Jean Paschini has learned to do business south of the border the hard way.
The chairman and CEO of ADF Group Inc., which makes steel structures, almost lost his 56-year-old company after taking on a contract to complete the roof of a new football stadium for the Detroit Lions. The project ran $70-million over budget because of a never-ending list of design changes, and the team refused to pay the extra money.
That experience taught him a lesson. So if you want to understand why the Quebec businessman recently caused a stir by holding hostage the 458-foot steel antenna that will top the new Freedom Tower of the World Trade Center. now you know. Within a week of the legal standoff, ADF had received the $25-million it was owed by the government agency that is rebuilding the towers devastated by the 2001 terrorist attacks.
“It is sad I had to resort to this, but I didn’t feel like losing that money or spending years in court,” Mr. Paschini said. Things weren’t like this 20 years ago, he added, but now, “the United States is a vindictive country where everybody lawyers up and sues everyone.”
Ask Mr. Paschini if he thinks that business will get any better after the election and he responds swiftly. “Republicans or Democrats, they are all the same,” he says. Business bullies, it seems, can come in the form of donkeys or elephants.
Mr. Paschini’s comments are echoed across Quebec. The province’s business leaders may have followed the U.S. election with great interest – but few of them believe it will make much difference to their business prospects.
The province harbours no dream of building a long pipeline to the Gulf of Mexico. Nor is it as dependent as the Ontario car industry on having a new bridge between Detroit and Windsor to unclog truck congestion. The “fiscal cliff” and the feared contraction of the U.S. economy remain a profound concern. But Quebec’s export sector doesn’t rely on the verdict of U.S. voters.
Quebec’s most important business export is aerospace products, which accounted for 11.2 per cent of the province’s total in 2011, according to National Bank Financial figures. But these manufacturers operate in a world market, and the health of the Quebec aerospace business is dependent on its product line and on global economic conditions.
If Bombardier’s C Series fails to make an impact in the single-aisle jet market, the province will likely feel the squeeze. That has nothing to do with red-state or blue-state politics.
For Quebec’s exporters, what ultimately matters is market access and a level playing field. And their experience in this respect has been mixed, both under Democratic and Republican regimes.
Republicans are not necessarily more open to trade than Democrats, who are seen as protectionists because of their close ties to unions. Just ask Carl Grenier, a long time free-trade negotiator for the federal and the Quebec governments who has also worked for the softwood lumber industry.
When the United States lost its case after a lengthy dispute-settlement process in 2005, president George W. Bush refused to abide by the decision; new Prime Minister Stephen Harper ended up negotiating a very onerous (and infuriating) compromise for the Canadian softwood industry. President Bill Clinton, on the other hand, lived by the free-trade accord’s dispute-resolution mechanism, which afforded the Canadian industry two years of peace in the mid-90s, recalls Mr. Grenier, who now teaches at Laval University and at the École nationale d’administration publique.
And during the campaign, both Barack Obama and Mitt Romney made protectionist arguments – when it suited them politically.
So Mr. Paschini chose not to wait for Tuesday’s election result. On Monday, he unveiled an $24-million (U.S.) investment to build a new plant in Montana in the hopes of cracking the U.S. public infrastructure market, which remains largely closed to Canadian-based plants despite a recent push toward liberalization.
As ADF awaits bridge contracts for its 9,300-square-metre structural steel fabrication complex, the company will use the adjoining yard, and Montana’s cheaper welders, to assemble huge steel structures that will be shipped to Alberta’s oil patch.
Mr. Paschini hopes that by setting up a U.S. facility, his company will be able to sidestep the protectionist instincts of American politicians when bidding for public contracts. He may be able to play hardball with some of his clients. But he also knows he cannot escape the written and unwritten rules of U.S. business.