Author Topic: Government Can Stop Sale of Canadian Companies on Grounds of National Security  (Read 18913 times)

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Canadarm maker fetches $1.3-billion
JANET MCFARLAND AND WENDY STUECK Globe and Mail Update January 8, 2008 at 9:13 PM EST
 Article Link

MacDonald Dettwiler and Associates Ltd., the company behind the iconic Canadarm, is selling its space and satellite business to a U.S. buyer, betting its future on the far more terrestrial but profitable world of real estate data.

Although best known as a manufacturer of space products for NASA, the company says its lower-profile software operations – which track land titles, insurance and mortgages – are faster growing and have greater global potential.

MDA said it agreed to sell its space and satellite operations to Alliant Techsystems Inc. of Edina, Minn., for $1.325-billion in cash, and said it will use most of the proceeds to invest in acquisitions in the United States, Europe and Canada to build its now core information systems business.

Based in Richmond, B.C., MDA has been Canada's premier space manufacturing company for almost 30 years and is a granddaddy of Vancouver's high-technology scene, whose alumni have gone on to start and run other noted Vancouver technology companies. MDA co-founder and former chief executive officer John MacDonald, who left MDA in 1998, has called the company “the epicentre of the Canadian space industry.”

Tuesday, Mr. MacDonald said the sale was the right decision, “but emotionally, it was very difficult for them.”

He said the space group needed a new owner to keep playing in the big leagues in the huge U.S. space industry. “There is more work to be done, but not in Canada. Canada's a small economy. You can argue until hell freezes over about whether Canada should be spending money on a space program.”
More on link
« Last Edit: July 22, 2009, 22:36:05 by Bruce Monkhouse »
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Offline S.M.A.

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MDA may move major Canadian defense/space assets to the States
« Reply #1 on: March 09, 2008, 21:11:55 »
The possible sale/move of MDA to the States and its effects on the Canadian defense/space industry as well as on Canadian sovereignty, as one person stated in the article said, may not be a surprise to some of you, but it certainly continues to attract the attention of the House of Commons. :o
« Last Edit: February 10, 2011, 12:02:05 by Mike Bobbitt »
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Offline stevenstaples

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #2 on: April 03, 2008, 09:23:59 »
We are arguing that Canada needs this satellite for national security reasons (see our legal opinion on www.rideauinstitute.ca). All concerned about our national security and the safety of CF personnel should put aside their differences and oppose this deal.


Col. Pierre Leblanc (ret.) (former commander of Canadian Forces Northern Area)
(CTV Question Period)
March 23, 2008
"The Prime Minister talks about sovereignty - use it or lose it. And yet we have a tool that is excellent for Arctic surveillance, monitoring of our internal waters that are contested by the Americans and other countries, and now we're going to sell this asset to an American company."

Prof. Rob Huebert (Center for Military and Strategic Studies, Univ. of Calgary)
(Globe and Mail)
March 24, 2008
"We've never thought strategically and it just astonishes me that we're probably the only country that we know of with this type of technology, and we [don't] understand its significance,"

Calgary Herald
Tuesday, March 25, 2008
“It is wholly Canadian technology, for which there is no substitute elsewhere. Given Canada's surveillance needs, this alone would justify every cent Canadians have invested in MDA.”

Steve Staples
sstaples@rideauinstitute.ca
613 565-9449


Offline E.R. Campbell

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #3 on: April 03, 2008, 09:41:28 »
A few factors, in no particular order of importance:

•   Mature companies change hands on a regular basis;

•   Technology companies tend to need the US DoD at least as much as it needs them;

•   The corporation (any corporation) has an overriding fiduciary responsibility to its shareholders; and

•   Contracts are enforceable, including those we may have with MDA if or when it changes hands.

 MDA was a jewel Canada’s R&D crown but our R&D efforts are best pursued in:

•   Universities – which do almost all the Research; and

•   Private companies – as often as not the most productive Development takes place in immature (small, start-up) companies. As a broad generalization (which are most often wrong) large, mature companies do less and less R&D and focus more and more on production.
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Offline Thucydides

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #4 on: April 03, 2008, 10:53:08 »
It is very interesting that Mr Staples now sees the need for enhanced defense expenditures, since there is little or no private market for building and operating RADARSATS.

What other critical national security issues need funding as well Mr Staples? Perhaps a fully manned, well equipped, general purpose military establishment would do the job and provide those national security measures?
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Re: MDA may move major Canadian defense/space assets to the States
« Reply #5 on: April 03, 2008, 21:01:54 »
Quote
All concerned about our national security and the safety of CF personnel should put aside their differences and oppose this deal.

Mr Staples,

You will have to forgive me, given your posting history and TV/Radio/Newspaper interview style, of just being the least bit skeptical of your concern for the well-being of me and my compatriots.  Now, I don't think for a second that you actively wish any of us harm.  It's just that, you think you know better than everyone who has ever worn a uniform.  You positively ooze superiority over soldiers, sailors and airmen- all without any detectable training, education or experience in military or defence matters.  You are, of course entitled to your opinion, just don't expect me to give it much weight.

Now, to the matter at hand.  I feel like disagreeing with you, just as a reflexive response, but to be honest, I don't know enough about the deal, it's background or implications to offer an informed opinion.  See how that works?

Thanks for your time.

Offline George Wallace

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #6 on: April 03, 2008, 21:11:58 »
I am of the opinion, Steven Staples left his Army.ca account logged on and some Military supporter played an April Fool's joke on him and posted using his name. 

I actually see the sale of MDA to a US company as a serious matter of concern.  As this is the best technology of its type in the world, we would loose all control of it, as well as be limited to accessing it through another nations Military.  This would mean that it could likely be denied us, or censored.

A rather interesting predicament.
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Re: MDA may move major Canadian defense/space assets to the States
« Reply #7 on: April 03, 2008, 21:29:36 »
Where is the satellite control element located?  At MDA in Vancouver?  In a Government Office building somewhere?  In the US?

I don't know the answer to these questions.

 I am well aware that US security regulations apply to US companies and their subsidiaries- and that can have strange effects on technology and info transfer.  It is just not clear to me in this case how much concern about the sale is over-blown Canadian Nationalistic, I-hate-the-evil-Americans-and their-arms-merchants tm rhetoric and how much is legitimate concern about control over a satellite we paid a bunch of money for.  The "taxpayer funded" bit is a bit of red herring.  It would be like criticizing the sale of GM Diesel division of London to GDLS after we bought 651 LAVs from them.  We paid money, MDA delivered a service. A business transaction, not taxpayer largess.

Honestly, part of me wants to say "block the sale", but, I have to ask, what are the second and third order effects if we do?  Are they worse than the sale itself?  Don't know...

Offline George Wallace

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #8 on: April 03, 2008, 21:36:03 »
It boils down to the access to our own technology for satellite imagery and surveys if it is controlled outside of the country, and is denied us for some reason as FOUO by the US military. 

Where it is controlled from in Canada, is irrelevant to the matter at hand, and may be OPSEC at the very least.
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Re: MDA may move major Canadian defense/space assets to the States
« Reply #9 on: April 03, 2008, 23:17:23 »
Everything you need to know about the RadarSat2 ground segment, including control station locations, is here.
It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
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Offline MarkOttawa

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #10 on: April 04, 2008, 00:42:30 »
George Wallace: I'm pretty sure it was St Steve himself--see his comment at this post at The Torch:

RADARSAT-2: Sound and fury...
http://toyoufromfailinghands.blogspot.com/2008/04/radarsat-2-sound-and-fury_02.html

If the Canadian government needs the capability, then it should buy it itself.  If the sale is blocked that effectively guarantees that MDA in the current situation will make no further such satellites for anyone.  So does the government create its own company for future work?  In any event the sovereignty-related capability really may be needed (if then) only a decade on, by which time RADARSAT-2 will likely be on its last legs.

And a more fundamental point: supposing the Government of Canada has the imaging capability and discovers a US  (not another country's) vessel doing  something we do not like; what does the government do?

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Offline MarkOttawa

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #11 on: April 04, 2008, 14:18:51 »
More here.:
http://www.ctv.ca/servlet/ArticleNews/story/CTVNews/20080403/Radarsat_080403/20080403?hub=Canada

To expand on my previous comment, note that RADARSAT-2 has only an expected seven-year life span, so it will cease operating before there is likely to be any significant maritime traffic in the Arctic that might raise sovereignty concerns for Canada. If Canadians want control of any further such satellites there is a simple answer: have the government buy MDA's space operations. And see how effectively and efficiently it can run things (there would seem to be no private Canadian interest in the radar satellite business). Simply preventing the current sale will do nothing to makes the business commecially viable in the future for MDA--unless, instead of an actual government purchase, there are continuous and probably large government subsidies.

Mark
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Re: MDA may move major Canadian defense/space assets to the States
« Reply #12 on: April 10, 2008, 12:05:09 »
Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail is the latest:

Quote
Ottawa rejects space firm's sale to U.S.
No 'net benefit' for Canada if MDA Corp. is sold to foreign owners, Prentice says of unprecedented stand against Alliant takeover
 
BRIAN LAGHI and CAMPBELL CLARK AND JOHN PARTRIDGE

Globe and Mail Update
April 10, 2008 at 11:41 AM EDT

OTTAWA — — Federal Industry Minister Jim Prentice confirmed Thursday morning that he has taken the unprecedented step of rejecting the planned $1.3-billion sale of Canada's leading space company to U.S. interests, concluding that the deal would not be in the best interests of the country.

Mr. Prentice's office issued a brief statement acknowledging that, as The Globe and Mail reported, he wrote to Alliant Techsystems Inc. (ATK) on April 8, to advise them that, "based on the information received at this time, he is not satisfied that the proposed sale of MacDonald, Dettwiler and Associates Ltd. (MDA) to ATK is likely to be of net benefit to Canada."

Under Canada's investment-review law, the company has 30 days to make new arguments to the minister, and Mr. Prentice must then confirm his rejection. But Mr. Prentice's move signals his intention to take the unprecedented step of blocking a major corporate takeover, in an issue that has been fraught with controversy as opponents argued that the sale of MDA could impair Canadian sovereignty.

A spokesman for Mr. Prentice, Bill Rodgers, confirmed Wednesday that the note had been sent, but he was unable to provide further details. When contacted by The Globe and Mail Wednesday night, Alliant officials responded with a two-sentence statement that indicated that they are not willing to declare the deal dead.


The proposed sale of MDA Corp.'s Information Systems Unit has raised fears that Canada could lose control of the data from Radarsat-2 in a dispute over Arctic sovereignty.

"We have been in discussions with the minister's office. Your information is not consistent with those discussions," the Edina, Minn., company's statement said.

MDA officials could not immediately be reached for comment Thursday.

ATK spokesman Bryce Hallowell would only say that "discussions with the Canadian government continue."

One Bay Street financial analyst, who spoke only on condition his name not be used, criticized MDA for not immediately disclosing on Tuesday that Ottawa had rejected the ATK deal.

"How can you have a $1.3-billion transaction, which is what has supported the stock price, disallowed and not issue a press release?" he asked rhetorically. "I think that is absolutely unbelievable.

"If I had bought those shares yesterday, I would be miffed," he added.

MDA's share price rocketed to $49 from $42.51 on the Toronto Stock Exchange on Jan. 9, the day after its announced the deal to sell its space business, also known as MacDonald Dettwiler and Associates., to ATK.

Since then they have slipped back, closing yesterday at $46.85.

They fell sharply at the opening bell Thursday and as midday approached in Toronto were trading at $42.80, down $4.05 or 8.6 per cent, up from a morning low of $42.

Mike Prior, director of market surveillance at Market Regulation Services Inc., said in a voicemail message that the regulatory agency is talking with MDA "to determine if there is any disclosure that they should be making." He added, however, that he "cannot say right now whether or not the company will be making any disclosure."

Much of the controversy surrounds the company's Radarsat-2, a remote-sensing satellite that allows observation of Canada's Arctic.

The satellite can see through clouds and nighttime cover and spot any vessel larger than three metres in length.

MDA is also the builder of the iconic Canadarm, the robotic limb used on the space shuttle and the International Space Station.

Opponents of the sale expressed deep concerns that it would violate Canadian sovereignty.

The federal government has never rejected any takeover in thousands of foreign-investment reviews since the Investment Canada Act went into effect in 1989, although it has sometimes extracted concessions before it approved a deal.

Alliant could use its 30-day appeal period to provide new information to Mr. Prentice. And the companies could restructure the deal to meet government concerns.

The proposed sale of MDA Corp.'s Information Systems Unit has raised nationalist sentiment and fears that Canada could lose control of the data from Radarsat-2 in a dispute over Arctic sovereignty. Alliant, also called ATK, is a U.S. weapons and space contractor. The systems unit is responsible for most of MDA's operations and 1,900 employees.

MPs from all parties have also questioned whether a jewel of the Canadian high-tech space industry should be sold into U.S. hands, and the Canadian Auto Workers union has raised concern for the impact on the industry.

Some of the staunchest criticisms came from within the Conservative Party. Tory MP Art Hanger voiced sharp concerns, and Conservatives on the Commons industry committee treated the sale with skepticism.

One Conservative MP, speaking on condition he not be named, said the sale had raised a surprising backlash among Canadians, who saw it as a point of pride being peddled to the United States — which might possibly use it against Canada's claim to Arctic waters.

The Radarsat-2 satellite, developed in large part with the guarantee of a $445-million federal contract for satellite data, will be Canada's only eye-in-the-sky capable of spotting a U.S. sub, for example, sailing through the Northwest Passage.

The United States does not recognize Canada's Arctic claims.

Opposition politicians have expressed concern that U.S. security laws could force MDA to withhold satellite images from Canada, or allow U.S. agencies to obtain such data even if Canada banned its transmission.

Officials with MDA and ATK insisted Canada would retain control of the satellite data, but the Rideau Institute, a foreign-policy lobby group, issued a legal opinion arguing that the U.S. law might trump Canada's.

Through it all, MDA president Daniel Friedman insisted that the company could not survive if it did not have contracts from the U.S. space program, and that only a U.S. owner could ensure that access.

Union locals and employee associations at MDA plants in Brampton and Montreal were just gearing up a campaign to push Ottawa to approve the sale, arguing that the best way to save their cutting-edge Canadian jobs is through a sale to a U.S. buyer.

They had bought an advertisement scheduled to run in a Parliament Hill newspaper and written to MPs.

Without access to U.S. space contracts, which make up 81 per cent of international space programs, MDA cannot thrive, and international free trade does not exist in the industry, said Janine Symanzik, president of SPATEA, the association that represents engineers and technologists at the Brampton plant.

I see two key points:

”One Conservative MP, speaking on condition he not be named, said the sale had raised a surprising backlash among Canadians, who saw it as a point of pride being peddled to the United States — which might possibly use it against Canada's claim to Arctic waters.” and

”Without access to U.S. space contracts, which make up 81 per cent of international space programs, MDA cannot thrive, and international free trade does not exist in the industry, saidJanine Symanzik, president of SPATEA, the association that represents engineers and technologists at the Brampton plant. ”

There is now a thirty day period during which ATK can make a “better” case. If the unnamed Tory MP is correct, however, no case, no mater how good, can win the case.


Edit: last paragraph of the Globe and mail article updated from the G&M web site.
« Last Edit: April 10, 2008, 13:55:20 by E.R. Campbell »
It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
Algernon Sidney in Discourses Concerning Government, (1698)
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Offline Bruce Monkhouse

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #13 on: April 10, 2008, 12:10:44 »
Quote,
One Bay Street financial analyst, who spoke only on condition his name not be used, criticized MDA for not immediately disclosing on Tuesday that Ottawa had rejected the ATK deal.
"How can you have a $1.3-billion transaction, which is what has supported the stock price, disallowed and not issue a press release?" he asked rhetorically. "I think that is absolutely unbelievable.
"If I had bought those shares yesterday, I would be miffed," he added.


Does anyone else just want to punch him/her in the squash? >:D

I, for one, am happy, albeit suprised, that this decision has been made.
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Re: MDA may move major Canadian defense/space assets to the States
« Reply #14 on: April 10, 2008, 12:14:30 »
Quote,
One Bay Street financial analyst, who spoke only on condition his name not be used, criticized MDA for not immediately disclosing on Tuesday that Ottawa had rejected the ATK deal.
"How can you have a $1.3-billion transaction, which is what has supported the stock price, disallowed and not issue a press release?" he asked rhetorically. "I think that is absolutely unbelievable.
"If I had bought those shares yesterday, I would be miffed," he added.


Does anyone else just want to punch him/her in the squash? >:D

I, for one, am happy, albeit suprised, that this decision has been made.

No, (s)he's 100% correct. Companies have a responsibility to publicly, even loudly, announce news that might effect share price as soon as that information is known. MDA did a disservice to investors - bad management. Management's overarching duty, above all else, it towards the shareholders; MDA's management failed.
It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
Algernon Sidney in Discourses Concerning Government, (1698)
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Offline Bruce Monkhouse

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #15 on: April 10, 2008, 12:18:17 »
Oopsy......I thought I read 'MND" not 'MDA".

I thought this person was blaming Mr. McKay.

Pay attention, Monkhouse
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Re: MDA may move major Canadian defense/space assets to the States
« Reply #16 on: April 10, 2008, 14:07:39 »
I see one dilemma for government in this statement by Janine Symanzik, president of SPATEA, the association that represents engineers and technologists at the Brampton plant:

Quote
Without access to U.S. space contracts, which make up 81 per cent of international space programs, MDA cannot thrive, and international free trade does not exist in the industry.

At $1.3± Billion MDA is not an especially big player in the global space industry but it may be an important Canadian company and, if its sale to a US firm is blocked, a Canadian company with some claim for support from the Government of Canada which will have denied it a chance to grow and prosper in the USA.

How does Canada keep a space company busy if some substantial share of its market is denied to it by US laws? Do we put the CSA into the space business à la CNES? Do we start building a military space based surveillance/warning/control system, which, in my opinion, we need?
It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
Algernon Sidney in Discourses Concerning Government, (1698)
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Re: MDA may move major Canadian defense/space assets to the States
« Reply #17 on: April 11, 2008, 07:05:20 »
Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s Globe and Mail, is an on point editorial:

My emphasis added.

http://www.theglobeandmail.com/servlet/story/LAC.20080411.EMDA11/TPStory/Opinion/editorials
Quote
THE RADARSAT-2 SALE
Canada holds on to a place in space

April 11, 2008

In an unprecedented move, Industry Minister Jim Prentice says that he is not convinced that the sale of Canada's most sophisticated space technology firm to an American arms manufacturer would be a net benefit to Canada. The buyer, Alliant Techsystems Inc., now has 30 days to provide information that might change his mind. Otherwise, Investment Canada will likely disallow a foreign investment for the first time in its history. Canadians have the right to ask how we reached this impasse with a U.S. purchaser when that nation is a defence ally, and why - if so critical - such taxpayer-funded technology was left in the hands of a publicly owned Canadian firm, MDA Corp., in the first place.

The answers are not reassuring. MDA's key asset is Radarsat-2, a state-of-the-art observation satellite that can peer through clouds and night skies, alert to intruders or environmental problems, particularly in the Northwest Passage. Sent into orbit last December, it is a brainchild of the former Liberal cabinet, which in 1994 asked the Canadian Space Agency to find a private sector partner to follow up its successful Radarsat-1 launch.

Ottawa wanted to create a competitive satellite operation, and pass its business of Earth observation to the private sector. MDA won that contract. Ottawa privatized its satellite operation functions and transferred Radarsat-1 ground systems to MDA.

The taxpayers, in turn, put up more than four-fifths of the cost of Radarsat-2, roughly $445-million, in return for access to the data, which the Canadian Space Agency now sells to other government departments.

The deal was full of buzzwords, such as public-private partnerships, with little tough analysis of the long-term consequences. MDA kept the rights to data that the space agency does not need, and can market it internationally. With feeble foresight, Ottawa is now relying on the firm for its vital intelligence. Though MDA officials told the Commons industry committee last week that Radarsat-2 operates under a Canadian licence, so Canada retains control over the satellite and its use, Mr. Prentice is likely unconvinced.

His hesitation is perhaps understandable. The U.S. government almost certainly has the power to refuse to let Alliant transfer photos to Canada, even if Alliant vows to do so. The industry committee should pursue this point. Investment Canada does not have an explicit national-security test - unlike the United States, which toughened its ability to block sales of U.S. firms to foreigners on national-security grounds last fall. Nor do the Americans allow foreign firms to bid on space-program contracts, even though Canada is an ally in North American air and space defence. The U.S. would almost certainly not allow a comparable sale.

So far, however, the reasons for Mr. Prentice's objections remain unclear. Canada has six grounds for assessing sales, such as the effect on technological development. The minister should explain his decision, and answer the bigger question of how Ottawa let a private firm take control of an asset thought to be so important to the public interest.

As people with an interest in national security we, Army.ca members, should share the Globe and Mail’s concerns.

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Offline E.R. Campbell

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #18 on: April 11, 2008, 07:52:27 »
Here, reproduced under the Fair Dealing provisions (§29) of the Copyright Act from today’s National Post, is a contrary view by Terence Corcoran that focuses on the lack of focus in Canadian space policy and programmes and the distinctly anti-American bias evident in the most public opponents of he MDA sale:

http://www.nationalpost.com/news/story.html?id=436521
Quote
Canada's expensive buy-in into the space game
Forget national security, Ottawa is blocking MDA's sale for another reason

Terence Corcoran, National Post  Published: Friday, April 11, 2008

Backed by the usual nationalist suspects -- i.e., out-of-office Liberals, unions, special interests, Canada Research Chair profs, the Toronto Star, even a National Post columnist - the Harper Tories appear set to relaunch Canada's space rocket.

That's just a metaphor, of course. Canada has never had any rockets for space work. It also has never had much of a space program to speak of, outside the Canadarm, a $1.4-billion contribution to the U.S. space station that, while a source of pride to Canadians who respond to collectivist icons, will disappear as a meaningful space venture when the U.S. space station program comes to an end soon.

Then there's the Canadian Space Agency. Starved of cash and drained of motivation by the Liberals, the CSA dried up as a source of funds and creative energy more than a decade ago, largely under the neglectful eye of the Chrétien government.

But now comes Jim Prentice, Tory Industry Minister, with what is shaping up to be a plan to get the government of Canada back into the space game. What he may also do at the same time, however, is bury the shareholders and private enterprise players who have given Canada the only genuine space outfit it has: the space systems group of MacDonald, Dettweiler and Associates (MDA), of Vancouver.

MDA plans to sell the system group to Alliant Techsystems of Edina, Minn., for $1.3-billion, a price that would deliver a big payoff for MDA shareholders. But in a move that knocked $160-million off shareholders' value in MDA Thursday, Mr. Prentice fired off a potentially deal-killing letter to Alliant. In a classic 1970s-style Canadian government stealth missile, Mr. Prentice tells Alliant that "I am not satisfied that your investment is likely to be of net benefit to Canada."

Note the first person power trip. Quoting language from the Investment Canada Act, Mr. Prentice then ties the company up in legal circuitry. Alliant, Mr. Prentice told the company, has 30 days to "make representations and submit undertakings." What kind of undertakings? The ego doesn't say. "At the end of this time period, I will notify you forthwith that I am satisfied that your investment is of net benefit to Canada or confirm that I am not satisfied that it is of net benefit."

We can only assume that when Mr. Prentice adds up the net benefit to Canada, he is taking into account the $1.3-billion in value that Alliant will transfer from Minnesota to the largely Canadian shareholders of MDA, including many MDA employees. That money would be in the pockets and treasuries of Canadians who could - as MDA certainly plans - invest in other business ventures that bring even greater benefit to Canada's economy.

Given the history of the Alliant-MDA takeover bid, however, it is not likely Mr. Prentice has investors at the top of his mind. From the very day Alliant announced the $1.3-billion bid, the voices of nationalist doom rose over the transaction.

First came concern that the revered Canadarm, symbol of national space prowess, was going to end up in U.S. corporate hands. That lasted a few days, before the realization that the Canadarm isn't worth anything as the U.S. kills its space station program.

With no traction on the Canadarm, Buzz Hargrove's Canadian Auto Workers - which represents MDA workers - cooked up a moral case against the takeover. Alliant also made land mines. How could Canada, world anti-land-mine crusader, tolerate a such a corporate monster? The CAW even managed to plant a story about a possible "revolt" among MDA employees, although only one made the news. "There's no way I would work for them," said Paul Cottle, a 31-year-old engineer who worked on satellite systems at MDA.

That story fizzled, and Mr. Cottle was soon replaced by bigger guns who fired up what has become the major focus of the MDA takeover fight: Radarsat 2. Lining up to protect Radarsat as a national treasure that cannot possibly be sold to Americans we find Michael Byers, Canada Research Chair in Global Politics at UBC; Marc Garneau, former astronaut and Liberal candidate; Scott Bryson, Liberal industry critic; the Toronto Star; John Polanyi, Nobel laureate and Univerity of Toronto professor.

Lauched earlier this year, Radarsat 2 is reputedly something of a miracle, a high-tech eye in the sky that can record and send images of the Earth back from space, at a scale as fine as three metres. The commercial, military and practical uses of the technology are apparently vast - and lucrative.

The glue that holds the Radarsat story together as propaganda is a conceptual fabrication that each of our celebrity activists foisted on Canadians. They claim that Radarsat was funded with $485-million in government money. They call it "an investment" by the government, a "taxpayer paid" satellite. As Mr. Byers slyly put it, the government actually paid for "85% of the total cost of the satellite."

But the government didn't actually pay for the satellite. Radarsat 2 is controlled by MDA, which put it up under its own effort, orchestrating complex rocket deals and other schemes far from the role of government.

The government of Canada paid $445-million for priority rights to satellite images over a period of many years into the future. It was an advance on the product, not an investment in the satellite. The satellite is a private, commercial satellite service that collects revenues from many governments all over the world. It is, in fact, a great private-sector space success story. MDA developed the satellite, moreover, when it was controlled by another American company, Orbital. Why did the CAW not object to U.S. ownership in 1998?

If MDA's satellite systems were sold to Alliant, Alliant could use its U.S. base to sell products to U.S. buyers, thus expanding the company's Vancouver-based core of satellite expertise.

But Mr. Prentice apparently has a better idea. We don't know what that idea is, but he appears to be preparing to get the government back in the space business. Will the MDA satellite system - and MDA shareholders - pay the price?

National Post

A couple of points:

First: I agree with Corcoran that, absent some huge changes in Canada’s national science and space policies and programmes, MDA’s shareholders are being condemned to the destruction of their assets in order to satisfy the ignorant, knee-jerk anti-Americanism of the economically illiterate majority;

Second: There’s nothing wrong with Minister Prentice’s first person language. He is taking ownership of the file – simultaneously shielding he PM from criticism from he US administration and strengthening is own leadership position in the Conservative Party of Canada; and

Third: While it is (sadly) true that Canada abandoned its (very tentative) rocketry programmes back in the ‘70s, we were a space pioneer – we became the third space-faring nation when Alouette (designed and built by the Defence Research Telecommunications Establishment (DRTE) (now the Communications Research Centre thanks to a power grab by Trudeau’s Communications Minister Gérard Pelletier in 1973) was launhed in 1962 – and we remain an important space-faring nation today, despite inept government policies that, consistently, sacrifice the national interst on the alter of the pogey and our “sacred trust” social programmes.

It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
Algernon Sidney in Discourses Concerning Government, (1698)
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Offline Flip

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #19 on: April 11, 2008, 13:47:57 »
I know it's usually bad form to disagree with the smart kids in the class, but sorry Edward.

Quote
First: I agree with Corcoran that, absent some huge changes in Canada’s national science and space policies and programmes, MDA’s shareholders are being condemned to the destruction of their assets in order to satisfy the ignorant, knee-jerk anti-Americanism of the economically illiterate majority;

I gotta' disagree.

As a small technology business owner I have had a front row seat to the "musical chairs" of foreign  buyouts.  I've seen many of my colleagues and friends suddenly find themselves unemployed when the technology enterprize (many supported with public money) they work for gets acquired and run into the ground or simply disbanded. As this history has repeated itself over and over in the past 25 years, I have a very hard time believing in a happy outcome if MDA were sold.

We've had a large number of these repeats of history in Edmonton.
And it has NEVER benefited Edmonton or my business.

I'm not Anti-American in the least.  I just don't like how corporations handle technology assets.

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #20 on: April 11, 2008, 15:04:07 »
I know it's usually bad form to disagree with the smart kids in the class, but sorry Edward.

I gotta' disagree.

As a small technology business owner I have had a front row seat to the "musical chairs" of foreign  buyouts.  I've seen many of my colleagues and friends suddenly find themselves unemployed when the technology enterprize (many supported with public money) they work for gets acquired and run into the ground or simply disbanded. As this history has repeated itself over and over in the past 25 years, I have a very hard time believing in a happy outcome if MDA were sold.

We've had a large number of these repeats of history in Edmonton.
And it has NEVER benefited Edmonton or my business.

I'm not Anti-American in the least.  I just don't like how corporations handle technology assets.



With respect, I cannot see how blocking this sale benefits MDA's shareholders. As far as I know - and I may well be very wrong - MDA doesn't have any irreplaceable technology that the US must have. It needs the US market more than the US needs MDA. In that situation, if MDA's access to the US market is limited, as MDA's CEO suggested it will be, then 80% of its potential market is gone. That cannot be good for business. Life would be better for MDA's shareholders if there was a Canadian space science/technology programme that would provide a steady stream of contracts, but there isn't.
It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
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Re: MDA may move major Canadian defense/space assets to the States
« Reply #21 on: April 11, 2008, 16:55:47 »
Maybe I'm missing something, or don't truly understand what's going on here.

If the US truly wants and needs this high flying spy cam, why don't they just buy one from the company.

If they don't want to do that, my other thought is that they were going to buy the firm, close the company and shelve the techology, to protect their own interests.

Am I being too simplistic? Or do I need to wrap the tinfoil tighter.

My other bother is, that after all the caterwalling from the left about the sale. The CPC agrees, stops it and then the liberal mouthpiece Mop & Pail complains about the CPC doing exactly what the outspoken nationalists wanted. Damned if you do, damned if you don't.

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Re: MDA may move major Canadian defense/space assets to the States
« Reply #22 on: April 11, 2008, 17:57:48 »
       I think the rub here, as was already mentioned by some, is that if RADARSAT 2 is so important to Canada's security why was it built and owned by a private company.  This is what happens to private sector assets; they get bought and sold.  This should have been from the outset a wholly government owned piece of hardware with options for the Fed's to sell image data to the private sector, not the other way around.  This, of course, is all clear with the magic of hindsight.  I believe, as it was mentioned in several news articles, that MDA has one month respond on the ruling and offer counter arguments/proposals, it is possible that RADARSAT will be taken off the table while the rest of the deal proceeds as was intended. 

My other bother is, that after all the caterwalling from the left about the sale. The CPC agrees, stops it and then the liberal mouthpiece Mop & Pail complains about the CPC doing exactly what the outspoken nationalists wanted. Damned if you do, damned if you don't.
I don't think this is simple a lefty-righty issue and to characterize it as such is not really useful in any way.  The government shot itself in the foot a bit in on this one; they have allowed many top tier Canadian firms to be scooped up by international buyers without so much as a peep (fine, they are private firms).  All of a sudden they turn protectionist for a relatively minor (money wise) deal.  With all do respect to them they were put in a very tricky situation and it was unlikely that this was going to turn out with everyone hugging.

      As to why they wanted to buy the space ops part of MDA.  My guess is that they wanted the capacity to build R2 like satillites or some of the specific technologies that went into it, not just the ownership/capacity of one SAT.  With that, a simple purchase of MDA would be seen as easier and cheaper than a greenfield investment, you also swallow a potential competitor at the same time.  I'd imagine Alliant's thinking is the same logic that drives most M&A, and not tinfoil hatty. 
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Re: MDA may move major Canadian defense/space assets to the States
« Reply #23 on: April 11, 2008, 19:07:53 »
...
If the US truly wants and needs this high flying spy cam, why don't they just buy one from the company.

If they don't want to do that, my other thought is that they were going to buy the firm, close the company and shelve the techology, to protect their own interests.

Am I being too simplistic? Or do I need to wrap the tinfoil tighter.
...

According to ATK and MDA, or at least what I think I heard (read) ATK and MDA say, ATK wants to become a bigger player in the US space field and the fastest, easiest way to do that is to buy MDA - which already is a player. MDA has some technology (patents) that ATK needs; simple as that. My guess is that ATK would, fairly quickly, 'hollow out' MDA.
It is ill that men should kill one another in seditions, tumults and wars; but it is worse to bring nations to such misery, weakness and baseness
as to have neither strength nor courage to contend for anything; to have nothing left worth defending and to give the name of peace to desolation.
Algernon Sidney in Discourses Concerning Government, (1698)
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Re: MDA may move major Canadian defense/space assets to the States
« Reply #24 on: April 11, 2008, 19:52:49 »
I believe, but could well be wrong, that one of the issues was potential loss of the data to be provided by RADARSAT should it be taken over by a US company.  Given American institutional xenophobia about things security-related, this was a real danger, IMHO.  I've seen enough "no foreign" US caveats in my time to know how it works.

MDA is also a defence contractor and let us not forget that.  If the shoe were on the other foot, do you think that the US government would permit the purchase of a major American defence contractor by a Canadian company, particularly if that contractor provided sensitive security data?  I don't think so, and it makes the accusations of "unfair" stemming from Minnesota politicians seem rather hollow and contradictory.
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