Money: Bombardier job cuts raise questions on impact of Buy America Act - PressFrom - Canada
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MoneyBombardier job cuts raise questions on impact of Buy America Act

12:02  12 july  2019
12:02  12 july  2019 Source:   cbc.ca

Bombardier to lay off half the 1,100 workers at Thunder Bay, Ont. railway plant

Bombardier to lay off half the 1,100 workers at Thunder Bay, Ont. railway plant Bombardier Inc. is laying off half of the 1,100 workers at its Thunder Bay, Ont., railway car plant, according to a federal government source. Two major contracts in Ontario — for the Toronto Transit Commission streetcars and Metrolinx GO Transit rail cars — are slated to halt by the end of the year. Local union president Dominic Pasqualino said he fears more job losses are on the horizon beyond the initial 550 as the contracts wind down. “This business is cyclical. Things go up, things go down. But the thing is, it doesn’t look like things are going to go back up,” he said in an interview.

The RAISE (Reforming American Immigration for Strong Employment) Act is a bill introduced in the United States Senate in 2017. Co-sponsored by Republican senators Tom Cotton and David Perdue, the bill seeks to reduce levels of legal immigration to the United States by 50% by halving the number

The Tax Cuts and Jobs Act of 2017 (TCJA) makes small reductions to income tax rates for most individual tax brackets and significantly reduces the income tax rate for corporations. On December 22, 2017, the most sweeping tax legislation since the Tax Reform Act of 1986 was signed into law.

Bombardier job cuts raise questions on impact of Buy America Act© Nicole Ireland/CBC In a news release confirming it would be terminating 550 employees from its Thunder Bay, Ont., plant, Bombardier claimed one of the challenging issues it faced was the U.S. Buy America Act. While Ontario Premier Doug Ford and the federal Liberal government were busy this week blaming each other for the financial woes of Bombardier, the company itself pointed its finger at another culprit.

In a news release confirming it would be terminating 550 employees from its Thunder Bay, Ont., plant, the aerospace company claimed one of the challenging issues it faced was the U.S. Buy America Act.

The U.S. Federal Transit Administration provides American cities with financial assistance for public transit systems, including buses, subways, and commuter rail. But in order to get that funding, 65 per cent of the steel, iron, and manufactured goods used in the projects must be produced in the United States. And that will raise to 70 per cent in 2020.

Bombardier to appeal Brazil ruling over alleged bidding infractions

Bombardier to appeal Brazil ruling over alleged bidding infractions MONTREAL - Bombardier Inc. says it intends to appeal a Brazilian administrative tribunal ruling that concluded the railway car manufacturer and 10 other companies manipulated contract bids. 

Bombardier ’s Belfast business, one of Northern Ireland’s biggest employers, will be hit particularly hard. Bombardier is reducing the workforce by a fifth; 580 job The devastating impact of these job losses in Northern Ireland comes on top of the loss of manufacturing jobs at Michelin and Gallaher’s.”

Train maker Bombardier 's plans to cut more than 1,400 jobs in Derby raises doubts over the future of the plant, the Unite union has said. Mr Young said the job losses would hit council tax revenues and income tax available and also have a deep impact on the wider supply chain in Derbyshire.

Because Bombardier has contracts with U.S. cities, and because of the Buy America requirement, the company said it had "no choice" but to move manufacturing to the U.S. and establish "an American manufacturing footprint and supply chain."

The result, according to Bombardier, is having to cut jobs at its Canadian plant.

But the company's decision has raised questions as to how much Buy America factored into Bombardier's troubles and if it has had a big impact on Canadian industries in general.

"The problem is, [Bombardier tries] to make it sound the reason behind the cuts is that the Americans have become more protectionist, and that's why they're losing money," said Ramy Elitzur, a financial analysis professor with the University of Toronto's Rotman School of Management.

Bombardier to appeal Brazil ruling over alleged bidding infractions

Bombardier to appeal Brazil ruling over alleged bidding infractions MONTREAL — Bombardier Inc. says it intends to appeal a Brazilian administrative tribunal ruling that concluded the railway car manufacturer and 10 other companies manipulated contract bids. Brazil's economic defence administrative council imposed fines of around $175 million against a "cartel" it found had manipulated at least 26 tenders between 1999 and 2013 in four Brazilian states. "Bombardier strongly disagrees with this judgment, which is based on a partial reading of [the council's] evidence in an administrative proceeding characterized by flagrant violations of constitutional principles, including the reasonable application of the law," the company said

The BAE cuts were announced on Tuesday as part of a wider restructuring plan that will lead to a total of 1,950 job losses — roughly 6 They stressed that BAE’s job cuts would not have any impact on defence capabilities and rejected suggestions that it was favouring cheaper off-the-shelf equipment

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Elitzur said while U.S. protectionist measures may have had a marginal impact on Bombardier's bottom line, the more complete picture is that the company has not been very efficient, effective or agile in terms of strategy.

'A little bit convenient'

Tyler Chamberlin, assistant professor at the University of Ottawa's Telfer School of Management, also questioned how much Buy America was impacting business at Bombardier.

"It strikes me as a little bit convenient to have that sort of answer at this time, that it's about Buy American rules," he said. "I'm certainly not aware of any deals that have been missed by Bombardier and handed to some American manufacturer."

As for a larger impact on Canadian industry, Chamberlin said he just isn't seeing it.

"Our GDP and our export numbers aren't suffering in big ways. Can you find a case or two? Maybe you might be able to. But they're not so sizable that it's actually holding back the Canadian economy or holding back Canadian exports."

Federal Liberals blast Ontario Tories over looming Bombardier layoffs

Federal Liberals blast Ontario Tories over looming Bombardier layoffs OTTAWA — The federal labour minister is blasting the Ontario government over the impending loss of 550 jobs at Bombardier's railway car plant in Thunder Bay, Ont. Patty Hajdu lays the blame for the losses at the feet of Doug Ford's Progressive Conservative government, saying in a statement that Ford failed to deliver on a promised contract for the facility in her hometown. Bombardier Inc. is laying off half of the 1,100 workers at plant after

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But other observers say the U.S. legislation is certainly having a significant impact on some industries in Canada. Buy America does not just apply to those in the business of selling buses or railway cars, but other U.S. government procurements including highway contracts and other infrastructure projects.

"Buy American had broader impacts than Bombardier. But its impact on Canadian exports of railway rolling stock is virtually prohibitive," said international trade expert Peter Clark.

"They tell us that effectively, they can't build up a good export base to the United States."

Clark agreed that companies like Bombardier that want to bid on some U.S. contracts will have to set up shop in the U.S., and that means fewer jobs in Canada.

"And the American states are pretty quick to offer incentives to move your plants to the U.S.," he said.

Bombardier job cuts raise questions on impact of Buy America Act© Jonathan Hayward/The Canadian Press Ontario Premier Doug Ford and the federal Liberal government have been busy blaming each other for the financial woes of Bombardier.

Dennis Darby, CEO and president of the Canadian Manufacturers and Exporters, of which Bombardier is a member, said Buy America is a real factor in public procurement.

Federal Liberals blast Ontario Tories over looming Bombardier layoffs

Federal Liberals blast Ontario Tories over looming Bombardier layoffs OTTAWA — Looming layoffs at Bombardier's railway car plant in Thunder Bay, Ont., are creating a political row between Queens Park and Parliament Hill. The federal Liberals and Ontario Tories are blasting each other in a bid to lay political responsibility for the impending loss of 550 jobs at each other's feet. Federal Labour Minister Patty Hajdu says in a statement that Ontario Premier Doug Ford failed to deliver on a promised contract for the facility in her hometown that could have saved jobs. "While our federal government and the hardworking people in my community worked to save jobs at the Bombardier plant, Doug Ford sat on his hands and made empty promises.

MONTREAL — Bombardier stock plunged almost 26 per cent in heavy trading Thursday following a revised outlook for its aerospace business, including plans Meanwhile, Bombardier also trimmed its 2015 guidance, including a drop to US0 million in cash flow from its Aerospace division from prior

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"If they have a U.S. contract and the U.S. says you have to build a certain percentage in the U.S., the jobs have to go there."

Darby said it forces companies like Bombardier and New Flyer, a Winnipeg-based bus manufacturer, to do a large part of the assembly in the U.S.

"Even though it's a Canadian company headquartered in Winnipeg almost all of the final assembly is done in the U.S," he said. "So that is a problem."

'No reciprocity'

Following Bombardier's announcement, Canada's premiers, gathered in Saskatoon for their annual conference, called on the federal government to take a more active role in negotiating an exemption from Buy America.

Darby said part of the problem is that there are no real effective reciprocal measures that Canada can employ.

"We have no reciprocity on this with any teeth. Both Quebec and Ontario can ask for up to 20 per cent of the value of rolling stock to be Canadian-made. But that's all there is right now."

Darby said Canada should have its own reciprocal Buy Canada measures, or there should be a Buy North American agreement.

"This is one of those areas where there is not a level playing field for companies like a Bombardier or others that are in the transit business or anyone who is doing public procurement because the U.S. rules are much, much stronger."

Trump makes Buy America rules more restrictive, demanding 75% U.S. components.
U.S. policies which act as a barrier to Canadian businesses bidding on government projects are about to get more stringent. U.S. President Donald Trump signed an executive order Monday demanding that 75 per cent of the value of any components in "Made in America" products must to be sourced in the U.S. That's an increase from 50 per cent previously. And, in a fresh blow to Canada's steel industry, he has demanded that 95 per cent of steel and iron used in any public contract must be from the U.S. Tariffs of 25 per cent on Canadian steel and 10 per cent on Canadian aluminum exported to the U.S.

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