This column originally appeared in Maclean’s.
Stop us if you’ve heard this one. Bombardier, the struggling Quebec transportation giant, has gone outside the company for its new CEO, Alain Bellemare, who brings with him a plan to right the business by raising capital, cutting its dividend, selling assets and reviving investor confidence. “There have been some execution challenges,” Bellemare, a former executive at United Technologies, admitted during his first Bombardier conference call with analysts. “But I think we’re getting pretty good traction.”
If it all sounds familiar, that’s because it is. In 2002, with Bombardier struggling amid the post-9/11 gloom in the airline industry, the company tapped outsider Paul Tellier (the former CEO of Canadian National Railway), who arrived with a similar plan to raise capital, slash the dividend, sell assets and win back investors. “Everything is not going to become perfect overnight,” Tellier said at the time, “but we’re on the right track.”
Or not. Tellier would be fired two years later after failing to deliver results. In the ensuing years, CEO Pierre Beaudoin has hardly performed better: The company’s highly touted C-Series medium-range jet project, on which Bombardier has staked its future, has faced endless delays and cost overruns. But when you’re a member of the controlling family, you get cut some slack, and so it’s off to the chairman’s office for him.
It doesn’t take an MBA to see the pattern of failure and disappointment here. It is now an open question as to whether Bombardier can survive intact. Certainly, the protectionist Quebec government will never permit Bombardier to put its entire plane and train business up for sale. But the risk that Bombardier’s relevance on the international stage will continue to diminish is something no act of the Quebec Assembly can legislate away.
That Canada’s national champions have shrunk, both in number and scale, is, unfortunately, nothing new. We’ve watched over the last 15 years as one iconic corporate brand after another has disappeared or been swallowed up: Inco and Alcan in mining, Nortel and ATI Technologies in tech, Tim Hortons in dutchies. There are exceptions, of course. The banks have international clout; on the annual list of the top 100 most valuable global brands by market research firm Millward Brown, three of the Big Five banks mark Canada’s only showing. Meanwhile, Magna International, the auto-parts company, and IT service provider CGI, are both important players abroad. But, each year, it has grown harder to point to large-scale Canadian firms dominating internationally.
Some have likened Bombardier’s struggles to the fight for survival at BlackBerry. It’s an interesting comparison, and not only because the two companies are among the worst long-term performers on the Toronto Stock Exchange. (Bombardier shares have fallen 79 per cent since early 2000, while BlackBerry is down 54 per cent.) Each company, in its own way, shows there is no easy answer to Canada’s vanishing corporate titans.
Look at it this way. If you’re in the camp that believes government should play a direct and active role in supporting Canadian companies, Bombardier offers a glaring example of where that path is apt to lead. For decades, Bombardier has been a regular customer at the Bank of Corporate Welfare, otherwise known as the governments of Canada and Quebec, with the two levels of government funnelling billions into the company’s coffers, either as direct grants or opaque repayable loans that may or may not ever be repaid. Through Export Development Canada, it’s estimated taxpayers have also backstopped more than $10 billion in Bombardier sales to international customers. Fat lot of good that’s done. On the other hand, BlackBerry is a textbook example of the inarguable brutality of consumer tastes. In failing to meet shifting customer expectations, the company is as much a victim of hubris as anything Steve Jobs ever did to it.
Even so, it is undoubtedly in the rough-and-tumble free market where Canada’s next generation of world beaters lie, as difficult and slow as that process of regeneration will be. We’re already seeing the green shoots, to borrow a phrase. A crop of fast-growing tech companies, namely Hootsuite, Shopify and Vision Critical, are likely to debut on the stock market this year. Another dozen or so are behind them. And, with the drop in oil slowing investment activity in the energy sector, there is more interest in Canada’s emerging technology sector than has existed in years.
Will we ever have as many national champions as before? Perhaps not. But, given a choice between government-propped-up laggards like Bombardier and a new breed of innovators, we should all welcome the latter.
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