There seems not to be much discussion or concern about foreign takeovers any more. At the time of the Waffle years ago there seemed to be much more Canadian nationalist sentiment on these issues. There used to be a significant group of Conservatives who were nationalist, people like George Grant.
We are not supposed to control our own economic destiny any more. We are to be a resource base for the US and we will again have a branch plant economy insofar as we have much manufacturing left. However, our manufacturing sector is declining at least in job numbers..
Canadian identity suffers as business icons depart
May 29, 2007 07:42 AM
Jack Layton
Looking down at the powerful Saguenay River from the heights of Alcan’s sprawling aluminum-producing facility in Jonquière, Que., last week, reinforced for me just how much is at stake for our jobs, communities and our future with so many Canadian companies being bought up by foreign investors.
With Alcan driving two-thirds of the economy in the Saguenay region, the entire community is anxious. The hostile bid by Alcoa for Alcan — the 5th largest Canadian-controlled firm in Canada and the world’s third largest aluminum manufacturer — has ignited an important debate on the extent to which Canadians should be concerned about the disappearance of signature Canadian companies.
Over the last 16 months, 600 Canadian companies have been taken over by foreign owners. By now, most of us can rhyme off the growing list of companies that have been removed from Canadian hands: Molson, Dofasco, Labatt, Inco, The Bay, Falconbridge and even the Montreal Canadiens.
The cumulative impact is being noted, even from surprising sources: Canadian CEOs. Dominic D’Alessandro, chief executive of Manulife, told his company’s annual meeting this month: “I sometimes worry that we may all wake up one day and find that, as a nation, we have lost control of our affairs.” Others saying that the issue must be addressed include: Gordon Nixon (Royal Bank Canada), Gerry Schwartz (Onex Corp.), Peter Munk (Barrick Gold Corp.) and Dick Haskayne (former CEO of several Alberta oil and gas companies) — not your typical 1970s economic nationalists.
When large Canadian companies are permitted to fall into foreign hands without rigorous due diligence, we risk losing not only good Canadian jobs, but also the competitive advantage that comes with being a centre of expertise.
On the jobs side, not only do well-paying head office jobs disappear, but so do jobs in the broader supply chain and in professional services. This is a point made recently by Gwyn Morgan, former CEO of EnCana: “While foreign-controlled branch operations are significant contributors to our economy, Canadian head offices employ greater numbers of high-value professional services and support firms.”
The Alcan case illustrates the issue of expertise. Not long ago, the presence of Canadian companies like Inco, Falconbridge, Dofasco, Algoma Steel, Teck Cominco, and, indeed, Falconbridge helped make Canada an important world centre for mining finance and managerial expertise. This is a strategic competitive advantage that we fritter away by not having in place the proper means to deal with ad hoc takeovers and their cumulative effect.
Beyond the dollars and cents, there is an intangible value in the pride and identity that is attached to Canadian business icons. Our collective sense of identity takes a hit when we see the ease with which companies like Molson, Labatt, Hudson’s Bay and the Montreal Canadiens are sold to foreign interests.
Perhaps most importantly is the loss of our ability to chart our country’s future. Again, the takeovers in the resource sector are instructive. As pointed out by D’Alessandro, Canada’s natural resources are “unique and irreplaceable assets.” The unfettered sell-off of our resource companies means that we effectively surrender Canada’s ability to make decisions in the national interest about key strategic assets today and into the future.
If the federal government’s allowance of so many foreign takeovers is by design, it’s extremely short-sighted. If it’s by neglect, then this government has abdicated its responsibility and it’s time to take action.
The Investment Canada Act, the law which governs foreign takeovers, is toothless and has never once stopped the foreign takeover of a Canadian firm in its 22-year history.
In the short term, we need to apply the legislative criteria we do have rigorously.
We also need to immediately look at best practices elsewhere, the application of rules to the resource sector, and adding further precision and strength to the “net benefit to Canada” test. New rules must include input from the public.
Canada is a country of great potential whose best and most prosperous years lie ahead. To build local communities and extend our global reach we must be more than mere tenants in our own country. We must start by recognizing that for Canada to chart its own future we must maintain the tools to build it.
Jack Layton, the MP for the riding of Toronto-Danforth, is the leader of the federal New Democratic Party.
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