Ottawa Rejects Sale of Company

[jdobbin]

http://www.ctv.ca/servlet/ArticleNews/stor...?hub=TopStories

The federal government has rejected the controversial sale of Canada's most famous space technology to an American arms maker.

Industry Minister Jim Prentice confirmed Thursday morning that he wrote to Alliant Techsystems Inc. on April 8 to advise the U.S. company that, "based on the information received at this time,'' he is not satisfied that the proposed sale of MacDonald, Dettwiler and Associates Ltd. is likely to be of net benefit to Canada.

Minnesota-based Aliant has 30 days "to make representations and submit undertakings'' in an attempt to alter this decision.

Guess the government didn't want to face the criticism that Diefenbaker did over Avro.

The question is: Does this mean continued government support of this company?

[Topaz]

http://www.ctv.ca/servlet/ArticleNews/stor...?hub=TopStories

Guess the government didn't want to face the criticism that Diefenbaker did over Avro.

The question is: Does this mean continued government support of this company?

I think Harper is hoping for a majority government and then he'll do what he pleases. It would be the end of the Cons if he did it before an election and the US companiy said it will still try to change their minds and the Cons could use the 1.4 Bil they were offered. Who ever is the PM must always remember the US can be your friend one day and turn around and be your enemy the next, this is past history. Of course, if Harper is in favour of Canada being part of the NA, the US would get it anyway!

[Leafless]

The question is: Does this mean continued government support of this company?

Up to now public tax payer funds supported this company.

In light of this, how can this fact possibly change?

This is all about Marc Garneau's image and federally subsidized Quebec jobs.

SCRAP IT.

[Shakeyhands]

I'm surprised to be honest. Flaherty and crew have a history of selling off companies and assets to hide budget deficets, maybe we do still have a bit of a cushion... Give it six months and we'll see.

[M.Dancer]

I'm surprised to be honest. Flaherty and crew have a history of selling off companies and assets to hide budget deficets, maybe we do still have a bit of a cushion... Give it six months and we'll see.

Given that it is not a crown corp., how would selling it have had that effect?

[daniel]

I'm surprised to be honest. Flaherty and crew have a history of selling off companies and assets to hide budget deficets, maybe we do still have a bit of a cushion... Give it six months and we'll see.

I won't be at all surprised if Flaherty has a deficit right now. He's been warning us for over a year now by using the term "back to Liberal deficit."

[August1991]

Guess the government didn't want to face the criticism that Diefenbaker did over Avro.

That comparison is inexact. Diefenbaker axed the Avro-Arrow because it was far too costly for what it would achieve. We had better uses for the money and could still have jet fighters.

(BTW, I have no desire to engage in a debate about the worthiness of the Avro-Arrow. A Rolls-Royce is a great car but I wouldn't drive one. I prefer to spend my money on other things.)

The question is: Does this mean continued government support of this company?

I find this question closer to the mark. For example, what to make of the following comment:

The most valued asset in the sale is Radarsat 2, which represents at least a $445-million taxpayer investment and decades of intellectual property development. One former Radarsat project manager estimates the real cost of the endeavour to the Canadian government at more than $800 million.

So, it's OK for the government to tax me and subsidize a Canadian that I have never met and don't know but it's not OK for the government to tax me and subsidize an American that I have never met and don't know.

If MacDonald, Dettwiler and Associates Ltd. received money to develop technology useful to all Canadians (including me), then what difference does it make whether MacDonald, Dettwiler and Associates Ltd. is owned by Canadians or Americans? OTOH, if MacDonald, Dettwiler and Associates Ltd. received money simply because they are Canadian, then why doesn't the government subsidize me - I'm Canadian.

Incidentally, MDA is listed on the TSX and Americans can own part of it (receiving federal largesse) through the simple expedient of buying shares.

Should the government forbid the sale on the grounds of national security and State Secrets? That's a joke question, right?

-----

This decision is all about politics and optics. The last thing the Tories want right now is to make pro-military nationalists angry. You pick and choose your fights and I'd say that this decsion was a no brainer even for the ideologically pure, fiscal conservatives in cabinet.

[jdobbin]

I'm surprised to be honest. Flaherty and crew have a history of selling off companies and assets to hide budget deficets, maybe we do still have a bit of a cushion... Give it six months and we'll see.

I've not heard if the Tories think in terms of funding the next generation of the space program. It is probably easier to sell a company that makes big demands on research and development than to keep it if the deficit does become an issue. Would a majority have changed the decision-making? Would a deficit?

[jdobbin]

I won't be at all surprised if Flaherty has a deficit right now. He's been warning us for over a year now by using the term "back to Liberal deficit."

Certainly the last GST cut strangled revenue and left little room for personal and corporate income tax cut which *would* have acted as a stimulus on the economy.

[bk59]

Up to now public tax payer funds supported this company.

...

This is all about Marc Garneau's image and federally subsidized Quebec jobs.

Except that a lot of these jobs are in Ontario and BC, not Quebec. This is also not a case of tax payer funds "supporting" the company. Tax payer money was not simply given to the company. As just one example, the government of Canada bought a share of a satellite that will be used by the government for the life of the satellite. It is hard to see how they would have bought that interest without paying for it.

And this has almost nothing to do with Marc Garneau. I have no idea why you would think it does.

So, it's OK for the government to tax me and subsidize a Canadian that I have never met and don't know but it's not OK for the government to tax me and subsidize an American that I have never met and don't know.

All other things being equal (as is the case in your example above) then yes, give the money to a Canadian rather than an American. Why? Because we are talking about the CANADIAN government. We can let the American government support Americans.

Should the government forbid the sale on the grounds of national security and State Secrets? That's a joke question, right?

Maybe the reason this question is a joke is because people see no problem with giving control of Canadian hi-tech companies to foreign companies. We do not have the defense industry here that the US has - and that is probably a good thing. But that does not mean that we should have no hi-tech R&D capabilities owned, operated & controlled by Canadians.

This decision is all about politics and optics. The last thing the Tories want right now is to make pro-military nationalists angry. You pick and choose your fights and I'd say that this decsion was a no brainer even for the ideologically pure, fiscal conservatives in cabinet.

This does seem to be the case. There are only so many different constituencies you can piss off with actions that can be characterized as anti-Canadian. However I don't think we've seen the end of this. Alliant still has 30 days to convince the government that the sale is a good thing. The Tories are a party that generally prefers to avoid government interference in these matters and I think this sale could still go through.

I personally think keeping this company as a Canadian company is a good thing.

[Wilber]

A Rolls-Royce is a great car but I wouldn't drive one. I prefer to spend my money on other things.)

Now owned by Volkswagen.

[GostHacked]

That comparison is inexact. Diefenbaker axed the Avro-Arrow because it was far too costly for what it would achieve. We had better uses for the money and could still have jet fighters.

Not it was political pressure from the US to scrap the Avro Arrow in favour of missle defence technology, which never came to fruition, so Canada scrapped one of the best airframes in the world to support a technology that never came to pass. Diefenbaker simply screwed us.

At that time the Avro was way ahead of it's time, and I would guess the US did not want anyone else to get an upper hand on their technology.

[Shakeyhands]

Given that it is not a crown corp., how would selling it have had that effect?

Quite right, I had assumed it was a crown corp. Should have read the article more attentively.

[M.Dancer]

Not it was political pressure from the US to scrap the Avro Arrow in favour of missle defence technology, which never came to fruition, so Canada scrapped one of the best airframes in the world to support a technology that never came to pass. Diefenbaker simply screwed us.

That is simply not true. At the time there was no missile defense tech. Not only was the Arrow scrapped because advances made it obsolete, the US alos scrapped a similar warplane with the same mission.

The Arrow was to be an interceptor design to counter soviet bombers at high altitude over the arctic by firing nuclear air to air missiles.

With the advent of the ICBM and almost no orders out side of Canada, the money hungry arrow was no longer needed.

I'm not sure who in their right mind would want nuclear weapons on our soil....but it was the liberals I believe who wanted to have the nuclear armed Bomarc to counter the remaining Soviet bomber threat.

[Wild Bill]

Not it was political pressure from the US to scrap the Avro Arrow in favour of missle defence technology, which never came to fruition, so Canada scrapped one of the best airframes in the world to support a technology that never came to pass. Diefenbaker simply screwed us.

At that time the Avro was way ahead of it's time, and I would guess the US did not want anyone else to get an upper hand on their technology.

There are a number of very good books written about the Arrow. You might want to read a few. It would likely change your opinion.

The best and simplest explanation given by those who were there at the time was that Avro Arrow was very well connected to the Liberal Party and never bothered to build any bridges with the Conservatives. Diefenbaker had railed while in Opposition against what he called a Liberal money pit. He had no idea of what the Arrow was or what it could mean to the Canadian aerospace industry. He had no thoughts about our domestic need for such a fighter or how much money could be made by selling the plane to our NATO partners. His ties were to the Prairies, not Malton.

When Dief got into power in a surprise upset he immediately moved to cancel the contract for Arrow fighters. He had other plans for the money, like for wheat farming. Unfortunately, cancelling the contract meant the fall of the company. It has been reported that when the stories about the layoffs hit the papers Dief and his advisors were horrified! Lost jobs are very bad press for a government. So they phoned up Avro Arrow and asked "Can't you just build something else, like tractors?"

They had no idea of the consequences of what they had done, but they sure understood the political tricks to try to bury it! They quickly understood that if the Arrow was sold to Britain or America (both of whom were frantically waving wads of money!) and proved to be as leading edge and successful as it appeared it would be hugely embarrassing for Dief's government. So the plane had to be scrapped and the plans burned! The spin immediately started that the Arrow really didn't fit our needs and wasn't really so "amazing".

No conspiracies about American plots out of jealousy. No secret plots to make us spend the money on missile defense. Simply a mistake by a new government that had a different power base to reward and a frantic cover-up when they learned what they had done. To me that makes much more sense.

Occam's Razor, eh!

[M.Dancer]

They quickly understood that if the Arrow was sold to Britain or America (both of whom were frantically waving wads of money!) and proved to be as leading edge and successful as it appeared it would be hugely embarrassing for Dief's government.

Occam's Razor, eh!

Except there were no buyers and again, and the US conterpart (and probably a better designed one at that) that would eventually become the F-111 was cancelled.

And since then, not one nation has built a dedicated bomber interceptor.

[bush_cheney2004]

That is simply not true. At the time there was no missile defense tech. Not only was the Arrow scrapped because advances made it obsolete, the US alos scrapped a similar warplane with the same mission.

Agreed....in fact...the US helped in the development of the Arrow with testing facilities at Langely, a loaner B-47 test bed, and fire control/missile suite development not paid for by Avro/Canada.

This failed MDA deal could have longer terms repercussions for MDA Federal contracts in the USA. I left ATK in the 90's, but one thing that has been consistent since then is widespread consolidation in defense manufacturing and services procurements based on dollars and politics, and not necessarily in that order.

[jdobbin]

Quite right, I had assumed it was a crown corp. Should have read the article more attentively.

It does receive a lot of federal money though in research and development. If the foreign sale is banned, we are left wondering if Canada will continue to fund that research. If we are in deficit in the next year perhaps this sale to a U.S. arms marker will be re-visited.

[madmax]

It does receive a lot of federal money though in research and development. If the foreign sale is banned, we are left wondering if Canada will continue to fund that research. If we are in deficit in the next year perhaps this sale to a U.S. arms marker will be re-visited.

Prentice has made a prudent move. A precedent setting move according to the papers. The NDP appear to be all over this file and I would guess that if this is revisted they will continue to spolight the issue, regardless of whether the Country is in deficit, or the Liberals or the Cons are in power.

If people start to view our technology leaving in this fashion like, the Avro Aero has been missed over the last 40 years, then a move to let it go, could turn out tol be a Diefenbaker like achievement.

[jdobbin]

Prentice has made a prudent move. A precedent setting move according to the papers. The NDP appear to be all over this file and I would guess that if this is revisted they will continue to spolight the issue, regardless of whether the Country is in deficit, or the Liberals or the Cons are in power.

If people start to view our technology leaving in this fashion like, the Avro Aero has been missed over the last 40 years, then a move to let it go, could turn out tol be a Diefenbaker like achievement.

What we don't know is the NDP committment to the space program. They may eventually have more terrestrial objectives and won't commit to the research and development over the long run.

[madmax]

What we don't know is the NDP committment to the space program. They may eventually have more terrestrial objectives and won't commit to the research and development over the long run.

You have to find new voters somewhere. If 50% of the Earthlings aren't voting, then using new R&D to find extra terrestrial voters is a noble cause .

[Shakeyhands]

You have to find new voters somewhere. If 50% of the Earthlings aren't voting, then using new R&D to find extra terrestrial voters is a noble cause .

LOL.... thats fantastic.

[M.Dancer]

It does receive a lot of federal money though in research and development. If the foreign sale is banned, we are left wondering if Canada will continue to fund that research. If we are in deficit in the next year perhaps this sale to a U.S. arms marker will be re-visited.

What a load odf nonsense...

If there is a deficit and we don't buy heir services will have no beqaring on whether they wish to be sold or not...

[Riverwind]

Incidentally, MDA is listed on the TSX and Americans can own part of it (receiving federal largesse) through the simple expedient of buying shares.

A 100% American owned MDA would still be a Canadian company subject to the laws of Canada and paying taxes in Canada. The only reason this deal got squashed is because the acquirers insisted on merging MDA with its operations in the states. The deal will be likely restructured to keep MDA as an independent company with a majority of shares held by the American buyer.

This decision is all about politics and optics. The last thing the Tories want right now is to make pro-military nationalists angry. You pick and choose your fights and I'd say that this decsion was a no brainer even for the ideologically pure, fiscal conservatives in cabinet.

MDA is chump change compared to Alcan, Inco or Falconbridge. The government decided it could afford to sacrifice this particular deal in the name of politics. In any case, the Ontario Teachers Pension Plan is the big sharedholder getting 'screwed' here and they don't have any business complaining after the regulators approved their idiotic leveraged buyout of BCE.

[Wild Bill]

Except there were no buyers and again, and the US conterpart (and probably a better designed one at that) that would eventually become the F-111 was cancelled.

Not true! Both the USA and Britain wanted to buy the Arrow and all the plans and paperwork. Dief's people flatly refused.

I think I'm gonna have to dig through my library again and get some quotes. When I do, I'll start a new thread if anybody's interested.