Bombardier £155m aid package in doubt

 

BOMBARDIER AEROSPACE has yet to formally accept a British government offer of £155 million in state aid for a new aircraft programme which would secure 800 jobs in Belfast.

It has also emerged that the proposed financial support may provoke a row with the US over the use of state aid to assist a commercial aerospace company.

The financial package on offer is subject to strict European Commission regulations governing state aid. In a statement yesterday, the European Commission said it had not received any notification to date in relation to Bombardier and Northern Ireland.

The Canadian group, which employs more than 5,000 people in the North, last month announced a £500 million investment for its Belfast facility. It was the single biggest investment undertaking by any company in the North.

The investment boost came as Bombardier unveiled its plans for the new C series commercial aircraft. Bombardier's Belfast facility, known locally as Shorts, has been selected to design and manufacture the wings for the new C series family of aircraft. The British government has offered the Canadian group financial support of £52 million in connection with its plans to locate the design and production of the C series wing in Northern Ireland.

This forms part of a wider £155 million investment package by the British government in Bombardier. This takes the form of what is described as "risk-sharing participation" in the design and development of specific civil aerospace projects in the UK.

The British government is offering Bombardier £130 million in launch investment - which is repayable and is not a grant. This earns a real rate of return and is only available in the UK to the aerospace sector. Bombardier has also been offered £25 million in selective financial assistance towards the project.

According to the British government's department for business, enterprise and regulatory reform, the Bombardier investment project was scrutinised by the British government and Invest Northern Ireland with the assistance of external legal and financial advisers.

It says the British government's proposed investment secures Belfast as one of Bombardier's key suppliers to the parent company. It believes the new aircraft programme will sustain more than 800 jobs at Shorts and has the potential to sustain more than 1,100 jobs over the peak production period if further work is secured.

But it is not just the British government which is backing the new C series family of aircraft. The Canadian aerospace giant has secured a large package of financial support from other governments which are "participating" in the development of the new C series aircraft. The Canadian government has promised C$350 million in loans, while the government of Quebec has guaranteed financial support of $118 million.

The total repayable investments by the various governments will cover nearly one-third of the expected research and development costs of the new aircraft. It is this level of state aid proffered by various governments for the new C series jet which may ignite a row with the United States according to media reports.

The Times newspaper in London said yesterday that US trade negotiators plan to challenge the amount of state aid being made available to Bombardier.

A spokesman for the Canadian group dismissed concerns that a potential US challenge could ground its new C series jet before it gets off the ground. "Government investment for aircraft manufacturing can be expected to attract international scrutiny.

"The offer of investment from Northern Ireland and UK government departments is subject to EU approval, and we are confident it is fully compliant with EU and international requirements."