Canada Continues to Endure Hollowing-out
Monday, July 23rd, 2007
By Inya Ivkovic, MA for Profit Confidential
When Alcan, Inc., took its first independent breath in 1928, it was all about being Canadian and all about thinking globally. This, in Canada, is an oxymoron of sorts, since narrow-mindedness tends to localize even the best of visions.
True, during the early years of Alcan’s spinoff from Alcoa, both companies considered Pittsburgh as the location of their head office and Alcoa’s founder, Andrew Mellon, as their primary banker. It is also true that since inception, all of Alcan’s CEOs were Americans. Yet Alcan has always acted distinctly Canadian.
And while Canadians are still reeling from losing BCE, Inc., to private equity, we have to get ready for our corporate landscape to go through another major shift, and fast. Namely, we are going to lose Alcan to Rio Tinto plc in the largest foreign takeover in Canadian history to a tune of US$38.1 billion.
If there were voices minimizing the effects of Canada’s corporate hollowing out, they should fall silent by now. And while Rio Tinto has promised to keep things as is, at least for the time being, we all know that Alcan, as a Canadian entity, is definitely gone.
So, how did Alcan — in essence an American spinoff run by Americans — become so Canadian? The company’s Canadian roots grew the longest in the period just before World War II, up until the early 1960s. Right from the beginning, when Alcan took Canada as its main mandate, the company expanded its horizon not just past the country’s borders, but past the entire continent.
To help with war efforts, Alcan’s head office literally ballooned, as the company designed, financed, and built smelteries, along with a hydroelectric plant to power them. This was happening on the domestic front. At the same time, the engineering department peaked at having employed 170 engineers and architects; studying international projects, such as aluminum plants in India.
Unfortunately, it seems we lost Alcan due to our own idiosyncrasies, such as victimizing Canada-oriented companies with Quebec’s threats to nationalize water resources, Quebec politicians worrying about ruining their images as nationalists investing in pro-Canada companies before independence referendums, or Canadian pools of money not having the brains to acquire significant stake in Alcan, and thus entrenching first barriers against takeovers.
Sadly, it is all a moot point now. Rio Tinto succeeded in taking one more corporate gem off our hands. And although smelteries are not likely to grow legs and move south of the border, Alcan’s Montreal head office will no longer be its own, but Rio Tinto’s. Soon there won’t even be a Montreal office. This takeover is neither the first nor the last, but it sure hurts to see them all go.
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