"Turbulent times lie ahead...but it's not all doom for Belfast workforce"

Description

Commissioned article in Belfast Telegraph re. possible impact of sales of Bombardier's four factors in NI

Subject

 

https://www.belfasttelegraph.co.uk/business/analysis/esmond-birnie-bombardier-move-means-turbulent-times-lie-ahead-but-its-not-all-doom-for-belfast-workforce-38073821.html

 

The sale of Bombardier in Northern Ireland

Dr Esmond Birnie, Senior Economist Ulster University Business School

Many people may feel  the recent Bombardier experience in Northern Ireland has been death by a thousand cuts. First, redundancies, then the sale of control of the CSeries to Airbus and now Bombardier’s announcement that it wants to sell its operations.

Aircraft making on the shores of Belfast Lough began in the late 1930s. In the 1940s the English firm Shorts re-located all its operations to Northern Ireland. Like the shipyard, Shorts in Belfast combined considerable technical virtuosity, such as pioneering vertical take-off, with an increasing appetite for subsidies from the Belfast and London governments. The business was under state ownership for many years but then privatised to the Canadian firm in 1989. After thirty years Bombardier seem to have decided they need to consolidate back to their business jet operations.

Across the four factories in Northern Ireland- Belfast, Newtownabbey, Dunmurry and Newtownards- the firm employs 3,600 people. Jobs in Bombardier tend to tick all the right boxes in terms of Northern Ireland industrial strategy in that levels of wages and productivity are above the Northern Ireland average. The firm also contributes a considerable proportion of all the exports and R&D activity within total Northern Ireland manufacturing. At the UK wide level it has been estimated that each job in an aerospace firm supports a further job elsewhere in the economy through supply chain work and additional consumer spending generated by aerospace workers. By implication Bombardier supports a total of 7,200 jobs in the regional economy.

We now have a seller but do we have a buyer? The global aviation market is dominated by the two biggest players- the American Boeing and the European Airbus. Boeing are probably preoccupied by their difficulties following on from the Boeing737MAX crashes. In any case, in 2018 Boeing launched a partnership with the Brazilian aircraft firm Embraer. Whilst Airbus took control of the CSeries, now A220, I suspect they would not want to buy up the rest of Bombardier in Northern Ireland.

By implication, the purchaser is more likely to be one of the smaller and more recent entrants to the aircraft industry and that is not without risk to the long term sustainability of the Northern Ireland operation. Spirit AeroSystems is one possibility. It is a spin off from part of Boeing, its aerostructures division at Wichita In Kansas, together with some purchases from British Aerospace (BAE). Closer to home, there is GKN. The roots of that firm go all the way back to iron working in Industrial Revolution Wales but more recently it has moved into automotive and defence engineering including the purchase of the Dutch aircraft firm Fokker.

Uncertainty, alas is very likely to continue to afflict both the Belfast operation and global aviation more generally. Two things could work to the advantage of Bombardier-Shorts. First, to the extent that either the UK government or any future devolved government is willing, there is the prospect of some subsidy or grant aid. Second, attempts to shift aircraft manufacturing to very low wage locations have not always prospered. One of the selling points of the Northern Ireland factories will be the particular expertise of the workforce in complex technologies.

 

 

The sale of Bombardier in Northern Ireland

 

Dr Esmond Birnie, Senior Economist Ulster University Business School

 

Many people may feel  the recent Bombardier experience in Northern Ireland has been death by a thousand cuts. First, redundancies, then the sale of control of the CSeries to Airbus and now Bombardier’s announcement that it wants to sell its operations.

 

Aircraft making on the shores of Belfast Lough began in the late 1930s. In the 1940s the English firm Shorts re-located all its operations to Northern Ireland. Like the shipyard, Shorts in Belfast combined considerable technical virtuosity, such as pioneering vertical take-off, with an increasing appetite for subsidies from the Belfast and London governments. The business was under state ownership for many years but then privatised to the Canadian firm in 1989. After thirty years Bombardier seem to have decided they need to consolidate back to their business jet operations.

 

Across the four factories in Northern Ireland- Belfast, Newtownabbey, Dunmurry and Newtownards- the firm employs 3,600 people. Jobs in Bombardier tend to tick all the right boxes in terms of Northern Ireland industrial strategy in that levels of wages and productivity are above the Northern Ireland average. The firm also contributes a considerable proportion of all the exports and R&D activity within total Northern Ireland manufacturing. At the UK wide level it has been estimated that each job in an aerospace firm supports a further job elsewhere in the economy through supply chain work and additional consumer spending generated by aerospace workers. By implication Bombardier supports a total of 7,200 jobs in the regional economy.

 

We now have a seller but do we have a buyer? The global aviation market is dominated by the two biggest players- the American Boeing and the European Airbus. Boeing are probably preoccupied by their difficulties following on from the Boeing737MAX crashes. In any case, in 2018 Boeing launched a partnership with the Brazilian aircraft firm Embraer. Whilst Airbus took control of the CSeries, now A220, I suspect they would not want to buy up the rest of Bombardier in Northern Ireland.

 

By implication, the purchaser is more likely to be one of the smaller and more recent entrants to the aircraft industry and that is not without risk to the long term sustainability of the Northern Ireland operation. Spirit AeroSystems is one possibility. It is a spin off from part of Boeing, its aerostructures division at Wichita In Kansas, together with some purchases from British Aerospace (BAE). Closer to home, there is GKN. The roots of that firm go all the way back to iron working in Industrial Revolution Wales but more recently it has moved into automotive and defence engineering including the purchase of the Dutch aircraft firm Fokker.

 

Uncertainty, alas is very likely to continue to afflict both the Belfast operation and global aviation more generally. Two things could work to the advantage of Bombardier-Shorts. First, to the extent that either the UK government or any future devolved government is willing, there is the prospect of some subsidy or grant aid. Second, attempts to shift aircraft manufacturing to very low wage locations have not always prospered. One of the selling points of the Northern Ireland factories will be the particular expertise of the workforce in complex technologies.

 

 

 

 

The sale of Bombardier in Northern Ireland

 

Dr Esmond Birnie, Senior Economist Ulster University Business School

 

Many people may feel the recent Bombardier experience in Northern Ireland has been death by a thousand cuts. First, redundancies, then the sale of control of the CSeries to Airbus and now Bombardier’s announcement that it wants to sell its operations.

 

Aircraft making on the shores of Belfast Lough began in the late 1930s. In the 1940s the English firm Shorts re-located all its operations to Northern Ireland. Like the shipyard, Shorts in Belfast combined considerable technical virtuosity, such as pioneering vertical take-off, with an increasing appetite for subsidies from the Belfast and London governments. The business was under state ownership for many years but then privatised to the Canadian firm in 1989. After thirty years Bombardier seem to have decided they need to consolidate back to their business jet operations.

 

Across the four factories in Northern Ireland- Belfast, Newtownabbey, Dunmurry and Newtownards- the firm employs 3,600 people. Jobs in Bombardier tend to tick all the right boxes in terms of Northern Ireland industrial strategy in that levels of wages and productivity are above the Northern Ireland average. The firm also contributes a considerable proportion of all the exports and R&D activity within total Northern Ireland manufacturing. At the UK wide level it has been estimated that each job in an aerospace firm supports a further job elsewhere in the economy through supply chain work and additional consumer spending generated by aerospace workers. By implication Bombardier supports a total of 7,200 jobs in the regional economy.

 

We now have a seller but do we have a buyer? The global aviation market is dominated by the two biggest players- the American Boeing and the European Airbus. Boeing are probably preoccupied by their difficulties following on from the Boeing737MAX crashes. In any case, in 2018 Boeing launched a partnership with the Brazilian aircraft firm Embraer. Whilst Airbus took control of the CSeries, now A220, I suspect they would not want to buy up the rest of Bombardier in Northern Ireland.

 

By implication, the purchaser is more likely to be one of the smaller and more recent entrants to the aircraft industry and that is not without risk to the long term sustainability of the Northern Ireland operation. Spirit AeroSystems is one possibility. It is a spin off from part of Boeing, its aerostructures division at Wichita In Kansas, together with some purchases from British Aerospace (BAE). Closer to home, there is GKN. The roots of that firm go all the way back to iron working in Industrial Revolution Wales but more recently it has moved into automotive and defence engineering including the purchase of the Dutch aircraft firm Fokker.

 

Uncertainty, alas is very likely to continue to afflict both the Belfast operation and global aviation more generally. Two things could work to the advantage of Bombardier-Shorts. First, to the extent that either the UK government or any future devolved government is willing, there is the prospect of some subsidy or grant aid. Second, attempts to shift aircraft manufacturing to very low wage locations have not always prospered. One of the selling points of the Northern Ireland factories will be the particular expertise of the workforce in complex technologies.