Protecting Alcan from the killer whales

Seals have been hugging the shoreline of Juan de Fuca Strait this week, heads straining for the telltale fins of migrating orcas who love to eat them. Once reassured, the seals continue their own hunt for herring and salmon. The neighbourhood bald eagle passes overhead, harassed by a small squadron of local seagulls. The issue here is likely a bad prior case involving the eagle and seagull eggs. A sad sight is the two stately Canada geese accompanied now by just one little gosling. The other four hatched this month have been snatched. I suspect the gulls.

So it goes in the world of nature. And as countless articles in the business press have been pointing out, this has been the year when big corporations have been doing their bit to swallow the smaller ones — hostile or friendly — in what is seen as the natural competitive order.

For a while, most commentators viewed this trend as part and parcel of globalization, which rewards economies of scale and cost-efficient synergies.

But recently, as more companies of merit disappear, a backlash has emerged that too much of this swallowing up is being driven by deal-making and personal pay-offs for the Wall Street middlemen, with uncertain benefits for the economy as a whole.

The first sense of this came when both Inco and Falconbridge were erased from the Canadian registry in the same messy deal last summer, in what was then the biggest (at $40 billion) takeover in our corporate history.

Saddled with management that seemed at best overwhelmed and a government in Ottawa that just didn't care — Finance Minister Jim Flaherty blandly observed that after all, foreign owners "couldn't move the mines out of Canada" — these two companies were pretty much doomed from the outset.

But while the loss of these two mining icons accelerated the debate about "hollowing out" the corporate landscape, there is a wider concern here as well: Its effect on Canada's international clout and networking if the country reverts to a branch-plant reputation.
Tipping point

As Dick Evans, CEO of Alcan, put it ominously, "The damage caused by the disappearance of Inco and Falconbridge Toronto head offices will reach far beyond simple economic losses from executive salaries and corporate financing. The biggest impact is the inter-connection with the rest of the world."

Evans was being more than a little prescient. Forget the potential takeover of icon Bell Canada by one or another group of American raiders. Or the fact that the usual handful of our own corporate barons — Toronto-based Thomson Corp., Gerry Schwartz's Onex and Frank Stronach's Magna International — have been vying far afield as well.

At the moment, there is one prospective deal that appears to be ripping at the heart of even the most unreconstructed free-enterpriser — the hostile takeover of Evans' Alcan by the American multinational Alcoa, Alcan's former parent and one of the biggest aluminum producers in the world.

This deal is seen as bad for Canada, even by such hard-nosed types as Schwartz, Encana founder Gwyn Morgan, and Calgary's éminence grise Dick Haskayne who allows, "I'm just sick about Alcan." Manulife head Dominic D'Alessandro has said he believes it may mean "we have lost control of our affairs."

Why such high-level hand-wringing? Is this simply a case of one takeover too many, a head-office tipping point? Or is what we are dealing with here a company whose extraordinary contribution to the world on behalf of Canada we can ill afford to lose. I suspect the latter.
Alcan and the world

With 68,000 employees in 61 countries, Alcan is an integral part of Canada's image and presence abroad. It delivers top-flight Canadian performance while also helping to build communities, for example, running AIDS programs in Africa.

Evans acknowledges that Alcan's international projection is deliberate and is designed to compensate fo