Slovacek747
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Is Boeing Subsidized?

Wed Oct 18, 2006 2:08 pm

Hi all, I just got in an argument with a friend of mine on whether or not Boeing is subsidized by the US government. I know Airbus is but I thought that Boeing was completely privately owned by shareholders and did not receive subsidies from the gov't. I understand they get military contracts and so forth but am I correct in saying they dont get any handouts to develop new planes?

Thanks,
Slovacek747
 
vikinga346
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RE: Is Boeing Subsidized?

Wed Oct 18, 2006 2:15 pm

I heard the argument! It was a brutal back and forth heated battle between two aviation enthusiasts, it was definitely something I'd pay money for to rewind on TiVo!

As for the topic, I am also very curious to know if Boeing is subsidized. I would think they would be for their military divison?
...you will walk the earth with your eyes turned skyward, for there you have been and there you shall return
 
bringiton
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RE: Is Boeing Subsidized?

Wed Oct 18, 2006 2:19 pm

Quoting Slovacek747 (Thread starter):
Hi all, I just got in an argument with a friend of mine on whether or not Boeing is subsidized by the US government. I know Airbus is but I thought that Boeing was completely privately owned by shareholders and did not receive subsidies from the gov't. I understand they get military contracts and so forth but am I correct in saying they dont get any handouts to develop new planes?

Boeing gets tax cuts to set up shop in a particular area be it in WA or elsewhere , they get tax insentives just like any other aerospace or large production house gets for setting up a shop in a particular area and contributing to the economic development of that region through employment and buisness generation . Boeing gets defence contracts through its Integrated defence and Phantom works devision but has to compete for those contracts in one of the most cut throat defence industries anywhere in the world ( BA-ID is second to LMA and in many ways have lost due to various reasons) . Those contracts might be for product development , technology development , procurment etc etc and FIXED profits are given to boeing as per US laws and dealings with the DOD . Boeing is not owned by the US govt (atleast i am not aware of it) and is a publically traded company with many share holders (some own more then others) . Boeing does not Get launch aids from the US govt to start a particular jet development , it hires sub contractors who compete amongst themselves for the lucrative contracts and get tax breaks etc to be more competitve so that they win over others .
 
robsawatsky
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RE: Is Boeing Subsidized?

Wed Oct 18, 2006 2:23 pm

 
supa7E7
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RE: Is Boeing Subsidized?

Wed Oct 18, 2006 2:34 pm

The US Government and Boeing have a deep financial relationship. Mostly, it goes like this: Boeing sells aircraft, spacecraft, missiles, logistics and service products. The US Government buys these products.

Given a 5% profit margin (in 2005), Boeing made about $1.5B profit from $30B in defense sales, mostly to the Pentagon and NASA.

Perfectly legal. Is it a subsidy, no. Is it a big financial connection, yes.
"Who's to say spaceships aren't fine art?" - Phil Lesh
 
bringiton
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RE: Is Boeing Subsidized?

Wed Oct 18, 2006 2:50 pm

Doesnt EADS sell Military harware to European govts aswell?? I would assume that its Efforts to sell military harware would not be loss making ones !!
 
ikramerica
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RE: Is Boeing Subsidized?

Wed Oct 18, 2006 3:08 pm

Quoting Supa7E7 (Reply 4):
Perfectly legal. Is it a subsidy, no. Is it a big financial connection, yes.

Yes, but when companies are required to sell things to the government at a loss, that usually happens in despotic nations. Give us discounted stuff or we'll shut you down is not the "american way" though of course it happens on a smaller scale on the local and county level (some cities and counties).
Of all the things to worry about... the Wookie has no pants.
 
RichardPrice
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RE: Is Boeing Subsidized?

Wed Oct 18, 2006 4:32 pm

There is a foreign sales tax credit Boeing gets as an aircraft manufacturer - the tax they pay on exports is reduced below that of the norm.

Boeing has also received fairly significant bonds and grants from foreign countries wanting 787 construction - Italy, Japan et al.

This topic cannot go anywhere good, its been done to death - literally. I hope it gets locked before it gets ugly.
 
scouseflyer
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RE: Is Boeing Subsidized?

Wed Oct 18, 2006 4:36 pm

 talktothehand  Please don't start this again - it's an argument that neither side can win so it we should all just "agree to disagree"!
 
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autothrust
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RE: Is Boeing Subsidized?

Wed Oct 18, 2006 5:25 pm

Quote:
"It's ironic that Boeing CEO Harry Stonecipher wants to step up complaints about Airbus 'subsidies,' considering Boeing's 7E7 will have up to $6 billion of 'subsidies' from Japan, Italy and the United States (Washington State)," says Pritchard, who studies the globalization of the commercial aircraft industry.

"But there are two major differences between an Airbus A380 'subsidy' and Boeing 7E7 'subsidy,'" Pritchard points out.

The Airbus subsidy is in the form of repayable loans with interest for aircraft development, which is legal according to the World Trade Organization, Pritchard says. The Boeing subsidy, on the other hand, is for aircraft production, which is prohibited by the WTO and which never will be paid back, he says.

http://www.buffalo.edu/reporter/vol35/vol35n40/articles/Boeing.html


Amazing just amazing and some people dare to blame Airbus getting illegal subsidizes.  banghead   crazy 
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sebolino
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RE: Is Boeing Subsidized?

Wed Oct 18, 2006 5:37 pm

Quoting AutoThrust (Reply 9):
Amazing just amazing and some people dare to blame Airbus getting illegal subsidizes.

When it's an American company, it's different ! At least, it looks like.
 
cobra27
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RE: Is Boeing Subsidized?

Wed Oct 18, 2006 6:00 pm

Quoting Supa7E7 (Reply 4):
The US Government and Boeing have a deep financial relationship. Mostly, it goes like this: Boeing sells aircraft, spacecraft, missiles, logistics and service products. The US Government buys these products.

Well said. Boeing gets indirect government support in Integrated Defense business. Airbus gets direct subsidies to launch new aircraft, even though they have been in service for more than 30 years, they are just to weak to lauch something on their own
 
N1120A
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RE: Is Boeing Subsidized?

Wed Oct 18, 2006 6:06 pm

Quoting Ikramerica (Reply 6):
Give us discounted stuff or we'll shut you down is not the "american way" though of course it happens on a smaller scale on the local and county level (some cities and counties).

No, the "American way" is to over pay on no-bid contracts  sarcastic 
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bringiton
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RE: Is Boeing Subsidized?

Wed Oct 18, 2006 6:10 pm

Quoting Cobra27 (Reply 11):
Well said. Boeing gets indirect government support in Integrated Defense business

How is it support ?? You can also claim that boeing gets indirect support from the airlines that it sells its aircrafts to aswell !! Boeing offers products to USAF.USA,USN and USMC in addition to NASA and other foreign militaries and gets a % of profit for its products . I am sure EADS does the same thing when UK , Germany , Spain , Austria , France etc buy their military hardware from it !! They are both selling a product to a customer with the EADS's military devision and the ID devision and that product has to compete with other manufacterers which in US are likes of Lockheed martin , Northrop Grumman , Bae , GD etc etc .
 
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autothrust
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RE: Is Boeing Subsidized?

Wed Oct 18, 2006 6:17 pm

Quoting Cobra27 (Reply 11):
Airbus gets direct subsidies to launch new aircraft, even though they have been in service for more than 30 years, they are just to weak to lauch something on their own

Rubbish, first Airbus gets repayable LOANS with Interests and second with over 400 deliverys this year:

Quote:

But Airbus has repeatedly said its cash flow is strong enough to finance its own development costs, including those of the A350, a direct competitor of the 7E7

http://seattlepi.nwsource.com/business/207500_boeingeu12.html
“Faliure is not an option.”
 
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sebolino
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RE: Is Boeing Subsidized?

Wed Oct 18, 2006 6:24 pm

Quoting Cobra27 (Reply 11):
Airbus gets direct subsidies to launch new aircraft, even though they have been in service for more than 30 years, they are just to weak to lauch something on their own

Ridiculous.
They have loans, not subsidies, and they use it because it is offered and allowed by treaty, and financially interesting for them, not because they are weak.
 
leelaw
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RE: Is Boeing Subsidized?

Wed Oct 18, 2006 6:28 pm

As I've said before, both of the OEMs sit in front of the governmental trough as much as possible in numerous ways, and neither comes to the "subsidies" debate with "clean hands." IMO, any attempt to sort out or adjudicate which OEM has cleaner hands with regard to governmental aid/subsidies is truly a fool's errand; the ultimate case of chasing one's own tail. In short, a real circle jerk.
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cobra27
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RE: Is Boeing Subsidized?

Wed Oct 18, 2006 6:53 pm

Quoting Sebolino (Reply 15):
Ridiculous.
They have loans, not subsidies, and they use it because it is offered and allowed by treaty, and financially interesting for them, not because they are weak

Wooow really, so they pick loans only because they can? They don't actually need them, it is just allowed? Man, I never thought it that way
 
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sebolino
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RE: Is Boeing Subsidized?

Wed Oct 18, 2006 7:05 pm

Quoting Cobra27 (Reply 17):
Wooow really, so they pick loans only because they can?

Of course. It will probably change with the A380 problems though.

Quoting Cobra27 (Reply 17):
Man, I never thought it that way

It's because you are biased, don't worry.
 
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autothrust
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RE: Is Boeing Subsidized?

Wed Oct 18, 2006 7:22 pm

Quoting Leelaw (Reply 16):
As I've said before, both of the OEMs sit in front of the governmental trough as much as possible in numerous ways, and neither comes to the "subsidies" debate with "clean hands." IMO, any attempt to sort out or adjudicate which OEM has cleaner hands with regard to governmental aid/subsidies is truly a fool's errand; the ultimate case of chasing one's own tail. In short, a real circle jerk.

How true, well said. Both manufacturers get their money somehow, the point is what the WTO will say to each case.

Quoting Sebolino (Reply 18):
Quoting Cobra27 (Reply 17):Man, I never thought it that way
It's because you are biased, don't worry.

 checkmark  Indeed.
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keesje
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RE: Is Boeing Subsidized?

Wed Oct 18, 2006 7:26 pm

The US governement (Im-Ex Bank) financed 777 & 787 contracts to e.g. Air Canada, Air India and Emirates. They say that played a big role in getting the contracts.

IDS is a much bigger & more profitable business for Boeing then commercial aviation. The relations with Dod are very close. An ethics program was launched to set clear bounderies.

Also putting high pressure on states with government owned Airlines in China, Israel and Japan can be qualified as strong government support I guess.

"Subsidy" is a bad word in the US. Giving support, financing, creating / saving jobs, leveling the playing field, protecting US interest etc. however are generally accepted.
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cobra27
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RE: Is Boeing Subsidized?

Wed Oct 18, 2006 7:43 pm

Quoting Sebolino (Reply 18):
Of course. It will probably change with the A380 problems though.

So there would be A380 without government loans? And who would the bring the cash in
 
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sebolino
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RE: Is Boeing Subsidized?

Wed Oct 18, 2006 8:10 pm

Quoting Cobra27 (Reply 21):
So there would be A380 without government loans?

I guess.

Quoting Cobra27 (Reply 21):
And who would the bring the cash in

Not me at least.
I would say, shareholders (EADS), banks, investors, partners, the equivalent of non-federal gvts, even foreign governments .... just like Boeing does.

You can't at the same time accusing Airbus of having undue state help because they are profitable, and saying that they can't do anything without this aid.
 
airfrnt
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 12:06 am

Quoting RichardPrice (Reply 7):
There is a foreign sales tax credit Boeing gets as an aircraft manufacturer - the tax they pay on exports is reduced below that of the norm.

That tax credit hasn't been in place for a while.

Quoting RichardPrice (Reply 7):
Boeing has also received fairly significant bonds and grants from foreign countries wanting 787 construction - Italy, Japan et al.

No, the local contractors received them. The same contractors also receive bonds and grants to help out on Airbus projects.

Quoting Keesje (Reply 20):
The US governement (Im-Ex Bank) financed 777 & 787 contracts to e.g. Air Canada, Air India and Emirates. They say that played a big role in getting the contracts.

Ex-Im is simply a financal arm, and makes profit just like any other state bank (including the state banks in Germany that do the same for European products) do. It's not a subsidy in any way shape or form.
 
baroque
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 12:34 am

Quoting RichardPrice (Reply 7):
This topic cannot go anywhere good, its been done to death - literally. I hope it gets locked before it gets ugly.

I agree. For those who wish to gain information on the matters, try the
WTO website - add Aircraft subsidies, the papers set out both cases.
House of Commons - numerous documents try

House of commons, repayable launch investment. This gives a range to chose from. You can look at the debates on matters such as the grant to Bombardier for example.
A major report is at
http://www.publications.parliament.u...06/cmselect/cmtrdind/368/36803.htm

BAE annual reports, especially around 2001 and 2002.
 
keesje
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 12:42 am

Quoting AirFrnt (Reply 23):
Ex-Im is simply a financal arm, and makes profit just like any other state bank

The Export-Import Bank supports the financing of U.S. goods and services, maintaining, and creating more U.S. jobs...
http://www.exim.gov/

Lets not start discussion the meaning of words. The US government plays a decisive role in subsidizing U.S. exports primarily through loan guarantees, it is the biggest business of the Im Ex bank. Perhaps not cool free enterprise, but a political/economic reality.

http://www.google.nl/search?hl=nl&q=im+ex+bank+boeing&meta=
http://www.commondreams.org/views02/0515-09.htm
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Alessandro
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 12:44 am

Dare I add, El Al? Yes, I add El Al, Israeli airlines that have all Boeing fleet.
From New Yorqatar to Califarbia...
 
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Stitch
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 12:46 am

Quite simply, Slovacek747, the "real truth" of the matter is far more convoluted and subtle then the simple "sound bites" many inside and outside A.net throw around as "truth".

As a few above me have noted, this issue has been hashed back and forth in this forum time and time again, with a few nuggets of "truth" strewn about a lot of "belief".

Unfortunately, RichardPrice is correct in noting that this question is currently unable to be answered because none of us have the professional and educational background for familiarity with the "truth" of the issue to provide an answer. Heck, even the folks involved in this at the professional and educational level can't come to an agreement.  Smile

So it just degenerates into a flame war at which point the moderators come in and close the thread and ban the more vociferous and boisterous members for a week.  Sad
 
TeamAmerica
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 1:03 am

Quoting Bringiton (Reply 2):
Boeing gets tax cuts to set up shop in a particular area be it in WA or elsewhere , they get tax insentives just like any other aerospace or large production house

A tax incentive is not a subsidy. When I take money from X to give to Y, I am subsidizing Y. A tax incentive is simply taking less money from Y. The difference lies in whether there is a transfer of wealth.

Quoting RichardPrice (Reply 7):
Boeing has also received fairly significant bonds and grants from foreign countries wanting 787 construction - Italy, Japan et al.

No, Boeing's suppliers received government support, not Boeing directly. I think we will find that Airbus takes advantage of similar opportunities.

Quoting Keesje (Reply 20):
The US governement (Im-Ex Bank) financed 777 & 787 contracts to e.g. Air Canada, Air India and Emirates. They say that played a big role in getting the contracts.

This is the first post critical of the US position that has real validity. Keesje is absolutely correct that the US Ex-Im bank provides loans at favorable rates to certain trading partners. I am not sure this is always a "big role in getting the contracts" but it does happen.

Quoting Keesje (Reply 20):
Also putting high pressure on states with government owned Airlines in China, Israel and Japan can be qualified as strong government support I guess.

"High pressure", Keesje? Seems that every time Chirac visits another country he is pitching Airbus...is that not also "high pressure"? I really don't see how you can believe that the US can pressure China or Japan in any case. We owe them money, not the other way around.

Quoting AutoThrust (Reply 9):
Amazing just amazing and some people dare to blame Airbus getting illegal subsidizes.

I fear you are a bit biased. Regarding Washington State's tax cuts, I again point out that not collecting taxes is different from a subsidy, and in any case you are equating $3 billion spread over twenty years with billions in present-day loans to Airbus. Apples & oranges, sir. The Washington State incentives are available to Airbus as well.

Quoting Cobra27 (Reply 11):
Boeing gets indirect government support in Integrated Defense business.

Let's please not forget that Airbus is owned by EADS. The relationship of Boeing's commerical aircraft works is much the same as Airbus is to EADS. This is conveniently forgotten in these Airbus vs Boeing tirades.
Failure is not an option; it's an outcome.
 
bringiton
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 1:34 am

Quoting TeamAmerica (Reply 28):
A tax incentive is not a subsidy. When I take money from X to give to Y, I am subsidizing Y. A tax incentive is simply taking less money from Y. The difference lies in whether there is a transfer of wealth.

That was precicely the point I was making . All i was doing was laying out the facts on the table !!

BTW the tax breaks are on products sold meaning to maximize benefit boeing has to sell products - the more the sell and earn the tax cuts follow so they dont get money to start a product development which may or may not make money !! Boeing gets tax cuts on aircrafts sold , it still has to develop the product and sell in the market place to get advantage.
 
Dougloid
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 2:10 am

Quoting Alessandro (Reply 26):
Alessandro From Sweden, joined Sep 2001, 3640 posts, RR: 0
Reply 26, posted Wed Oct 18 2006 17:44:15 UTC (1 hour 23 minutes 41 secs ago) and read 168 times:


Dare I add, El Al? Yes, I add El Al, Israeli airlines that have all Boeing fleet.

Just what are you implying, sir? I mean, a man with a pair of huevos on him will say it out loud-so why are you dancing around the edges of what you mean to say?

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SJCRRPAX
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 2:15 am

Quoting Scouseflyer (Reply 8):
Please don't start this again - it's an argument that neither side can win so it we should all just "agree to disagree"!

 checkmark 

Absolutely. If you are European you will make up all kinds of wild stories to prove this, and if you are **American** you will deny this.

 arrow  Here is the truth. Boeing is the most vital American company with respect to our national defense. Under no circumstance will the USA ever let Boeing fail to the point of bankrupcy. Likewise Airbus is extremly important to European Industry, defense and Pride. No way Europe will let Airbus fail. So there you have it, both companies can have failures but neither will go out of business ever. We can expect both sides to play games and pretend they are private, but if either gets in trouble their respective taxpayers will come to the rescue, but Boeing and Airbus will both hide the fact. Here is a question for the Europeans and Americans, "Would you rather it was the Chinese and Japanese who were the only two countries making large commercial aircraft?" , because that is what will happen if Boeing and Airbus go under.
 
707lvr
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 2:41 am

It never ceases to amaze - the number of people who continue to believe that a reduction in the GROSS SALES TAX imposed by a LOCAL jurisdiction specifically on Boeing is a subsidy.

I'm sure the U.S. would have no objection if Haute-Garonne were to reduce the billions in local taxes that it levies exclusively on Airbus.
 
TeamAmerica
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 2:55 am

Quoting Alessandro (Reply 26):
Dare I add, El Al? Yes, I add El Al, Israeli airlines that have all Boeing fleet.

Ditto what Dougloid said above. This is an ugly thing to imply, and cowardice to not simply say what you mean.  thumbsdown 
Failure is not an option; it's an outcome.
 
StarGoldLHR
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 3:01 am

Quoting Ikramerica (Reply 6):
Give us discounted stuff or we'll shut you down is not the "american way" though of course it happens on a smaller scale on the local and county level (some cities and counties).

Blackberry ?
So far in 2008 45 flights and Gold already. JFK, IAD, LGA, SIN, HKG, NRT, AKL, PPT, LAX still to book ! Home Airport LCY
 
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Stitch
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 3:35 am

Quoting 707lvr (Reply 32):
It never ceases to amaze - the number of people who continue to believe that a reduction in the GROSS SALES TAX imposed by a LOCAL jurisdiction specifically on Boeing is a subsidy.

Actually, it applies to any aerospace company in WA state.  Smile
 
airfrnt
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 8:49 am

Quoting Keesje (Reply 25):
Lets not start discussion the meaning of words.

I don't think there is a lot of people here who think that the word "Bank" is the same as the word "Subsidy".

At least not outside of Airbus talking points, which desperately try to plays this word game to justify business practices that the WTO will strike down sooner or later.
 
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SLCUT2777
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 8:57 am

Quoting Supa7E7 (Reply 4):
Given a 5% profit margin (in 2005), Boeing made about $1.5B profit from $30B in defense sales, mostly to the Pentagon and NASA.

Perfectly legal. Is it a subsidy, no. Is it a big financial connection, yes.

I'm sure if you did all the math of the DIRECT subsidies the governments of France, Germany and a number of other EU nations pay Airbus to keep people employed, what money Boeing makes off military contracts for the US Defense Department and NASA pale in comparison. Right now Airbus might just as well be what a "Crown Corporation" is to Canada to the entire European Union. Merely a "Kowtow to the Labour Unions" financial leach to the taxpayers of these countries.
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elmothehobo
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 9:04 am

The answer to your question is officially no for both, however both manufacturers, and if I may go out on a limb and say most aircraft manufacturers, get government support in some way. Boeing gets tax credits or reduced taxes for new projects or maintaining existing ones. Boeing also can use technology it developed for miltiary/space program for its civilian projects.

Airbus gets loans and incentives from the government for developing new products. In the end, both get some kind of unofficial subsidy, and it is naive and ignorant to say that one of the companies does not get support.

These manufacturers really represent one of the last bastions of Keynesian economics in business.
 
DfwRevolution
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 10:01 am

Quoting ElmoTheHobo (Reply 38):
Boeing also can use technology it developed for miltiary/space program for its civilian projects.

No, it can't.

Boeing must demonstrate that research and techniques from government projects are not used in the design or development of commercial products. This recently made some news with the 787 as Boeing had to replicate materials experiments (using their own RD funds) that had already been performed under DOD projects in the 80s/90s.

If Boeing does not fulfill these requirements, they will not be granted an export liscense on the 787.

Quoting ElmoTheHobo (Reply 38):
Boeing gets tax credits or reduced taxes for new projects or maintaining existing ones

Taxes and subsidies are two very different thing.

A tax exemption does not give money to Boeing, it just doesn't take any away. The default rate of taxes is 0%. If state, local, and federal governments decide not to take away money that already belonged to Boeing, that doesn't amount to a subsidy.
 
Coelacanth
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 10:09 am

Hello from Coelacanth,

I can sum things up for yah real quick .

Boeing has grown up, is living on its owe , paying its bills and Airbus is still living @ home and still getting an allowance from mommy & daddy , the Taxpayers of Europe !

Boeing may have to get a Home equity loan that will be paid back . But Airbus is still leaching off of its parents .


Coelacanth

 old 
 
TPASXM787
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 10:26 am

So what if they do. In fact, so what if Airbus does?

In A's case, if the gov't chooses to give them low interest loans repayable over many years, why burn the cash? I know I feel better sitting on $25k with a low interest car loan than having a free and clear car with no cash.

In B's case, if local gov'ts are willing to give them tax breaks, etc why not go there? What company with just half of a brain wouldn't? For both companines it is all about the bottom line. Whatever will make the company and it's sharehoders the most cash is what will be done. Nothing more, nothing less.

btw, if you did a search, this topic has beaten to death. All it ends in is an across the pond pissing match. No one's is bigger, we all average out.
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JAXFLL
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 10:42 am

Quoting Supa7E7 (Reply 4):
The US Government and Boeing have a deep financial relationship. Mostly, it goes like this: Boeing sells aircraft, spacecraft, missiles, logistics and service products. The US Government buys these products.

Given a 5% profit margin (in 2005), Boeing made about $1.5B profit from $30B in defense sales, mostly to the Pentagon and NASA.

Perfectly legal. Is it a subsidy, no. Is it a big financial connection, yes.

Plus, let's not forget all the money that Boeing puts into proposals that never come to fruition. It's not like just because Boeing puts in a proposal the contract goes to Boeing.

Quoting DfwRevolution (Reply 39):
No, it can't.

Boeing must demonstrate that research and techniques from government projects are not used in the design or development of commercial products. This recently made some news with the 787 as Boeing had to replicate materials experiments (using their own RD funds) that had already been performed under DOD projects in the 80s/90s.

If Boeing does not fulfill these requirements, they will not be granted an export liscense on the 787.

Correct. Someone that speaks with some knowledge.
 
TPASXM787
Posts: 1667
Joined: Tue Mar 29, 2005 6:31 am

RE: Is Boeing Subsidized?

Thu Oct 19, 2006 10:45 am

Quoting DfwRevolution (Reply 39):
Boeing must demonstrate that research and techniques from government projects are not used in the design or development of commercial products. This recently made some news with the 787 as Boeing had to replicate materials experiments (using their own RD funds) that had already been performed under DOD projects in the 80s/90s.

This is quite true, and Boeing just shelled out about $600mil last quarter in fines for doing just this, causing them to post a loss.
This is the Last Stop.
 
elmothehobo
Posts: 967
Joined: Thu Aug 10, 2006 11:10 am

RE: Is Boeing Subsidized?

Thu Oct 19, 2006 11:27 am

Quoting DfwRevolution (Reply 39):
No, it can't.

Boeing must demonstrate that research and techniques from government projects are not used in the design or development of commercial products. This recently made some news with the 787 as Boeing had to replicate materials experiments (using their own RD funds) that had already been performed under DOD projects in the 80s/90s.

If Boeing does not fulfill these requirements, they will not be granted an export liscense on the 787.

Yes, that is completely true, but technology, along with engineers and profits made the military division migrate to the commercial side.

Boeing must maintain seperate lines for military technology, which raises costs. At the same time, Boeing gains access to proven technology.

Quoting TPASXM787 (Reply 43):
This is quite true, and Boeing just shelled out about $600mil last quarter in fines for doing just this, causing them to post a loss.

Yes, which is why the Department of Defense had to "reclarify" a Boeing's seperation between Civil and Military. I had a nice discussion about with a Air Force procurement/finance officer who gave me a nice breakdown of this.

Quoting DfwRevolution (Reply 39):
Taxes and subsidies are two very different thing.

A tax exemption does not give money to Boeing, it just doesn't take any away. The default rate of taxes is 0%. If state, local, and federal governments decide not to take away money that already belonged to Boeing, that doesn't amount to a subsidy.

Yes they are, but they serve a very similar purpose. A company gets money in a lump sum or saves it in taxes. While a lump sum is often preferable (and seldom used), the savings on taxes are just beneficial.
 
Alessandro
Posts: 4962
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 12:24 pm

Doug, if read all the thread you´ll see what I said about Boeing and El Al.
Sure I think the US government gives away money to Israel so they can buy
any civilian plane they want as long as it´s from an US company.
From New Yorqatar to Califarbia...
 
707lvr
Posts: 457
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 2:24 pm

I probably should have been more specific. The Washington State legislature made the following eligibility definitions for imposing the tax and therefore for the tax reduction:

"Superefficient airplane" means a twin aisle airplane that carries between two hundred and three hundred and fifty passengers, with a range of more than seven thousand two hundred nautical miles, a cruising speed of approximately mach .85, and that uses fifteen to twenty percent less fuel than other similar airplanes on the market. (State of Washington, 2003).

"Significant commercial airplane final assembly facility" means a location with the capacity to produce at least thirty six superefficient airplanes a year (State of Washington, 2003).

All of the other Significant Commercial Airplane Final Assembly Companies which make fewer than 36 superefficient airplanes a year would not pay the targeted gross sales tax and therefore not qualify for a reduction in the tax, so in that sense it is definitely a tax break for Boeing, I guess.
 
baroque
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RE: Is Boeing Subsidized?

Thu Oct 19, 2006 4:57 pm

Quoting TeamAmerica (Reply 28):
A tax incentive is not a subsidy. When I take money from X to give to Y, I am subsidizing Y. A tax incentive is simply taking less money from Y. The difference lies in whether there is a transfer of wealth.

Have you read the WTO documents? I suspect not. They will not give you the answer to your question but they will indicate the interpretations that can be given to that sort of proposition.

Quoting SJCRRPAX (Reply 31):
Here is the truth.

That seems close to the case, but it important to note that those conditions have not applied (so far) to either company.

Quoting SLCUT2777 (Reply 37):
I'm sure if you did all the math of the DIRECT subsidies the governments of France, Germany and a number of other EU nations pay Airbus to keep people employed, what money Boeing makes off military contracts for the US Defense Department and NASA pale in comparison. Right now Airbus might just as well be what a "Crown Corporation" is to Canada to the entire European Union. Merely a "Kowtow to the Labour Unions" financial leach to the taxpayers of these countries.



Quoting Coelacanth (Reply 40):
But Airbus is still leaching off of its parents .

Please, both of you look at posts on earlier threads and look at the House of Commons documents as well as BAE reports. It is clear there that in most years, REPAYMENTS are greater than outgoings. On at least the A32x, the A300 and the A330-340 (not sure about the 340-500/600), total repayments have exceeded initial grants.

The House of Commons documents set out exactly WHY the RLI program is run. Part of it is employment, but it goes far beyond that, which is where the complications in comparisons with organizations such as NASA come in.

Also if you look through the HoC documents, you will find details of grants to other organizations such as RR and Bombardier, but there are many more.

I keep writing this, but apart from RP (and I probably learned this from him anyway!), not many seem to listen. If Boeing had set up a plant to manufacture wings for the 787 in the UK, it too could have had an RLI grant, subject to the usual terms. Had it done so, my guess is that over the life of the 787, they would have repaid substantially more to the UK than the original investment. I do NOT mean the additional interest, I mean the royalty per copy.

Every time Leahy signs an order for a 32x or a 330, a little cash register in Whitehall goes PER-KLANG! And yes, they ARE open all hours (with fond memories of the late Ronnie Barker!). The Treasury guys would not be too proud to take a dollar instead of a euro.

FWIW, I think the 350 investment will be granted if and when the 350 wide or narrow is launched.
 
cobra27
Posts: 939
Joined: Wed May 23, 2001 6:57 pm

RE: Is Boeing Subsidized?

Thu Oct 19, 2006 7:37 pm

Quoting Sebolino (Reply 22):

You can't at the same time accusing Airbus of having undue state help because they are profitable, and saying that they can't do anything without this aid.

They are a good government company, but they should provide they own money for developing planes, if they don't manage that, they should feel really ashamed
 
keesje
Posts: 8856
Joined: Thu Apr 12, 2001 2:08 am

RE: Is Boeing Subsidized?

Thu Oct 19, 2006 8:54 pm

Quoting Cobra27 (Reply 48):
They are a good government company, but they should provide they own money for developing planes, if they don't manage that, they should feel really ashamed

Just why do you have to touch this open nerve agian?

Planned subsidies for Boeing’s 787 program from Washington State ($3.2 billion), Kansas ($0.5 billion), Oklahoma ($0.35 billion). Washington State 7E7 subsidies alone are about as high as European launch investment for A380.

The only difference is that A380 launch investment is paid back and is compatible with the 1992 WTO Agreement, while Washington support is not.

To this must be added the planned 787 subsidies of around $1.6 billion from Japan. (& $590 million for Alenia)

 Wink
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