Union offers Bombardier concessions

Wednesday, July 9, 2008

KANSAS CITY, Mo. — With a decision on Bombardier Aerospace's new aircraft assembly plant possibly days away, Canadian machinists are trying to counter Missouri's offer of tax incentives with labor concessions.

Over the weekend union members approved a tentative contract that would offer Bombardier significant cost savings and increased flexibility if the company agrees to build its proposed C series jetliners in Montreal, The Kansas City Star reported on its Web site Tuesday.

"They're asking us for a decision by July 15," said Bombardier spokesman Marc Duchesne. "If we do, they've offered a new collective bargaining agreement to give us the flexibility to confront market fluctuations."

Montreal and Kansas City are the only competitors for the proposed $375 million plant, which could employ up to 2,100 people, Duchesne said.

Earlier this year, Gov. Matt Blunt signed into law legislation authorizing $240 million in tax incentives for the Canadian airplane maker.

The new law represents Missouri's largest-ever offer in the international competition for big-ticket business projects.

Bombardier is the world's third-largest civilian plane manufacturer and is looking for a place to make its new series of 110- and 130-seat regional passenger jets. Missouri is promoting land near Kansas City International Airport as an alternative to Bombardier's previously expressed preference of Mirabel, Canada, just north of its Montreal headquarters.

The law enacted by Blunt would offer up to $240 million in tax credits over eight years, beginning in 2013, based on the number of employees the company hires at the plant. Bombardier would repay the tax credits, plus a 5.1 percent rate of return, by giving Missouri a fixed amount of money for each plane it sells from the plant.

Kansas City also would issue bonds under which the city would own the property and lease it to Bombardier.

While company officials have said they would prefer to build the plant in Canada, they are tempted to move south because of the weak U.S. dollar. Its aircraft are priced in dollars.

Bombardier, which said it may make a decision on the plant next week, has said it first must obtain enough solid orders for the new plane to move ahead with production. The company has set the minimum limit at between 50 and 100 planes.

"Discussions are going well with potential customers," Duchesne said.

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