Canada Blocks Sale of Space Tech Company To US

Dave Knott writes "The Canadian federal government has blocked the $1.3-billion sale of the space technology division of MacDonald, Dettwiler and Associates to Alliant Techsystems, a major US defense contractor. Industry Minister Jim Prentice is quoted as saying he is 'not satisfied' the sale will be a net benefit for Canada. MDA is Canada's leading developer of space-based technology, including the famous CanadArm and the recently installed space station robot Dextre."

Re:Net benefit?

[Ctrl-Z]

...even a part of Canada's national identity (Tim Hortons)...

Huh? [wikipedia.org]

Re:If they want to sell and cant?

[tomhudson]

No, it's not the company's choice. They've received a LOT of funding from the Canadian government, as did their predecessor.

It's the same as the sale of US ports to outsiders.

Re:Net benefit?

[Anonymous Coward]

How is the sale of a Canadian company to US interests ever a net benefit for Canada?

It's a net benefit when the company will no longer be viable without significant investment, and there is no such Canadian investment forthcoming.

Typically this sort of thing occurs due to scale, when Canadian companies are competing internationally. The proposed sale of MDA may reflect the current broadening of space technology beyond NASA projects.

It's interesting that Prentice's letter did not go into greater detail. It displays government oversight while letting industry figure out the details of how to comply. I'm not saying there isn't the smell of politics in the room, just that this particular move was well played.

Re:Net benefit?

[Anonymous Coward]

I believe federal regulations require any sale about $295mil to foreign entities be approved. A similar mechanism is likely in place south of the border (e.g., IBM sale to Lenovo, US ports sale to Dubai Inc(?)). It would be foolish to not analyse very large sales to foreign countries.

MDA was/is heavily subsidized by the government.

MDA owns/controls RADARSAT II which surveys the north which is a contentious issue. Transferring ownership could have massive future implications for land or waterway claims especially if the new owners block access to the satellite.

---- I haven't paid much attention but those are the minor bits that I have gathered.

Re:Net benefit?

[B3ryllium]

They were wholly-owned by Wendy's Corporation for a few years. Just recently spun off into their own entity.

It's not over yet

[hyades1]

They get to take another kick at selling out in 30 days, when they report back to the Minister. If the press hadn't got hold of this, it would already be a done deal.

Re:Take note, Candian entrepreneurs..

[Anonymous Coward]

If you want to develop space-related technologies, don't take grant money from the government of Canada. Your government won't respect your property rights, and will intervene if you try to reap the rewards of building a valuable business.

Re:Ok

[theshowmecanuck]

The US doesn't block this kind of thing on sovereignty grounds -- although to be fair it may be because the current administration doesn't understand that US sovereignty has any geographic limits...

I call bullshit. See what would happen if Lockheed Martin tried to build their new fighter planes in a different country. Or sell off their satellite division to another country. It would go over like a lead balloon in a wind storm. Of course that wouldn't happen, the U.S. would never let companies sell off that kind of technology to another country.

Note that there is a historic sensitivity in Canada to selling off to other countries or otherwise dismantling high tech companies [wikipedia.org]. Especially when said companies that could place the country in a very competitive place, economically and in a technical sense. Canada severely shot itself in the foot before... the pain just subsided over the past decade or so.

Re:Net benefit?

[theshowmecanuck]

This is just a plane stupid comment. There were plenty of Canadian companies and strategic industries sold off wholesale to foreign interests during the Liberal party's time in power. Including Stelco and Inco. Not to mention allowing non Canadian monopolies to develop strategic resources (like the diamond mines in the north... DeBeers or DeBeers subsidies). So put a sock in it. I've seen Harper defend Canada's national interests far more than Chretien (who was concerned more with lining his and his cronies pockets... e.g. golf courses, free driveways, and the advertising scandal in Quebec). So get off your high horse. BTW I used to vote Liberal until the reign of bullshit got too deep.

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Re:If they want to sell and cant?

[defected]

What is not mentioned in these discussions is that MDA was already sold to a US company before, Orbital. Eventually Orbital got rid of MDA and it ended up with the Ontario Teachers Pensions as the largest investor.

There have been rumblings of a sale to a US defense firms for months... and the company has been sending out trial balloons with the most likely candidates to buy the company....with absolutely no protest.

But with a minority government this could be used a as political hot potato...hence the use of the jingoistic "sovereignty" card by the current administration...gets points with the voters but makes no business sense.

Even the unionized employees at the Brampton plant realize they are doomed if this sale doesn't go through and they've been lobbying for the sale.

Re:Well, they had a tin ear for public relations..

[going_the_2Rpi_way]

Absolutely. The U.S. disputes Canadian sovereingty in the high arctic. The U.S. also disputes Canadian sovereignty over national resources like oil and softwood lumber. Taking our raw resources without letting us cut trees into lumber or refine the oil ourselves (and the associated jobs) is not a good indication the U.S. 'likes you guys' as much as they 'like your resources'. Heck, you even want Canadian freshwater for frig's sake. Open up NAFTA. Go ahead. See what happens when you actually have to bid on that oil. Remember AVRO? Of course you don't. So here's the fear: a U.S. company gets ownership of Radarsat2, and the U.S. government prevents them from selling real-time images of the high north that show U.S. boats navigating the northwest passage or otherwise violating what Canada considers to be sovereign territory (territory, by the way, that the US also considered to Canadian-sovereign until the probability of large oil and other reserves became evident). Countries don't have friends, as we are so often told by your diplomats, they have interests. Selling Radarsat-2 is clearly not in our interest. Also, selling a finished, successfully launched and proven technology paid for by Canadian taxpayers in a finished form that is literally just coming online (and about to pay dividends) makes no sense at all.

Re:Ok

[gobbo]

It`s not just about sovereignty, first of all, and it isn`t a strictly private company: the canadian taxpayer subsidized this program, something like a billion dollars (real numbers are unclear). We just don`t want to be ripped off.

Considering that it`s the little friendly nation next door with a small military and tons of resources, yer damn right we should be worried about our sovereignty; we`re subject to a flood of media, business purchases, and political pressure by the elephant to the south. USA farts, we notice.

One of the biggest threats to our sovereignty right now is surveillance by your institutional conspiracy theorists, the spooks. Selling off our surveillance tech won`t help.

Re:Ok

[theshowmecanuck]

Yeah and contrary to what a lot of folks in the U.S. think, Canada lost more jobs to the U.S. than the U.S. did to Canada when free trade came in. Jobs that moved to states like South Carolina and Arkansas, where the labour laws are more lax and the pay way less. Then they lost the jobs to Mexico. Mind you some jobs skipped going to America and went right to Mexico. And Canada lost a lot of control over their own oil and natural gas supply. So let Obama or Clinton cancel NAFTA if they get elected. Canada can get a better deal for its oil and gas then... retain more rights on its own resources.

Re:Net benefit?

[pokerdad]

Please tell me you have your tongue planted firmly in your cheek when you say that a beer brewery, a donut shop chain and a hockey team are part of Canada's national identity.

I wish that were true, especially in light of the fact that some of the companies I mentioned became part of our "national identity" basically through telling us that they were. Here's a break down...

• Laura Secord - a chocolate company; its sale to the US was largely considered an outrage because the founder choose to name his company after the girl whose actions saved (the british colonies of) Canada from invasion by the US in 1812.
• Molson - a beer company; there are some legitamate reasons why it might be part of our national identity - it is North America's oldest brewery, but those historical reasons have nothing to do with why people were pissed off; basically for years Molson had being running tv spots that said nothing about their product, but instead were patriotic messages (Joe Canada [wikipedia.org] being the worst of these)
• Tim Hortons - a donut company; unlike the previous two, it didn't really try to be patriotic, it just was uber successful; perhaps the biggest reason it has been seen as a national symbol is that depite the influx of American brands such as Starbucks, Tim Hortons has remain the most popular brand in the country (though not in all regions). It likely didn't hurt that its named after a hockey player, and its spokesman is a hockey player too.
• Montreal Canadians - a hockey team; while I agree its pathetic, is it really surprising that a nation of hockey lovers would consider the most successful pro hockey team in the country, that is named after the country, would be considered a patriotic symbol? Heck, I've never liked the Habs, and my stomach turned a little when I heard about their sale.
• Hudson Bay Company - a department store chain; this one actually is legitamate. HBC didn't start out as a department store chain, but rather as a fur trading company, and their efforts in northern and western Canada are largely resposibly for it being settled in a timely manner; many of the major cities in western Canada were founded by HBC as fur trading posts.

Perhaps the only thing more pathetic than the fact we identify ourselves as a nation by these companies is that this list was just the ones who sold out; there are plenty more that have not; Canadian Tire is probably more a source of patriotism than any of the companies I named before.