Selling Like Hotcakes

I don’t know if you recall my post of … in which I talked about the government’s unwillingness to support Canadian firms on the international playing field. Well, wouldn’t you know it, Canada’s largest miner, Alcan, has just announced its takeover by the Rio-Tinto group of London. It took a month for my prophecy to materialise!

I really don’t think that people understand just how important an issue this is to our country’s economy. I’m by no means an economic nationalist and believe that takeovers are natural processes which play an important role in a stable and functional economy. Canada’s problem is that the number and value of the takeovers is alarmingly high, and to make matter worse, they majority of them involve the mining industry (Inco, Falconbridge, Dofasco, LionOre, Algoma, and now Alcan).

Although buyers usually assure the government that all Canadian operations will be conserved, the problem has much less to do with the company itself than with its supporting industries who are reliant on orders from the giants to make ends meet. The reality is that foreign companies are much less likely to invest in Canadian projects and technology than our own firms, so a sudden disappearance of a large number of domestic companies can have a devastating impact on the whole sector.

And it goes beyond pure financial issues; a decrease in investment in a specific industry can also create a knowledge void with extremely long lasting impacts. As Ian Telfer, CEO of GoldCorp, one of Canada’s last remaining giants: "It's not only the financial impact of them not being here, it's also the knowledge base that starts to disappear".

It’s no fluke that so Canadian companies are being taken over; the government is to blame. This gets us back to my previous post: the government needs to finally give Canadian firms the tools to compete.