A post-Brexit industrial strategy: putting employment in Britain at the heart of economic policy.
Boeing's threats to jobs in the UK
The US International Trade Commission's recent unexpectedly 4-0 unanimous decision against Boeing has put all eyes on the aerospace giant's next steps.1 Boeing, however, has suspended taking action pending the ITC's release of its explanations for the decision preventing the US's imposition of a 292 percent tariff against competitor Bombardier, which had jeopardised thousands of UK jobs. As these explanations are set to be released tomorrow, Tuesday 13th February, Boeing has in front of them several courses of action and responses.
To best preserve their reputation and save face, Boeing must accept the verdict and re-direct their efforts towards creating competitive products in the market and towards repairing their damaged relations with the UK, rather than pressing a closed issue and continuing to fight for tariffs.
As such, Boeing's trade row is best interpreted as a cautionary tale. Instead of developing a competitive, better-priced, and more efficient product, they attempted to use protectionist tariffs to shut down competition in a marketplace as a response to what they perceived to be unfair subsidisation of Bombardier by the UK and Canada.
This self-interested behaviour is a classic example of crony capitalism, and Boeing is paying for it in the form of anger and resentment from the UK, which is a major market for their defence business. In the media, calls for contracts with Boeing to be reviewed or cancelled persist2, including in a report from MPs on the Northern Ireland Affairs Committee. These calls brilliantly exemplify how protectionism can backfire. The Bruges Group calling in no uncertain terms for action to be taken to dissuade Boeing from threatening British jobs.3
And so Boeing is now faced with a choice of how to move forward. Their first step should simply be to accept the ITC's verdict: they lost. Their protectionist plan failed and continuing to fight the verdict will not only reflect poorly on the company but will also negatively affect UK workers. That Boeing accepts the verdict, therefore, is of pressing national interest.
Repairing relations with the UK
After accepting the outcome, they must actively work to repair their wounded relations with the UK. Boeing's behaviour as of late has been described by Prime Minister Theresa May as an "undermining" of the government's long-term relationship with the company. As a valuable defence partner of the UK, repairing and preserving that relationship is in both parties' interest. Undoubtedly, this will include a period of negativity around the C Series topic, both politically and in the media. This is to be expected and therefore to be accepted: it will pass in due course and is not worth fighting.
Taking these two steps will set Boeing on the path to making amends. The alternative—continuing to fight for tariffs and protectionism that harms workers in the UK—will result in an even worse political and media environment. Talk of stopped contracts will grow louder in London and Belfast.
After calls led in the UK by the Bruges Group for the Government to cancel Boeing's defence contracts with the UK if their bullying of Bombardier persisted Theresa May's administration passed the first test of a post-Brexit industrial strategy; it will fight to protect jobs in the UK.4 5 Yet the battle may not be over. However, Boeing will be unwise to continue with its efforts to undermine Bombardier's C series plane production in Northern Ireland.
A further aggravated situation will harm the UK government, UK workers, and Boeing. Boeing must accept defeat and re-direct its energies, and outsiders should regard their defeat as a lesson in the dangers of protectionism.
1https://www.bnn.ca/boeing-waiting-for-itc-explanation-before-next-cseries-steps-1.984203
3www.brugesgroup.com/blog/signaling-a-post-brexit-industrial-strategy-1
4https://www.theguardian.com/business/2017/sep/27/uk-boeing-contracts-bombardier-us