Wednesday, July 22, 2009


Jeffrey Simpson in The Globe and Mail today explains the basic duty of honourable leadership

I've written to Jeffrey Simpson and I hope others will, too, after you read his opinion of fairness to the public. He could as easily be talking about BC Rail as about another Canadian treasure: Nortel. I'm going to break all the rules and post in full, begging G&M forgiveness in the circumstances. What circumstances? The need citizens feel, to hear a strong voice saying these things which happen to be what most of us feel about Canada in any transaction. In any plan of action. [Recall a distant news item about Gordo travelling to Washington DC circa 2001 for talks with Dick Cheney which focused on BCRail?] Go HERE to watch the readers' comments come rolling in on Jeffrey Simpsons view of the betrayal of Northern Telecom, recently known as Nortel. There are 42 comments so far ... I hope you'll add your voices. - BC Mary.

We were there for GM and Chrysler. Why not for Nortel?

Say what you like about Jim Balsillie, but here's a patriot who believes in doing something for his country and his company at the same time

Jeffrey Simpson
The Globe and Mail - July 22, 2009

When General Motors, Chrysler and their unions pleaded for money, Ottawa and Ontario stumped up about $10-billion to keep the metal-bangers afloat.

When Nortel Networks, the largest technology company in Canada, asked for help, the federal Conservatives waxed their ears and watched the company slide beneath the waters of insolvency.

One reason: The car companies had large, vocal, tough unions, whereas Nortel was full of white-collar, non-unionized employees. Another reason: The car companies were in economically stressed cities, whereas Nortel was in suburban Toronto and Ottawa.

GM and Chrysler did very little research in Canada, because most of it was done in the United States; Nortel was by far the largest private contributor to research in Canada. GM had a hundred engineers on staff in Canada; Nortel had thousands. The car manufacturers spawned parts suppliers and dealerships; Nortel, it is estimated, spawned 260 startup companies.

At its height, circa 2000, Nortel had 33,000 employees around the world, with 6,000 in Canada. Even in decline, Nortel continued to spend $1.8-billion a year on research, in a country starved for private-sector research.

There was, and is, no guarantee that government intervention could have saved Nortel; but there was, and is, no guarantee that government intervention will save GM and Chrysler. These companies, after all, had been losing market share for a long time.

It was said that nothing could be done to save Nortel, including from itself, but we'll never know because Ottawa didn't even try; it was said that nothing could be done to save GM and Chrysler, including from themselves, but we'll know because Ottawa (and Washington) did try.

It is said that, short of Canadian government intervention, the auto sector would have all slid south; without government intervention, all that will remain of Nortel in Canada are the remnants that foreign buyers choose to keep here.

It is unfair to say the federal government remained utterly indifferent to Nortel’s fate. Ottawa has abetted the dismemberment of the company. The Export Development Corp. extended a $300-million line of credit to Nokia Siemens Networks to buy Nortel’s wireless assets, apparently to save some jobs in Canada. A U.S. investment firm has now joined the bidding in the auction that’s to take place on Friday.

So there we have the extent of Ottawa’s industrial policy for Nortel: Offer credit to foreigners to buy part of a Canadian company, because the Finnish-German consortium says it will “save” 800 jobs in Canada.

Now along comes Jim Balsillie, the Ghost Rider of Canada's private sector, to announce that his company, Research In Motion, wanted in on the bidding for Nortel assets and was stymied.

Say what you like about Mr. Balsillie, who's also been butting heads with the National Hockey League in his bid to get a team transferred to Southern Ontario. Call him arrogant, a publicity hound, a man who doesn't play by the rules. In Canada's corporate plutocracy, where too many titans feel success is defined by selling their company to foreigners to “maximize shareholder value,” here's a patriot who believes in doing something for his country and company at the same time.

If a few more people like him had been active in political and bureaucratic circles in Ottawa - ministers such as C.D. Howe or Ed Lumley or John Crosbie - at least something would've been studied to keep Nortel going, instead of the sickening fire-sale spectacle.

Who knows if that “something” would have succeeded, given Nortel's problems? But if the car companies were worthy of all that attention, surely Nortel was worth more than a passing glance.

Nokia, poised to buy a part of Nortel, grew out of its home country, Finland, because its government (and people) decided that a small nation needed an industrial champion. Similar thinking remains in scarce supply in Canada.

With a bankruptcy auction set to start for Nortel's assets, it might be too late for Mr. Balsillie, even though Industry Minister Tony Clement, having read the morning papers, now says maybe, yes, a Canadian solution might be considered.

Mr. Clement, active on the auto bailout file, had been missing in action on the Nortel front, perhaps because he and his fellow Conservatives figured nothing should be done to interrupt the flow of the market. Mr. Balsillie begs to differ.

Have your say HERE. - BC Mary.


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