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Corporate Welfare / Subsidies

Bombardier’s Troubles Continue As Company Lays Off 7000

By Patrick Ishmael on Feb 23, 2016

Back in November we updated readers on the case of Bombardier, a company that in 2008 sought millions in state tax incentives to move some of its Canadian operations to Missouri. In the end the company didn’t make the jump to the Show-Me State but did receive millions in incentives from Canada, Britain, and Quebec. Last year we found out that Bombardier needed a billion dollar bailout to keep the company going; this year, we found out that wasn’t all it needed.

Bombardier, the Canadian transportation company, said on Wednesday that it would lay off about 7,000 employees over the next two years, as it struggles to find buyers for a new series of planes that for the first time put it in direct competition with the aviation giants Boeing and Airbus….

While the Air Canada sale provided important help for the CSeries, sales of the aircraft remain below levels that analysts generally view as assuring the project’s success. Including the 45 planes for Air Canada, Bombardier now has 288 firm orders.

Making money in business is never a certainty, and yet time and again state and local officials seem to think they have a special insight for picking moneymakers when they don’t. Whether you’re talking about developing a hotel, a stadium, an airport, or something else, the incentives of politicans often diverge greatly from the long-term interests of the communities they’re supposed to represent. It’s fun to cut the ribbon at a groundbreaking and get your picture taken with a hard hat on, but who ends up with the bearing the burden when an incentivized business goes belly-up? Taxpayers, that’s who.

Fortunately, it wasn’t Missouri’s taxpayers who paid the price when Bombardier’s incentive-addled business plans crash-landed, and state officials should learn from having dodged that bullet. Rather than riskily cutting deals with a select few, policymakers should invest in every family and business in the state by simply lowering everyone’s taxes. 

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About the author

Patrick Ishmael

Director of Government Accountability

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