Belfast Telegraph

Thursday 21 August 2014

Fresh calls over corporation tax as Bombardier is wooed to Africa

Northern Ireland’s biggest manufacturer is to open a new base in north Africa — prompting claims that more must be done to make the province as business friendly as possible.

Aircraft maker Bombardier Aerospace, which employs 5,000 people in the province, has said it is locating a new plant in Morocco for reasons including competitive manufacturing costs and closeness to Europe.

The company will be exempt from tax for five years at the site and will pay taxes at a lower rate for more than 20 years afterwards.

It is understood Bombardier Aerospace president Guy Hachey recently visited Morocco and met with King Mohamed VI.

Business people have been campaigning intensely for a cut in corporation tax in Northern Ireland so that it can compete with the Republic’s 12.5% rate.

The current rate across the UK is 26%. It is hoped that a lower rate here would give the economy a keener competitive edge.

Canadian-owned Bombardier announced last week that it will start work in Casablanca in January and it is forecast to employ 850 people there by 2020. Bombardier said the work in Morocco will initially include “subassembly of simple structures”.

A spokesman for Bombardier in Belfast said the Moroccan facility would have no impact on its operations here. The firm has built a new factory in Belfast for the manufacture of wings for its C-Series aircraft and last year bought a new site in north Belfast.

The spokesman said: “We are expanding in different parts of the world, including building a facility in Morocco, essentially to help us be more competitive.

“We have invested over £500m in Belfast at the moment in the new C-Series factory and recently expanded by buying the former Nortel site in Newtownabbey.

“Our workforce in Belfast are not affected by the expansion in Morocco, which is part of our plans to ensure Bombardier's competitiveness worldwide.”

SDLP MLA Alban Maginness, a member of the Assembly’s enterprise committee, said the choice of Morocco underlined the pressure on Northern Ireland to be as business friendly as possible.

“It underlines the necessity for the transfer of corporation tax powers to Northern Ireland and hopefully we can negotiate after that a lower tax rate for our own economy to compete, not just with the Republic, but also with other places,” he said.

“The lesson is that multinational firms engaged in manufacturing are very aware of their cost bases and if they feel that the cost base is uncompetitive in Northern Ireland they can up sticks and move to other international locations with relative ease.

“So we have to be very competitive in terms of our cost base, and that includes corporation tax.”

Sir Reg Empey, vice-chairman of the All-Party Parliamentary Group on Aerospace, said the Morocco investment “isn’t the first and won’t be the last” example of an investor in Northern Ireland being tempted by incentives to set up elsewhere. But he said Bombardier had invested a great deal in the province.

“This is an ongoing process and happens in every sector, that they tend to do simpler stuff somewhere else. Bombardier has made a massive investment here. This is an inevitable process and the only way you can stay ahead is by being at the cutting edge,” he said.

Background

Bombardier, Northern Ireland’s biggest manufacturer and the company behind the biggest ever inward investment (£520m) in the province, has said the decision to open a new facility in Morocco will have no impact here. But the powerful multinational choosing to invest in a low-cost region like Morocco has encouraged more questioning of Northern Ireland's corporation tax rate. KPMG tax expert Eamonn Donaghy, a campaigner for a cut in the rate, said: “A low corporation tax regime is beneficial as it encourages companies to locate assets and high value added employees in that jurisdiction.”

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