Canada

A nasty case of Sun-burn

DAVID THOMAS January 23 1978
Canada

A nasty case of Sun-burn

DAVID THOMAS January 23 1978

A nasty case of Sun-burn

Canada

MONTREAL

comed Sun Life’s departure because the immediate economic damage is surpassed by the momentum it gives the cause of independence. Said an aide to Finance Minister Jacques Parizeau: “It’s a political crisis, but not for us. Which side is doing all the wailing?”

The sprayed graffiti was succinct: BON DEBARRAS (good riddance). That indignant reaction to Sun Life Assurance Company’s decision to move its head office to Toronto marred the grey, granite walls of the firm’s wedding-cake building on Dominion Square which has symbolized the wealth and power of Montreal’s English business establishment. Once considered the most secure nook of the British Empire, Sun Life’s basement vaults were haven for the Crown jewels and the British Treasury’s store of gold evacuated from wartime London. Now, Sun Life itself is doing the fleeing, from a rapidly evolving Quebec that has no place for firms clinging to splendid isolation from the engulfing French majority.

English Montrealers, national unity groups, Toronto business leaders and federal politicians seemed to perceive the implications of the move more than Sun Life’s own directors and officers who hunkered down in surprised silence when the protest came from their own side in the constitutional struggle. Federal Finance Minister Jean Chrétien hastily summoned Sun Life president Thomas M. Galt and board chairman Alistair M. Campbell to his office but could not make them even consider changing their minds. Negotiations resumed January 12 at 24 Sussex Drive when Prime Minister Trudeau and Chrétien had another go at Galt and Campbell. The two men returned to Montreal Saturday to a quickly convened meeting of directors which made one concession to the federal politicians: Sun Life agreed to delay its decision which originally was to be made at the end of January, by about three months so that policyholders voting by mailed proxies could be consulted on the specific issue of the move. But with most of the 932,000 participating policyholders living outside Canada, thus having little direct interest in the country’s political stability, the decision is unlikely to go against the board’s recommendation. Galt also said that Trudeau predicted that the provinces would agree to guarantee minority language rights across Canada. If so, Sun Life would reduce the number of people transferred to the new head office in Toronto.

For English Montrealers, already demoralized by the forest of FOR SALE signs growing over suburban lawns, anxiety could not have been greater if the rival Prudential Insurance Company of America had announced it would blow up the Rock of Gibraltar. And, though it refrained from indecorous public rejoicing, the Parti Québécois government wel-

But the initial announcement’s damage had already been done. “It’s helping to polarize people,” said Chrétien, “and that’s

not helpful at all.” Indeed, by further bleeding Quebec of English voters and causing endemic anti-English resentments to flare among the French, Sun Life may have done more to promote independence than the rhetoric of René Lévesque. The Premier accused the company of trying to “destabilize” the province by blaming the move on PQ language law. If it was an attempt at destabilization it backfired.

Whether it was, as the company claimed, the language rules or, as the government charged, because Sun Life feared controls on its investment activity, or even, as was speculated, because the company feared its Quebec letterhead was scaring away potential customers, the move is the most spectacular in a series of investment shifts in and out of Quebec during the past year. The movement of money is propelling the province toward economic separation after which political sovereignty could well become a natural consequence.

As Anglo-Canadian business pulls out its capital and employees, new American and multinational money comes in with promises to respect Quebec’s language and right to choose independence. A dozen

head offices moved divisions from Quebec during the first six months of PQ government, taking with them 750 employees who, according to unpublished government figures, were nearly all unilingually English. Among the movers: Northern Telecom, Canadian Pacific, Royal Trust, Royal Bank and the Bank of Montreal. But investments providing jobs for French Quebeckers are replacing much of the lost business activity. Canadian Industries Ltd. is sinking $100 million into new chemical facilities near Trois-Rivières, a decision made by its British parent, Imperial Chemical Industries Ltd. In the lush Saguenay region, Alcan Aluminium Ltd., one third U.S.-owned, is spending $200 million to replace tired refining plants. Both companies, while favoring Canadian unity, say they will continue to produce in Quebec if independence arrives. But they caution that certain head office operations might leave Montreal if recruitment of personnel becomes impossible. Already, CIL’S engi-

neering department has gone to Toronto.

By far the most significant investments are by General Motors of Canada which spent $36 million to turn its Ste-Thérèse plant over to production of a new, midsized Oldsmobile and then decided to shut down its bus assembly line in London, Ontario, and build a new plant in Quebec where 300 workers, functioning in French, will produce city buses for the whole Canadian market. The coziness of GM and the secessionist government is explained by the province’s natural wealth, its traditional welcoming of American business and the multinational automakers’ adroitness. Quebec aluminum and electricity are needed by GM which, after a rocky start, learned faster than most Anglo-Canadian businesses how to win the loyalty of Quebeckers. Language of work, at GM’S Ste-Thérèse plant became a cause célèbre in 1970 when former premier Robert Bourassa sided with striking workers and threatened to legislate French onto the plant floor. Bill 22 language legislation was Bourassa’s delivery on that promise. But GM did not wait for the 1974 law to convert Quebec production and management operations to French. Says corporation spokesman Nick Hall: “We’re happy we did because it’s certainly given us a bit of an edge.” The PQ’S Bill 101, he says, is less severe for GM than the Liberals’ Bill 22. Quebec and GM are now negotiating a possible investment of $400 million to employ 2,500 workers to make aluminum car parts.

In contrast to GM’S skill Sun Life displayed startling disregard for Quebec sensibilities, neglecting even to inform the government of its move. Finance Minister Parizeau was humiliated to learn the news in a midnight phone call from his Ottawa counterpart—and adversary—Jean Chrétien. Parizeau had to personally track down Sun Life president Galt for confirmation, and Galt offered the excuse that an executive assigned to inform Quebec had not been able to do so because he had a dentist’s appointment.

Parizeau’s retaliation—a pledge to force Sun Life to invest $400 million in Quebec, an amount he says was collected in the province but invested elsewhere—may have struck more at the root of Sun Life’s decision than the language law. Language regulations for head offices have yet to be issued and, though the government has promised to be lenient, the company did not wait.

Sun Life is almost a caricature of Montreal’s English establishment and never showed much welcome for French Quebeckers despite their proven competence in the insurance business. Only 185 of the 1,800 head office employees and two of the 21 directors are French. Publicly, the company insists it is not leaving primarily because Quebec was preparing to impose the same investment requirements for insurers operating inside Quebec that the federal government applies for insurance companies within Canada as a whole. The firm

sticks by its claim that the language law cuts off its supply of English-speaking recruits.

The two men who orchestrated the decision, Galt, 56, and Campbell, 72, are both actuaries by training and typically removed from the mainstream of Quebec society. Fellow directors* are spread through the similarly Anglo boards of other firms with head offices in Montreal, and the Sun Life action may presage other important departures.

The Quebec government was not taken by surprise. “It was certain there would be flights of capital,” said economist Bernard Bonin, who is laying the policy foundation for the economic association the PQ will propose to the rest of Canada. “It was also probable that English-Canadian capital would be the first to go. Multinationals capable of living with the governments of Brazil and South Korea have no trouble with Quebec’s.” To Bonin, former co-director of the Canadian Journal Of Econom -ics, the political impact of such losses is obvious: “Every time companies like Sun Life leave, the greater are the chances the government will win its referendum.”

French Quebeckers are no longer cowed by the pronouncements of English business chiefs whose dominating presence probably is the single most important cause of separatist feelings. Further, the departure of English office workers hits hardest at other businesses run by the same English minority, multiplying the number of federalist voters who will leave before the independence referendum.

Quebec is ready to withdraw its substantial government business with Sun Life and is waiting for the office decision by policyholders. But Lévesque clearly had no desire to change the firm’s decisions. “We won’t get down on our knees to beg that they stay,” he declared. His finance minister said the move sticks Quebec with another white elephant: “We’ll have to do something with that building,” Parizeau said. “What do you suggest? An old-age home?” DAVID THOMAS

*Claude Bertrand, Frank M. Covert, H. Roy Crabtree, Albert L. Fairley Jr., Jock K. Finlayson,J. Peter Gordon, Eric L. Hamilton, G. Arnold Hart, Louis Hébert, G. W. Humphrey, Howard J. Lang, Herbert H. Lank, Lord Polwarth, Alfred Powis, Ian D. Sinclair, James Sinclair, J. Herbert Smith, John A. Tory, Colin W. Webster.