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Amazon is the new Chrysler in the branch plant economy of Canada

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Last week, Amazon made the announcement that it would be doubling its workforce in Vancouver by opening a second corporate office in the city.

While not the fabled HQ2 that the online retail bigwig will soon be bestowing on some lucky North American metropolis, the news has nonetheless been greeted with hearty approval from all and sundry.

Should it? In reality, Amazon’s move is more evidence that Canada’s branch plant mentality won’t be changing anytime soon.

“Today is a great day for jobs in British Columbia,” rang out the Twitter feed from BC Premier John Horgan on the eve of Amazon’s news that it would be adding job space for 1,000 new employees in Vancouver by opening a new office by the year 2020.

"Amazon is excited to continue growing our workforce throughout Canada," said Alexandre Gagnon, Vice President of Amazon Canada and Mexico in a press release. "We are among the largest employers of software engineers in Canada and look forward to continuing to create new job opportunities for Canadians."

Now, 1,000 prospective jobs —skilled, full time with benefits and working for one of the world’s top employers —is nothing to sneeze at. Or maybe it is, since it effectively represents a continuation of what is now a centuries-old modus operandi in Canada called the branch plant mentality.

Since the early 20th century, US companies —think the auto industry but, really, almost any sector from hotels and food to heavy equipment and mining —have found it profitable to set up satellite shops across the border in Canada, where they can provide goods for Canadians while avoiding tariffs and, from the Canadian perspective, come off as the saviours of cities and small towns across the country.

This goes back a long way. The Chrysler Corporation of Canada was incorporated in 1925, just twelve years after the first mass production vehicle rolled off the line.

The trick is, of course, that by being branches of a bigger company elsewhere, these Canadian plants have no control over what they produce (and thus what we consume) nor do the profits from these operations stay in Canada, instead ending up abroad. And, in the end, when a head office decides to close a plant (for the good of the company) Canada’s branch economy has no say in that either.

You might think that things are different in the tech sector, with Canada being home to some stellar efforts both in the past (Nortel, BlackBerry) and present (Shopify, Hootsuite). But you’d be wrong. There’s every reason to worry that the mistakes of last century are being repeated in the new economy.

“With a few exceptions, Canada does not successfully commercialize its scientific and technological discoveries into world-leading products and services. Canadian companies are rarely at the leading edge of new technology and find themselves a step behind the leaders."

That was Gilles Rhéaume of the Conference Board of Canada back in 2010 speaking of our poor showing on the industrial innovation front. The Conference Board’s report on innovation came out just as Nortel was selling off the last of its major businesses to US-based Ciena Corp., prompting David Olive, Business Columnist for the Toronto Star to write disparagingly about Canada’s lack of support for its own companies.

“The steep decline and ultimate dismantling of the 125-year- old Nortel roughly coincided with the loss to foreign owners of such other ‘national champions’ as Alcan, Inco, Falconbridge, Stelco, Ipsco and Dofasco, the latter among the world's best-run and most consistently profitable steelmakers during close to a century of Canadian ownership,” writes Olive. “'Canada for sale’" was Ottawa's guiding principle, if one wants to dignify with a label the feds' lack of interest, under both the Paul Martin Grits and Stephen Harper Tories.”

And while the rhetoric from the young Trudeau hits all the right notes, industry experts are skeptical. Not only has the government’s proposed tax reforms put a chill on the country’s startups and entrepreneurs, the gist of the government’s innovation plan seems to involve branding ourselves as the North America’s cheap tech labour source.

Attempting to woo flashy companies is not a singularly Canadian endeavour but we’ve certainly perfected the art. Last year, when Microsoft Corp. announced it would be opening an “Excellence Centre” in Vancouver and adding more jobs to boot, the cheers went up just as they are doing now.

But as Sean Silcoff wrote for the Globe and Mail, that Microsoft deal only came after the BC government exempted the company from the standard processing needed for foreign workers. The effect would see Vancouver used as a temporary entry point for foreign tech workers ultimately bound for the US, not Canada.

Silcoff wrote that the move is emblematic of the approach taken by Canadian government.

“This exemption places the needs of a foreign multinational above Canadian companies, whichultimately puts Canada at an economic disadvantage,” said Silcoff.

Of course, Amazon is sexy with its wheelbarrows of jobs and environmentally sustainable buildings. Google is sexy, too. They all are. But luring them into putting up branches here isn’t an innovative strategy, it’s as old as Canada.

About The Author /

Jayson is a writer, researcher and educator with a PhD in political philosophy from the University of Ottawa. His interests range from bioethics and innovations in the health sciences to governance, social justice and the history of ideas.
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