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Bombardier – opportunity lost, but for whom:

September 5, 2017

Is it O.K. for taxpayers to continually bail out big business as two big too fail or should companies and government be looking towards other solutions?

Small business owners have a much tougher time with regulation that larger companies do – whether it is access to grants and subsidies to help establish the business or the burden of dealing with an, at times, overly zealous tax collection regime. Big business always has more opportunity to negotiate but is that economic mentality justified or fraught with issues.

Imagine for a moment, on a smaller scale a local (fictitious) plumbing company that had been in business, and in the same family, for several generations ran into difficulty. The company employed about twenty staffers including five family members. After a couple of years of performance problems, the firm’s reputation was in decline – they were unable to deliver their products in a timely manner and kept asking their customers for more money to complete jobs and excused deadlines constantly.

The firm’s customers started looking elsewhere to have their plumbing needs met – in fact, a large local hotel that had faithfully used the company’s services for several decades started to engage another local plumber to solve its drainage issues. The company received no incentives from the government, and started to fall behind on paying its taxes as it struggled to maintain its staff and improve its service delivery. Eventually, drowning in debt, the company closed.

But that was not the end of the plumbing business in the community, people still had toilets and bathtubs and need to install and maintain them. The plumbers that were let go from the company went to work for competitors and the contracts that were lost were picked up by other firms. What then makes companies like Bombardier any different in the grand scheme of things: We have learned time and time again that government makes poor fiscal policy decisions, is this just another such example:

This is a blog, providing fodder for though, and doesn’t facilitate responses in the same way that social media does but the questions raised are interesting to the insolvency community. Perhaps Bombardier should be restructured and streamlined without a direct cost to tax payers. Perhaps the laid off employees would find employment working for competitors, even if in other countries – after all the Canadian government has long been a supporter of globalism.

If taxpayer bailouts are to be the norm for big business then perhaps the same courtesy ought to be extended to smaller business, or visa versa.