100- to 150-Seat Large Civil Aircraft from Canada Investigation Nos. 701-TA-578 and 731-TA-1368 (Final) Publication 4759 February 2018 U.S. International Trade Commission Washington, DC 20436 U.S. International Trade Commission COMMISSIONERS Rhonda K. Schmidtlein, Chairman David S. Johanson, Vice Chairman Irving A. Williamson Meredith M. Broadbent Catherine DeFilippo Director of Operations Staff assigned Drew Dushkes, Investigator Justin Enck, Investigator Jennifer Powell, Investigator Mitchell Semanik, Industry Analyst John Benedetto, Economist Charles Yost, Accountant Russell Duncan, Statistician Carolyn Holmes, Statistical Assistant Karl von Schriltz, Attorney Douglas Corkran, Supervisory Investigator Address all communications to Secretary to the Commission United States International Trade Commission Washington, DC 20436 U.S. International Trade Commission Washington, DC 20436 www.usitc.gov 100- to 150-Seat Large Civil Aircraft from Canada Investigation Nos. 701-TA-578 and 731-TA-1368 (Final) Publication 4759 February 2018 CONTENTS Page Determinations ..................................................................................................................... 1 Views of the Commission ....................................................................................................... 3 Part I: Introduction .............................................................................................................. I-1 Background ................................................................................................................................ I-1 Statutory criteria and organization of the report ..................................................................... I-1 Statutory criteria ................................................................................................................... I-1 Organization of report ........................................................................................................... I-3 Market summary ....................................................................................................................... I-3 Summary data and data sources ............................................................................................... I-4 Previous and related investigations .......................................................................................... I-5 Nature and extent of subsidies and sales at LTFV .................................................................... I-6 Subsidies ................................................................................................................................ I-6 Sales at LTFV .......................................................................................................................... I-7 The subject merchandise .......................................................................................................... I-8 Commerce’s scope ................................................................................................................ I-8 Tariff treatment ..................................................................................................................... I-9 The product ............................................................................................................................... I-9 Description and applications ................................................................................................. I-9 Manufacturing processes .................................................................................................... I-13 Domestic like product issues ................................................................................................... I-15 Physical characteristics and uses ......................................................................................... I-20 Interchangeability ................................................................................................................ I-20 Manufacturing facilities, production processes, and production employees .................... I-21 Channels of distribution ...................................................................................................... I-21 Customer and producer perceptions .................................................................................. I-22 Price ..................................................................................................................................... I-22 i CONTENTS Page Part II: Conditions of competition in the U.S. market........................................................... II-1 U.S. market characteristics....................................................................................................... II-1 U.S. importer/purchasers ......................................................................................................... II-3 Supply and demand considerations ......................................................................................... II-5 U.S. supply ............................................................................................................................ II-5 U.S. demand ....................................................................................................................... II-10 Substitutability issues ............................................................................................................. II-19 Importance of specific purchasing factors ......................................................................... II-19 Changes in purchasing patterns ......................................................................................... II-24 Comparison of U.S.-produced and imported 100- to 150-seat LCA .................................. II-25 Elasticity estimates ................................................................................................................. II-29 U.S. supply elasticity ........................................................................................................... II-29 U.S. demand elasticity ........................................................................................................ II-29 Substitution elasticity ......................................................................................................... II-30 Part III: U.S. producers’ production, shipments, and employment ...................................... III-1 U.S. operations ........................................................................................................................ III-1 Production-related activities ............................................................................................... III-2 Related firms ........................................................................................................................... III-3 Changes in operations ......................................................................................................... III-4 U.S. production, capacity, and capacity utilization ................................................................. III-5 100- to 150-seat LCA ........................................................................................................... III-5 Alternative products ............................................................................................................ III-5 Boeing’s U.S. shipments and exports ...................................................................................... III-7 Historical shipments ............................................................................................................ III-7 Current shipments ............................................................................................................... III-8 Backlog ................................................................................................................................. III-8 Sales efforts ......................................................................................................................... III-9 ii CONTENTS Page Boeing’s orders ...................................................................................................................... III-10 Order details ...................................................................................................................... III-10 Order pricing ...................................................................................................................... III-11 Order delivery .................................................................................................................... III-11 Order risk and cancellation ............................................................................................... III-12 Boeing’s inventories .............................................................................................................. III-12 Boeing’s imports and purchases ........................................................................................... III-13 U.S. employment, wages, and productivity .......................................................................... III-13 Part IV: U.S. imports, apparent U.S. consumption, and market shares ............................... IV-1 U.S. importer/purchasers ........................................................................................................ IV-1 U.S. imports/purchases ........................................................................................................... IV-6 Negligibility