Stephen Harper is Failing To Defend Canadian Technology Jobs While Simultaneously Discouraging Innovation


– ‘Research in Motion’ and ‘Nortel’ are two (very) Canadian companies. What differentiates them from other companies is that they have been consistent in investing in R&D. Chrysler and GM, along with Canada’s petroleum companies, put a bare minimum into innovation.

– The Export Development Corp. extended a $300-million line of credit to Nokia Siemens Networks to buy Nortel’s wireless assets. Prime Minister Harper has decided that his priority is not protecting Canadian jobs. Nortel did have bad management, but so did GM and Chrysler. While Nortel holds the patents to products that people actually buy, GM/Chrysler made cars nobody bought that were terrible for the environment. GM/Chrysler are now putting more (still not enough) money into R&D, the bailout worked, why not the same for Nortel? Not only does Prime Minister Harper hold a double-standard towards Nortel, he is making it easier to dismantel the company peice by piece and selling it to a company that isn’t Canadian. Stephen Harper is punishing Canadian companies that acts responcibily and effectively (the way the public actually wants a company to behave) like RIM and rewarding non-Canadian companies.

– “Nortel’s hundreds of wireless patents would let RIM build one of the world’s most formidable wireless networks.” Canada could become a world leader in a field that is expanding very quickly.

In another article the Toronto Star says that defending Nortel: “could be accomplished simply enough by withdrawing EDC’s support for the Nokia Siemens bid. And by reminding Siemens AG, half-owner of the front-running bidder for Nortel’s wireless operations, that the portion of Siemens’ $2.6 billion in Canadian business that is government-related is not something to take to the bank in future years if Nokia Siemens does not develop a sudden lack of interest in one of Canada’s few remaining global champions.”

– Tony Clement has said it “was not the government’s role to determine” who would win the auction for Nortel. The Conservatives also don’t believe it’s the governmnts role to effectively regulate nuclear isotopes, or competently run the economy. The problem is that by giving $300 million to Nokia Stephen Harper’s government has already taken an active role. A role that hurts Canadians.

– From the Globe and Mail: “At a time when they were rescuing GM and Chrysler, they didn’t ask the simple question: Could we restructure Nortel to preserve the enormous intellectual property and research capacity in Canada,” Mr. Ignatieff said Wednesday. “It’s a huge loss, and it means a leading Canadian player – RIM – is going to be faced with competition from intellectual property that was originated in Canada and is now being sold to foreign companies.”

Many Canadian industries are lagging behind in innovation (from cars to lumber.) Prime Minister Harper has repeatedly punished progress, hindered development and discouraged any form of innovation or willingness to put money into R & D. The Prime Minister has appointed anti-science men/women to NSERC, his government has cut University funding for science and has no plan to help Canadian companies compete in the ‘Knowledge Economy’ of the future.

Since it is too late to save Nortel, the Canadian government should let Jim Balsillie buy the patents he needs for RIM and hopefully learn from this situation.

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 for deux poids, deux mesures: 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.

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