Bombardier will lay off 2,500 workers as the company struggles to keep its operations afloat amid dwindling demand for business jets during the COVID-19 pandemic.
In a release Friday morning, the Quebec-based transportation company said the aerospace industry as a whole is expecting to see a 30 per cent year-over-year loss in business jet sales, forcing it to reduce its workforce.
The company said 1,500 of the permanent job cuts will be in its Quebec facilities and 400 in Ontario, with the rest of the layoffs in its international facilities. The layoffs will begin this month and be carried out throughout the year.
The layoffs come just days after Bombardier made its official exit from the commercial airplane industry, selling off its CRJ regional jet program to Mitsubishi Heavy Industries Ltd. for $550 million US on Monday.
The company has recently staked its future on business jets, sales of which have dropped during the COVID-19-related recession and the subsequent decline in travel.
“Our sales books are still quite full in the long term, but we still had to adjust to the reality we’re going to be facing from now until the end of the year,” Bombardier spokesperson Mark Masluch said in an interview.
“That said, in our collective agreement and in the way we work, there is always the opportunity to call back our workforce if there’s a rebound in the market.”
Masluch insisted that the layoffs were strictly the result of COVID-19.
Bombardier paused all operations in March in an effort to protect employees from the spread of the novel coronavirus.
It gradually resumed operations again last month, but had already reported a loss of $200 million US in its first quarter.
Union disappointed by decision
The International Association of Machinists and Aerospace Workers, the union that represents Bombardier workers, said it was disappointed by the company’s decision.
In Montreal, 717 Bombardier employees benefited from the Canada emergency wage subsidy (CEWS) program, but that help was set to expire today.
Last month, the union asked that Bombardier reapply to the CEWS program but, judging by the layoffs, the union does not believe that request was ever put in.
“I don’t know exactly what motivated these decisions,” said David Chartrand, co-ordinator for the union’s Quebec branch.
Chartrand said the federal government is also to blame. He said it has been absent in supporting the aerospace industry as a whole.
“We need help from the government to support these industries, but they’ve been completely inactive,” he said.
Quebec promises help
Quebec Finance Minister Eric Girard said Bombardier remains an important economic driver and the provincial government “will help them to go through this difficult period.”
“If they need help, I am convince that the minister of economy will be there to attach the right conditions to this help just like he did for the Cirque du Soleil,” he said, referring to a loan recently handed out to the struggling Montreal-based entertainment giant.
Prime Minister Justin Trudeau said the federal government will continue to support workers of all industries as they struggle during the pandemic.
“Obviously, the aerospace industry, airlines, are particularly affected with the ceasing of global travel and with the fact that the demand for purchasing business jets has decreased dramatically,” said Trudeau.
“We will work with industries and individual companies to try and ensure they have access to all the supports that we’ve put forward.”
History of government bailouts
Bombardier, which was in trouble long before the start of the pandemic, has been bailed out before.
In 2015, then-premier Philippe Couillard agreed to provide Bombardier with a $1.32-billion bailout, in hopes of saving jobs in the province.
In return, the province would gain a 49.5 per cent stake in the company’s C-series program, later referred to as the A220. The government made a 20-year commitment to the project.
The same year, just as Trudeau was first sworn in as prime minister, Bombardier called on the federal government to match the $1-billion investment.
Although the Canadian government did not agree to those terms, it did provide the company with $372.5 million in interest-free loans in 2017.
Despite all that, Bombardier sold its remaining A220 stake to Airbus last February, in an effort to pay off a multibillion-dollar debt.
That same month, the company sold its rail-building unit to French train giant Alstom SA, marking its exit from the rail business.
In February, Quebec Premier François Legault insisted the province was done injecting money into the 83-year-old company.
“The government has already invested a lot of money in Bombardier,” he said at the time, calling Couillard’s investment a “mistake.”
As of Friday, Bombardier has 8,200 employees in Quebec and 2,100 in Ontario.