Canadian state takeovers cause corporate concern
Is Canada going socialist?
Some influential American industrialists with branch plants here and some New York financial analysts are saying so, because of the growing intervention of Canada's federal government in private business.
Owning 176 companies in manufacturing, natural resources, and transportation, as well as consumer services called ''crown corporations,'' the Canadian government appears determined to expand its stake in the private sector. This is viewed with growing fear by some Americans and Canadians who insist it is Prime Minister Pierre Trudeau's plan to socialize Canada.
It was recently acknowledged that the fourth-largest takeover of a foreign oil company's integrated Canadian operations by Petro-Canada, the federally owned oil corporation, will cost $600 million instead of the announced $347 million.
The latest ''victim'' is not a US oil company for a change (Petro-Canada has already bought out the Canadian operations of two of the US companies), but the refinery, marketing, and retail operations of British Petroleum in Canada.
Imperial Oil Ltd., Exxon Corporation's very large Canadian subsidiary, says Petro-Canada, which existed only on paper in 1974 and is now Canada's fifth-largest oil company, has emerged as a major competitor.
The latest Petro-Canada buy out was synonymous with a further Canadian government announcement that the CDIC (Canada Development Investment Corporation), a holding company on paper only, will take control of the government's big stake in Massey Ferguson Ltd., Canada's financially troubled farm-machinery-manufacturing giant, plus four wholly owned crown corporations.
These are De Havilland Aircraft of Canada, producer of the world-famous STOL (short takeoff and landing) aircraft; Canadair Ltd., a military-aircraft manufacturer and a former subsidiary of General Dynamics Corporation; Teleglobe Ltd., a telecommunications outlet; and Eldorado Nuclear Ltd., producer of nuclear facilities.
Most of Canada's 176 state enterprises are deep in debt despite the estimated
However, three of them, all in the transport-communications industries with estimated assets of $10 billion, showed a meager $30 million profit during 1981. They are Air Canada, the world's ninth-largest international airline; CN Rail, a transcontinental inter-modal rail and trucking empire that also owns two US railroads; and the above-mentioned Teleglobe Ltd.
This extension of the role of the state in private business is taking place at a time when the White House is dominated by classic free enterprisers and California millionaires. They are likely to have little sympathy for direct government involvement in a Canadian economy always short on sources of domestic private capital.
A leading academic specialist on the Canadian state enterprise puts this need in a positive context:
''The crown corporation (so named because as a monarchy all state enterprises in Canada are constitutionally vested in the crown) is a special Canadian device to carry out the development of the hard frontier.''
CP Ltd., one of the world's largest diversified and privately owned transportation empires, needed government subsidies and free land grants to make possible the construction of its predecessor Canadian Pacific Railway in the 1880s across a still-empty but potentially rich Canadian West.
''That was necessary a century ago but not now,'' says an angry US company president who worries about the future of his Canadian subsidiary.
''Today Trudeau's technocrats are planning to take over more profitable US-owned branch plants which already have helped to develop Canada's economy. This trend to statism could scare away future US corporate investment in Canada.''