US Steel, historically the mighty American rival of Stelco, the Steel Company of Canada, has reached a deal to take over its Canadian rival for $1.16 billion. With Stelco in foreign hands, the once domestically owned industry will be wholly under the control of companies based outside of Canada.
Last year, Dofasco was sold to foreign interests and earlier this year, Algoma Steel and Regina-based Ipsco were purchased by foreign companies.
The take over of Stelco marks the end of the century long saga of Canadian owned steel companies. The steel story was a remarkable one because unlike automobiles and petroleum, where foreign owners predominated from near the beginning, Canadian companies ran the industry.
And it didn’t happen by accident. What made the Steel Company of Canada especially noteworthy when it was established in 1910 was that the company reversed the usual pattern of Canadian economic relations with the outside world. Instead of exporting a raw product for manufacture elsewhere, Stelco imported American iron ore and coal to produce steel in Hamilton, Ontario. It was Canada’s rejoinder to Pittsburgh.
Stelco was created as a deliberate act of national policy, involving both British and Canadian entrepreneurship. The notion was that an industrialized country required its own steel industry, owned and controlled domestically.
Recently the C.D. Howe Institute---that ever faithful lobbyist on behalf of foreign ownership and deeper integration of Canada with the US---released a report arguing that this country needs far more foreign investment.
The C.D. Howe Institute and its scribes are wedded to the theory that all mergers and acquisitions are beneficial because they promote greater productivity and higher returns on invested capital. The only thing this theory ignores is the real world. Repeated studies have shown that in manufacturing industries, Research and Development facilities and parts, components, and capital equipment manufacturers grow up around a central producer such as Stelco. These networks are crucial sources of cutting edge innovation and of employment, much of it highly skilled. Shift the ownership of the key company outside Canada and the R and D and other network functions will also shift outside the country. The net result, as will be the case with Stelco, will be lost innovative activity and employment.
The timing of this boggles the mind. The middle to long term outlook for producers of steel and other commodities is extremely bright in today’s global economy. Only a dull and unimaginative business community was choose this as the moment to lose its control of the steel industry, and only a witless government would stand by and allow it to happen.
How much of Canada would the C.D. Howe Institute put up for sale? Based on their track record---all of it. Perhaps their final act, when everything else has been sold, will be to put themselves up for sale and turn out the lights.
Last year, Dofasco was sold to foreign interests and earlier this year, Algoma Steel and Regina-based Ipsco were purchased by foreign companies.
The take over of Stelco marks the end of the century long saga of Canadian owned steel companies. The steel story was a remarkable one because unlike automobiles and petroleum, where foreign owners predominated from near the beginning, Canadian companies ran the industry.
And it didn’t happen by accident. What made the Steel Company of Canada especially noteworthy when it was established in 1910 was that the company reversed the usual pattern of Canadian economic relations with the outside world. Instead of exporting a raw product for manufacture elsewhere, Stelco imported American iron ore and coal to produce steel in Hamilton, Ontario. It was Canada’s rejoinder to Pittsburgh.
Stelco was created as a deliberate act of national policy, involving both British and Canadian entrepreneurship. The notion was that an industrialized country required its own steel industry, owned and controlled domestically.
Recently the C.D. Howe Institute---that ever faithful lobbyist on behalf of foreign ownership and deeper integration of Canada with the US---released a report arguing that this country needs far more foreign investment.
The C.D. Howe Institute and its scribes are wedded to the theory that all mergers and acquisitions are beneficial because they promote greater productivity and higher returns on invested capital. The only thing this theory ignores is the real world. Repeated studies have shown that in manufacturing industries, Research and Development facilities and parts, components, and capital equipment manufacturers grow up around a central producer such as Stelco. These networks are crucial sources of cutting edge innovation and of employment, much of it highly skilled. Shift the ownership of the key company outside Canada and the R and D and other network functions will also shift outside the country. The net result, as will be the case with Stelco, will be lost innovative activity and employment.
The timing of this boggles the mind. The middle to long term outlook for producers of steel and other commodities is extremely bright in today’s global economy. Only a dull and unimaginative business community was choose this as the moment to lose its control of the steel industry, and only a witless government would stand by and allow it to happen.
How much of Canada would the C.D. Howe Institute put up for sale? Based on their track record---all of it. Perhaps their final act, when everything else has been sold, will be to put themselves up for sale and turn out the lights.
6 comments:
Time to take out the political trash.
And that is exactly what happened under NAFTA and further for SSP. Yes, I remember the NAFTA debate, and I remember 1993 and the Liberal redbook. They vowed they wouldn't sign it, but lickety spit, as soon as they got that big majority, they signed on the dotted line.
So why should we vote liberal to keep the Harper conservtives from power? I just keep on forgetting the reasons why. Must be because they are soooooooo different!
Beyond the hypercrisy here, this article is bang on. Too bad voting liberal wouldn't change the hollowing out of Canadian industry and manufacturing.
No quarrel about the Liberals on free trade and the selling off of Canadian assets such as the CNR, and Petro Canada.
Thanks for your inputs on the schools issue, by the way.
I don't think we're really so far apart on the fundamentals. I do question the wisdom of a huge political fight about Catholic schools, however.
This after Thomas Caldwell of Caldwell Securities puts full page ads in three newspapers against foreign ownership and goes on CBC radio to protest. Link to the interview: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=190x21900
Duration: 00:11:04
Lets face it: Canadian companies will never be as popular as maple syrup. But if this past year is any indicator, foreign investors are looking to take a big chunk of corporate Canada back home with them. Since the beginning of 2006, nearly six-hundred Canadian companies have been lured by foreign takeovers, cumulatively worth more than a 150-billion U.S. dollars.
Thomas Caldwell believes this trend could spell disaster. He is the chairman of Caldwell Securities -- a leading investment management firm, and a member of the Toronto Stock Exchange. This past week, Mr. Caldwell took out full-page ads in all three of Canada's major newspapers. And, in no uncertain terms, he blamed his neighbours on Bay Street for what he calls 'The Sellout of Corporate Canada."
We reached Tom Caldwell at his office in Toronto.
http://www.cbc.ca/aih/latestshow.html
http://www.cbc.ca/mrl3/8752/asithappens/20070730-aih-2.wmv
Pretty shameful.
Here's what he said basically in case you can't listen (it starts in the second half of that clip):
Why attract Canadian companies
Mr Tom Caldwell on As it Happens CBC Radio:
-corporate HQ in Canada:
--support staff employment, lawyers, printers, etc
--lets lower Cdn employees work up the chain to become CEO, can't happen with HQ in another country
-blames Bay Street for short sightedness
--building a company does not mean watching the stock price go up on speculation, 20% in a day
--it means keeping it in Canada, appreciating value slowly, becoming world class, and in the end it appreciates 50% in value instead of the 'fast-food' takeover
-fixing this: government environment in Canada: GST, taxes
--GST too costly to process
Why do you not call for the nationalisation of Stelco or government subsidy of a worker buyout?
There may be some value in developing a national bourgeoisie but many Canadian homegrown capitalist such as T Eaton company were far from progressive and often anti-union. If Canadian ownership means capitalist ownership there seems little progressive in that.
http://kencan7.blogspot.com
Well this is business, big companies always absorb small ones because they want to fragment them and sell them by pieces, actually is a good business.
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