400 Cargojet jobs in jeopardy
Complicated deal to bring aerospace centre of excellence to Winnipeg unravelling
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Hey there, time traveller!
This article was published 01/12/2016 (2673 days ago), so information in it may no longer be current.
OTTAWA — A deal to bring several hundred aircraft maintenance jobs to Winnipeg with Hamilton-based Cargojet is falling apart, the Free Press has learned.
“The Cargojet deal is off the table,” said a source aware of the negotiations.
The deal was part of an Air Canada pledge to set up a Western Canada Centre of Excellence for aircraft maintenance in exchange for the provincial government letting go of a legal challenge over how many of its own heavy maintenance workers it legally had to keep in the province.
Air Canada promised to establish the centre of excellence with three of its suppliers. Air Canada spokesman Peter Fitzpatrick said Friday two of them, “Hope Aero Propeller & Components Inc. and Airbase Services Inc. remain on track to open in 2017 and Air Canada is committed to providing them work as previously announced.”
However Cargojet was the big prize of the three, with 150 jobs up front and up to 400 jobs eventually. As of Friday, those jobs are no longer coming.
All Fitzpatrick would say about Cargojet is that “the agreement called for Air Canada to lease the company hangar space on commercially favourable terms so it could establish a maintenance facility and we have done so. With regard to Cargojet’s plans, it would be best if you contacted them.”
Cargojet refused to comment, with senior vice president Pauline Dhillon citing “ongoing consultations with stakeholders.”
Loan offered to Cargojet
Sources confirmed to the Free Press Cargojet was looking for cash to help cover its costs to establish itself in Winnipeg. It asked the province for help with about $10 million in investment, the province offered a loan, and the company didn’t want a loan, so Cargojet is now ready to walk.
Cliff Cullen, Manitoba minister of growth, enterprise and trade, issued a statement to the Free Press but didn’t directly address the Cargojet situation.
“Manitoba offers significant competitive advantages for firms looking to locate in a city that boasts a robust aerospace sector and highly skilled work force,” he said. “Our government is focused on making Manitoba even more attractive to businesses looking to make investments that are consistent with our government’s commitment to long-term and sustained economic impacts and opportunities.”
Several sources have told the Free Press previously none of the three companies were looking to relocate to Manitoba but had their arms twisted by Air Canada, which provides them with a decent amount of work. The airline was looking for a way to get out of its legal jam over the Air Canada Participation Act that erupted in 2012 when Aveos Fleet Performance went bankrupt. The subsidiary had been doing most of Air Canada’s heavy maintenance work and its bankruptcy put more than 2,400 people out of work, 400 of them in Winnipeg.
Air Canada suddenly shifted most of the work to companies outside Canada, including the United States, Ireland and Israel, prompting Quebec to sue it for violating the act which required it to have maintenance jobs in Montreal, Mississauga, Ont., and Winnipeg. Manitoba supported the lawsuit. The airline and the federal government said Air Canada met the requirement by having daily maintenance workers, but a Quebec judge disagreed and said the act was clearly referring to the higher-paying long-term maintenance jobs that involve overhauling entire parts of the planes.
Air Canada was preparing to take the battle to the Supreme Court but also started negotiating with Quebec and Manitoba offering deals in exchange for dropping the lawsuit. At the same time it was negotiating with Transport Minister Marc Garneau in Ottawa about amending the act to clarify the airline was meeting its requirements with any kind of maintenance workers. In Winnipeg it has about 28 line maintenance workers, who do small jobs on the planes while they are at the gate.
‘Selling Manitoba’s aerospace industry out’
Out of all of those talks came offers from Air Canada for centres of excellence in Winnipeg and Montreal, as well as a plan for Air Canada to buy new Bombardier jets, helping that company out of its own deep fiscal hole. This was all riding on the act being changed. Kevin Howlett, the senior vice-president for government affairs and regional markets for Air Canada, said at a Parliamentary committee last spring, if the changes weren’t made, the jet purchase and the centres of excellence would be off the table.
The bill making the changes passed in June. As of early July, the negotiations with Cargojet were in full swing. The airline even held a job fair seeking applicants for dozens of new positions, including in management.
Manitoba NDP MP Daniel Blaikie said Air Canada is playing games in refusing to do anything more to help get Cargojet to set up in Winnipeg. He also said the federal government cleared the path to gain the jet purchase for Montreal’s struggling Bombardier, and once again the Manitoba aerospace industry will take a hit because of it.
The changes to the Air Canada Public Participation Act made last spring mean Manitoba no longer has any legal recourse to fight Air Canada, and the airline has nothing compelling it to complete the deal beyond public opinion.
“The problem from the start is the federal government was making a sweetheart deal for the Quebec aerospace industry and selling Manitoba’s aerospace industry out,” said Blaikie.
mia.rabson@freepress.mb.ca
History
Updated on Saturday, December 3, 2016 8:43 AM CST: Headline fixed.
Updated on Saturday, December 3, 2016 8:45 AM CST: Headline fixed