Why Mexicans Don't Drink Molson. Andrea Mandel-Campbell
self-made millionaire who now makes his home in Vancouver. It goes like this: A fox meets a tiger in the forest. The fox says to the tiger, “Don’t eat me because I am really powerful. If you don’t believe me, follow me around the forest and you’ll find everyone bowing to me.” Sure enough, everywhere the tiger and the fox went, all the animals bowed. “Well, of course, everybody was really bowing to the tiger,” says Fung. “In Canada, we take the U.S. to be our tiger.”
The problem is, as global supply chains weave their way around the planet, companies consolidate and free-trade agreements are thrown out like so many nets into the sea, the tiger may find better things to do than follow a fox around the forest. Shorn of its protector, the fox falls prey to the law of the jungle. And Canada, like the fox, has very little in the way of natural defences to shield it from the ferocity of global markets. In fact, on closer inspection, this fox, with its puffy tail and pointy ears, begins to resemble an overgrown squirrel.
The first telltale sign of Canada’s vulnerability is in its companies. In an era where size matters, the country has precious few multinationals. Despite laying claim to the second-largest proven oil reserves in the world, Canada has no “super-majors” like Exxon Mobil or British Petroleum. Few countries are carpeted with such vast tracts of trees, yet there is not a single tier-one forestry company to rival those of the Scandinavians or the Americans. Canada’s mining companies have traditionally been the most international, but only two — Barrick Gold and Teck Cominco — still have Canadian head offices and are pipsqueaks compared with behemoths like Anglo-American of the United Kingdom, Brazil’s cvrd and Anglo-Australian miner bhp Billiton. Aluminum maker Alcan is perhaps the most global Canadian company, but with us$20 billion in sales it is considered small by international standards (the newly merged Arcelor Mittal steel giant has sales of us$77.5 billion) and is an increasingly likely takeover target.
As for Canada’s blue chip banks, they are irrelevant internationally, dwarfed by multinational monoliths like Citigroup and Holland’s ing Group and even outgunned by Australia, where poisonous animals outnumber the population.* According to the Fortune 500 list of the world’s biggest companies in 2004, Canada’s leading entry was George Weston Ltd. at 240. But while Weston has grown fat plying Canadians with baked goods and President’s Choice brand foods at its ubiquitous Loblaws and Superstore chains, French grocer Carrefour is in an entirely different weight class, with a global empire that includes more than two hundred stores in China alone.†
Canada’s lack of global girth exposes an even softer underbelly. While Sweden has Ikea, Finland has Nokia and Italy has the fashion triumvirate of Armani, Gucci and Prada, Canada does not have, nor has it ever had, a single global brand. Even landlocked and impossibly mountainous Switzerland boasts a swath of high-altitude names, from banks and Rolex watches to Nestlé chocolate, Nescafé instant coffee and pharmaceutical giants Novartis and Roche.
In contrast, Canada is almost anti-brand. In a country without a lot of large companies, an inordinate number of them are generic manufacturers or outsourced contractors hired to make other companies’ products. The no-name club includes Cott, which is now the largest private-label soft drink manufacturer in the world; Celestica, a contract electronics manufacturer; Apotex, a generic drug manufacturer; Patheon, a leading contract drug maker; and Peerless Clothing, which manufactures men’s suits under licence for upscale brands like Calvin Klein and Ralph Lauren. Even Montreal-based Gildan Activewear, one of the largest T-shirt makers in the world, is no Fruit of the Loom.
Some say its because we’re just too darn nice and middle-of-the-road to put our imprint on anything and duke it out for world domination. Finns, despite their socialist leanings, are definitely not soft and cuddly, say those who have dealt with them. The Australians, descended from convicts exiled to a distant island, are ballsy adventurers who travel the world over. And while Bern may rival Ottawa as the world’s most boring capital city, the Swiss are “calculating, regimented and disciplined. They know what they want and are fantastic negotiators,” says Jeff Swystun, the Toronto-based global director for the branding company Interbrand.
“It’s a problem of our marketing aggressiveness. When has Canada ever conquered another country? We are a country that’s never had a revolution, never had a civil war,” says Swystun. “Unfortunately marketing is all about scrapping it out — for market share, for share of mind and share of wallet. That means being aggressive day in and day out. And that just doesn’t appear to be in our character. It would mean taking a stand, and that’s something we are loath to do.”
So instead of being scrappers, we are skimmers. Whether it’s the big banks that sit at home counting their billions, logging companies content to hew two-by-fours instead of manufacture tissue paper, or manufacturers churning out generic products rather than innovating, Canadian companies scoop the cream off the top rather than milk their products and services for all they are worth. Why go through the painful and risky process of building brands, expanding internationally and adding value when there is relatively easy money to be made carving up homegrown monopolies, cutting down trees and turning out component parts?
“The Americans phone us and say ‘We need wood’ and we sell it to them, and they sell it back to us as a cabinet,” says Drury Mason, Alberta’s assistant deputy minister of economic development. “And we’re happy to do it because we made money on the wood.”
That kind of inward-looking comfortable complacency has taken a toll on the country’s entrepreneurial drive. The lag is reflected in a reluctance to invest in new technology, a reliance on cheap labour and a yawning productivity gap between us and the United States. Canada’s investment per worker in machinery and equipment is about 60 per cent of U.S. levels, its companies spend less than half as much on research and development as the Americans do, and we are twenty years behind our neighbour in our stock of information technology.39
It’s why, when I was in the Arctic, I was surprised to learn that all of Canada’s fleet of Coast Guard icebreakers are powered by Finnish-made engines, and why Quebec, traditionally the largest source of aluminum for Alcan, doesn’t have a single aluminum auto parts maker. It’s also why, despite manufacturing cars for forty years as part of the Auto Pact, an automotive free-trade agreement between the United States and Canada, Canadians are essentially still assembly-line workers.
Not surprisingly, Canada continues to slip in the World Economic Forum’s annual rankings of the world’s most competitive countries. Its overall business competitiveness sank from sixth place in 1998 to fifteenth in 2006, largely due to a weak track record on innovation. According to the survey, Canada ranks thirty-second out of 125 countries in its propensity to compete based on unique products and processes. When it comes to the degree to which exporting companies go beyond the simple resource extraction and are involved in product design, marketing sales and logistics, it ranked a dismal forty-sixth. In contrast, Finland, Sweden and Denmark have topped the charts year after year, thanks to a private sector that according to the forum “shows a high proclivity for adopting new technology and nurturing a culture of innovation.”
That’s not to say that Canadians never come up with innovative technologies or ground-breaking inventions. They do. In fact, they do it quite often. The problem is that they seem to have a hard time making the leap from the laboratory to the marketplace. When a Canadian product does make it to the store shelves, it’s usually because an American company made it happen. “What Americans are good at is taking a commercial venture and getting people excited about it,” says Nizar Somji, owner of the Edmonton-based technology firm Matrikon. “We are not only unable to commercialize, but we are unable to get people excited.” Adds Interbrand’s Jeff Swystun: “We don’t have a marketing mindset in this country at all. We’re bad at making the finished product shine, and there’s a real void in marketing talent, in aggression, in boldness of claim. It’s truly a void in the business world.”
The story of IMAX Corp., the iconic big-screen movie company, is the Canadian conundrum writ large. In the late 1960s, a group of Canadians developed a revolutionary technology for large-format film. The technique became a staple at science centres and museums, but eventually it stumbled on drab content and limited growth. Two Americans picked up the floundering company in 1994 and gave it a new lease on life. No