Bombardier and Boeing Trade Dispute Threatens Jobs – Bad News For Procurement Too

The trade dispute between Bombardier and Boeing, which involves the governments of the US, Canada and the UK highlights the complexity of these matters. The US has slapped a huge 200 percent tariff on Bombardier jets that Delta Airlines plans to buy because the US claims the Canadian government is subsidising Bombardier. As the BBC reported:

The aerospace firm was accused of anti-competitive practice by rival Boeing, which complained to the US authorities. Boeing accused Bombardier of selling the jets below cost price after taking state subsidies from Canada and the UK. The US Department of Commerce proposed the 220% import tax on the jets, which could hit Bombardier jobs in Belfast.

But, as the BBC pointed out, this has a knock-on effect in the UK – Bombardier employs 4000 people in Northern Ireland, still an economically deprived area. British politicians have stepped in and threatened that Boeing’s considerable business with the UK government, largely military equipment, might be at risk. But of course, that might lead to the US pointing out that Rolls Royce for instance sells a lot to the US military … and so it goes on. Politicians feel they have to respond in any case:

Prime Minister Theresa May has said Boeing's behaviour in its trade dispute with Bombardier is undermining its relationship with the UK. She said Boeing was not adopting "the sort of behaviour we expect from a long-term partner"…  In 2016, Boeing won a contract to supply 50 Apache helicopters to the British Army, which could now be scrapped.

Most economists believe that international trade is not a zero-sum game - that we all benefit from free trade. But if some countries cheat the system then they can benefit if others follow the rules. That has been Donald Trump’s philosophy, and he has promised to “put America first”. Yet others claim that Boeing itself has benefited hugely in various ways from US government support, and the firm is reckoned by many to get more unofficial state aid from its government than any other in the world

Ultimately this sort of tit-for-tat approach, if it really gets nasty, will just lead to negative effects in many countries. Boeing might be an “American” firm but employs thousands in the UK and elsewhere. Bombardier is Canadian but also employs many staff in the US – and in the dispute a few years ago over train purchases in the UK, most politicians sided with them over Siemens, a German firm that also employs thousands here. That demonstrates the complexity of the issues here. None of these firms are really “American” or “British” any longer.

The other issue for procurement is that protectionism is bad news for the “profession”. Procurement comes into its own when we have open, free and transparent competition, and we can demonstrate the value of executing that in a competent, professional and commercial manner. If decisions about which supplier should be chosen comes down to a matter of supporting local or national providers and excluding others, then procurement takes a back seat.  We can’t do much about it, we fear, but it is a worry for the profession.

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