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Editorial: Too small to bother?

There’s been lots of talk in the news lately about financially troubled corporations and how their plights are handled by governments.

For example, the Quebec-based aerospace and mass-transit company Bombardier has been the subject of controversy after it proceeded to give 50 per cent pay increases to senior executives shortly after receiving yet another taxpayer-funded bailout, this time in the amount of $3.7 billion.

It doesn’t help, as columnist Andrew Coyne noted in a recent article in the National Post, that its board of directors is fairly stuffed with family members of executive chairman Pierre Beaudoin.

He stood to gain $5 million personally, until the compensation was deferred a couple of years in the face of public outrage.

Much of the outrage was fuelled by the fact that, as it was preparing to open the money taps for its executives, the company remained mired in the muck and was shedding thousands of rank-and-file employees.

It speaks to a certain arrogance that large companies cultivate over time, especially those that are, for one reason or another, deemed ‘too big’ to fail by the political class.

It’s a variation on that old saying that “If you owe a bank $100, that’s your problem. If you owe a bank a million dollars, that’s their problem.”

Consider the curious case of the Big Three automakers during the 2008 financial crisis. Two of the three companies were actively circling the drain at the time, and only Ford had any time on the clock through the blind luck of having finalized a long-term credit deal only days before the wheels came off the financial system.

Calling for a bailout, the CEOs of all three companies were called before the U.S. Congress to testify on the need for public funds. All three arrived, separately it is worth noting, in private jets.

Apologists for this sort of behaviour will attempt to brush it off as the cost of attracting the top talent it takes to run a modern business. What they also brush off is the fact that if they’re appearing, hat in hand, before government seeking a handout, these ‘leaders’ might not be all they’re cracked up to be.

By contrast, consider the plight of Canadian Prairie Garden Purees, a small startup company with big ideas, based in Portage la Prairie.

Recently, that company’s secured creditors requested and were granted court protection and the future of the company remains in doubt. Affected growers say that not only will their farms take an immediate hit from loss of market and unpaid accounts receivables, but the sector itself will be knocked off stride.

Many have noted that this company has come up with a truly innovative process that shows big promise. It creates a high-value food-processing ingredient from vegetables that would otherwise go to compost. It potentially adds value to the farm economy as well as the rural economy through job creation.

In fact, it is so novel, that a case study on the company conducted by the Rural Development Institute at Brandon University concluded “that it was a disruptive innovation that required other innovations along the supply chain in order to make it successful.”

“In order for Canadian Prairie Garden to reach its long-term production goals it must build its own facility. This is a very expensive and time-consuming process, which will balance increasing sales with production capacity,” the study said.

In other words, it’s one thing to have a good idea and product. It’s another to finance the development of it and the growth of a company.

The idea of public involvement has been floated but it seems when it comes to support for agriculture and food, governments are reluctant to invest. That raises the prospect of the company shutting down altogether, or its technology being swooped up by outside interests and taken someplace else.

Farm income support programs, for example, are constantly being tweaked to ensure they offer income protection in the face of uncontrollable circumstances but not personal enrichment. Spend much time around these discussions and sooner or later you’ll hear about the need to protect the public purse from “moral hazard,” a term that almost certainly has never been applied in consideration of support to the likes of Bombardier.

Rather, it seems these small startup companies are viewed by politicians as ‘too small to bother.’

Yet, these small- to medium-size enterprises are vital to this country’s economic growth. They will be key to the federal government’s much-hyped target to grow the Canadian economy through the agriculture and food sector.

A relatively small investment to help this company through its growing pains could pay off in spades over the long term.

About the author


Gord Gilmour is Editor of the Manitoba Co-operator.

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