BUSINESS WATCH

Hunting for a master plan

Peter C. Newman October 31 1983
BUSINESS WATCH

Hunting for a master plan

Peter C. Newman October 31 1983

Hunting for a master plan

BUSINESS WATCH

Peter C. Newman

That ever-elusive genie—a viable industrial strategy to guide us into the turbulent world of the late 1980s—is loose again among federal politicians of all stripes.

No one is opposed. Everyone praises its virtues. But nothing happens.

Debate on the issue has been heating up as the result of Robert Reich’s impressive new U.S. best seller, The Next American Frontier, which documents the position that nothing any democratic government does in the next few years will be more important than formulating appropriate industrial initiatives. “When most Canadians talk about us having our own industrial strategy,” says Ed Lumley, minister of industry, trade and commerce and of regional economic expansion, into whose bailiwick it falls, “their perception is of some guy in Ottawa sitting down to write a grandiose document that will impose rules of conduct on the private sector. I don’t believe you can do that. All we really can do is act as catalysts in the right direction.” Senator Jack Austin, the other Liberal cabinet minister most concerned with this issue, agrees. “We’re not going to get an industrial strategy in this country until we sort out the government-industry relationship,” he insists. “And that should cover everything from research and development to managerial training, to encouraging risk-taking, to underpinning Canadians as investors and backing up Canadian investment capital—in other words, not just helping with export sales but keeping the population well educated, healthy and productive.”

It’s a tall order. Adoption of a national industrial strategy implies a broadly based consensus on how to bring into proper balance the nation’s diverse goals—its resources, skills, environmental risks, trade initiatives and all the various factors that go into making an economy function most effectively. In Canada’s case conjuring such a miracle is complicated to a horrendous degree by two immutable facts. We are not a unitary state. This means that any national economic initiative requires unanimous provincial sanctions. Also, two-thirds of our most productive industries are owned by outsiders. Whatever we decide can be, and often is, overruled by foreign landlords acting on very different sets of guidelines than our own. Those extraterritorial entre-

preneurs are far more interested in the production of new fortunes than the equitable redistribution of existing wealth—a core mandate of any Ottawa administration.

Lumley is one of the few unreconstructed free-enterprisers in the Trudeau cabinet. A native of Windsor, Ont. (where his first after-school job was washing Coca-Cola trucks), he moved to Cornwall, Ont., and established his own wood-finishing firm. In federal politics since 1974, he has never really become

part of the capital scene. “Ottawa is a great place,” he says, “but it’s not real. .Getting you hair cut in Cornwall on a Saturday morning is part of the real world; getting your hair cut in the parliamentary barber shop is like attending a diplomatic function.”

In his portfolio he has focused on expanding trade. “Canada,” he says, “is the smallest of all the industrialized trading nations in the world. We’re the only major country that doesn’t belong to any economic bloc.”

Lumley is convinced that the government must become an active player in a I

complementary rather than competitive sense, making sure that export financing matches that of other countries. Unlike Jean-Luc Pepin, one of his predecessors in the job, he doesn’t believe we need national trading corporations but would like to see instead the organization of export consortia for major foreign capital projects so that Canadians don’t compete against one another for the same plums.

Lumley managed to get a position paper through cabinet that would concentrate Canada’s export push in the 20 countries with the most cost-effective returns. “I don’t believe in a winnersand-losers philosophy,” he says. “Textiles are supposed to be a soft sector, yet Peter Nygard in Winnipeg, for example, runs as modern and efficient an operation as anywhere and is competing abroad.” Lumley is particularly proud of the new Bell Textron helicopter plant announced for Mirabel and is planning to announce another helicopter deal (in partnership with the Messerschmitts of West Germany) for Fort Erie, Ont., next month.

A pragmatist who believes more in share-of-market increases than in arbitrary export targets, Lumley is directing his department’s efforts toward seven specific areas designed to increase our end-product sales abroad. He wants to continue the Foreign Investment Review Agency but is trying to reorient it as a tool to negotiate increased investment in Canada. He calculates that during the past six months the agency’s efforts have led to $3 billion in industrial expansion here.

“The Japanese, for example,” he says, “are natural partners for us. The three biggest things they’re short of—energy, food and water—we have in abundance. They know that full implementation of the Tokyo Round of tariff talks will mean that 85 per cent of Canadian goods will flow into the United States duty free, and most of the remainder will pay a duty of five per cent or less. So the Japanese, who are the greatest marketers in the world, look at this North American continent and see that they can have access to that huge U.S. market from here—and achieve secure supplies of energy, food and water at the same time.”

It all sounds suspiciously plausible. “Everybody wants to see an industrial strategy packaged in a fancy booklet,” says Lumley. “I tell them, ‘While you guys are busy writing, I’m going out to make it happen.’ ”