It has been my great honour to publish this newspaper, in this city, for more than 33 years. I can tell you it has never been a straight line.
Surviving the vicissitudes of a cyclical economy, the strikes, the anticipation of the strikes, the recovery from the strikes, the evolution of our competitors from local to national corporations, the downsizing of the mining sector, the transition of the retail economy from a small-business base to a big-box infrastructure, the arrival of the Internet, and the astonishing consolidation of the newspaper industry in Canada has been an incredible ride.
Today, Northern Life is the last independently owned newspaper of its kind in Canada and we cherish it.
The times have been no less challenging for the city itself.
The recent drama with Inco and Falconbridge and now the Phelps Dodge takeover is a life-changing event for Sudbury.
It is not an incremental change. It is not a bump in the road. It is as big as it gets. We will never be the same. With this consolidation goes an era and the perks and stresses of being close to the heart of major international corporations that consider Sudbury central to their DNA.
There will be all sorts of conflicting story lines, spins, claims, counterclaims and heartfelt appeals as this game plays itself out.
Most of them will be driven by money and self interest which is as you would expect. This is a big money game. One of the biggest in Canadian history. There are a lot of stakeholders in this game. The list includes, but is not limited to:
a) The stockholders
b) The employees
c) The unions
d) The boards of directors of these companies
e) The most senior executives of the companies
f) The suppliers to these companies
g) The provincial government and various provincial
politicians (of all parties)
h) The federal government and various federal
politicians (of all parties)
i) The municipal government and various
politicians
j) Various institutions in Sudbury from
hospitals to universities, and social agencies to museums.
k) The media (local and national) which, not unlike myself, insert
themselves into the storyline with what they view to be interesting
or important, and finally,
l) The people. The people of Sudbury and the people of
Canada.
The first direct report to the community since the Phelps Dodge
announcement came from Mark Cutifani, Inco’s president
of North American/European operations, when he
addressed the Greater Sudbury Chamber of Commerce last Friday.
It must be said at the outset, Cutifani is the most talented,
charismatic, straightforward, community-minded, hard-driving
executive to occupy this position in my 33 years of business in
Sudbury.
He is extraordinary. He has revitalized the Sudbury operations. He
has insisted the company start investing again in the community. In
the past 12 months, Inco donated $7.43 million to this community
including, $5 million to the Centre for Excellence in Mining;
$500,000 to the new Collège Boréal residence;
$500,000 to the Northern Ontario School of Medicine; and $300,000
to the Living with Lakes Centre. He has also delivered a
strike-free labour agreement under, no doubt, difficult
circumstances.
But more than that, Cutifani walks the talk. He sits on the board
of Laurentian University and he shows up at strategic planning
sessions to do the hard work.
When asked by Northern Life publisher Abbas Homayed to step up as
chair of the United Way, he signs up and makes phone calls in spite
of gruelling time pressures.
Cutifani has my vote, as president of Inco, as premier of the
province, or anything else he might chose to undertake.
True to form, Cutifani did a brilliant job presenting the current
situation at Inco. His general theme is, yes, it would have been
nice to have the Inco/Falco consolidation on its own, but this new
deal is even bigger and has business merit. Remarkably, for a
senior executive of Inco when confronted with some hard truths
about the deal—like how come Inco makes up a majority of
the shareholders post takeover and gets only four board
members?—he said that was a legitimate weakness of the
deal. If this kafuffle was about Cutifani I’d be outside
golfing with the rest of you.
But it is not.
We need to see the implications of this deal, knowing full well the
players in the game will change and most assuredly the people they
report to will be changing soon.
Perhaps the best example of this reality was unintended with a
moving tribute to Inco’s chair Scott Hand.
The question was asked at the luncheon what Cutifani thought about
the remarks of Norman Keevil, the chair of Teck Cominco Ltd.
(another potential buyer of Inco), who asserted that Hand had
“sold Canada out.”
Cutifani responded with class. He described how Hand had been a
mentor of his; how he had listened to him when he wanted more
investment in Sudbury; how he had listened to him when he requested
he be allowed to take on his new world wide responsibilities from a
base in Sudbury; and how he had delivered on every promise
made.
Of course, Hand is no longer really in charge. He is 64 and now a
vice-chair on his way to retirement.
So what is going on?
Well, in short there is a commodity boom. It has been raining money
for metal producers. Most people feel it will keep raining because
the economies of India and China are red hot.
Some people go to the Chicago Mercantile Exchange and buy pork
bellies. Some people buy pork belly farms. Some people buy forward
contracts on the London Metal Exchange for nickel and copper, and
other people buy mining companies that produce it.
The temptation to spend this new
currency—both money in the bank and inflated stock
valuations—is irresistible. Sometimes there is a great
“synergy” story, and sometimes it is just
hogwash.
The Inco/Falco combination has great promise. Some of the rest of
it could be wishful thinking. There is one unalterable truth in the
commodity business. What goes up almost always comes down, and
promises made when prices are high are seldom kept when prices are
low.
I won’t bore you with all the
potential outcomes, but at the moment a Swiss company called
XStrata wants to buy Falconbridge—it already owns 20
percent—and Teck Cominco wants to buy Inco, but without
Falconbridge.
Inco was faced with having to raise its offer for Falconbridge to win the day and the board decided it was too risky.
They decided to sell themselves to Phelps Dodge to get the money and avoid getting bought by anyone else with too much money. What is important to note is that if the governments of the United States and the European Community had been quicker to approve this deal Inco might well have pulled off its purchase without attracting all this attention.
The delay gave life to the XStrata deal, and gave time for Teck Cominco and others to get in the game.
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