Here’s a depressing exercise: Scan the upper reaches of the Top 1000 companies in the July-August issue of Report on Business magazine and try to spot Canada’s global winners.
You could call them Canada’s corporate ambassadors, if they existed.
The short list is exceedingly short: Barrick Gold, Bombardier, Magna International, Thomson Reuters, Potash Corp. of Saskatchewan, Suncor and BlackBerry (formerly Research In Motion). Sadly, strong arguments can be made to strike most of them.
Barrick, the gold industry’s top producer, has deftly employed a series of costly, self-inflicted wounds to more than halve its share price.
Bombardier is truly a global player and has fine brand recognition within the aerospace and train industries. However, the thrice-delayed C Series jet, its most ambitious aircraft, could yet prove to be a dud.
Potash Corp., the top fertilizer company, has global sales but is largely a Canadian producer. Ditto Suncor.
That leaves Magna, Thomson Reuters and BlackBerry.
Of that trio, BlackBerry is the standout winner, or at least was. It was Canada’s dream enterprise.
It came out of nowhere to utterly dominate the global smartphone industry. Its brand became so popular, so ubiquitous, that it was used as a verb (“BlackBerry me” or “BB me”).
It created huge amounts of value for shareholders and spawned a tech ecosystem in Southern Ontario, a welcome development after Nortel’s demise.
No doubt, it was Canada’s finest international star, a compelling meld of useful technology and fashion, the must-have device for everyone from CEOs and Vatican cardinals to scientists and university students.
And it’s about to disappear. BlackBerry’s plummeting global market share, now less than 3 per cent, verges on the insignificant. It is losing money. Its (former) creative forces, Mike Lazaridis and Jim Balsillie, were superb innovators but failed to keep the company competitive after Apple’s iPhone emerged as the whale in the aquarium in 2007. BlackBerry probably will not survive as an independent company. It is evaluating its “strategic options,” meaning it is likely to be sold to a larger competitor or taken private and vanish from the stock market.
Why does Canada, a Group of Seven country that encourages open markets, celebrates innovation and risk-taking, pumps fortunes into R&D, votes in business-friendly governments, is blessed with skilled workers and globally competitive tax rates and sits on the doorstep of the world’s largest market produce so pathetically few global corporate superstars?
A few tiny countries like Switzerland, the Netherlands and Sweden could suffer the loss of a company similar to Blackberry with aplomb. That’s because they are bursting with international success stories: Nestlé, Syngenta, Glencore, UBS, Novartis, Shell, ING, Philips, Volvo, Ericsson, Ikea. We could go on, but you would want to drown yourself in your beer. Make that non-Canadian beer. There is no Canadian beer company of any size left in our beer-guzzling land, let alone one with a global presence (Labatt is owned by the Belgian-Brazilian brewing giant, Anheuser-Busch InBev; Molson by Molson Coors of Denver).
Vanished companies like Labatt and Molson, of course, go a long way to explain the Canadian disease. The great hollowing out, as it was called, was not supposed to cripple Corporate Canada because, in theory, greedy investors who sold their shares with alacrity to anyone with a foreign passport were supposed to redeploy their fat winnings into new companies that would fill the void. It hasn’t quite worked that way. Alcan, Inco, Falconbridge, Dofasco, Stelco, Newbridge, Vincor, Cara and dozens of other biggies are gone and have left bupkis in their place.
It can take decades, a century even, to build a company like Inco or Dofasco. Don Argus, the former chairman of BHP Billiton of Australia, the world’s largest mining group, was right to denounce Canada’s sellout culture. “Canada has lost more head offices than any other country,” he said in 2008, at the height of the resources’ buying and selling spree. “Canada has already been reduced to an industry branch office and is largely irrelevant to the global mining stage.”
Of course, BlackBerry doesn’t really play into the hollowing out story. In retrospect, it should have foisted itself on Microsoft, Nokia or Amazon shortly after it became apparent to investors and tech geeks, if not to the deluded executives at BlackBerry itself, that the iPhone was here to stay. BlackBerry’s value destruction since then has been awe-inspiring. Mr. Lazaridis and Mr. Balsillie were superb entrepreneurs, but failed at keeping the company competitive.
So why does Canada lack global champions? Don’t blame government policies. Blame the sellout culture, nice-guy directors with a propensity to protect the wrong executives at the wrong time and Canada’s classic lack of corporate self-confidence. The upshot is a country that turned into a one-trick pony – oil sands – with a few decent, protected banks and insurers at its side. If Switzerland, the Netherlands and Sweden can churn out global champions, Canada should be able to at least double the rate. The next BlackBerry is not just around the corner.