Cement industry 'furious' at Quebec's funding of Bombardier project

A plan to build a $1-billion cement plant onthe Gasp peninsulais coming under fire from critics.

Among them are taxpayer groups that point to the big pot of government money underwriting the project, which was hatched by members of theBeaudoin family, founders of the Quebec aerospace and transportation giant Bombardier.

Quebec taxpayers are lending $250 million to the project leader,McInnisCement, which is owned by theBeaudoinfamily's investment arm,Beaudier.

Another $100-million for the plant, which will be built in the community ofPort-Daniel-Gascons, will come from provincial investment fund Investissement Qubec. In addition, McInnis Cement will get a 10-year tax write-off on capital spending and a preferred price on electricity, in part because it will create permanent jobs at the cement plant.

Quebec's Gaspregion has 16 per cent unemployment, and the project holds out the hope of 2,300 jobs during the construction phase and 200 once it is in operation.

Project expected tobring 400 jobs

Christian Gagnon, CEO of McInnis Cement, says the plant will eventually result in 400 jobs in the cement business, including people involved in distribution operations.He calls the project"highly competitive"and environmentally sustainable.

Asked why he needed government money, Gagnon said startup projects are high risk.

"The Beaudoin family is taking a huge amount of risk to go into that, he said in an interview with CBC's The Lang & O'Leary Exchange. "It is much more difficult, a venture like that, when its a totally new venture from the ground up than buying something that is a going concern. So. the difficulty to put together a financial arrangement to do all of that is what is behind it."

Gagnon says his critics, who include the rest of the cement industry, have old and inefficient plants and are afraid of the competition.

Michael McSweeney, CEO of the Cement Association of Canada, said there is already an excess of capacity in thecement industry in Quebec.

"In four cement plants [in Quebec] today, we have about 3.7 million tonnes' capacity," McSweeney said. "Last year, 1.7 million tonnes that was produced in Quebec was consumed in Quebec, and 700,000 tonnes went to the U.S. That leaves unused capacity of about 1.3 million tonnes."

The McInnis plant would have capacity of 2.2 million tonnes per year by 2016 and would be competing with existing cement producers for the same customers in the U.S. northeast, where construction is expected to pick up as the U.S. economy recovers.

"The Cement Association of Canada is furious, angry and indignant that the Quebec government would be giving almost half a billion Quebec tax dollars to a private-sector company," McSweeney said.

He accused the rulingPartiQubcois of buying votes with jobs in the Gasp regionat the expense of other parts of Quebec.