Bombardier

Lord Mendelsohn Excerpts

Tuesday 10th October 2017 Lords Chamber

[Lord Mendelsohn (Lab)]

My Lords, I thank the Minister for repeating the Statement made by the Secretary of State in the other place. It sets out the case very well indeed. I am sure the whole House welcomes the Government’s commitment to resolve this trade dispute between Boeing and Bombardier as swiftly as possible.

Indeed, this dispute is of great concern to the 4,200 Bombardier employees in Northern Ireland, their families and the communities in East Belfast, Newtownabbey, Dunmurry and Newtownards. For so many jobs at one of Northern Ireland’s largest employers to be placed at risk is a matter of real concern, as are the wider potential economic impact and, in the case of Northern Ireland, the potential political repercussions. Bombardier represents 8% of Northern Ireland’s GDP and 40% of its manufacturing base and supports 20,000 more jobs in the wider supply chain across the country. There is a great deal at risk. Bombardier acquired the Shorts facility in 1989. The Shorts heritage goes back over 100 years and the Belfast base was established in 1948. It is a centre of excellence and many other leading businesses in the aviation and defence sectors owe their excellent performance and existence to the Shorts—now Bombardier—facility.

The aviation sector is important to our country and it has great potential. We have Airbus facilities, a Boeing facility in Sheffield and the Bombardier facility. Aviation expertise, world-leading engineers and an experienced and seasoned workforce create the potential for this sector to be a real opportunity for us. This dispute and recent news regarding BAE and Monarch do not represent the collapse of the aviation industry but do not bode well for those of us who want to see it thrive in the years ahead. Does the Minister agree that a sector deal, with a particular focus on supply-chain issues and infrastructure requirements, would be helpful in this context?

I want to make it very clear that we on these Benches unreservedly take the view that Bombardier is being challenged on a case that has no merits and that the US Department of Commerce’s initial determinations are flawed and without justifiable foundation. It is clearly specious to suggest that there is harm or potential harm to Boeing in a sector where it does not have a competitor product; nor can there be any doubt that the UK’s vigorous adherence to state aid rules means that any support provided to the Bombardier facility does not contravene trade rules.

We hope that the key actors in this see sense and either withdraw the complaint or abandon the US Government’s flawed process, and that this is resolved as quickly as possible to ensure that any harm is minimised. But hope is not enough and we need to be steadfast in our action. We offer the Government our support and help and we recognise that there has been some considerable effort: 24 interactions with the US Government, including two with the President, as well as 12 with Boeing and 10 with other key actors, including the EU. But we have concerns about the effectiveness of the approach and would like some assessment from the Government of whether they feel that anyone is listening or even that the process itself is fair. We acknowledge the role of Canada, as well as the help of the trade unions, but we would be grateful if the Minister could also tell us how much support, and to what level, the Government are seeking from the European institutions. Have the Government asked the EU to consider taking steps in relation to its trade with the US?

We recognise that Boeing is a very welcome inward investor to the UK and we have a significant and long-standing relationship. We would like it to increase the size, scale and scope of its Sheffield facility, and to see it flourish. But the conduct we have seen from it is not what we would expect of a supplier. We would be grateful if we could understand from the Minister what further interactions we have had with Boeing and when the most recent ones were.

In relation to the US Government, have the Government taken a view on whether or not this process has been used because of the weakness of the merits of the case? It is noticeable that unlike most disputes in the aviation sector, which take place at the WTO, this one is a US government approach. Surely the US Commerce Secretary’s recent comments in support of the action and the determination of the tariffs suggest that this process may have been used for a reason. In discussions with the US Government, have Ministers seen any evidence of US government encouragement of Boeing? Can the Minister tell us, in the case of such disputes, on how many occasions, either by number or percentage, has the final decision overturned a provisional decision? Can the Government suggest what their plan would be if the final decision confirmed the provisional declaration? What would be the strategy in the United States? Have the Government sought the advice of expert US trade lawyers or advisers?

Does the Minister agree with me that actually, the fundamental problem here is one of market structure? Boeing has such a large market share that it prices on the basis of monopolistic control, actively supported by eye-watering subsidies from the US Government— a rather familiar tale of locking everyone out to favour the dominant incumbent. This country has benefited from a more open market, with Airbus, Boeing and Bombardier having meaningful facilities here, and this US-led action demonstrates not only its determination in defending its interests but how quickly it can sometimes apply protectionism. It raises questions about its commitment to a new, fair and reasonable trade deal. Finally, can the Minister confirm that this point has been forcefully made to the US Government during the discussions?

[Lord Fox (LD)]

My Lords, I draw your Lordships’ attention to my declared interests. I thank the Minister for repeating the comprehensive Statement, which I think has support right across the House. There is a danger that this is a bellwether moment for Bombardier, Northern Ireland’s industry and, perhaps, Britain’s future trading relationships. It is an important example and possibly a glimpse of what life outside the European Union might look like.

As the Statement rightly says, this unilateral and disproportionate response by the US Department of Commerce is over a variety of plane that Boeing itself does not manufacture. Does the Minister agree that this is perhaps a more symbolic gesture, with an eye on other manufacturers in other places—a warning shot, perhaps—with Bombardier as the innocent victim of a larger global power play in plane manufacturing? It also demonstrates in style how the US is going to administer multilateral organisations. It sets out in stark contrast what life could be like after Brexit as we adopt WTO rules, just as the Trump Administration step up their attack on that institution, not least through the vetoing of appointments to the WTO’s appellate body, denying it the ability to deal with such trade disputes.

Canada has long demonstrated through its actions that it views Bombardier as a strategic Canadian resource. In Northern Ireland, as the noble Lord, Lord Mendelsohn, stated, it has a very important economic as well as symbolic position within the community. I will not repeat what he has just said, except to reaffirm that its loss would be a savage blow to the drive for economic development that is absolutely essential to support the Good Friday agreement and everything that has gone before. But it is also strategic to the UK aerospace industry. We have to remember that wings are a very important part of what we do in this country, and that is what Bombardier does, so there is a very strong need to defend that technology as well.

Of course, the US action is at an early stage. In due course, as it progresses through the courts and winds its way towards the WTO, I dare say—largely because it has no merit—that Bombardier may have success in overturning the ruling. But these things take years—years and years. What kind of shape would this business be in after going through this process? No company Bombardier’s size could withstand a process of that length. Can the Minister tell us the status of the Delta sales? Are they on hold or do they go ahead as normal until the appeals process is complete? The Minister set out the co-operation that is coming from Canada but we should remember that the parent company is Canadian and if it starts to seek to preserve the overall concern, where will it cut first—in Canada or in Northern Ireland? It is very important that the Government seek assurances from Bombardier that it will continue to support the Belfast operation.

Finally on this point, we can expect the Chinese to heat up their bid for Bombardier. What line do Her Majesty’s Government have into that process? What advance warning are they likely to get in the event that a bid from the Chinese or someone else comes along?

I welcome the seriousness with which the Government are taking this; it is imperative that that seriousness continue. I am sure the Government will take the time to explain to Boeing the caustic effect it is having on what has been a burgeoning relationship in this country. I am sure the Government are reminding it about the Apache and Chinook helicopters and Poseidon aircraft that are currently on order from the MoD. Will the Minister say what contingency plans are being put in place to ring-fence the skills we have in Belfast in the event that they start to leech out? We are glad to hear that the Minister is working tirelessly, but what exactly is he now doing? We have heard that he talked to a wide variety of opposite partners in Canada and the US, but what levers does he have to pull? Can the Minister assure us that while we are cosying up, trying to negotiate a trade deal with the US, we will not ease back or soften our approach to the defence of Bombardier? The Minister has a long list of people he has talked to, so far to no effect. What is the next step?