MACLEAN'S REPORTS

BACKSTAGE IN OTTAWA

Bud Drury's new orders: back industry, beat unemployment, save the nation

PETER C. NEWMAN September 7 1963
MACLEAN'S REPORTS

BACKSTAGE IN OTTAWA

Bud Drury's new orders: back industry, beat unemployment, save the nation

PETER C. NEWMAN September 7 1963

BACKSTAGE IN OTTAWA

Bud Drury's new orders: back industry, beat unemployment, save the nation

PETER C. NEWMAN

ONE OF THE TOUGHEST ASSIGNMENTS in the

Liberal cabinet has been drawn by Charles Mills "Bud” Drury, the minister of defense production who recently became Canada’s first minister of industry as well. Drury’s performance over the next few years will, to a large degree, decide whether the Pearson government can fulfill the main promise which returned it to power: that it will cure the unusually high rate of unemployment which befuddled the Diefenbaker administration.

Nearly every economist who has analyzed the job shortage has concluded that the one part of the economy which can supply a significant source of new employment is manufacturing. How to supply the jobs without upsetting the country’s political balance is Drury’s big problem.

Canada’s postwar boom gave us a high standard of living, but in terms of job opportunities it contributed little. Despite the billions poured into the exploitation of Canadian resources, primary industries in Canada (excluding agriculture) still employ only three percent of the labor force. Canada has 37,000 manufacturing establishments turning out goods worth nearly $25 billion a year. This is triple our industrial output at the end of World War 11. But because of automation, employment in manufacturing industries has actually dropped from twenty-six percent of the labor force in 1946 to twenty-five percent in 1962.

HOW TO HELP WITHOUT MEDDLING

Until now, manufacturing industries have never had a real spokesman in the federal cabinet. Action on their behalf has come about largely as a result of pressure by professional lobbyists. Drury will be a full-time defender of industry, right inside the cabinet chamber.

Anyone trying to find a prototype for a minister of industry would probably end up with a man very much like Drury, whose bearing and qualifications would make him stand out in any corporate board room. Formerly an executive with his large family transportation interests in Montreal, Drury left business for public service and following World War 11 (when he served with distinction as Canada’s youngest brigadier) he joined the economics branch of the external affairs department and eventually became deputy minister of national defense. He has, along with Mitchell Sharp,

Guy Favrcau and Jack Pickersgill, given the Liberal cabinet whatever image of competence it has managed to project.

Drury’s terms of reference charge him with promoting "the establishment, growth, efficiency and improvement of manufacturing industries in Canada.” How much actual pow'er he’ll have isn’t clear. His weapons will not include the handing out of subsidies, tariff concessions or tax incentives. He can, however, recommend these to his colleagues, particularly to Finance Minister Walter Gordon, who happens to be related to him by marriage.

The balance between helping industry and intruding into free enterprise is a fine one but Drury is determined it can be maintained. "It’s a question of intent,” he says. "We’ll assist, not direct. Even if wc feel a company is acting against its own interests, we won’t interfere.”

One of the duties of his old job, coupled with his new one, may well make Drury one of the most powerful men in Canada. An important recommendation of the recent Glassco commission was that defense production be reorganized into a department of supply which would be the purchasing agent for all branches of government. If this is done — and the Liberal government is believed to be supporting the idea — Drury, as minister of defense production, would gain control over nearly a billion dollars’ worth of industrial buying a year.

So far, his new department has few grandiose plans. It will have only a hundred or so employees by the year's end, some of them dollar-a-ycar experts borrowed from industry but most of them transfers from the domestic business branch of trade and commerce.

“I TEND TOWARD FREE TRADE”

The quickest and most effective way to help secondary manufacturers is to slap on tariffs to keep out competing imports. But if Canadian manufacturers think this is how Drury regards his job, they’ll be disappointed. “I have a pragmatic approach to tariffs, but I tend toward free trade,” he says. "Artificial arrangements to help industry can’t last and should be undertaken only in an emergency.” One of Drury’s main jobs will be to prepare Canadian industry for the impact of the mutual tariff slashing expected to flow from the negotiations based on President Kennedy’s Trade Expansion Act.

One problem Drury has yet to solve is how

to achieve the objective of helping Canadian manufacturing, when two thirds of Canada’s secondary industrial capacity consists of American-owned subsidiaries. “There won’t be any discrimination,” he says, “because as the health of manufacturing as a whole improves, Canadian ownership should expand as well. But of course 1 am concerned with the problem of foreign control.”

Drury makes no extravagant claims, but he did move into his new portfolio with at least one important victory behind him. In midJune he flew to Washington and won an important concession from U. S. Defense Secretary Robert McNamara, the New Frontier’s toughest bargainer. After spending most of one day eyeball-to-eyeball with Drury, McNamara backed down on an earlier decision to slow his country’s balance of payments drain by cutting off defense research contracts in Canada.