Ever since the time of Pharaoh, government has felt the need to create jobs for the people. Only now, we don’t build pyramids. We are much too modern for that notion. We are high tech workers; we build airplanes by decree of economic development committees.
Europe organized Airbus in 1970. The company is mostly owned by France and Germany with smaller shares being held by England and Spain. Russia, the grandmaster of government boondoggles, recently bought a 5% share of Airbus.
To justify the way that Airbus bleeds European taxpayers for subsidies, the company has built 16 plants in its member countries. I am sure that each plant has a sign in its front yard that reads, "Jobs for Your Community." Of course, there is no mention of the cost to taxpayers to create those jobs. Socialist ventures are exempt from truth-in-investing disclosures.
Airbus is currently building the 555-seat A380-the world’s biggest passenger plane. The A380 is the most ill-conceived invention of the post-9/11 era. But it is huge, like the Great Pyramid of Giza and the Aswan Dam, and that is its attraction to the bureaucrats who manage the government-owned consortium.
The future of the Airbus A380 is beginning to resemble that of the Concorde SST. England’s BAE and France’s Aerospatiale built that marvel before both government-owned companies became founders of Airbus. Airbus learned from the Concorde’s mistake. The Concorde carried too few passengers to ever make a profitable flight. Therefore, Airbus designed the A380-the behemoth which is too big for any airport terminal in the world to load and unload.
Government squabbling has now left Airbus’ top management in disarray. Delivery of the A380 is still two years away. Orders have stagnated. And Boeing has taken the lead in the long-haul market with its new 787 Dreamliner.
Writing in the Wall Street Journal, Holman Jenkins compared Airbus’ current state to that of the Concorde as a "Rip Van Winkle moment." Yogi Berra would say, "It’s déja vu all over again!"
Just like the socialist governments of Europe, we West Virginians own an interest in a government-run aircraft consortium. And somewhere in Martinsburg, there is a sign that reads, "Jobs for Your Community."
According to press reports, West Virginia loaned Swearingen Aircraft Co. $4 million to build small business jets. Apparently, the company could only repay half the loan, so our state took a 2% interest in the company in lieu of the $2 million outstanding debt.
Later on, the Republic of China (Taiwan) invested $500 million in the project through its state-owned Sino Aerospace Investment Corporation, and the resulting company is Sino-Swearingen Aircraft Corp. (SSAC) of which Taiwan owns 90%. Thus, I assume that we own 2% of 10% of a company capitalized at $500 million. That’s one million dollars. Our investment appears to have lost half its value.
I was unable to find any publicly-available financial information for the company. As investors, our state should make that information available. For example, do we own common stock or preferred stock? Does the stock pay a dividend? Has the stock split? Does the stock trade on an exchange? Are our shares restricted?
In late June, we received some bad news about our aircraft investment. SSAC is headquartered in San Antonio and the city offered the company a $70 million development package to expand its plant facility. San Antonio has upped the "Jobs for Your Community" ante. We cannot match its offer.
I do hope that SSAC builds jets or jet components in Martinsburg someday. But the reality is this-thirty other companies (including Airbus, Boeing, Bombardier, Learjet, and Embraer) have new business jets in development. It’s always tough for a start-up company to match the competition from industry veterans.
Sino-Swearingen’s website boasts that "SSAC's goal is to become the world's leading aircraft producer…" And therein lies a good lesson for businessmen wanting to secure government welfare: If you can’t build Pharaoh the biggest pyramid, then do the next best thing and promise to build him the most.
