Wednesday, July 22, 2009

RIM asks the Harper Conservatives to stand up for Canada

Interesting little drama playing out in our high tech industry given the auction of Nortel assets that's going on. RIM is making a bid for some of the more valuable Nortel intellectual property assets now and the bid is hampered by questions of whether they complied with the court run bidding process. So they are making a political play, essentially asking the government to invoke the Investment Canada Act provisions for their benefit, as the sole Canadian purchaser in the mix. Nortel's technology should not end up in the hands of foreign players, they argue. What's interesting about this is how it plays into a growing story line of the Harper government being asleep at the switch while valuable Canadian industrial assets are slip sliding away to foreign interests.

We've seen on the medical isotope file how this government has evidenced little concern about the loss of that high tech industry that Canada's been a world leader in for half a decade. They are prepared to privatize Atomic Energy Canada Ltd., signal that Chalk River will be shutting down within about five years and move Canada entirely out of the isotope business. The Americans have consequently decided to stop relying on us and build their own isotope capability, thereby destroying a large part of the Canadian isotope market. This is all to the detriment of Canadian patients who will be dependent on foreign suppliers, Canada's research and development capabilities, Canadian jobs in the nuclear medicine industry, etc.

Now we have RIM essentially goading the Harper government into keeping Canadian high tech assets here in Canada in the Nortel process, arguing that "economic and national security considerations justify further review" of the bidding process that they feel they are being kept out of. This move by RIM is finding some allies, see this Toronto Star editorial today which gives a good overview of the dynamics:

RIM issued a press release Monday evening saying that the loss of Canadian ownership of Nortel's wireless division may "significantly, adversely affect national interests" and calling on the government to "review the situation closely."

In Ottawa, everyone was running for cover yesterday in the wake of RIM's press release. Industry Minister Tony Clement wiped his hands of the matter in a press release: "The government of Canada does not have a say how the (bankruptcy) judge rules on any proposed sale of Nortel assets." Subsequently, Clement told reporters that he hopes Nortel will call a meeting to clear the air "perception-wise" on why RIM's bid wasn't considered.

The government should use every means at its disposal to ensure that RIM's bid is given due consideration so that at least a piece of Nortel might remain in Canadian hands.
Jeffrey Simpson is also sympathetic in his presentation of RIM's argument as it tries to keep this potentially valuable wireless technology IP in Canada:
Mr. Clement, active on the auto bailout file, had been missing in action on the Nortel front, perhaps because he and his fellow Conservatives figured nothing should be done to interrupt the flow of the market. Mr. Balsillie begs to differ.
Will be interesting to see how this plays out from now until Friday when the auction takes place.

"A lot of this research and development has been paid for by Canadian taxpayers," said Richard Powers, associate dean of the University of Toronto's Rotman School of Management.

"This is something that the government will have to take a look at now because the issue has been raised."

Tony Clement's bad week just seems to have gotten so much worse...