During a speech to the Board of Trade of Metropolitan Montréal today, Bombardier president and CEO Paul M. Tellier reiterated that the future of the aerospace industry should be a priority for Canada and proposed concrete solutions for drawing up a Canadian aerospace policy.
According to Tellier, this policy should be based on three key activities in the industry: the design of new products, the manufacture of these products, and most particularly, the sales financing of these products.
In terms of product design, he suggested the creation of new funding partnerships for research and development with the sharing of risks and profits between the public and private sectors, as well as the creation of consortiums consisting of local and foreign principal contractors, suppliers and governments.
In terms of product manufacturing, he encouraged provincial and federal governments to maintain their level of investment support in production facilities and invited them to innovate when it comes to creating incentives.
Furthermore, Tellier believes that such a policy "should include a major sales financing assistance component" and proposed that "Canada make a long-term export financing commitment that would include increased Export Development Canada financing capacity, direct or indirect increases of credit limits by product sector, as well as by customer and by country, and flexibility permitting the sale and exchange of EDC portfolio components in order to create the necessary room for new transactions."
Finally, Tellier believes that "in Canada we should create a centre of excellence specializing in the private financing of aircraft sales based on the development of a loan guarantee policy that would encourage private finance sources to provide loans to industry customers."
Aerospace industry challenges
Tellier also reminded his audience of the monumental challenges facing the Canadian aerospace industry, including:
- even greater competition in which foreign competitors benefit from huge government financing in terms of research and development, export financing and tax breaks;
- new industry players such as China, Russia and Japan, which have the know-how, the resources and the much-needed full government support; and
- the rising Canadian dollar.
According to Tellier, a targeted effort by all public and private stakeholders is essential to the maintenance and the development of Canada's aerospace industry, "otherwise we will allow certain nations in Europe, Asia and the Americas-nations more likely to create favourable conditions for development-to benefit from growth in the international aerospace market. This is one possibility we refuse to contemplate," he stated.
Reminding listeners of the importance and the success of the Canadian aerospace industry, Tellier emphasized the considerable advantages Canadians draw from this industry and reiterated that Bombardier hopes to "work intensively and relentlessly with the aerospace industry and with governments to draw up a policy aimed at maintaining Canada's strong presence and its enviable reputation as a world-class knowledge-based economy."
Tellier highlighted the current challenges in the rail transportation equipment industry: consolidation, which has not eliminated excess production capacity; and the lack of product standardization which prevents economies of scale and leads to increased production costs. "We must, in short, tighten our cost structure. We must act swiftly and simultaneously on all fronts in Europe, within a very sensitive political environment, in which governments are customers and market regulators alike."
A world-leading manufacturer of innovative transportation solutions, from regional aircraft and business jets to rail transportation equipment, Bombardier Inc. is a global corporation headquartered in Canada. Its revenues for the fiscal year ended Jan. 31, 2003 were $21.2 billion Cdn and its shares are traded on the Toronto, Brussels and Frankfurt stock exchanges (BBD, BOM and BBDd.F). News and information are available at www.bombardier.com.
N.B. Fiscal year 2002-03 revenues have been restated following the sale of the recreational products business.
Vice President, Communications