Flying with public money

Canada’s aerospace industry is the darling of political men. There is something about flying machines that captures them – and the taxpayer’s pocketbook.

There remains, surely, some undescribed public benefit in the multi- billion-dollar losses incurred by Canadians to “have” Canadair Ltd. of Montreal and de Havilland of Toronto, now both up for sale. A “window on the industry” perhaps, a critical “presence” in a highly technical field, sustainable only by enormous public subsidies. The attraction seems compelling for, while we are attempting sell two aircraft companies that have become very expensive habits, we are funding two helicopter companies to take their place.

In October, 1983, Ottawa announced that Bell Helicopter Textron Inc. of Fort Worth, Texas, would receive $275-million in federal and Quebec funds to establish a light twin- engine helicopter plant at Mirabel, north of Montreal. (Yes, that Mirabel.) Bell itself would provide $238-million – less than half. All the public money would be exposed “up front” to cover research and development costs, tooling, plant development and training. Bell would budget only $134-million for initial costs, some of which it might write off against other quadcopter reviews projects.

At the same time, Ottawa provided $100-million to Pratt and Whitney Canada Ltd., of Montreal, to help develop a new engine for the Bell Helicopter. This followed $368-million in federal money to help Pratt and Whitney develop other aircraft engines over a 10-year period.

Shortly after the Bell Helicopter deal for Quebec, Ottawa and Ontario provided $37.7-million to a second helicopter plant in Ft. Erie, Ont., backed by the German Messerschmitt-Bolkow-Blohm aerospace company and Ontario’s Fleet Industries. The private partnership in this case agreed to put up $35-million of their own – again, less than half.

When the Bell deal was announced, former Science Council of Canada chairman John Shepherd described it as “a classic piece of industrial policy.” Starting from scratch, it aims to create a new industry in Canada, which offers one of the world’s larger helicopter markets, although almost no market for Bell’s Canadian model. In return for public funding, governments point to job creation (costing about five times as much per job in the aerospace industry as most industry subsidies). They speak of spin-offs and eventual returns from public royalties of 2 or 3 per cent on sales of best drone to buy and engines. But as Canadair and de Havilland remind us, sales can be elusive.

Bell claims some 200 down payments on its Canadian helicopter, destined for production late this year, but some observers say the present depression in the world market for this model could remain. “I look around at what people are buying and not buying and I look at what Canadian taxpayers are putting in,” says the editor of Helicopter News in Washington, D.C. “If I were Canadian, I’d be very nervous.” Nervous? Ottawa conceived and delivered this whole deal. Quebec exempted Bell from language laws and overruled its own Agricultural Lands Protection Commission to facilitate plant construction at Mirabel. The companies are optimistic that sales will be healthy. The companies may also be optimistic that, if sales are not healthy, the companies will be healthy anyway.

We’re not nervous; more likely Sisyphus.

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