveries are tariff free, local assembly had no difference to Airbus products.
Really? Where did you find that? Sorry if it is common knowledge, but I didn’t know anything about that.
Is this part of the GATT 92 agreement?
Hello Aero Ninja,
Regarding the no tariffs for commercial aircraft claim that dukeofurl likes to make, this applies to the normal course of trade, it does not prohibit CVD (subsidy) duties (which can be pursued either through the WTO or US law) or dumping duties (pursued only through the laws of the country in which the dumping occurs, WTO only offers dispute resolution). Think about it – would Boeing and Airbus have been pursuing WTO CVD cases against each other for 14 years if there were no duties possible and all that was at stake was the intellectual satisfaction of one side or another being able to say that they won?
Hi AP_Robert,
Thanks for your information. I was asking because I had just such doubts in my mind.
For anyone who may not have heard about the Boeing and Airbus WTO cases that I referenced above in this thread, I have included an excerpt from a Seattle Times article about these cases below. See the link after the excerpt for the full article. Note that the amounts remaining in dispute, according to the WTO, are 800 million USD in the Airbus complaint against Boeing, and 22 billion USD, repeat 22 billion USD, in the Boeing case against Airbus. Apparently Boeing lawyer and former general counsel to the US trade Representative Robert Novick does not agree with dukeofurl’s belief that tariffs are not possible for commercial aircraft, since he is quoted in the article as saying that: “The U.S. is headed for the right to retaliate,” …. “It’s coming very soon.”
Excerpt from Seattle Times article starts here.
“Last year, Boeing saved a total of $242 million from the total package of state tax incentives, including B&O tax credits for property leases and investments in pre-production equipment and a sales and use tax exemption.
However, these other tax incentives are no longer an active part of the WTO dispute panel’s remit. It’s only the $800 million Boeing has saved from the B&O rate reduction that is still in dispute.
This compares with $22 billion in Airbus launch aid — government loans used to fund development of new airplanes — that remain in dispute following the corresponding ruling last September in the parallel WTO suit against the EU.
That case, filed more than a year before the case against Boeing, is closer to an endpoint.
Bob Novick, former general counsel to the U.S. Trade
Representative and now outside counsel to Boeing, said the appeal in that case against the EU should be decided this year, after which the U.S. government can begin the process of taking retaliatory trade measures.
“The U.S. is headed for the right to retaliate,” said Novick. “It’s coming very soon.”
If the Washington state B&O tax reduction is found to be out of compliance after the appeal, “We’ll take a hard look and see what we need to do,” Boeing Vice President John Demers said in an interview.”
https://www.seattletimes.com/business/boeing-aerospace/wto-upholds-ruling-against-washingtons-tax-reduction-for-boeing/
@AP_Robert
The source you cited missed to mention just like Boeing that the $22 billion were not a gift by the EU to Airbus. Airbus had and is paying them back. The whole matter is about the interest rate. The rate was rather low but on the other side the creditors receive royalties for every aircraft made and will be made.
BTW 1 % of $22 billion is about $220 million. The 1 % is just a figure to get closer to the right scale. I don’t know how far below the usual interest rates for Airbus have been.
@Robert:
I hate to tell you this but yes, Boeing would (and did) be doing that (Airbus countered) just for the publicity and and hopes to smack Airbus.
AP_Robert, that may be so about various punitive tariffs from breaches of Trade obligations.
I meant it in the context of the Mobile assembly plant having no tariff advantages over European assembled A320/321s
That was a multilateral agreement, and Canada also signed it….yet look at where we are. A deal with the USA is about as useful as used toilet paper.
On the macro level, I find it extremely interesting how a strictly commercial aircraft deal between a Canadian manufacturer and a U.S. major airline on 1 continent somehow find a way to ultimately connect with Brexit politics on another continent within just 19mths.
Totally fascinating twists & turns….
That is true, its turned into a more screwy world than it was before and it already was pretty twisted.
Yes and the EU has filed for the recent 777 aid which is similar in structure to the 787 aid, so it is expected to also be ruled illegal…. Then the question comes to harm. If you look at Boeing receiving illegal subsidies to sell hundreds of 787s against the A330, and sell them at vastly below cost. the 100B is sales through dumping becomes pretty HUGE, then you look at the ability of the EU to retaliate against Boeing sales in the EU vs Airbus sales to the US. and there is where Boeing is really vulnerable. The US cannot really touch A320, whereas the EU can crush 737, 787 and 777. while A330 and 350 sales in the US are not that great.
And no one has paid a dime yet, it will all get negotiated out an all we have is a huge amount of money spent that could have been used for some good.
Hello Mark from Toronto,
Regarding:” the EU has filed for the recent 777 aid which is similar in structure to the 787 aid, so it is expected to also be ruled illegal…. “.
Are you talking about the DS487 case filed by the EU in December 2014? If so, the result was not as you anticipated, the WTO passed final judgement on this case in September 2017 with no recommendation for action against Boeing and the US. Just short of 3 years, record time for the WTO! Note that the “earlier versions of the same tax credits” mentioned in the last paragraph of the excerpts predated and were never used for development of the 777X.
Here are some excerpts from a September 4, 2017 Reuters story on the final decision on the case. See the link after the excerpts for the full story.
“PARIS/GENEVA (Reuters) – The World Trade Organization has reversed a ruling that Boeing (BA.N) received prohibited support for its newest aircraft, dealing a blow to the European Union in its long-running row with the United States over subsidies.
Monday’s decision by WTO appeal judges overturns a ruling which had banned some Washington-state support for plants including a $1 billion factory designed to build the world’s largest carbon-composite wings for Boeing’s 777X jet.”
“But its appeals body found the tax breaks had not explicitly targeted trade flows, removing them from the WTO’s most severe category of banned aid known as “prohibited” subsidies.”
“The WTO appeals body did not consider whether the 777X tax credits fell under the more common banner of “actionable” subsidies, since the EU had not resorted to fallback arguments as it gambled on securing a quick, game-changing victory.
But the EU may use evidence from the case to try to widen a previous successful claim against earlier versions of the same tax credits, meaning that although the EU’s latest gambit failed, the 13-year-old war between Washington and Brussels over support for their dominant planemakers will continue.”
https://www.reuters.com/article/us-wto-aircraft/wto-reverses-boeing-777x-tax-credit-ruling-in-blow-to-eu-idUSKCN1BF1PC
For those inclined to believe that Reuters, a London based division of the Canadian Thomson Reuters conglomerate is a biased mouthpiece of the evil US-Boeing-Brazil conspiracy against Airbus, following are some excerpts form the WTO’s summary of the case. See the link after the excerpts for the full summary. Those who don’t like details or reading text that is more dense than that of a typical US high school textbook should stop reading here.
“DS487: United States — Conditional Tax Incentives for Large Civil Aircraft
Current status
Report(s) adopted, no further action required on 22 September 2017.”
“On 19 December 2014, the European Union requested consultations with the United States with respect to conditional tax incentives established by the State of Washington in relation to the development, manufacture, and sale of large civil aircraft.”
“This dispute concerns legislation enacted in the state of Washington in the United States in November 2013 through Engrossed Substitute Senate Bill 5952 (ESSB 5952), which amended and extended various tax incentives for the aerospace industry. The European Union identified seven separate tax incentives, including a reduced business and occupation tax rate, credits against business taxation, and exemptions from various other taxes in the state of Washington.
The European Union claimed that those tax incentives are prohibited under Articles 3.1(b) and 3.2 of the SCM Agreement as subsidies that are contingent on the use of domestic over imported goods. According to the European Union, the contingency results from two siting provisions contained in ESSB 5952, namely a First Siting Provision and a Second Siting Provision. In the European Union’s view, the challenged aerospace tax measures are de jure contingent upon the use of domestic over imported goods inasmuch as the text of the relevant legislation sets out the prohibited contingency. The European Union also made a secondary claim that the aerospace tax measures are de facto contingent upon the use of domestic over imported goods.”
“Having found that the reduced business and occupation tax rate for the manufacturing or sale of commercial airplanes under the 777X programme is inconsistent with Article 3.1(b) of the SCM Agreement, the Panel also found that the United States has acted inconsistently with Article 3.2 of the SCM Agreement.
On 16 December 2016, the United States notified the DSB of its decision to appeal to the Appellate Body certain issues of law and legal interpretations in the panel report. On 17 January 2017, the European Union notified the DSB of its decision to cross-appeal.”
“On 4 September 2017, the Appellate Body report was circulated to Members.
Summary of key findings
The United States appealed the Panel’s finding that, with respect to the First and Second Siting Provisions, considered jointly, the business and occupation (B&O) aerospace tax rate is a subsidy de facto contingent upon the use of domestic over imported goods under Article 3.1(b) of the SCM Agreement. For its part, the European Union appealed the Panel’s findings that the European Union did not demonstrate that the First and Second Siting Provisions, considered separately or jointly, make the United States’ aerospace tax measures de jure contingent, or that the First Siting Provision makes such measures de facto contingent, upon the use of domestic over imported goods under Article 3.1(b) of the SCM Agreement.
In addressing the European Union’s interpretation claims, the Appellate Body ruled that the Panel, in its de jure contingency analyses of the First and Second Siting Provisions, did not articulate a legal standard under Article 3.1(b) of the SCM Agreement requiring the use of domestic goods to the complete exclusion of imported goods. Neither did the Panel articulate such a legal standard in assessing the de facto contingency of the First Siting Provision. The Appellate Body therefore rejected the European Union’s claims that the Panel erred in its interpretation of Article 3.1(b) in the context of its de jure contingency analyses of the First and Second Siting Provisions, as well as its de facto contingency analysis of the First Siting Provision.
The Appellate Body rejected the European Union’s claim that the Panel erred in its application of Article 3.1(b) of the SCM Agreement in finding that the First Siting Provision does not make the aerospace tax measures de jure contingent upon the use of domestic over imported goods. The Appellate Body also rejected the European Union’s claim that the Panel erred in its application of Article 3.1(b) by unduly restricting the scope of the evidence from which it assessed de jure contingency with respect to the Second Siting Provision. In addition, the Appellate Body did not consider that the Panel committed error under Article 11 of the DSU in setting out the scope of application of the Second Siting Provision.
In addressing the appeal by the United States, the Appellate Body considered that the Panel did not properly establish that the Second Siting Provision entails a de facto condition requiring the use of domestic over imported goods. The Appellate Body did not consider that the Panel’s analysis and reasoning provided a sufficient basis for its finding that the Second Siting Provision makes the B&O aerospace tax rate de facto contingent upon the use of domestic over imported goods. Therefore, the Appellate Body reversed the Panel’s finding that the B&O aerospace tax rate is a prohibited subsidy under Article 3.1(b) of the SCM Agreement.
Having reversed the Panel’s sole finding of inconsistency under Article 3.1(b) of the SCM Agreement, the Appellate Body made no recommendation in this dispute.
At its meeting on 22 September 2017, the DSB adopted the Appellate Body report and the panel report, as modified by the Appellate Body report.”
https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds487_e.htm
One thread in the arguments above is that the 2013 version of the tax breaks do not discriminate against foreign companies wishing to set up aerospace facilities in Washington. Toray and Mitsubishi of Japan have taken advantage of tax incentives for their aerospace faculties in Washington, as could Airbus if it desired to place a manufacturing facility in Washington state. The WTO is kinder to incentives available to everyone than it is to incentives targeted specifically to a certain firm or project. Below is a list of the tax savings of aerospace companies other than Boeing over “the last two years” (2014 and 2015?) from a June 2016 Everett Herald Story. See the link after the list for the full story.
“Here are some of the larger tax-incentive savings of aerospace employers other than Boeing for the past two years. This list could change as the state collects additional data from recipients of aerospace tax incentives. A final report from the state Department of Revenue is due out in December.
ElectroImpact Inc.: $2,406,661
Toray Composites America Inc.: $1,729,596*
Exotic Metals Forming Co. LLC: $1,777,254
Senior Aerospace Operations LLC: $1,519,002
Astronics Advanced Electronic Systems: $1,412,423
Kaiser Aluminum Washington LLC: $1,209,587*
Hexcel Corp.: $1,160,787
Primus Intl Inc.: $1,023,229
Alcoa: $1,004,382
Triumph Composite Systems: $790,097
Goodrich Corp.: $748,240
Aviation Technical Services Inc.: $545,810
Mitsubishi: $328,854
*2015 only
http://www.heraldnet.com/news/boeing-gets-lions-share-of-millions-in-aerospace-tax-breaks/
There is the next step before the law suits start.
https://www.flightglobal.com/news/articles/boeing-bombardier-and-delta-spar-ahead-of-cseries-t-443534/
In reference to the Tuesday flightglobal BoeingBombardierDeltaArticle: Does Delta airlines pit the pending 100 plane order for either the 737Max8/10 or Airbus 320Neo/321neo to Boeing telling them they can have this order if they back off of the CSeries 100 75 plane order? It’s got to be at least implied one would think? Boeing’s already lost orders and the court of public opinion.
Boeing should radically change its tone, take that humble approach & start to do so yesterday. Alternatively more unexpected things beyond their control might happen.