Dec. 19, 2017, © Leeham Co.: Bombardier will build a C Series final assembly line (FAL) regardless of the ruling from the US International Trade Commission on whether Boeing was harmed by the order from Delta Air Lines for 75 CS100s and options for 50 more.
This is what Bombardier officials told the ITC, under sworn testimony, in the “harm” hearing Monday, according to a transcript.
Boeing officials argued that the plans for a US FAL at Mobile was a feint and that the line wouldn’t be built, claiming it doesn’t make economic sense.
Delta, for its part, said it’s negotiating a contract revision with Bombardier to accept deliveries assembled only from the Mobile plant.
Bombardier drew an analogy to the auto industry, which decades ago began manufacturing cars in the US, principally in the South (including Alabama). At one time, Japanese auto makers were accused of dumping minivans in the US. Building manufacturing plants negated allegations of countervailing duties and anti-dumping tariffs, the airframer said.
The proposed plant is no different, BBD said. The C Series produced there become a US-made product under US law, it says.
Boeing claims the plans for a plant are merely a ruse to avoid tariffs and should be nailed for “circumvention,” if any credence is given to the plans.
But because there is no definitive agreement between Airbus and Bombardier, of which the FAL is a part, and no definitive agreements for the plant itself, the entire deal is “legally irrelevant,” Boeing’s lawyer argued.
Bombardier replied there are no definitive agreements yet because the Airbus-BBD transaction must receive multiple anti-trust clearances. The progress is contained in a confidential filing, but LNC has been told the US already has cleared the deal.
Bolstering its arguments, Bombardier says the Mobile FAL will increase the US content of the C Series, which currently stands at 52%. The ITC panel asked what the increase will be; BBD said this is in a confidential filing.
But final assembly generally is not a significant part of the US value content. During one of its many skirmishes with Boeing, its touch-labor union, the IAM 751 District, said the value of assembling the 787 or 777X amounts to only about 5% of the value of the wide-body aircraft.
The hearing Tuesday before the ITC is whether Boeing was harmed by the Delta order, which Boeing claims was at $19.6m—a figure Delta and BBD dispute. Boeing also claims its was harmed by a near-win by BBD with United Airlines. Boeing made a last-minute deal to sell 65 737-700s to United (at the time, the reported price was about $24m). This and the Delta deal dragged down pricing on the 737-800, 737-7 and 737-8, Boeing claims—“harming” Boeing.
Bombardier claimed Boeing made its last-minute United deal solely to block the sale of the C Series, based on statements made later by then-Boeing Commercial Airplanes CEO Ray Conner. Delta and Bombardier argued Boeing was never a factor in the Delta order, having no airplane in the 109-seat size Delta wanted.
If the ITC finds there was no harm to Boeing, then the Department of Commerce case goes away and with it, the 300% tariffs the DOC preliminarily decided to levy. A final decision by the DOC is due any day. A decision by ITC is due next month.