Government's "win" in keeping Teck's head office in Vancouver after Anglo-American takeover is meaningless optics that contradict sovereignty push, says Bay Street veteran
I used to work for one of those Canadian mining titans, Inco. I saw it first hand. A culture of mediocrity took over in management. Inco, under the then management of Scott Hand made a play for Falconbridge. At that time Xstrata, out of Switzerland, had acquired approximately 20% of the Falconbridge shares from Brascan, at a very low price for the time. In the deal though, if the price for the shares rose significantly before May of 2006, then Xstrata would have had to pony up the difference. The offer Inco made was months before then. Falconbridge had a nickel refinery in Norway. Rather than announce that this refinery would be sold, to satisfy any concerns by the EU, he just said in effect, if need be. Xstrata managed to get the EU to drag their heels. The date in May passed, thus giving Xstrata a huge advantage that they then used to out bid Inco. Thus, because Hand sat idly by rather than playing hardball, he lost the Falconbridge deal. But in doing so exposed Inco to the much more aggressive and hungry wolves around the world. Later that year the Brazilian company CVRD (now Vale) bought Inco.
The decade of 2000-2009 saw many of the Canadian mining giants taken over by foreign interests, or consolidation. Companies that disappeared during that period include, Noranda, Falconbridge, Inco, Cominco, Placer Dome, Alcan and Rio Algom. We as a country have never recovered. Primarily because of weak management. At the end of that decade the only two left standing were Teck and Barrick.
Around that time I found this indifferent attitude pervaded much of Canada. People were not interested in building a legacy. Instead, if the opportunity presented itself, they cashed out. What I describe as the "I won the lottery!" attitude.
One thing I cut out of this interview, which I'm somewhat regretting now given your comment, is a bit about how this is similar in a lot of industries. I spent many years covering tech and you saw it over and over again. Few people were in it to really build world-beating companies, with most just wanting to get to a point where they could cash out. There's no doubt that Canada has a mediocrity mindset problem.
I really hate to say it but that has become the "Canadian way" - cash out and run for the hills while saying woo hoo! We have become so accepting that we are being fleeced and that innovation of any sort is not rewarded. The real irony is that the vast majority of Canadian's are "conservative" in that they are overly cautious and unwilling to change. Even when the evidence clearly shows that we are rewarding incompetence at the highest levels, especially government. To illustrate, all of the political parties with representation pretty much say and do the same in Ottawa. Case in point was when Yuroslav Hunka was feted on Parliament Hill and got a standing ovation by every MP, including "Conservatives". Yet none took a moment to wonder why they were welcoming a guy who was there because he fought against the Russians during WW2, and not ask the question "but weren't the Russian our allies?" All were on the pro-Ukraine bandwagon, unwilling to ask critical questions. All because none wanted to rock the boat. Even the current "elbows up" crowd are unwilling to face the realities here in Canada to the point that "Trump Bad" is all they can say and do while the country collapses around them. See no evil, hear no evil and speak no evil when it comes to the Canadian status quo and hope to cash out rather than standing up for our rights and freedoms. A country of paper tigers.
On a similar note there's an interview with the president of Shopify Harley Finkelstein in the Lemonade Stand podcast where he talks about how rare it is for a Canadian-owned tech company to reach the point where it is one of Canada's largest companies by market cap. It is almost only Shopify and Canada's banks in the top 10 companies by market cap.
Caldwell is spot on about the lack of follow-through. The House Industry committee has actually grilled officials on this exact topic. The problem is that the government relies on companies to self-report their compliance. They rarely conduct independent audits to see if the jobs actually stayed. It is essentially an honour system for multi-billion dollar corporations.
What strikes me is that PM Carney's speech this week declared a more honest approach to geopolitics, so it'll be interesting to see how/if this applies to domestic issues. When it comes to mergers, the proverbial sign still appears to be in the window.
Brilliant piece. Caldwell's observation about the 3 to 5 person decisoin-making locus at every major company cuts through all the political theater. I worked on a few cross-border integrations back in the day and saw this exact pattern play out everytime, promises made at announcement time quietly evaporated as economic reality won over political optics.
I used to work for one of those Canadian mining titans, Inco. I saw it first hand. A culture of mediocrity took over in management. Inco, under the then management of Scott Hand made a play for Falconbridge. At that time Xstrata, out of Switzerland, had acquired approximately 20% of the Falconbridge shares from Brascan, at a very low price for the time. In the deal though, if the price for the shares rose significantly before May of 2006, then Xstrata would have had to pony up the difference. The offer Inco made was months before then. Falconbridge had a nickel refinery in Norway. Rather than announce that this refinery would be sold, to satisfy any concerns by the EU, he just said in effect, if need be. Xstrata managed to get the EU to drag their heels. The date in May passed, thus giving Xstrata a huge advantage that they then used to out bid Inco. Thus, because Hand sat idly by rather than playing hardball, he lost the Falconbridge deal. But in doing so exposed Inco to the much more aggressive and hungry wolves around the world. Later that year the Brazilian company CVRD (now Vale) bought Inco.
The decade of 2000-2009 saw many of the Canadian mining giants taken over by foreign interests, or consolidation. Companies that disappeared during that period include, Noranda, Falconbridge, Inco, Cominco, Placer Dome, Alcan and Rio Algom. We as a country have never recovered. Primarily because of weak management. At the end of that decade the only two left standing were Teck and Barrick.
Around that time I found this indifferent attitude pervaded much of Canada. People were not interested in building a legacy. Instead, if the opportunity presented itself, they cashed out. What I describe as the "I won the lottery!" attitude.
One thing I cut out of this interview, which I'm somewhat regretting now given your comment, is a bit about how this is similar in a lot of industries. I spent many years covering tech and you saw it over and over again. Few people were in it to really build world-beating companies, with most just wanting to get to a point where they could cash out. There's no doubt that Canada has a mediocrity mindset problem.
I really hate to say it but that has become the "Canadian way" - cash out and run for the hills while saying woo hoo! We have become so accepting that we are being fleeced and that innovation of any sort is not rewarded. The real irony is that the vast majority of Canadian's are "conservative" in that they are overly cautious and unwilling to change. Even when the evidence clearly shows that we are rewarding incompetence at the highest levels, especially government. To illustrate, all of the political parties with representation pretty much say and do the same in Ottawa. Case in point was when Yuroslav Hunka was feted on Parliament Hill and got a standing ovation by every MP, including "Conservatives". Yet none took a moment to wonder why they were welcoming a guy who was there because he fought against the Russians during WW2, and not ask the question "but weren't the Russian our allies?" All were on the pro-Ukraine bandwagon, unwilling to ask critical questions. All because none wanted to rock the boat. Even the current "elbows up" crowd are unwilling to face the realities here in Canada to the point that "Trump Bad" is all they can say and do while the country collapses around them. See no evil, hear no evil and speak no evil when it comes to the Canadian status quo and hope to cash out rather than standing up for our rights and freedoms. A country of paper tigers.
On a similar note there's an interview with the president of Shopify Harley Finkelstein in the Lemonade Stand podcast where he talks about how rare it is for a Canadian-owned tech company to reach the point where it is one of Canada's largest companies by market cap. It is almost only Shopify and Canada's banks in the top 10 companies by market cap.
Caldwell is spot on about the lack of follow-through. The House Industry committee has actually grilled officials on this exact topic. The problem is that the government relies on companies to self-report their compliance. They rarely conduct independent audits to see if the jobs actually stayed. It is essentially an honour system for multi-billion dollar corporations.
What strikes me is that PM Carney's speech this week declared a more honest approach to geopolitics, so it'll be interesting to see how/if this applies to domestic issues. When it comes to mergers, the proverbial sign still appears to be in the window.
And we know there's no honour umongst thieves.
This book was published nearly twenty years ago but it might as well have been yesterday:
Why Mexicans Don't Drink Molson
Andrea Mandel-Campbell
https://books.google.de/books/about/Why_Mexicans_Don_t_Drink_Molson.html?id=rE7vYrlrgBgC&redir_esc=y
I remember reading that! Might be time for a reread...
Brilliant piece. Caldwell's observation about the 3 to 5 person decisoin-making locus at every major company cuts through all the political theater. I worked on a few cross-border integrations back in the day and saw this exact pattern play out everytime, promises made at announcement time quietly evaporated as economic reality won over political optics.