The best way to help Bombardier is to allow the company to restructure itself, says the MEI

MONTREAL, Feb. 17, 2016 /CNW Telbec/ - Bombardier's announcement that it will cut 7,000 jobs has elicited from a number of political and financial commentators calls for the company to guarantee that it will maintain these jobs in exchange for governments' financial assistance. On the contrary, says Mathieu Bédard, Economist at the Montreal Economic Institute, the best way to help Bombardier in the medium and long term is to let the company restructure itself.

Businesses, to be viable, must respond to consumer demand and to the reality of their market. Even though Air Canada has indicated its intention to purchase up to 75 of the company's CS300 aircraft, this is the first order since September 2014. Bombardier must be free to restructure itself, taking into account among other things the weak demand that exists for its planes. Additional constraints from Quebec, and possibly also from Ottawa, regarding the maintenance of jobs could hamper its ability to return to profitability and sustainability.

According to Mr. Bédard, "Companies must sometimes reduce the size of their operations, allowing for rehiring in the future. Flexibility and the option of shedding a portion of its personnel, now redundant, are important preconditions for an eventual return to growth and sustainable employment."

Artificially maintaining jobs that do not correspond to the company's current needs would be a mistake that, far from saving jobs, would ultimately end up destroying even more of them. Despite Bombardier's difficulties, "an implicit nationalization of its management through the use of public funds would in all likelihood fail to improve matters," concludes Mathieu Bédard.

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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.

 

SOURCE Montreal Economic Institute

For further information: Interview requests: Mariam Diaby, Communications Director, MEI / Tel.: 514-273-0969 ext. 2231 / Cell.: 514-668-3063 / Email: mdiaby@iedm.org

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