Making Boeing Great Again - Airinsight
Boeing describes the competitive situation, when speaking to the people who know the industry, and does not include the Bombardier C Series (or the Embraer E2). Were Boeing to list the Bombardier or Embraer products, they would be laughed out of the room. Nobody from the US Department of Commerce or ITC was in the audience obviously
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Ernest S. Arvai Posted on November 30, 2017
Making Boeing Great Again should not be the goal of US trade policy. The trade action by Boeing against Bombardier appears, superficially, to fit well with President Trump's campaign theme to Make America Great Again. President Trump campaigned against unfair trade practices that are harming U.S. workers and U.S. manufacturers. Boeing alleged that Bombardier is unfairly subsidized by Canada, which has permitted it to sell CSeries aircraft below cost in the United States, undercutting Boeing and the U.S. jobs from Boeing's most successful aircraft, the 737.
Upon closer inspection, however, it is clear that Boeing's actions, if successful, could harm more U.S. workers in the broader aerospace and airline industries than would potentially benefit from import tariffs designed to protect Boeing.
Moreover, because Boeing stretched the bounds of appropriate use of the trade enforcement remedies and deployed a host of arguments that are hypocritical or baseless – such as complaining about sales lost to a plane smaller than anything Boeing makes – Boeing risks igniting a trade war or other realignment in the aerospace sector, to the detriment of the US aerospace industry. If Boeing succeeds in its trade case, the only beneficiary will be Boeing itself – while everyone else loses. This strategy is not Make American Great Again — at best, it is Make Boeing Competitive Again.
Perhaps more than any other U.S. manufacturer, Boeing depends on international trade and the U.S. government's enforcement of fair trade rules abroad. But its trade case against Bombardier now undermines Boeing's ability to fight unfounded protectionist actions instituted in countries around the world. China, for example, could easily levy massive import duties on Boeing's planes using the same arguments advanced in Boeing's trade action against Bombardier. That would be a disaster for Boeing and the U.S. workers who manufacture its planes. Rather than pick on a competitor one-tenth its size, with arguments that are full of inconsistencies and contradictions, detailed below, Boeing should abandon its misguided use of the trade laws and focus on being competitive at the marketplace.
Boeing Contradicts Itself about the Relevant Market
In the trade case, Boeing claims that there is a separate and distinct market for aircraft containing 100 to 150 seats that are capable of flying 2,900 nautical miles. Unfortunately, Boeing has convinced U.S. regulators of this spurious proposition, despite widespread industry understanding that the aircraft market is a continuum, ranging from the smallest regional jets to the largest wide bodies. Airlines choose a platform of the right size for a given route to optimize their operating economics and right-sizing aircraft to avoid flying planes with empty seats.
Outside of the trade case, Boeing characterizes the market differently. In its Current Market Outlook, Boeing describes a market composed of regional aircraft, single-aisle aircraft, small to medium twin-aisle aircraft, and large twin-aisle aircraft. Reviewing Boeing's annual forecasts in our archives back to 2005, we find that Boeing's forecasts consistently reference the single-aisle market, not a market for aircraft with 100 to 150 seats. Indeed, it would be irrational for Boeing to describe the market that way, as its flagship 737 has grown from under 100 to about 200 seats with some models of the 737 MAX, the newest 737 variants.
According to Boeing Executives, the CSeries Does Not Exist reported on Fliegerfaust
On September 18, at the 18th Annual Aviation Industry Suppliers Conference (SpeedNews) in Toulouse, Drew Magill, Boeing's Managing Director, Marketing Europe offered this slide. Boeing describes the competitive situation, when speaking to the people who know the industry, and does not include the Bombardier C Series (or the Embraer E2). Were Boeing to list the Bombardier or Embraer products, they would be laughed out of the room. Nobody from the US Department of Commerce or ITC was in the audience obviously. Boeing has ...
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