The urge to merge
Aug. 6, 2006. 08:40 AM
hey are Canadian icons, their history woven into the fabric of this country's economy, labour law and
environmental legacy, and now they are for sale. Inco, the mining giant that grew out of a nickel-rich
hole in the ground in Sudbury, is being courted by two suitors — one Canadian, the other American.
Falconbridge, Inco's rival, seems all but certain to fall into foreign hands, with a tempting offer by
Switzerland's Xstrata on the table.
Whenever a Canadian company is "in play," the debate resurfaces: How important is it for our country
to keep Canadian companies in Canadian hands? In the case of Inco and Falconbridge, it's not just
about preserving Canadian ownership of one or two companies, but also about preserving an entire
industry. Some argue such "protectionism" is crucial for Canadian business and industry; for others,
"There's a time to be a hard-nosed business person who wants to be financially successful today,"
says Ken Wong, marketing professor at Queen's School of Business. "But that isn't (necessarily) good
for the long-term .
.. Sometimes business has to be subservient to the public interest." Canada's natural
resource and telecommunications sectors are core assets that should be protected, argues Wong.
Corporations, he adds, do not outsource core competencies because they don't want to tie their future
to someone else's hand.
In Canada, one in five companies has a foreign owner, according to the latest Statistics Canada data.
Among the benefits of protecting certain industries from foreign ownership are efficiency of operations,
national security and preservation of national culture. The argument for having a head office in Canada
is also familiar: If CEOs are located in head offices in Canada, they will be more likely to make
decisions that will help the Canadian economy. Job cuts will be in other countries, research and
development will remain, profits will stay in the country.
But are these perceived benefits real? Companies, after all, don't merge to harm another country's