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Lament For a Nation, part 2: The loss of Canadian companies

I noticed this posting over at Relentlessly Progressive Economics this morning and am reposting the link for all to read – particularly my blog friend Antonio at Fuddle Duddle, who can’t understand all the fuss being made over the loss of Canadian ownership of companies to multinational corporations – Alcan being the latest example. Well, this article shows there is good reason for there to be a fuss.

David Olive’s article in the Star is another list of good reasons that people should be concerned, and he has an answer to those who argue this is just a natural thing in our capitalist and global market society:

These apologists for unrestrained capitalism argue that government has no role to play in keeping our few remaining industrial champions in Canadian hands. They have an answer to the obvious question of: “How exactly is Canada well served by having no significant multinational firms it can call its own?” Their answer is that the unguided forces of nature in this case, soaring commodity prices that make our resource firms takeover targets, and the surfeit of cheap money that has financed a boom in monster acquisitions worldwide possess far more wisdom about industrial policy than any government, or, for that matter, public opinion. Tell that to the U.S. Congress, which has blocked several attempted foreign takeovers of American firms in recent years.. Alone among major industrial powers, Canada is letting its industrial sovereignty slip away…Not being the master of one’s fate doesn’t sit well with everyone. As long as the dynamic aspects of business occur elsewhere, our best and brightest will follow that star. For lack of will to more forcefully direct our own economic future, we’re practically begging for a brain drain.

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11 comments to Lament For a Nation, part 2: The loss of Canadian companies

  • I don’t like the thought of diminishing or losing Canadian ownership in companies either, but the sad fact of the matter is, there are very few truly “national” companies out there in any case.  Multi-nationals are called that for a reason.  If it were a case where the corporate boards of these companies actually showed they cared about the countries they were nominally based in, instead of acting in a manner consistent with ensuring the greatest possible profit, lowest tax rates, and minimal regulations, regardless where they have to go to find them, I’d be more concerned.  As it stands, trading one set of faceless directors for another set of faceless directors, both controlled by an even more faceless set of shareholders, often doesn’t make much practical difference.  There are exceptions, and I’m willing to criticize or demand changes in how companies operate.  In that case, who owns them or where they live, (probably the Caymans), is not relevant.   I also think it is important that a country’s people maintain control of certain industries and resources.  Give up that control, and you’re begging to be exploited, and again, the nominal nationality of the exploiters doesn’t make that much difference in the end.

  • D'oh!

    Baie-Comeau's smelter is Alcoa not Alcan. Must have had the latter on the brain.

  • paul

    Well janfromthebruce
    Apparently my taxes don't mean much.
    Could you specify specifically what "generous corporate taxation policies, through generous tax breaks and substancies" that helped to build Alcan? How about just one?
    Perhaps I should specify to whom you can sell your home or car to make it even seeing you feel free in telling people what to do with the assets.

  • janfromthebruce,

    I’ll give you a small example from personal experience. I lived for a number of years in Baie-Comeau. There’s been an aluminum smelter there since about 1956-1957. It was a foreign owned company initially (Canadian British Aluminum, which was in reality neither Canadian nor British), and then became branded as Reynolds Aluminum in the 1960’s.? It became part of Alcan many years after I left there, but Alcan wasn’t always really ‘Canadian’ either.?

    The senior management at the Baie-Comeau smelter (and Shawinigan, too, as I recall) was invariably American for many, many years.

    Outside of?BC (Kitimat) I can’t think of any other province other than Quebec that has a significant, if any, aluminum industry.Even at that there are only a handfull of smelters there. So, I can’t really see that it has much personal import for people in any other province other than Quebec, or the folks in Kitimat. I don’t think many of them care about the nationality of the ownership as long as the smelter stays open and they have work. That’s the reality in a resource/mill town.

  • Scary Conservative

    Would Canadian companies  buying up foreign companies outside of Canada be a bad thing?

  • mushroom

    Just because

    1) the Liberals have not nationalized anything since the 1980s

    2) protect Canadian communities and workers
    3) taking a stand and show that the Liberals are a party willing to protect Canada from the forces of globalization
    4) drive Maxime Bernier bonkers and help solidify the centre left vote in La Belle Province
    5) get on the good side with Scott, Jan, and David Olive

  • Antonio

    nationalizaton of Alcan?

    for any specific reason or just because…

    Foreign owners invest more in their Canadian companies than Canadian owners do in Canada.

    All takeovers are shares changing hands. This economic nationalism is pretty funny, considering Canadian companies have been making purchases abroad for years and we have not heard so much as a peep from these "economic nationalists".

  • mushroom

    I have yet to write a blogpost calling for the nationalization of Alcan once the Liberals under Dion get into power.

  • janfromthebruce

    Well Paul, you as a shareholder are only part of the equation. What about Canadian communities and workers who work for Alcan. They too should have a say in foreign ownership. And as for the part of ownership, I am sure Scott and myself, as Canadian taxpayers, do help out Canadian companies, whether through our generous corporate taxation policies, through generous tax breaks and substancies. Without this, this Canadian company got a leg up and remained financially viable, or you as a shareholder wouldn't have invested or the company become attractive to foreign ownership. Give me a break!
    Shareholders aren't God. 
    C

  • paul

    As an ex-shareholder of Alcan, I can assure you that the brain drain happened long ago with this company. If I had known that a company outside Canada wanted it, I would have held onto my shares and made money from the sale.

    This has been a poorly run company for years. The stock was languishing for an awfully long time despite an increase in aluminum prices. I don’t expect you arm chair quarterbacks to understand this as I don’t expect to ever understand how you could feel you lost something to which you never owned a single share.

  • Firstly, Canadians now have 20% representation on the board of Rio Tinto, the largest mining company in the world, a company that is much bigger than Alcan.

    Secondly, If Rio Tinto Alcan, the aluminium subsidiary is in Montreal, then there is actually NO negative impact of the deal, because the head office jobs are necessary for the subsidiary.

    Kudos to the Quebec government, who tied that clause to their deal for power with Alcan. That gave Alcan a competetive edge, as well as a big take me over sign…

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