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U.S. shutdown has limited impact on Canadian companies outside aerospace


October 15, 2013
By Ross Marowits The Canadian Press

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A partial U.S. government shutdown appears to have limited impact on Canadian businesses, even though it’s prevented aerospace companies like Bombardier from delivering aircraft to U.S. customers and collecting millions of dollars in sales.

The Montreal-based manufacturing giant says it can’t ship two regional aircraft, with a combined value of about US$75 million, because the Federal Aviation Administration has laid off employees that register the new planes.

 

Banks require a registration number to close the financing and pay the manufacturer.

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“It’s a nuisance,” Bombardier spokesman Marc Duchesne said.

Bombardier says the shutdown is having a “minimal” impact on its business jets and that it is working on confidential contingency plans.

The General Aviation Manufacturers Association said the political dispute in Washington could significantly threaten aircraft deliveries for the entire fourth quarter, which typically accounts for 35 per cent of annual shipments, or about US$8 billion.

In addition to the impact on commercial aircraft, the group said the registry closure could hold up 156 small-sized and business aircraft valued at almost US$1.9 billion that are scheduled for delivery in the first two to three weeks of October.

Bell Helicopter said it has also been unable to register and de-register aircraft.

“Without the FAA’s involvement, we cannot ship aircraft from our Canadian manufacturing site into the U.S., nor can we deliver aircraft to customers here in the U.S.,” said spokeswoman Bridget Garcia.

The Quebec-based company couldn’t say how many aircraft deliveries are on hold, but noted there is no impact on employment.

“We’re just kind of waiting to see what happens and assessing the damage, so to speak.”

Thousands of FAA inspectors have been furloughed, part of the hundreds of thousands of government workers who have been temporarily laid off over the budget battle in Congress.

The Canadian Manufacturers and Exporters said the shutdown is affecting agri-food and pharmaceutical companies that rely on U.S. regulatory inspections at the border not performed by customs officials and those that sell to state and federal governments. But CEO Jayson Myers said the impact has been “contained.”

“I haven’t been hearing a flood of complaints… so far this hasn’t led to major losses. It has meant that products have been stalled at the border or contracts are delayed or payment has not been received,” he said.

Myers said Canadian firms that do business with small U.S. companies could also be hurt by their inability to have business loans processed. And banks, insurance companies and others in the financial services sector could feel some effects if they are unable to access government-prepared statistics and analysis.

But he said the impact on Canada will spread if the U.S. doesn’t raise its debt ceiling, prompting interest rates to rise on both sides of the border and causing a “chilling effect” across the economy.

Some U.S. car dealers have been unable to get their hands on some vehicle models because the Environmental Protection Agency isn’t certifying if they meet emissions standards. But Huw Williams of the Canadian Automobile Dealers Association said Canadian dealers typically have more than 30 days of inventory.