Suddenly, thanks to the dollar’s decline, our country is an increasingly compelling low-cost provider for companies in other parts of the world. That includes, it would appear, Montreal-based Bombardier.
No doubt the Bombardier deal, if it came to fruition, would be one of the most significant corporate catches in Kansas City history.
The company is considering construction of a $375 million plant that could ultimately employ 2,100 workers earning an average of $55,000 a year — more than the average local-household income. Backers estimate the deal could spin off another 5,200 jobs in the area over time.
Politically speaking, offering state tax credits and local financing assistance — all structured to be repaid over time by Bombardier — are slam dunks.
Here’s why:
Unlike so many irksome incentive deals we’ve seen here over the years, the Bombardier deal would clearly create net new wealth in our region. This isn’t just the latest example of shifting existing area jobs from one municipality to another in an endless game of local tax base taffy pull. These jobs would be coming from a whole other country.
That’s why even confirmed tax-break skeptics such as Mayor Mark Funkhouser of Kansas City are wagging tongues in support of the Bombardier deal.
“These are high-end, manufacturing jobs, not retail,” Funkhouser said last week. “This is real economic development.”
He’s right. Let’s go for this.
Landing Bombardier would offer the latest example of what is becoming one of the area’s quiet success stories — the retention of a strong manufacturing base even as that sector of the economy shrinks nationwide.
Nowhere is that more evident than at area auto plants. Even as Ford and General Motors have endured a wrenching restructuring marked by plant closures and thousands of lost jobs, the two companies continue to invest in and shift workers to the Claycomo and Fairfax plants.
It also can be found at the Harley-Davidson motorcycle plant near the Kansas City International Airport site being scouted by Bombardier.
There are plenty of reasons why Kansas City appeals to manufacturers. We have a central location at a major hub for the nation’s rail and highway systems. We have plenty of low-cost land. We boast pretty amicable local business-organized labor relations. And, in Bombardier’s case, we offer access to an existing aerospace work force that reaches as far as Wichita.
Those factors got Kansas City on the short list the last time Bombardier seriously considered proceeding with its C Series of 110- and 130-seat aircraft a few years ago. This time, though, our weak currency could be the clincher.
Bombardier has made no secret of the fact the weak U.S. dollar, which is the currency used in accounting for aircraft transactions, is pinching its performance. The U.S. dollar has lost about one-third of its relative value versus the Canadian dollar over the past five years.
Here’s an admittedly simplified way of looking at the assembly plant decision from Bombardier’s perspective. Setting aside recent inflation for a moment, in Canadian dollars the cost of building a $375 million plant here five years ago has been reduced to roughly $250 million just because of the decline in the U.S. dollar. Even if Bombardier is leveraging us in hopes of squeezing out a better deal to build in Montreal, that’s quite a currency hump to clear.
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