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Is Canada really rich in natural resources?: Calculating the effects of Foreign Ownership
Written by: Jon HansenArticle Overview: In Toronto, CBC business reporter Jeannie Lee said there is a great deal at stake for Canada — and especially for southern Ontario, where Canada's steel industry is concentrated and where the global slump has already gutted the auto industry. Canadian steel plants produced almost 16 million tonnes of steel in 2007, employing about 32,000 people and, by one estimate, supporting 140,000 indirect jobs, she said. from "Buy American" rule in U.S. stimulus bill could cost Canada jobs, CBC News (January 29th, 2009)
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Is Canada really rich in natural resources?: Calculating the effects of Foreign Ownership
In Toronto, CBC business reporter Jeannie Lee said there is a
great deal at stake for Canada — and especially for southern Ontario,
where Canada's steel industry is concentrated and where the global
slump has already gutted the auto industry.
Canadian steel plants produced almost 16 million tonnes of steel
in 2007, employing about 32,000 people and, by one estimate, supporting
140,000 indirect jobs, she said.
from "Buy American" rule in U.S. stimulus bill could cost Canada jobs, CBC News (January 29th, 2009)
Expanding on the closing theme from last week's post "Buy American: Establishing Artificial Bondaries or Removing Unwanted Barriers?," in which I introduced Colin Clark and Jean Fourastie's "three-sector
hypothesis of industry" - actually four with the addition of the
Quaternary Sector, the January 29th CBC News article is interesting for
a number of reasons.
While there is no doubt that the steel industry is of course part of
our indigenous Primary Sector which cultivates our nation's abundance
of natural resources, I must admit that I had not contemplated the
impact that foreign ownership of these companies had on the overall
issue of free trade and the Buy American Policy.
Perhaps this is an overly simplistic view, but if we do not own the
companies who employ our workforce in this Primary Sector, is it not
similar to renting versus owning your home?
For example, if I am renting I would of course take care of the
daily living maintenance required as part of the general upkeep of the
home. However, and for obvious reasons, I would not be inclined to
invest a great deal in making home improvements such as adding a deck
or installing new plumbing.
The point I am making is simply this, who owns what were once our
companies, what are their interests and, at what point will those
interests conflict with those of our national interests?
I am asking these questions for a number of reasons including the
fact that I would like to know the answers. I am also interested in
understanding if we have somehow mistakenly equated having indigenous
resources as being the same thing as controlling them. If memory
serves me correctly it wasn't that long ago that we took legal action
against a US conglomerate who arbitrarily decided to pull up their
Canadian stakes. (Note: reference the July 18th, 2009 article in
TheRecord.com titled "Ottawa sues former Stelco Group.")
In essence, and without summarily discounting the 32,000 direct and
140,000 indirect people the steel industry employs, are we spending too
much energy fighting for a disappearing sector with concentrated
interests in Central Canada, instead of focusing on the repatriation of
our national domestic economy through the proactive development of
Tertiary and Quaternary Sectors?
Let's be honest, the fight for the Canadian steel industry
shouldhave happened before these companies were sold in the first
place. Suing
American industrial giant U.S. Steel Corp. to force it to live up to
job commitments that were made when it bought the former Stelco Inc. by
pointing to the provisions of the Investment Canada Act doesn't instill
a great deal of confidence in terms of a favorable outcome. What's the
old saying, possession is nine-tenths of the law?
Once again, I am not professing to have any great solutions because
like most Canadians, I do not have all the facts. However, it just
seems to me that opening-up government contracts to perhaps the very
companies who have bought Canadian firms, then broke their commitments
under said agreements by closing down plants, is similar to the Doom
Loop that Jim Collins described in his book Good to Great.
If I am missing something, please tell me. But for all intents and
purposes, it look s as if we are fighting yesterday's "lost" war
today. Maybe it's time that we followed the "general pattern of
development," of wealthy nations, and progressed to the latter phases
of the Clark and Fourastie sector hypothesis of industry?
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