fpinfomart.ca

U.S. takeovers good for Canada, study
says
The Spectator
Wed 18 Aug 2004

Page: A16
Section: Business
Byline: Tara Perkins
Source: The
Hamilton Spectator

A study recently released by the C. D. Howe Institute says
U.S. companies are not buying up enough Canadian businesses.

The study aims to counter patriotic headlines over stories like the merger
of Molson and Coors and a possible takeover of The Bay by Minnesota-based
Target.

Here in Hamilton, a U.S. firm is taking a look at Stelwire and an American
investment firm recently bought Slater Steel.

The new study says those takeovers are exactly what Canada needs.

"Canadian companies are clearly not disappearing into the hands of
foreigners," it said.

In fact, the trend is in the opposite direction. Canadian companies are
buying and creating more businesses abroad than foreigners are here.

"Overblown fears of a fire-sale of Canadian corporate assets to foreigners
obscure the reality that Canada has become a net capital exporter, while
losing appeal as a destination for foreign investments," the study by the
right-leaning think-tank said.

A report released by Statistics Canada this spring found that between 1997
and 2002, Canadian firms bought 447 foreign companies. Foreign companies
bought 345 Canadian firms during the same period.

U.S. businesses make up about 65 per cent of foreign direct investment in
Canada and European ones about 25 per cent. In 2003, foreign direct investment
in Canada was the lowest it had been for a decade at $8.3 billion.

The C. D.
Howe study called on the Canadian government
to change tax and trade policies to ease foreign investment. Lowering business
taxes would be the easiest way to increase investment.

There has been "a deterioration in Canada's relative attractiveness as a
destination for new investments, a critical issue that has not received enough
attention."

More foreign investment means more jobs and money for Canadians, the study
argued.

When Delaware Street Capital took over Hamilton's dying Slater Steel, it
saved 300 local jobs. Stelwire, a Stelco division that employs about 400 in
Hamilton and Burlington, is up for sale.

Chicago-based Heico has said it's taking a look at Stelwire. Heico recently
bought Quebec steelmaker Ivaco and owns Robertson-Ceco, which in turn owns
Hamilton's Robertson Building Systems.

Despite its U.S. parent, Robertson bills itself as "one of the oldest
companies in Hamilton." And the maker of steel building systems promotes
itself by proclaiming, "more than 136 years in the Canadian market."

Jim Tiessen of McMaster's DeGroote School of Business said in some ways it
doesn't matter where a company's owner is. Tim Hortons is owned by a U.S.
company but considered a Canadian institution, he pointed out. However, he is
concerned about the loss of corporate headquarters in Canada. Head offices
mean top paying executive jobs and more work for local accountants, lawyers
and advertising firms.

The C. D.
Howe study said when a U.S. firm owns a
Canadian business, it's this country that benefits. It is estimated $1 billion
in foreign investment increases GDP by $4.5 billion and results in 45,000 jobs
within five years, the study added.

University of Toronto professor Joe D'Cruz said Canada has trouble keeping
large businesses in Canadian hands and that research, development and
innovation usually occur where large corporations are headquartered. "I'm
disappointed that Canadian companies are not capable of holding their own
against the United States."

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Edition: Final
Story Type: News
Length: 536
words