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EU Says It Would Slice Airbus Support If Boeing...  
User currently offlineKalakaua From United States of America, joined Jan 2004, 1516 posts, RR: 5
Posted (10 years 1 month 2 weeks 5 days 17 hours ago) and read 8806 times:

EU Says It Would Slice Airbus Support in Return for Boeing Cut

http://quote.bloomberg.com/apps/news?pid=10000085&sid=aAzolsZrDMss&refer=europe

Aug. 14 (Bloomberg) -- The European Union said it would be ready to cut support for Airbus SAS, the world's biggest planemaker, in return for less U.S. aid to Boeing Co. after President George W. Bush threatened to file a trade complaint.

``The EU has as strong an interest in disciplining government support to Boeing as the U.S. has in disciplining support to Airbus,'' said Ewa Hedlund, a spokeswoman at the European Commission, the EU's executive arm in Brussels.

Bush said yesterday European subsidies to Airbus are ``unfair'' and the U.S. may file a World Trade Organization complaint to force a cut. Both sides have discussed aircraft aid in recent weeks and more talks are planned.

Read more by clicking on the link.


Gravity explains the motions of the planets, but it cannot explain who set the planets in motion.
49 replies: All unread, showing first 25:
 
User currently offlineKim777fan From United States of America, joined Aug 2004, 510 posts, RR: 1
Reply 1, posted (10 years 1 month 2 weeks 5 days 13 hours ago) and read 8398 times:

I think the difference is that Boeing gets *local* support from communities to locate there and create jobs that benefit the community overall. It's not necessarily a national a Federal thing, whereas Airbus has had funds pumped into them from various nations where Airbus is not even located more or less for prestige and so that Airbus can dominate the marketplace.

Boeinghas to give back to those communities in terms of jobs, charitable donations, etc whereas Airbus can skate even if they default on one of their "loans."


User currently offlineElwood64151 From United States of America, joined Feb 2002, 2477 posts, RR: 6
Reply 2, posted (10 years 1 month 2 weeks 5 days 13 hours ago) and read 8375 times:

Boeing, based in Chicago, gets U.S. government help in the form of indirect subsidies through research grants from defense projects and the National Aeronautics and Space Administration.

The difference is, the US government gets something for the research that is done: New Technology. All the EU gets for its various member-state loans is "national" pride.

Phil Singer, a spokesman for Democratic presidential candidate John Kerry, 60, a four-term senator from Massachusetts, said in an e-mailed statement that Bush's call for an end to Airbus subsidies is ``too little, too late.''

And what has Mr. Kerry done about all this? I'll tell you what: Nothing. Nor was it even on his agenda before it was brought up by Stonecipher and Bush...



Those who fail to learn history are doomed to repeat it in summer school.
User currently offlineWhitehatter From , joined Dec 1969, posts, RR:
Reply 3, posted (10 years 1 month 2 weeks 5 days 13 hours ago) and read 8347 times:

The difference is, the US government gets something for the research that is done: New Technology. All the EU gets for its various member-state loans is "national" pride.

and interest. Lots of it actually. It's nice to have too, as it keeps my taxes down.

We've made quite a bit of money on those Airbus loans. In fact I wish the UK Government would loan even more money to Airbus as it's a good investment that is making money for our Treasury.

Any more election-frenzy bullshit that anyone wants to spin then?

[Edited 2004-08-14 23:21:49]

User currently offlineSebring From Canada, joined Jul 2004, 1663 posts, RR: 14
Reply 4, posted (10 years 1 month 2 weeks 5 days 13 hours ago) and read 8328 times:

I think the difference is that Boeing gets *local* support from communities to locate there and create jobs that benefit the community overall. It's not necessarily a national a Federal thing, whereas Airbus has had funds pumped into them from various nations where Airbus is not even located more or less for prestige and so that Airbus can dominate the marketplace.

Boeinghas to give back to those communities in terms of jobs, charitable donations, etc whereas Airbus can skate even if they default on one of their "loans."


What nonsense. The local support - usually state money - is an out and out bribe. It happens in the automotive industry, the high tech industry, the aerospace industry, the movie industry, pro sports, the airline industry and many others. A company says it wants to build a plant, and basically puts it up for bids. The state making the most concessions in the form of tax holidays or grants gets the plant. The company was going to build that very plant somewhere - so the grants are a net cash gain or saving that is rarely repaid. It is a subsidy, and since every state does it, its hard to see how anyone really comes out ahead in the long run except the companiea which laugh up their sleeves at the suckers.

Americansl build stadiums for pro sports with tax payer dollars, and subsidize auto assembly plants, semi-conductor plants, and so on. It's probably good theory if you are the only jurisdiction doing it, but when everybody is doing it, becomes fiscal lunacy. Maybe Europe isn't any better, but they aren't as hypocritical about it.


User currently offlineElwood64151 From United States of America, joined Feb 2002, 2477 posts, RR: 6
Reply 5, posted (10 years 1 month 2 weeks 5 days 13 hours ago) and read 8292 times:

What nonsense. The local support - usually state money - is an out and out bribe

Which in our system of government, the Feds have absolutely no ability to control. I don't like them, either. In my opinion, they violate the 14th Amendment. But the fact is, "special consideration" for certain companies has been judged (until this point) to be Constitutional by the courts, and the Feds don't have a Constitutional power to control the taxes of a local government.

The company was going to build that very plant somewhere - so the grants are a net cash gain or saving that is rarely repaid

Actually, there are some states that do come out winners: States with higher income tax rates that otherwise would never have seen that factory. They cut the slack for the company and its profits, but its already high income and/or sales taxes make up for much of what was given in tax breaks. A factory that would have been located in, say, South Carolina, with its low taxes in general, ends up in Ohio or Illinois instead.

Americansl build stadiums for pro sports with tax payer dollars, and subsidize auto assembly plants, semi-conductor plants, and so on. It's probably good theory if you are the only jurisdiction doing it, but when everybody is doing it, becomes fiscal lunacy.

There's a difference with the stadiums: Few sports franchises today could afford to build their own stadium (besides the Yankees, the Redskins, and a few other major-market players). And much of the time those stadiums are paid for in rents, parking fees and concession sales.

As for subsidizing the assembly plants, again I say I don't think it's right either, but so far no one has successfully challenged it.

and interest. Lots of it actually. It's nice to have too, as it keeps my taxes down.

How much interest can you earn from a defaulted loan? Airbus can default on the loans without penalty (except its S&P or Moody's rating). That's the problem: Basically, for Airbus it makes the risk almost zero and the potential profits astronomical. Boeing has access to no such capital. For Airbus, if they fail, it's free money. For Boeing, if they fail, the whole company goes down the tubes.



Those who fail to learn history are doomed to repeat it in summer school.
User currently offlineWhitehatter From , joined Dec 1969, posts, RR:
Reply 6, posted (10 years 1 month 2 weeks 5 days 13 hours ago) and read 8266 times:

How much interest can you earn from a defaulted loan? Airbus can default on the loans without penalty (except its S&P or Moody's rating). That's the problem: Basically, for Airbus it makes the risk almost zero and the potential profits astronomical. Boeing has access to no such capital. For Airbus, if they fail, it's free money. For Boeing, if they fail, the whole company goes down the tubes.

Supply evidence that these loans are without default penalty.

Can you?

Can anyone?

And how can it be free money for Airbus? If they go bust THEY LOSE EVERYTHING. How is that free? A loan is still repayable if the company is in operation.

Let's examine Boeing's 'non-access' shall we. The recent X-Plane contract. Boeing failed with its design. Did they have to repay the DoD the billions they got in the development contract? By your rules Boeing should have repaid every cent as they failed.

Boeing make the best jets in the world. Politicians are using them as a sleazy vote-grabber by spinning and distorting the truth about the aircraft market. Shills then come on here ad nauseum and repeat the party rhetoric. It's just plain wrong.

[Edited 2004-08-14 23:50:10]

User currently offlineSebring From Canada, joined Jul 2004, 1663 posts, RR: 14
Reply 7, posted (10 years 1 month 2 weeks 5 days 12 hours ago) and read 8232 times:

Which in our system of government, the Feds have absolutely no ability to control. I don't like them, either. In my opinion, they violate the 14th Amendment. But the fact is, "special consideration" for certain companies has been judged (until this point) to be Constitutional by the courts, and the Feds don't have a Constitutional power to control the taxes of a local government.


This is an argument we in Canada hear from you all the time. You Americans hide behind it like a five year old behind his mother's skirt.You sign a trade agreement, then effectively renege on it by letting this state or that city do an end run. You also don't live up to your trade obligations if it doesn't suit you. You run to the WTO to protect one special interest (Boeing) but ignore WTO rulings when it suits the cause of other special interests, even over the best interests of US consumers (softwood lumber, beef). Pardon the rest of the world for having no sympathy for the way the US does business. The only level playing field it wants is the one tilted in its favor.

Actually, there are some states that do come out winners: States with higher income tax rates that otherwise would never have seen that factory. They cut the slack for the company and its profits, but its already high income and/or sales taxes make up for much of what was given in tax breaks. A factory that would have been located in, say, South Carolina, with its low taxes in general, ends up in Ohio or Illinois instead.


Do they really come out ahead? Maybe on that one deal they do, but how about the companies that might have located in their area but are lured away by another state's subsidies. Each state has only so much subsidy money available.

There's a difference with the stadiums: Few sports franchises today could afford to build their own stadium (besides the Yankees, the Redskins, and a few other major-market players). And much of the time those stadiums are paid for in rents, parking fees and concession sales.


This has been debunked by many studies. If this money wasn't spent, it would be spent somewhere else in the same area. If people don't go to their football, they will go to the movies, or a theme park, or eat out more often or buy a bigger car, whatever. The money gets spent. And the money not spent on a stadium for pro sports teams can be spent in the community on fixing up schools or buying new buses or whatever. In the case of arenas, the situation is even worse because pro sports teams are clearly "negotiating" with local governments, threatening to move their teams. Just look at the Sacramento situation. Basketball fans in Sacramento have supported their team as well as any in the league but now the Malouf Brothers who own the NBA team have put a gun to the heads of local government, implying that if the city doesn't build them a new taxpayer-funded arena, they could move the team. This is happened across pro sports. I'm glad to say that no government in Canada will go to the lengths many US municipalities will go to subsidize pro sports. Maybe that's why we can afford (barely) universal health care.








[Edited 2004-08-14 23:58:40]

[Edited 2004-08-15 00:06:05]

User currently offlineTrident2e From , joined Dec 1969, posts, RR:
Reply 8, posted (10 years 1 month 2 weeks 5 days 12 hours ago) and read 8216 times:

We should all take this story with a rather large pinch of salt. Sounds more like the desperate ramblings of a desperate man desperately trying to get himself re-elected with some all-American, aren't we hard done to bullsh!t.

User currently offlineMauriceB From Netherlands, joined Aug 2004, 2490 posts, RR: 25
Reply 9, posted (10 years 1 month 2 weeks 5 days 12 hours ago) and read 8202 times:

oke don't bash me for my replay pleaze, i don't try to get an A. vs B


i think any government may suport a company based in its country although not by giving money, but like buying planes from that manufactor, or advertise for the company. and if they give money(wich i don't suport) it has to be fair at least, so that USA and Airbus make deals that they both give the same or so. or els this will really turn out in a ''no-competition'' in the future. but i still think a company has to make it on theire own, without financial help. If any company would get money before they will get bankrupt we still would see TWA, Pan Am, Mcdonnal douglas, Sabena, swiss... its just life, some have to leave for making room for others.....


greetings maurice


User currently offlineWhitehatter From , joined Dec 1969, posts, RR:
Reply 10, posted (10 years 1 month 2 weeks 5 days 12 hours ago) and read 8183 times:

I've posted a long and involved explanation of why no one side has no reason to come the 'holier than thou' position before now. But still the blinkered shills come back here and wail about these so-called subsidies.

It's time they realised that all politicians are sleazebags no matter what their colour, and there are three golden rules.

1. Politicians lie
2. Politicians twist facts to suit themselves
3. If you think a politician is being honest, see rule one.



User currently offlineWidebody From Ireland, joined Aug 2000, 1152 posts, RR: 8
Reply 11, posted (10 years 1 month 2 weeks 5 days 10 hours ago) and read 8059 times:

Kim777fan, Elwood64151,

You've been swallowing too much of the crap they've been stuffing down your throat over there, cause it's clear from your posts above you have no idea how it works over here. All the countries get is prestige and national pride?!!

The very reason the loans have attractive conditions is because of the jobs they create. The more money you pump in, the greater the percentage of the project you obtain for your country. Take Britain for example, if I remember correctly, for a loan of 800m, the figures were 22,000 new jobs and 64,000 existing jobs secured (Airbus and suppliers) - have you any idea what that means in places where the Airbus factories are located?! For years the government has spent billions keeping companies afloat, 800m is peanuts for what they get in return! Same for all the others!

Get yourself out some books on Europe and do some reading, don't let your opinions on aviation fall victim to politics.


User currently offlineETStar From Canada, joined Jan 2004, 2103 posts, RR: 7
Reply 12, posted (10 years 1 month 2 weeks 5 days 9 hours ago) and read 7904 times:

Countries on both sides of the pond drop a bucket-load of dough to their respective aircraft manufacturer for reasons of employment, tax revenue, economy etc, all reasons for their countries to succeed and for politicians to succeed as well. Be it local, provincial/state aides, it still is government subsidies and it is not like one is doing it and the other one is not. As for that smart guy who said that all the Europeans get is national pride should be reminded of which manufacturer came up with new technology (and better/more innovative products I might add) such as FBW, and which airline ended up adopting it (oh yeah, now the Dreamliner is getting more composite materials too!). So, yet again, when it comes to an american company and/or product, the rest of the world is dead wrong. Look outside the box, you are missing out on a lot!

User currently offlineDfwRevolution From United States of America, joined Jan 2010, 978 posts, RR: 51
Reply 13, posted (10 years 1 month 2 weeks 5 days 8 hours ago) and read 7833 times:

Get yourself out some books on Europe and do some reading, don't let your opinions on aviation fall victim to politics.

Having read several books entirely on the foundation of the Airbus consortium, I can tell you the irony of the current situation is amazing. The goal of Airbus was not to dominate the aerospace industry, but rather to keep high-tech aeronautic jobs afloat and provide European's a strategic alternative to the U.S' dominance in commercial aviation.

Now, 30 years later, Airbus is pushing U.S. aerospace jobs out of business just like the U.S. was doing in the 50s, 60s, and 70s. Airbus' goal was to make the industry fair, but now, they are using old, out-of-date trade rules to maintain an advantage over Boeing. It's outrageous, both companies need to make some serious comprimeses because if nothing is done, another monopoly or trade war will arise.


User currently offlineWhitehatter From , joined Dec 1969, posts, RR:
Reply 14, posted (10 years 1 month 2 weeks 5 days 8 hours ago) and read 7803 times:

both companies need to make some serious comprimeses because if nothing is done, another monopoly or trade war will arise.

Now this explains why I have you on my respected users list.....


User currently offlineTcfc424 From United States of America, joined Nov 2003, 517 posts, RR: 2
Reply 15, posted (10 years 1 month 2 weeks 5 days 6 hours ago) and read 7277 times:

Okay, I will admit that I haven't read every word of every post on this thread. However, there was something mentioned that has really attracted my attention. That is the discounts/subsidies/etc that cities and states allow for big business to come to town. Living in Austin, Texas (Silicon Hills) I see two sides to the story.

1) In 1999, it seemed great for Austin to lure and welcome high-tech (read: computer and software) companies to town. Literally, over 100+ people were moving into town DAILY! Excellent revenue and sales tax growth, schools (if it weren't for Robin Hood---those of you from out of state wouldn't understand), fire departments, city services were printing greenbacks from the property tax and sales tax revenues. Lovely, truly. FAST FORWARD to 2004. Still, over 100,000 unemployed (thanks to the dot.com and tech bust) and no jobs available for anyone without a Masters Degree in whatever. Worked well for a while, now...it jut sucks.

2) Texas State University (formerly Southwest Texas State) has reaped the benefits of luring an outlet mall to its area. Yes, tax breaks, concessions, etc. were made. However, because of the selection of San Marcos as the place to build, San Marcos has become the #2 destination in Texas, just behind the Alamo. Also, college students have the opportunity to work nearby at the outlet malls, and the tax revenues have been staggering...so staggering in fact that the city LOWERED the property tax rate because they were easily able to afford city services. Add to that a roster of over 2,000 jobs provided to the 27,000 collge students...BINGO.

There are two sides to the city/state subsidy story, and both very different in outcomes. That is a cost to do business (by the city and by the employer). It does not mean that XYZ company will be successful, it simply provides them a better reason to select one city over the next.

How does this apply to the never ending A vs. B story? Simple. Tell me that Toulouse, France did not offer Airbus ANY reason to select their city and the issue is dead. I would imagine that Toulouse, just like any city across the golbe, has touted Airbus by offering incentives and the like to build their plant there. This is a local matter, not a Federal matter.

Currently, the issues facing Airbus and Boeing regarding funding should not revolve around local (city/state/provincial) funding, but rather their funding sources. It should also be taken into account that the contract agreement reached by both parties in 1992 was cast in a different economic situation, and ultimately a different market demographic. Then, Airbus was a fledgling, a baby compared to the evil Boeing mega conglomerate.

I agree Boeing is a large company with diverse fields. EADS is also, now, a large company with diverse fields.

Your comments, and ladies and gentlemen, lets keep it respectful.

Mike S. In AUS


User currently offlineSpacecadet From United States of America, joined Sep 2001, 3629 posts, RR: 12
Reply 16, posted (10 years 1 month 2 weeks 5 days 5 hours ago) and read 7198 times:

This is an argument we in Canada hear from you all the time. You Americans hide behind it like a five year old behind his mother's skirt.You sign a trade agreement, then effectively renege on it by letting this state or that city do an end run.

This is the way this country is. Don't like it? Don't sign trade agreements with us. Ever heard the phrase "fool me once, shame on you, fool me twice, shame on me"?

I'm not saying this is the way it should be in the modern age, but the United States is exactly that - the United STATES. Every state is, in many ways, its own little country. The federal government has limited control and always has. Over the years it's gained more and more control but the issue of exactly how much is the right amount has been argued ever since this country was founded. Think of the federal government in the US as it relates to states in the same vein as the United Nations is to the rest of the world. Or think about the EU, which is probably a closer analogy to what the US is.

Our history is different than your history. Most of Canada was unified under the British flag for a long time, and finally broke away en masse peacefully well after we did violently and piecemeal. After the American Revolution, each "state" (meaning "nation" at the time, and still now in most contexts) wanted to retain power over its own affairs, even down to maintaining their own borders and armies. A few of our founding fathers thought a central government would be necessary and compromises were reached; our Bill of Rights is one of those compromises (it exists to protect states and citizens against the power of the federal government), but many others still exist too. States still have borders, which are enforced differently (California, for example, has border checkpoints even when coming from another state!). They still maintain their own sets of laws, their own court systems, their own school curriculums, etc. The federal government ostensibly speaks for all member states but if a state's representatives in congress vote "no" on a particular treaty there is often no federal or state law preventing that state from exercising their own individual rights in breaking that treaty in various ways afterwards, unless the treaty is worded in a particular way to specifically overrule state law.

This is necessary because unlike most nations, we do not have a homogenized people. What works for Virginia is not going to work for New York. That was true 220 years ago and it's still true today. I would expect in 200 years somebody else will be writing pretty much this exact same post using the examples of, say, France and Spain.

Enough of the history lesson. I just get sick of people in other countries bitching about the way our system of government is set up. People call us arrogant at the same time as they spout on about their superiority simply because their system works differently than ours.

To get back on topic, if you ask me Bush should be doing the opposite of what he is doing. Threaten to start directly subsidizing Boeing rather than complaining about Airbus. If the EU wants to work that way, fine - let them subsidize whoever they want. Hey, it's their system. So let's modify our system to match. If Boeing needs a subsidy to compete with subsidized competitors, give it to them. See how Airbus and the countries that fund them like it. Fair's fair and if we want to be a good world citizen we'll adapt to the way the rest of the world works, right?



I'm tired of being a wanna-be league bowler. I wanna be a league bowler!
User currently offlineL410Turbolet From Czech Republic, joined May 2004, 5718 posts, RR: 18
Reply 17, posted (10 years 1 month 2 weeks 5 days 4 hours ago) and read 7057 times:

Spacecadet,
what a stupid excuse for the US not sticking to treaties they sign. Individual US states are not in the same position to its federal government the way EU countries are towards the EU or (please!) UN member countries towards the UN. The difference is, US states have no international sovereignty. Last time I checked, New Hampshire did not have a seat on the UN, did it? You should go back to 12th grade of high school and retake US government class. I remeber more from my high school exchange year than you know about your own country.
Also there's a certain hierarchy of laws, where international traties are supreme to local legislation.


User currently offlineIAHtown From United States of America, joined Aug 2004, 17 posts, RR: 0
Reply 18, posted (10 years 1 month 2 weeks 5 days 3 hours ago) and read 6943 times:

The main difference between the state subsidies that Boeing gets for locating facilities in certain communities and the subsidies Airbus gets from European governments is that Airbus can also get the state subsidies for building facilities in the US while Boeing can't get the subsidies from the European governments.

User currently offlineCXA340 From United States of America, joined May 2004, 51 posts, RR: 1
Reply 19, posted (10 years 1 month 2 weeks 5 days 3 hours ago) and read 6930 times:

L410turbolet-
wow, you really just do not undestand it, and that's sad. The complaint that Washington, Missouri, Kansas, or Texas cannot give tax breaks to Boeing, because it would in some way violate a WTO regulation is without merit, because Washington, Missouri, Kansas, and Texas have never signed a treaty with the WTO that would regulate their powers to give tax breaks. This is a domestic issue, pure and simple. What if every state in the union was to do away with corporate income taxes, relying only on a sales tax, or personal income tax? Would the EU or Canadians cry foul at what is surely an exercise of the rights of each state to regulate themselves? Would you be marching us before the WTO to scream that Columbus, Olympia, Topeka, or Charleston must put back these forms of taxation? What about the 10 or so states that currently do not have both a sales tax and income tax, are you already preparing your case to make them have both? When can we expect the lawsuit? Does that come with a free flight to the WTO in Europe? The World Court has chastized the Bush Admiinistration for being constittionally unable to intervene in the criminal proceedings of Mexican defendents sentenced in capital cases in Oklahoma, Texas, and Ohio. But, the Federal Constitution specifically precludes the President from being involved in such matters, matters that are specifically left to the states. I can gaurantee you that no one a the World Court placed a long distance phone call to speak with the governors in Columbus, Austin, or Oklahoma City regarding this matter, maybe they should have. We do not suppose that the British Primeminister can intervene in the criminal affairs of the French, why do you suppose the Federal President can intervene in the affairs of a soveriegn state?

The debate between Boeing and Airbus, and the subsidies they receive, is a defining example of how Europeans and Canadians have come to misinterpret the United States' form of government, which is a democratic republic. They have come to understand Washington DC as an all-powerful entity, never realizing the preclusions placed upon it by the Federal and various state/commonwealth constitutions (one could mention here how there are technically 44 states, 4 commonwealths, 1 assembly, and 1 kingdom - but that would just be really confusing to our friends north of the border and across the pond).

btw - I had a 5 on my AP American exam, a 5 on my AP US Government exam, a 780 on my US History SATII, and have my degree in Ethics, History, & Public Policy, so yes I know what I am talking about in terms of my own country - thank you.


User currently offlineTrevd From United States of America, joined Jun 2004, 327 posts, RR: 3
Reply 20, posted (10 years 1 month 2 weeks 5 days 3 hours ago) and read 6849 times:

Spacecadet - that has to be one of the most uninformed posts I've seen here on A.net. States do NOT have power to vote on or approve treaties as those rights are specifically reserved for the Federal gov by the Constitution. Further, any action a state took that were in violation of a federal treaty would be subjugated to federal jurisdiction.

Now on the other hand, most of our European and Canadian friends here are completely missing the boat on this issue. And that issue is, the 1992 agreement on "Direct" government subsidies for aircraft development costs. The truth of the matter is the european governments have been providing billions of dollars of direct cash subsidies to Airbus. The 1992 agreement limited those subsidies to 30% of an aircraft programs development costs. During the same period the amount of direct subsidy US manufacturers (Boeing) have received is ZERO - this is a fact.

The point made in several posts in this thread the US manufacturers have received subsidies from the states is not accurate and just another example of Airbus PR trying to obsfucate the issue. The facts are that no state has provided direct cash subsidies to any US manufacturer. Several states such as the recent "package" offered by Washington state to encourage Boeing to manufacture the 7E7 in Washington have provided beneficial changes in tax law to improve the business climate in that state as an incentive for the work (i.e. jobs as Whitehatter suggests which are just as important here in the US as they are in Europe!! ). Same applies to the state of Illinois and the move by Boeing to Chicago. There it was a case of corporate tax breaks to encourage Boeing to move its corporate headquarters there rather than manufacturing. Contrast this to the situation in Europe where Airbus pays almost ZERO tax.

Now, perhaps the most mis-understood issue out there is this idea that Airbus is paying back these subsidies as "loans". It's often stated that way by both the Airbus PR/marketing machine and the French/German gov'ts to make them appear more palatable, both to regulators and their own citizens. The truth of the matter is there are no such loans. Certainly nothing that resembles commercial financing. Instead, what they have is an agreement to 're-pay' the subsidies over time as aircraft are delivered. The way the scheme works is that Airbus gets to estimate the size of the market for each program subsidies are provided for and they then make a payment for each aircraft delivered. And if they eventually deliver the number of aircraft estimated, the subsidies or "loans" will have been re-paid.

For example, the $2 billion dollars in subsides provided over time for the A300/A310/A300-600 program were supposed to be paid back based on a market size of 2,000 airplanes; or with a $1 million dollar payment per airplane delivered. Unfortunately, that program has only delivered about 800 airplanes, so over 60% of the "debt" remains outstanding. The nasty secret is that if Airbus cancels the program, the remaining debt is forgiven by the governments. Now you understand why Airbus estimates the size of the market for an A380 size airplane at over 1,000 units. With about $4 billion in direct cash subsidies ( er... loans, right loans) to pay back that's almost $4 million per airplane. Unfortunately, Airbus' track record is not very good with only the A320 program having a chance at paying back it's subsidies. The A300/A310/A300-600 programs will certainly cause over $1 billion in losses and the A330/A340 programs will probably double that. The amazing thing is that European tax-payers either haven't woken up to this or are okay paying the price just to have some symbol such as Airbus to point to for national pride.

Either way, it will be interesting to see how this issue goes. While it appears Bush is finally picking this up as an issue, I would not be surprised to see Kerry take it even further if elected.





User currently offlineSabenapilot From Belgium, joined Feb 2000, 2714 posts, RR: 46
Reply 21, posted (10 years 1 month 2 weeks 5 days 2 hours ago) and read 6721 times:

What some people here fail to understand is the very different view on these 'subsidies' on both sides of the Atlantic mostly comes from the very different way in which both sides deal with unemployment.

In continental Europe, when people get sacked, they turn to the government to get an allowance which will help them to get on with their lives as before. The system and its benefits varies from country to country, but in Belgium for instance, any unemployed person with a family will receive around 750 euro or roughly 900 dollars a month until he/she finds a job. In France for instance, unemployed are paid more than 2 thirds of their last salary.

Needless to say something equally generous does not exist across the Atlantic. If you get sacked there, you quickly are on your own and don't expect any government to step in to help you out indefinitely.

Taking this difference into account, it is easy to see why governments in Europe are eager to spend a few hundred of millions on projects which generate massive employment for many tens of thousand of people, isn't it? In the European social-economic model it constitutes a sound investment! Governments hand out the money ONCE and create jobs for life in return (thus drastically lower their future unemployment payments) and on top of that, they might get (part of) their money back over time!

From an American point of view of course and in the absence of a costly social security system, all money handed out to a company like Airbus under the terms agreed to by the European governments must be considered gone and are thus to be considered plain subsidies.

The lesson to be learned from this is things are never BLACK nor WHITE when you look at them from a different angle.


[Edited 2004-08-15 10:41:38]

User currently offlineSolnabo From Sweden, joined Jan 2008, 853 posts, RR: 2
Reply 22, posted (10 years 1 month 2 weeks 5 days 2 hours ago) and read 6715 times:

Never heard about Eva Hedlund (sound swedish though) Big grin

IMO €U in Brussels is a bureaucratic castle...

Micke//SE



Airbus SAS - Love them both
User currently offlineL-188 From United States of America, joined Jul 1999, 29802 posts, RR: 58
Reply 23, posted (10 years 1 month 2 weeks 5 days 1 hour ago) and read 6665 times:

Sabenapilot, I will have to agree with you that there are very different views on where to obtain financing for new projects depending on which side of the pond you happen to be on.

However, I to this day will refuse to call military contracts to Boeing "Subsidies". The fact that a product is expected to be delivered precludes that title.




OBAMA-WORST PRESIDENT EVER....Even SKOORB would be better.
User currently offlineBrons2 From United States of America, joined Sep 2001, 3015 posts, RR: 4
Reply 24, posted (10 years 1 month 2 weeks 5 days 1 hour ago) and read 6625 times:


Needless to say something equally generous does not exist across the Atlantic. If you get sacked there, you quickly are on your own and don't expect any government to step in to help you out indefinitely.


Um, when I got laid off from my dot-com job, I received 1300 a month until I found a new one. We have unemployment in the US-I don't think you have done your homework here. The difference is, it's time limited in the US. I could only have received 6 months tops of benefits.

The money comes from unemployment insurance premiums paid for by your previous employer to the state government.



Firings, if well done, are good for employee morale.
25 Post contains links Leskova : Brons2, if you think that unemployment benefits are unlimited (in time) in Europe, then you're mistaken as well - although I'm quite sure it's not jus
26 Post contains images Dynkrisolo : If you think Airbus doesn't get local tax breaks like Boeing does, then you're mistaken. Just because you don't hear about it, it doesn't mean it does
27 Joni : "During the same period the amount of direct subsidy US manufacturers (Boeing) have received is ZERO - this is a fact. " Some people appear to have c
28 Trident2e : IAHtown - you are COMPLETELY wrong! My government pays subsidies to many international companies for locating their businesses in the UK. If Boeing wa
29 Post contains links Trevd : Leskova cites some interesting examples, but once again most of this is a repetition of the same old Airbus PR/marketing lines. The WTO dispute stems
30 Leskova : Trevd, while I'm certainly no expert on European tax systems, I can tell you one thing - your example (Snecma & P&W selling to Korea) might work for F
31 Sebolino : On the other hand, if Snecma sells CFMI engines to Korea, while they still must pay the local tax in Korea, they are exempt from any tax in France on
32 Widebody : The question is the level of the playing field at the moment - how level is it? Taking into account the financial support for each manufacturer, is it
33 Widebody : Reading up a bit more on this today, the Boeing position is very unclear. There is a trade agreement which both Airbus and Boeing agreed to in 1992. B
34 F4f3a : I dont know why there are complaints about financial aid. Developing new aeroplanes costs a lot of money. Aeroplane manufacturers whether boeing airbu
35 TrevD : Leskova, Please go back and read my post. What I suggested was unfair was not some overall EU tax scheme (I know there isn't one),but rather that the
36 Post contains links Kalakaua : UPDATE! Follow the link: http://www.dw-world.de/english/0,3367,1431_A_1298566_1_A,00.html?mpb=en Bush Mulls WTO Suit Against Airbus The US considers s
37 Joni : I wonder if Bush has considered what might happen to Boeing if an EU counter-proposal to the WTO would force the US to dramatically cut subsidies to
38 Post contains links and images AvObserver : And a related AW&ST article I didn't see posted elsewhere, here... http://www.aviationnow.com/avnow/news/channel_aviationdaily_story.jsp?id=news/wil08
39 Joni : AvObserver, A few paragraphs down in the article you quoted we read "Federal R&D investment in the aerospace industry has dropped from $27 billion in
40 Dynkrisolo : A few paragraphs down in the article you quoted we read "Federal R&D investment in the aerospace industry has dropped from $27 billion in 1987 to $10
41 Arrow : The hypocrisy in Bush threatening to go to the WTO on Airbus subsidies is staggering. No nation in the developed world has thumbed its nose at WTO rul
42 Brons2 : I can imagine the potential need for re-discussion, but where does the Bush attitude of 'I'll take them to court' come from? I can agree with this. Le
43 BENNETT123 : The problem with re-negotiating the old agreement is that according to Spacecadet, a contract made with the Federal govt is not binding on the States.
44 Gearup : Good post Arrow, what you say is sooo true. Softwood lumber is only one example as you know. I would love to know what their involvement was regarding
45 AvObserver : ""Federal R&D investment in the aerospace industry has dropped from $27 billion in 1987 to $10 billion in 1998." Yet Mr. Douglass (CEO of Aerospace In
46 Widebody : AvObserver, If US aerospace companies are at a competitive disadvantage because of lack of federal R&D investment, while EU companies are taking full
47 Post contains images AvObserver : Perhaps, but I've a feeling that if the U.S. were to turn around and vigorously support its aerospace industry the same way Europe does now, including
48 Joni : Dynkrisolo, It would appear that you _have_ checked those numbers, and arrived at a dramatically different conclusion from the one arrived at by the
49 Widebody : AvObserver, Maybe, but if the funding of the EU/US was in line with an international agreement, there would be no case to answer. Today there appears
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