CEO Denies Company Could Move To US
"Surprising."
"Detrimental to Canada's industrial future."
"There's been some sort of quid pro quo..."
That's how some Canadians reacted when they heard that their
government has awarded a contract for new CF-18 simulators -- not
to the home team, CAE, Inc., but to Bombardier Aerospace, which
plans to buy the sims from L-3 Communications in New York. To make
that deal work, Ottawa will have to pay $44 million more than CAE
bid and uses what, to Canadians, amounts to foreign goods and
services.
The situation is especially irksome to Canadian patriots because
CAE has a worldwide reputation for the fine quality of its
simulators. That raises a lot of eyebrows in the Great White
North.
Under the contract, estimated to be worth $270 (Canadian),
Bombardier will build training centers at two Canadian Forces bases
and L-3 will supply the simulators themselves. As a result of
losing the bid, CAE now says it's had to lay off 300 workers.
CAE may be an industry leader in
simulation machinery, said aerospace analyst Richard Stoneman, "yet
in their own home country they can't land a training contract. The
guys from L-3 must be laughing up their sleeves."
While Canadians across the country are scratching their heads --
some angrily -- Stoneman suggests the government's decision to go
with Bombardier to prevent it from selling off its aviation
training division as part of a corporate restructuring. "The
government was not amused, having sunk all sorts of money into that
facility, to have Bombardier walk and hand it over to a
non-Canadian operator. So there's a suspicion there's been some
sort of quid pro quo with Bombardier over not selling off that
asset."
"We're continually pressing for more information on what brought
the decision about," said CAE CEO Derek Burney. "Once we've
exhausted that, we'll decide what action to take."
To add what looks like insult to
injury, Ontario-based Atlantis Systems, is listed on the contract
as working with Bombardier. But Atlantis executives have written
the Canadian defense minister to say they have nothing to do with
the project, according to Burney.
"That puts the Canadian content (on the Bombardier bid) way down
from where it allegedly was," he said.
The flap comes just one day after the Pentagon awarded a major
contract to CAE. Burney says that contract will be handled by his
company's Tampa (FL) subsidiary. But Burney denied that he plans to
move the company, lock, stock and simulator, to Tampa in the wake
of the pilot-training contract award.
So far, there's been no comment from Bombardier and no comment
from Prime Minister Paul Martin.
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