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It’s hard to like Bombardier

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It’s possible that Bombardier is not the biggest recipient of corporate welfare in Canadian history.

That dubious honour might belong to the Canadian Pacific Railway, which was granted big chunks of valuable public land by the federal government in the 19th century.

Or it might belong to the Hudson’s Bay Co., which was given suzerainty over much of what is now Canada by the British Crown in the 17th century.

But whatever its exact place in the subsidy ranking, Bombardier is certainly up there. The Quebec-based transportation giant and its predecessor companies have received close to $3 billion in government loans and grants over the years.

And more often than not, the company has rewarded its benefactors by kicking them in the teeth.

Which is what it did last week, when it announced plans to lay off 3,000 workers in Ontario and Quebec.

Some of these workers may be taken on by the aerospace companies that are buying portions of Bombardier’s business. But so far there are no guarantees.

The company said the asset sales will net it $900 million while the cutbacks will save an additional $250 million a year.

It said it wants to streamline its operations.

This comes two years after Bombardier laid off 5,000 Canadian workers in another effort to streamline operations. The aim then was to focus on its C Series passenger plane.

The company received $1.4 billion in loans and grants from the federal and Quebec governments to aid in this endeavour. It responded by giving huge bonuses to senior executives.

Ultimately, for reasons that weren’t entirely its fault, Bombardier gave away control of its C Series program to European competitor Airbus — while receiving nothing in return.

The Canadian and Quebec governments, which had bankrolled much of the aircraft’s development, also received nothing.

All in all, it is hard to like Bombardier.

Torontonians will know it as the manufacturer of $1 billion worth of pricey streetcars that don’t work.

Bombardier famously has been unable to deliver on time the 204 cars ordered by the Toronto Transit Commission nine years ago. As my Star colleague Ben Spurr reported, most of those that have been delivered contain welding defects that require them to be taken out of service for repair.

To add insult to injury, the defective streetcar parts were manufactured largely in low-wage Mexican plants. Bombardier still has railcar operations in Kingston and Thunder Bay. But they focus on assembly.

So much for Toronto’s laudable effort to buy Canadian.

Bombardier exemplifies everything that can go wrong in so-called public private partnerships. It took over publicly owned aerospace firms in Ontario and Quebec, largely because government wanted to get out of the airplane manufacturing business. But then it continued to rely on government aid to keep going.

Similarly, it bought rail car plants in Thunder Bay and Kingston that the Ontario government of the day was desperate to unload. But it remained the province’s favoured subway and streetcar manufacturer, its status even protected in the North American Free Trade Agreement.

Somewhere along the way, Bombardier became a multinational with operations in Europe, contracts in Central Asia and factories in Mexico. Its rail division is headquartered in Berlin.

It became so big that governments in Ottawa, Quebec and to a lesser extent Queen’s Park couldn’t allow it to fail.

Yet in spite of being intimately intertwined with government, it remains a private firm dedicated to the profits of its owners.

Governments may see it as a vehicle for creating good jobs. But as Bombardier demonstrated again last week, it can eliminate those good jobs any time it wants.

Thomas Walkom is a Toronto-based columnist covering politics. Follow him on Twitter: @tomwalkom

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‘Business as usual’ for Dorel Industries after terminating go-private deal

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MONTREAL — Dorel Industries Inc. says it will continue to pursue its business strategy going forward after terminating an agreement to go private after discussions with shareholders.

« Moving ahead. Business as usual, » a spokesman for the company said in an email on Monday.

A group led by Cerberus Capital Management had previously agreed to buy outstanding shares of Dorel for $16 apiece, except for shares owned by the family that controls the company’s multiple-voting shares.

But Dorel chief executive Martin Schwartz said the Montreal-based maker of car seats, strollers, bicycles and home furniture pulled the plug on a deal on the eve of Tuesday’s special meeting after reviewing votes from shareholders.

“Independent shareholders have clearly expressed their confidence in Dorel’s future and the greater potential for Dorel as a public entity, » he said in a news release.

Dorel’s board of directors, with Martin Schwartz, Alan Schwartz, Jeffrey Schwartz and Jeff Segel recused, unanimously approved the deal’s termination upon the recommendation of a special committee.

The transaction required approval by two-thirds of the votes cast, and more than 50 per cent of the votes cast by non-family shareholders.

Schwartz said enhancing shareholder value remains a top priority while it stays focused on growing its brands, which include Schwinn and Mongoose bikes, Safety 1st-brand car seats and DHP Furniture.

Dorel said the move to end the go-private deal was mutual, despite the funds’ increased purchase price offer earlier this year.

It said there is no break fee applicable in this case.

Montreal-based investment firm Letko, Brosseau & Associates Inc. and San Diego’s Brandes Investment Partners LP, which together control more than 19 per cent of Dorel’s outstanding class B subordinate shares voiced their opposition to the amended offer, which was increased from the initial Nov. 2 offer of $14.50 per share.

« We believe that several minority shareholders shared our opinion, » said Letko vice-president Stephane Lebrun, during a phone interview.

« We are confident of the long-term potential of the company and we have confidence in the managers in place.”

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Anglais

Pandemic funds helping Montreal businesses build for a better tomorrow

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Many entrepreneurs have had to tap into government loans during the pandemic, at first just to survive, but now some are using the money to better prepare their businesses for the post-COVID future.

One of those businesses is Del Friscos, a popular family restaurant in Dollard-des-Ormeaux that, like many Montreal-area restaurants, has had to adapt from a sit-down establishment to one that takes orders online for takeout or delivery.

“It was hard going from totally in-house seating,” said Del Friscos co-owner Terry Konstas. “We didn’t have an in-house delivery system, which we quickly added. There were so many of our employees that were laid off that wanted to work so we adapted to a delivery system and added platforms like Uber and DoorDash.”

Helping them through the transition were emergency grants and low-interest loans from the federal and provincial governments, some of which are directly administered by PME MTL, a non-profit business-development organization established to assist the island’s small and medium-sized businesses.

Konstas said he had never even heard of PME MTL until a customer told him about them and when he got in touch, he discovered there were many government programs available to help his business get through the downturn and build for the future. “They’ve been very helpful right from day one,” said Konstas.

“We used some of the funds to catch up on our suppliers and our rents, the part that wasn’t covered from the federal side, and we used some of it for our new virtual concepts,” he said, referring to a virtual kitchen model which the restaurant has since adopted.

The virtual kitchen lets them create completely different menu items from the casual American Italian dishes that Del Friscos is known for and market them under different restaurant brand names. Under the Prasinó Soup & Salad banner, they sell healthy Greek options and their Stallone’s Sub Shop brand offers hearty sandwiches, yet the food from both is created in the same Del Friscos kitchen.

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Downtown Montreal office, retail vacancies continue to rise

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Some of downtown Montreal’s key economic indicators are heading in the wrong direction.

Office and retail vacancies in the city’s central core continued to climb in the fourth quarter of 2020, according to a quarterly report released Thursday by the Urban Development Institute of Quebec and the Montréal Centre-Ville merchants association. The report, whose first edition was published in October, aims to paint a socio-economic picture of the downtown area.

The survey also found office space available for sublet had increased during the fourth quarter, which may foreshadow even more vacancies when leases expire. On the residential front, condo sales fell as new listings soared — a sign that the downtown area may be losing some of its appeal to homeowners.

“It’s impossible not to be preoccupied by the rapid increase in office vacancies,” Jean-Marc Fournier, the former Quebec politician who now heads the UDI, said Thursday in an interview.

Still, with COVID-19 vaccinations set to accelerate in the coming months, “the economic picture is bound to improve,” he said. “People will start returning downtown. It’s much too early to say the office market is going to disappear.”

Public health measures implemented since the start of the pandemic almost a year ago — such as caps on office capacity — have deprived downtown Montreal of more than 500,000 workers and students. A mere 4,163 university and CEGEP students attended in-person classes in the second quarter, the most recent period for which figures are available. Border closures and travel restrictions have also brought tourism to a standstill, hurting hotels and thousands of local businesses.

Seventy per cent of downtown workers carried out their professional activities at home more than three days a week during the fourth quarter, the report said, citing an online survey of 1,000 Montreal-area residents conducted last month.

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