The Hollowing Out of Corporate Canada?

[jdobbin]

At the moment, the only thing Harper seemed to have an issue with is if a Chinese state company bought a Canadian company.

http://www.canada.com/topics/news/politics...6cdc2bc&k=80950

A report earlier Wednesday also revealed that foreign direct investment in Canada last year, fuelled by takeovers of firms here, surged 10.1 per cent or $41.3 billion last year to $448.9 billion.

It was the steepest increase in such investment, which is aimed at corporate control, since the collapse of the high-tech boom in 2000, the Statistics Canada report noted.

“The increase was mostly the result of acquisitions of major Canadian firms by foreign investors, which was also the case in 2000,” it said.

However, it noted that Canadians last year were also buying up foreign firms.

“Both Canadian direct investment abroad and foreign direct investment in Canada recorded the highest percentage increase in six years ... ,” Statistics Canada said.

In fact, according to an analysis by KPMG released Wednesday, there have been more Canadian acquisitions of foreign firms than foreign acquisitions of Canadian firms over each of the past two years.

“Despite the perception that Canada is up for sale, there is significant deal flow going both ways,” said KPMG’s Peter Hatges.

With Alcoa in the hunt for Alcan, will Quebec MPs have the same acquiescence.?

[geoffrey]

Personally, I enjoy spending other countries money... far more than I enjoy spending my own. But hey, if you think we should only send our money to other people, then that's ok too. There is a reason why Alberta has a higher GDP per capita by a huge margin over anywhere else in Canada, it's all foreign dollars that boost us there.

There is very limited capital in Canada to do anything, let's open the market up completely to foreign companies (excluding state owned operations) and have some fun with the massive wealth we'll have.

Look at Ireland, or Alberta, if you need an example of how massive foreign investment has made regions extremely wealthy.

[August1991]

With Alcoa in the hunt for Alcan, will Quebec MPs have the same acquiescence.?

Quebec's Caisse de depot (the equivalent of the CPP) has a 28% equity stake in the British Airport Authority (Heathrow).

Quebecers or Canadians are in no position to criticize foreigners buying Canadian assets when they themselves buy foreign assets.

Moreover, the possible takeover of Alcan may possibly be to the advantage of the Caisse and other Canadian investors. The value of their investment may increase.

[incidentally, I am repeating the points made by the head of the Caisse in Quebec.]

I frankly think this argument of "foreign ownership" is a curious position of the NDP et al that merely plays into the hands of the Paul Desmarais of Canada. Desmarais gets to be a big fish in a small, protected pond.

The world's largest airport operator BAA plc was acquired for $24.7 billion by a consortium formed at the direction of Grupo Ferrovial, S.A. of Spain, Caisse de dépôt et placement du Québec and GIC Special Investments Pte Ltd of Singapore. BAA owns and operates seven UK airports (including London Heathrow, Gatwick and Stansted) and operates 12 international airports including four in the United States, six in Australia, one in Italy and one in Hungary.

Link

[geoffrey]

I frankly think this argument of "foreign ownership" is a curious position of the NDP et al that merely plays into the hands of the Paul Desmarais of Canada. Desmarais gets to be a big fish in a small, protected pond.

Bingo.

[jdobbin]

Personally, I enjoy spending other countries money... far more than I enjoy spending my own. But hey, if you think we should only send our money to other people, then that's ok too. There is a reason why Alberta has a higher GDP per capita by a huge margin over anywhere else in Canada, it's all foreign dollars that boost us there.

There is very limited capital in Canada to do anything, let's open the market up completely to foreign companies (excluding state owned operations) and have some fun with the massive wealth we'll have.

Look at Ireland, or Alberta, if you need an example of how massive foreign investment has made regions extremely wealthy.

I think the one thing that Australis has done when approving large mergers or takeovers is to ensure the head office of the merged company is in Australia. That was how BHP-Billiton came to be.

What do you think of that?

[jdobbin]

With Alcoa in the hunt for Alcan, will Quebec MPs have the same acquiescence.?

Quebec's Caisse de depot (the equivalent of the CPP) has a 28% equity stake in the British Airport Authority (Heathrow).

Quebecers or Canadians are in no position to criticize foreigners buying Canadian assets when they themselves buy foreign assets.

Moreover, the possible takeover of Alcan may possibly be to the advantage of the Caisse and other Canadian investors. The value of their investment may increase.

[incidentally, I am repeating the points made by the head of the Caisse in Quebec.]

I frankly think this argument of "foreign ownership" is a curious position of the NDP et al that merely plays into the hands of the Paul Desmarais of Canada. Desmarais gets to be a big fish in a small, protected pond.

The world's largest airport operator BAA plc was acquired for $24.7 billion by a consortium formed at the direction of Grupo Ferrovial, S.A. of Spain, Caisse de dépôt et placement du Québec and GIC Special Investments Pte Ltd of Singapore. BAA owns and operates seven UK airports (including London Heathrow, Gatwick and Stansted) and operates 12 international airports including four in the United States, six in Australia, one in Italy and one in Hungary.

Link

I certainly don't have a problem with mergers and takeovers. The only addendum I can think for a speedy merger might be the same policy as Australia has which is the head office one.

[geoffrey]

I think the one thing that Australis has done when approving large mergers or takeovers is to ensure the head office of the merged company is in Australia. That was how BHP-Billiton came to be.

What do you think of that?

Head offices are really irrelevant in today's super-decentralised corporate structure. Shell Canada for example is headquarted at 4th and 4th in Calgary, but Royal Dutch Shell is obviously headquartered in Windmill land .

Guess where the combo of the two spends the most money? Oilsands or in the Netherlands developing uuuhhhh, tulip fields? Should Royal Dutch move to Calgary in order to have consolidated ownership of Shell Canada?

Do I have a problem with a wooden shoed Jeroen van der Veer spending his money in Alberta? Giving Albertans jobs? Building Albertan infrastructure?

The head office doesn't matter, where the dollars are spent does.

The reason I picked on Shell is that RDS wants to buy out the 22% of Shell Canada shares that they current don't own and are traded on the TSX (you made some money in your RRSP on that announcement, by the way, and when gains are realised, Canada's net wealth will have increased). Should RDS move their head office to Calgary if they want to do so? Should they always have been located in Calgary?

Or better yet, why does the head office really matter?

I don't work in the oil industry, but I see the wealth that is gained through their spending in my city in particular. I don't think we can ever turn our backs on how much more money is outside of Canada, and silly restrictions like head office relocation don't help.

Look at Devon Canada vs. Devon Energy. Look at ConocoPhillips Canada vs. ConocoPhillips.

Even look at the partnerships, like Syncrude/Suncor. Should their investors have to relocate to Canada?

Sorry about only referring to oil examples, but I think they are the clearest example.

[jdobbin]

The head office doesn't matter, where the dollars are spent does.

I agree. The Australian governments argument was that more money was spent in the country when the head office was there. They broke it down into employees, execs, money spent by these people, how they were the heart of a business community and how it fed on itself to create more business.

No doubt money will also be spent in a branch plant economy but the absence of the movers and shakers and entrepreneurs hurts communities.

[geoffrey]

No doubt money will also be spent in a branch plant economy but the absence of the movers and shakers and entrepreneurs hurts communities.

If this were 10-15 years ago, I would agree. But that's outdated thinking. The enterprise model in favour now is extremely decentralised, entrepreneurial based companies. Shell Canada, while being ultimately control in the Netherlands, has an executive team here.

We might lose some admin jobs by not having head offices here, but the decisions are more and more made on the ground in the community that it affects. Social responsibility is now one of the major issues in a project... not like the rape and pillage approachs of only a few decades ago.

[August1991]

The Australian governments argument was that more money was spent in the country when the head office was there. They broke it down into employees, execs, money spent by these people, how they were the heart of a business community and how it fed on itself to create more business.

No doubt money will also be spent in a branch plant economy but the absence of the movers and shakers and entrepreneurs hurts communities.

I can't speak intelligently of the Australian policy (I don't know it) but I can say something about the mindset underneath Dobbin's opinion.

Dobbin, you seem to think that the government can creat wealth by forcing a corporation to do something it otherwise wouldn't. That's extremely unlikely, and certainly not in this case.

If the Canadian government forces BP or Shell to spend money it otherwise wouldn't, you can be certain that BP or Shell willo find a way to shift the expense on to someone else, and that someone else will be a Canadian.

Here's another way of looking at this. If the Canadian goverment wants to force BP to do something BP won't otherwise do, then that amounts to a tax of BP. Why not just impose the tax directly on BP and distribute the tax revenue to all Canadians?

[jdobbin]

I can't speak intelligently of the Australian policy (I don't know it) but I can say something about the mindset underneath Dobbin's opinion.

Dobbin, you seem to think that the government can creat wealth by forcing a corporation to do something it otherwise wouldn't. That's extremely unlikely, and certainly not in this case.

If the Canadian government forces BP or Shell to spend money it otherwise wouldn't, you can be certain that BP or Shell willo find a way to shift the expense on to someone else, and that someone else will be a Canadian.

Here's another way of looking at this. If the Canadian goverment wants to force BP to do something BP won't otherwise do, then that amounts to a tax of BP. Why not just impose the tax directly on BP and distribute the tax revenue to all Canadians?

I don't think I said anything about creating wealth. People do that. Businesses do that.

As far as Australia goes, BHP in London wanted to buy Billiton in Sydney. The Australian government said sure. Just put the head office in Sydney.

BHP said "deal." Now, one of the largest mining companies is based in Sydney.

Having the head office has proven to be a huge factor for a city, a province and a country.

I have no problem with mergers per se. The government can and should look to make sure that there might be a net benefit from it. The Australian measure is probably the least they could do. You should look it up.

[Big Blue Machine]

There's an article in the business part of the Globe that says that a KPMG study finds that Canadian companies are actually buying more foreign companies than vice versa.

So no need to worry.

[jdobbin]

If this were 10-15 years ago, I would agree. But that's outdated thinking. The enterprise model in favour now is extremely decentralised, entrepreneurial based companies. Shell Canada, while being ultimately control in the Netherlands, has an executive team here.

We might lose some admin jobs by not having head offices here, but the decisions are more and more made on the ground in the community that it affects. Social responsibility is now one of the major issues in a project... not like the rape and pillage approachs of only a few decades ago.

And I have seen the opposite. The company I worked for had its head office function in Winnipeg. They were bought by a Montreal company and a regional office was set up in Edmonton. The company used to have 25 people in a management team that served the country. The were on the Blue Bomber Board of Directors, had season tickets to all the sports, were involved with the United Way and were a force in the community. They were also profitable but not huge.

Now the company has a single manager, does no charitable work and have no one involved in community activity. This can't be said for the Edmonton and Montreal offices which do all those things. I wish I could say that this isn't the rule of thumb from some of these mergers and takeovers but if you live in Winnipeg or Hamilton or even Montreal, you've seen it happen a few times.

It is better to have the head office than not have it.

[jdobbin]

There's an article in the business part of the Globe that says that a KPMG study finds that Canadian companies are actually buying more foreign companies than vice versa.

So no need to worry.

And some of those companies have to do meet far more requirements than foreign companies do for buying in Canada.

I think head offices should be a issue.

[dpwozney]

Dobbin, you seem to think that the government can creat wealth by forcing a corporation to do something it otherwise wouldn't. That's extremely unlikely, and certainly not in this case.

If the Canadian government forces BP or Shell to spend money it otherwise wouldn't, you can be certain that BP or Shell willo find a way to shift the expense on to someone else, and that someone else will be a Canadian.

“A corporation is a fiction, by definition, ...”, according to Patrick Healy in a statement that can be read here.

“A corporation is a 'fiction' as it has no separate existence, no physical body and no 'mind'”, according to this presentation by Joanne Klineberg.

The Governor General of Canada is a “corporation sole”, according to Elizabeth II in this document. A “corporation sole” is defined and recognized as being a corporation.

It is a fiction that a corporation is a person.

Do Canadians want businesses, companies, their government, and their Queen to operate in the realm of reality, or in the realm of fiction?

[August1991]

As far as Australia goes, BHP in London wanted to buy Billiton in Sydney. The Australian government said sure. Just put the head office in Sydney.

BHP said "deal." Now, one of the largest mining companies is based in Sydney.

Having the head office has proven to be a huge factor for a city, a province and a country.

I have no problem with mergers per se. The government can and should look to make sure that there might be a net benefit from it.

The government can decide whether there's a net benefit? Really?

If it was beneficial for BHP to have a "head office" in Sydney, then BHP would have had one voluntarily. If not, and BHP did it because they were forced to, then the expense amounts to a tax. But a curious tax that goes into the pockets of several Sydney office building landlords instead of Australian citizens in general.

And I'll bet that BHP shareholders did not lose anything. So the policy amounts to a cumbersome (and wasteful) transfer from Australians to Sydney landlords.

It is a fiction that a corporation is a person.

Do Canadians want businesses, companies, their government, and their Queen to operate in the realm of reality, or in the realm of fiction?

Uh, can you run that one by me again?

A contract is a voluntary agreement where both parties benefit and a corporation is a nexus of contracts.

Who cares whether a corporation is a "person" or not? And the last Big Mac I ate at Wal-Mart met my test of reality.

[mikedavid00]

Look at Ireland, or Alberta, if you need an example of how massive foreign investment has made regions extremely wealthy.

What do you consider 'wealthy'?

I don't feel a life in Ireland as compared to Canada to be more wealthy than here.

Here's what $300,000 CAN gets you in Ireland. Notice the cars outside.

I don't consider that a wealthy living personally.

It's like people calling Dubai wealthy.. You can't base everything off GDP per capita. That is far too simplistic of looking at things.

Wealth of a country is the quality of life and material items that one can afford. The USA is still tops by a longshot.

[jdobbin]

The government can decide whether there's a net benefit? Really?

If it was beneficial for BHP to have a "head office" in Sydney, then BHP would have had one voluntarily. If not, and BHP did it because they were forced to, then the expense amounts to a tax. But a curious tax that goes into the pockets of several Sydney office building landlords instead of Australian citizens in general.

And I'll bet that BHP shareholders did not lose anything. So the policy amounts to a cumbersome (and wasteful) transfer from Australians to Sydney landlords.

What expense are you referring to? What did it cost the Australian government to make it a condition that the world's largest mining company be based in Sydney?

[dpwozney]

Uh, can you run that one by me again?

Do Canadians want businesses, companies, their government, and their Queen to operate in the realm of reality, or in the realm of fiction?

“A corporation is a fiction, by definition, ...”, according to Patrick Healy in a statement that can be read here.

“A corporation is a 'fiction' as it has no separate existence, no physical body and no 'mind'”, according to this presentation by Joanne Klineberg.

The Governor General of Canada is a “corporation sole”, according to Elizabeth II in this document. A “corporation sole” is defined and recognized as being a corporation.

It is a fiction that a corporation is a person.

A contract is a voluntary agreement where both parties benefit ...

Both parties may think they will benefit, but both parties do not necessarily have to benefit.

... and a corporation is a nexus of contracts.

It is a fiction that a person can make a contract with a fictional entity.

Who cares whether a corporation is a "person" or not?

Maria cares if a corporation is not a person.

And the last Big Mac I ate at Wal-Mart met my test of reality.

Are you referring to Wal-Mart as something real, such as a physical store, or are you referring to Wal-Mart as a corporation?