Canada...for sale (two articles!)

[samsonyuen]

From: www.theglobeandmail.com/s...iness/home
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Canada a great brand, but needs marketing
SCOTT DEVEAU
Globe and Mail Update
It's time to market beavertails, maple syrup and the BlackBerry on the global market with a Made in Canada stamp, after the country was named the world's second most popular national brand by a global pollster.

The Anholt Nation Brands Index for the second quarter of 2006 saw Canada jump ahead of Germany and Switzerland to claim the number two spot on the list of 35 countries. Canada's rosy image now only pales beside that of the United Kingdom's (and the EU's, which was featured as a 'guest country' on the survey).

But Simon Anholt, an international branding adviser who commissions the quarterly poll through Global Market Insite, Inc., contends Canada is failing to capitalize on its positive international image — and points as proof to the gulf between those polled who say they would like to travel, invest and study in Canada to those who actually do.

"What's so interesting about Canada is not so much the results themselves, but the disparity between the results and the country's actual performance," he said. "There's no question that the majority of people in the world think very highly of Canada, but it doesn't translate that into action."

The survey polled more than 26,000 people from the world's 35 richest nations between May 18 and June 4 on their perceptions of the cultural, political, human and commercial assets, investment potential and tourist appeal of their own country and the others. Canadians ranked first overall as a people and rose to the top of the investment (2nd) and governance (3rd) categories, and second overall for individual countries.

"(Canada) is also very strong on products, which is something that always surprises me," Mr. Anholt said, adding demand for Canadian products ranks 8th overall.

"Generally speaking, [those polled] think they would love Canadian products, if they existed."

He said Canada has done a very poor job at wrapping its exports in the flag, particularly when compared to the U.S., which has a plethora of global brands, from McDonalds to Nike.

He assumes that the demand for a Made-in-Canada brand is an extrapolation on what little is known about the country: that we're a leader in technology, our products are good quality, and that "it would be nice because Canadians are nice."

"My advice to Canada is get making Canadian branded products because there's a market for them. People would pay a premium for something made in Canada as long as it chimed in some way with those beliefs," he said. "The BlackBerry is a tragedy because nobody knows it's Canadian. Things like that could be enormously valuable."

The Vancouver 2010 Olympic Games are an excellent opportunity for the country shed its global image of "mountains, oceans, and Neil Young riding on a buffalo," Mr. Anholt said.

"[Canada's] a sort of bland paradise, there's no urgency to visit it," he said. "People say Canada is a place I have to go before I die, or perhaps after that."

That's why even some of Canada's infamous places, like Vancouver's troubled Downtown Eastside, could offer some benefit to country's brand because it could burst the squeaky-clean image, he said.

"Canada has a problem in that everyone knows and believes it's a perfectly wonderful place, populated by perfectly wonderful people, and yet people aren't going there," he said.

To be fair, Canada is the 11th most popular tourist destination in the world, according to the UN's World Tourism Organization. Mr. Anholt's survey ranks it as the 9th.

"Clearly the Olympics are an excellent opportunity to get people over there and to see things."

Nation Brands Index Q2 2006 Overall Ranking

1. The European Union*
2. United Kingdoms
3. Canada
4. Germany
5. Switzerland
6. Italy
7. France
8. Japan
9. Sweden
10. United States
*The EU was listed as a 'guest country' on this quarter's poll to measure its brand identity on a global scale.

 

[samsonyuen]

From: www.canada.com/nationalpo...42&k=34078
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Everything from Inco to Sleeman draws shoppers

Peter Koven, with files from Peter Nowak, Financial Post
Published: Saturday, August 12, 2006
Canada is fast becoming a shopping mall for foreign firms thanks to a strengthened Canadian dollar and a sharp rise in commodity prices.
"It's undeniable that Canada is on the radar screen for foreign investors," said Ed Giacomelli, managing director of the investment banking firm Crosbie & Co., which tracks Canadian merger and acquisition activity. "Because of the strength of our economy, the resource sector and our dollar, you see foreigners looking at Canada more aggressively and strategically."
This year alone Dofasco Inc. sold for $5.6-billion, Fairmont Hotels & Resorts Inc. went for US$3.9-billion and Vincor International Inc. sold for more than US$1-billion. Inco Ltd. could soon prove to be the country's largest foreign cash takeover, while Falconbridge Ltd. and ATI Technologies Inc. are in the process of ending up in foreign hands. Yesterday, Intrawest Corp. agreed to a US$1.8-billion offer from a U.S. private-equity firm and Sleeman Breweries Ltd. agreed to be acquired by Sapporo Breweries Ltd. of Japan for $293-million plus debt.
The country's economic strength, combined with a relaxed regulatory environment and the relatively small size of Canadian companies, has made them ripe for takeovers.
According to Mr. Giacomelli, Canada was ignored by foreigners for many years because it accounts for such a small portion of the global capital markets. Add in a weak currency and large fiscal imbalances, and there was no reason to give it a close look.
But the rise in commodity prices and the dollar has thrust Canada into the global spotlight, and convinced foreign investors across a range of sectors to pay attention.
"It would have made a lot more sense to buy Canadian companies five years ago," said Eric D'Amours, principal with Towers Perrin in Toronto. "They were cheap. Now they're performing better, and they're expensive."
When foreigners look at Canada, they see a country whose regulatory environment makes it more open to investment than many other developed nations.
"It is easier here for a foreign company," said Norman Levine, managing director of Portfolio Management Corp. in Toronto. "Investment Canada doesn't make you go through hoops, especially when you compare it to Europe. And in the U.S., antitrust is a lot stronger, you've got Sarbanes-Oxley to deal with and a lot of companies want to avoid that."
The Inco saga provides a good demonstration of how different the regulatory environments are. The European Union put the company's proposed acquisition of Falconbridge on hold over competition concerns last year. In the meantime, Switzerland-based Xstrata PLC launched a rival bid that easily won Canadian approval.
The other key issue is that Canadian companies just haven't been as aggressive as some of their foreign rivals.
Experts say Canadian firms have preferred to stick to safe strategies instead of making big acquisitions. Those strategies have paid off in the sense that Canadian stocks have performed extremely well in recent years but has made those companies targets for larger foreign firms.
"To me it's disconcerting to see it. It just highlights the fact that boards of Canadian companies have become afraid of doing something wrong," said Mr. Levine.
He points to Dofasco as an example of a company that never should have left Canada.
"It was the cream of the crop. There's no reason Dofasco couldn't have been more aggressive and become a global leader itself. Management and directors just weren't thinking that way."
There are exceptions. Manulife Financial Inc spent $15-billion to buy John Hancock in 2004, an acquisition that has turned out to be a success. Toronto-Dominion Bank made a similar gamble the same year, dropping US$3.8-billion for a majority stake in Banknorth Group Inc.
But Canada is weighted heavily toward resource companies, and it can be dangerous for those firms to get too levered at the top of a cycle. Many technology companies learned that the hard way when they went on acquisition sprees in the late 1990s before finding themselves insolvent.
"Take a Ted Rogers," said Mr. Giacomelli. "There a guy who's prepared to grow and take on leverage. But he's done it in businesses that have outstanding growth prospects and are not too susceptible to an economic downturn. But for a natural resources company, if the economy slows and commodity prices turn down, it affects your ability to service debt."
The other problem for Canadian companies looking to grow is that the capital markets haven't always provided the help.
"Up until six or nine months ago, it was almost impossible for companies to raise money in Canada unless they were income trusts," said Mr. Levine. "Those are not the companies that are going to go and conquer the world."

 

[bizorky]

Ottawa urged to push foreign takeovers
Outside investment has a 'net benefit,' internal files suggest

SIMON TUCK
From Friday's Globe and Mail
OTTAWA — Federal officials have told Industry Minister Maxime Bernier that Ottawa should encourage more foreign takeovers and other investment from abroad, despite public concern that corporate Canada is being gutted by a flurry of acquisitions.

Internal government documents, prepared earlier this year for the Harper government, say takeovers and other foreign investment provide "net benefit" to Canada and that the government should consider further reducing restrictions.

Foreign-based multinational corporations are on average more innovative, invested in new technology and focused on cross-border trade, say the documents, obtained through federal access-to-information legislation.

Contrary to the myth of the "hollow out" left by foreign takeovers, the government officials argued, multinational giants also tend to pay better than domestic companies and offer advantages in trying to create better trade ties with China and other emerging markets.

"The overall evidence provides compelling economic reasons to welcome FDI [foreign direct investment] inflows in Canada and not to be overly concerned by what appears to be reasonable levels of foreign ownership of Canadian corporations," says a Feb. 24 document prepared by the Industry Department for Mr. Bernier shortly after he was named to cabinet.

Mr. Bernier, one of the founders of the Montreal Economic Institute, a conservative think tank, is a staunch believer in free trade and the reduction of economic barriers.

The Industry Minister has already told the Canadian Radio-television and Telecommunications Commission, for example, that it needs to change the way it looks at things and rely more on market forces to the "maximum extent feasible."

But some Canadians are concerned that foreigners are owning an increasingly large chunk of the national economy, particularly with the recent selloff of crown jewels such as Molson Inc., Hudson's Bay Co., Dofasco Inc., and Fairmont Hotels & Resorts Inc. And that list doesn't include recently proposed deals that haven't been formally approved, such as Inco Ltd., Falconbridge Ltd., and this week, U.S. forestry giant Weyerhaeuser Co.'s $3.3-billion (U.S.) acquisition of Montreal-based Domtar Inc.

Indeed, the two blockbuster takeovers of mining icons Inco and Falconbridge boosted Canadian merger and acquisition activity to a new record in the second quarter of this year.

A report this week from Toronto-based investment banker Crosbie & Co. said there were a total of 480 transactions announced during the three-month period ending June 30, with a value of $86.1-billion. That was triple the value of the deals in the first quarter.

But the government documents, obtained by Ottawa researcher Ken Rubin, also argue that Canada should consider further reducing foreign investment restrictions, even in sensitive sectors with special barriers: telecommunications, broadcasting, airlines, publishing and banking.

One internal document, which was marked "secret" and written on Jan. 11, 2006, a couple of weeks before the Conservative election win, said Canada has "lagged behind" in reducing foreign investment restrictions.

Some parts of the documents were blacked out by government officials before they were released, but the Jan. 11 document concludes that Canada needs more multinational corporations, whether they're foreign-owned or not.One document cites a recent OECD study that found that Canada has the second-highest level of foreign ownership restrictions among the group's countries, after Iceland.

But economist Armine Yalnizyan, also the director of research at the Community Social Planning Council of Toronto, said there are legitimate social reasons why there are restrictions on foreigners controlling sensitive sectors, even though foreign investment does spur economic growth.

"All citizens need access to basic services."

But numerous studies, including those by Statistics Canada and the Bank of Canada, have concluded that the loss of corporate head offices is nothing to be feared.

Don Drummond, chief economist at Toronto-Dominion Bank, said he and most other economists believe increased competition would be good for the Canadian economy, and reducing the restrictions on foreign investment is one way to create it.

Foreign direct investment in Canada -- as well as Canadians' investment abroad -- has jumped sharply since 1990. Much of that growth occurred in the second half of the 1990s, when the North American economy was on a tear.

As might be expected, U.S. companies dominate the buyers' list, accounting for 62 per cent in 2003, compared with 51 per cent in 1990. Britain and Germany were the second and third most important foreign owners of Canadian assets in 2003, accounting for 11 per cent and 6.3 per cent respectively.

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Does anyone else feel as if there is a swinging pendulum with respect to foreign takeovers and loss of head offices? One decade it is good, the next decade it is bad. I have to wonder if Canada is not always on the verge of being a little "third world" with the potential loss of Canadian ownership. But then the looming voice of globalization rises to inform me that Canadian companies with a vested national interest have gone the way of the dinosaur.

 

[Antiloop33rpm]

I have to wonder if Canada is not always on the verge of being a little "third world"

It is funny you should say that because I have been thinking over a paper I want to start shortly making the case for Alberta becoming little more than a Banana Republic. I thought maybe I was being a little extreme in my thinking but it seems I'm not the only making these analogies.

 

[cdl42]

Interesting. What would be the basis of your argument?

 

[unimaginative2]

One industry, one export.

 

[cdl42]

Ah. I see. Many things certainly seem to be pointing that way in Saudi Albertia.

 

[cdl42]

I think this essay from last Sunday's Star should spark some discussion on this topic. Poor Albertans, being pushed out of Canada by those damn easterners after giving so much to the country...

Oil fuels Alberta separatists
In the coming decades, wealthy Alberta could leave Canada as Ottawa struggles to bridge the growing regional divide in the national economy, writes Roger Gibbins
Aug. 21, 2006. 09:09 AM
ROGER GIBBINS

It should never have come to this. Tomorrow Albertans will go to the polls to vote on leaving Canada, and any doubt as to the outcome was removed last month when the British Columbia legislature resolved to hold a similar referendum within six months. It is likely that Saskatchewan will soon follow suit.

The legal technicalities are straightforward. Back in the late 1990s, when the Quebec sovereignty movement was still alive and well, the Supreme Court and later Parliament through the Clarity Act recognized that the government of Canada had an obligation to enter into negotiations if there was "a clear expression of the will of the population of a province on whether the province should cease to be a part of Canada and become an independent state." Those negotiations could begin as early as next week.

Back in the 1990s, no one imagined that this option would be exercised by a province other than Quebec. The critical question, therefore, is: How did we get to this sorry state of affairs? What went so wrong along the way?

Although there has always been a small smattering of separatist support in Alberta, usually a very small smattering, the origins of our current mess date back to 2006 when oil prices first passed $70 a barrel. The Alberta government, having paid off its provincial debt, was then generating larger surpluses than the federal government.

At the same time, the Ontario economy was beginning to falter in the face of both intensifying international competition and weakening American markets. A rising Canadian dollar, driven upward by robust international markets for western Canadian natural resources, squeezed the vise even tighter on the traditional manufacturing sector.

For a while the growing regional divide was masked. On average, the Canadian economy was doing well, and regional disparities within the context of more general national prosperity attracted less attention. Unemployment rates were at record lows, and Canadians across the country were enjoying growing real estate wealth.

It was also assumed by most Canadians that the regional disparities being generated by Alberta's energy wealth, and for that matter by the general wealth of the resource-based western Canadian economy, would largely disappear once resource markets returned to normal levels.

The western boom was seen as a temporary blip, a one-off windfall analogous to a lottery win. As then-Alberta premier Ralph Klein noted when asked about high energy prices, "what goes up must come down" — which indeed had been the historical experience of Alberta's volatile boom and bust economy.

Thus Canadians waited patiently, or in some cases impatiently, for energy prices to return to normal, and for the natural order of things to reassert itself. Over time, however, it began to sink in that the new normal was $70 oil, and then $80, and then $90.

The good old days of cheap energy, and with them the older model of the Canadian economy, were gone, along with hot airline meals.

Now, of course, the Canadian economy was not alone in being hit by higher energy prices, and indeed, in some ways, was better off than most given that Canada was a net exporter of oil, natural gas, uranium and hydroelectric power. The problem and the political crisis came from the unequal regional distribution of those resources.

Slowly it became clear that the accumulation of wealth in Alberta, and to a lesser degree across the West, was the new reality.

At the same time, the Ontario economy continued to be squeezed by competitors from China and India, by American protectionism in the face of the same competition, and by weakening American markets as the U.S. grappled unsuccessfully with growing debt, a deteriorating balance of payments, and international obligations that could not be shed.

In response, the western provinces were scrambling to find ways by which regional wealth could be used to positive national effect. The Alberta government, for example, generously endowed the Canadian Scholarship Fund to the point where it dwarfed the Rhodes and Woodrow Wilson funds, and where it was attracting the best and the brightest international students to universities across the country.

Similar endowments for medical research, wellness programs, clean coal and sustainable energy research were pushing Canada to the forefront of the international research community. Canada, led by the western provinces, was shedding its historical underperformance in the commercialization of university research.

Furthermore, the western provinces collaborated to strengthen transportation linkages between Canada and the booming Asia Pacific economies, with positive effects that rippled across the country from sea to sea to sea.

And, in Alberta, the onslaught of prosperity gave residents both the opportunity and the luxury to manage the impact of energy developments on an increasingly stressed provincial land base.

The pace of development was brought within the carrying capacity of the physical environment, and the province's vast energy endowment was not being exploited at the expense of its natural capital.

These steps, however, could moderate but not bridge the growing regional divide in the national economy. As oil prices crept past $100 a barrel, and then past $110, and then $120, the divide became even deeper. Every escalation brought more wealth to the West, and more cost-pressure to central Canadian firms.

As energy prices continued their inexorable climb, the regional imbalance grew in step, and all this took place against the backdrop of a troubled American economy.

There was no question that the regional concentration of energy wealth was a source of strain for the federation as Ontario and Quebec faced significant out-migration of people and head offices, and immigration became more difficult to attract. Not surprisingly, therefore, a political reaction was inevitable.

Although the western-led national government argued gamely that what was good for the Alberta economy was also good for the Canadian economy, the political battle was lost to a coalition of opposition parties running under the banner "Canadian resources for Canadians."

The equalization formula, funded as it was by federal taxpayers — the great bulk of whom lived outside Alberta and even outside the West — provided little counterweight for the public wealth that was piling up in Alberta.

The province's Heritage Savings and Trust Fund, now worth well over $150 billion, made Alberta an easy target.

Shortly before the pivotal election, renewed military conflict in the Middle East, nuclear weapons testing by Iran, and an outbreak of civil war in the Russian Caucases drove oil prices close to $200 a barrel.

Despite a surge of migration into the West, the majority of the national electorate still lived in Ontario and Quebec, and swept into power a new government determined to arrest and even turn back the energy-led tide of prosperity in Western Canada. Many in the West, particularly those with relatives, friends and business colleagues living in other parts of Canada, had some sympathy for "Canadian resources for Canadians." Western Canadians, after all, were enjoying a great deal of prosperity and thus the change in the national government alone was not enough to push them over the national unity edge.

Unfortunately, things did not go well politically.

The new federal government, led by Ontario's first prime minister in more than 50 years, introduced a draconian series of tax measures to channel energy wealth into the national treasury.

The need to address global warming was used as the rationale for sweeping carbon taxes, but the regional redistribution of wealth was the real driver. Constitutional niceties were put aside as the federal government's responsibility for peace, order and good government was expanded to include the responsibility to reduce regional disparities. Energy resources, it turned out, although not hydro resources, were now in the national interest and under the jurisdictional umbrella of the federal government.

Even then, Albertans were not pushed to the breaking point.

The straw that finally broke the province's back was the environmental disaster unleashed by federal management of Alberta's resource endowment.

The province was quite literally out of sight and out of mind, and as the price of oil approached $200 a barrel, the focus of the national government shifted to more and more production.

The collapse of an increasingly fragile environment and the destruction of iconic landscapes were seen as an unfortunate but unavoidable price to pay as the rest of the country used petrodollars as a shield to protect provincial economies from ever-intensifying international competition.

In short, Alberta became the Canadian cash cow, the bulwark against the economic effects of international competition and weak American markets.

Energy revenues were used to prop up an increasingly unproductive manufacturing economy, with petrodollars becoming the new tariff wall. In the near term, Canadians were therefore able to avoid the painful economic adjustments that other countries had to endure in the face of high energy prices, but in the long term the national economy was further weakened.

It turned out, of course, that while the concentration of energy wealth in one province had dramatic effects, the distribution of that wealth across a much larger national population had correspondingly more limited effects.

The expectations held by supporters of "Canadian resources for Canadians" could only be met if energy production was pushed higher and higher, and pushed beyond the carrying capacity of the Alberta environment.

Environmental protection comes first and foremost from those who can taste, see, touch and breathe environmental degradation, and not from distant bureaucrats or voters.

This meant that as control of Alberta's resource endowment shifted from provincial to national hands, concerns about environmental damage weakened.

The standards of environmental stewardship and intergenerational equity that had come to shape the provincial policy architecture were abandoned by a national government intent on maximizing energy revenues.

The result was the emergence of a new and powerful political coalition in Alberta determined to lead the province out of Canada.

Environmentalists locked arms with energy producers in defence of the province; ideologically moderate urbanities joined forces with ranchers and farmers as both the urban and rural environments became even more stressed.

"Canadian resources for Canadians" came to be seen as environmental degradation for Alberta, and thus the fight was joined to save both the provincial economy and environment.

And now, in 2020, where do we stand as Albertans prepare to go to the polls, and to strike out on their own?

The nation's energy wealth has been dispersed and dissipated without strategic impact; there is no legacy except for unsustainable regional transfers and social programming.

Canada is trailing rather than leading the technological race to wean the global economy from its dependence on hydrocarbons. Alberta's population has shrunk as people fled a growing ecological disaster. And, ironically, the rest of the Canadian economy, buffered by energy revenues, is now even less able to compete globally.

The Alberta Camelot that began to emerge in 2006 has come and gone. It was the Canadian curse that the Camelot created by high energy prices was located "in the regions," that it came to be seen as a national threat rather than a national asset.

What, then, could we have done differently?

We could have recognized that regional swings in the national economy are inevitable, and should be accommodated rather than resisted by public policies.

We could have accelerated the transition to new energy sources instead of shielding Canadian industries and consumers from high energy prices.

We could have built on the wisdom of "think globally, act locally" and recognized that the delicate balance between economic growth and environmental protection is better struck provincially rather than nationally.

We could have built protections for regional interests and aspirations into the institutional architecture of the national government

We could have done a lot, and instead we stand on the verge of losing so much. It should never have come to this.

Roger Gibbins is president and CEO of the Canada West Foundation, a public policy research group based in Calgary.

 

[unimaginative2]

That article's such a laugh. $150 billion dollar Heritage Fund? Vast funding for research? All that windfall is going to is inflation-generating, vote-buying cheques.

 

[ganjavih]

Yawn...

 

[Antiloop33rpm]

What would be the basis of your argument?

As unimaginative said, one industry, one export is part of it. It is not hard to see how Alberta is following this direction as oil seems to be all it will speak of anymore. But there are also other aspects of the Banana Republic that are applicable. The first is heavy corporate control over the resources. With nationalization unlikely to take place it is safe to say that corporations will continue to control this resource and no doubt push for further control over various aspects. There is also the role that government played. In many cases the Latin American companies where controlled by dictatorial or corrupt governments whos primary interest was ensuring the corporate stranglehold remained in place. In Alberta, will those two descriptions may be harsh, there has been more and more policy made around oil and the heavily reliance on oil for federal funds and balanced budgets puts a lot of importance on oil and could very well lead the government to operate in a dodgey manner in order to keep it as such. And of course you have Mr. Harper who's pro-oil policies only continue to build up Alberta as a single resource kingdom.

The final part of the paper would deal with some of the possible negative outcomes that could arise from following these policies. The most obvious one would be economic collapse should prices or demand drop. But there are other possible outcomes, seperate or in addition to, that could also take place such as violence, and military interference.

Edit: As for the seperatist scenario article, and western seperatism in general, I find it hard to believe that there will ever one day be the same kind of support that exists in Quebec. The idea of seperate Alberta has been floated around 20 years or more and in that time there really hasn't been any growth in the movement. No strong seperatist media. No strong indoctrination in the school systems. Obviously such a movement could, in theory rise up over night, but another element that is missing is one that tends to be at the core of most cases for seperatism and independence and that is oppression of rights and freedoms. Quebec seperatism grew in a time where many people were very poor, stuck in a highly church run state, and found their language being threatened. Are there really that many cases of a province or region demanding seperatism based almost solely on the fact that it just wants to make more money and not pay those 'bastards' back in Ottawa?