Tuesday, October 18, 2016

Canadian Tax Dollars Financing American High-Tech Jobs?

"[But ...] the bottom line is that Canadian government money is going to support high-tech jobs in the United States."
"The question is whether this should continue?"
Chuck Black, analyst, Toronto

"For MDA [McDonald Dettwiler and Associates] or any company that is looking for EDC [Export Development Canada] support, we review each transaction on a case-by-case basis to ensure that the benefit to Canada is clear and positive."
"In MDA's case, EDC's consideration would likely be based on the direct benefit to MDA's operations in British Columbia and Quebec."
Phil Taylor, spokesman, Export Development Canada
Export Development Canada has financed several satellites being built at Space Systems Loral in Palo Alto, California.
Export Development Canada has financed several satellites being built at Space Systems Loral in Palo Alto, California.
Handout/Space Systems/Lora

Echoes here of Ontario's Algonquin College subsidizing higher education in the wealthy country of Saudi Arabia, through Ontario taxpayers, when Algonquin College came up with the brilliant idea that it would contract with the Saudi government to operate a vocational college offering education to rural Saudis, and in the process grow Algonquin's reputation as an international player in the field of education. Trouble was, the Saudis who enrolled at the campus lacked the basic academic foundation to understand the courses they enrolled in, and Algonquin lost the millions it hoped to gain, forcing it to pull out and pay a penalty by aborting its contract.

When Canada still had its Conservative-led government, the-then government of Stephen Harper blocked the sale of British Columbia-based MDA to Alliant Techsystems of Minneapolis, on the basis of protecting Canada's space industry from foreign buyers. It was recognized then, as it should be now, that in the best interests of Canada, a taxpayer-supported industry that builds satellites whose cost of research and production is underwritten by Canadians, should never fall into foreign hands.

Evidently, the new Liberal-led government that sought to reverse all Conservative-led government initiatives, failed to recognize when that vital Canadian interest was cut out from under their notice by a company determined to have its way. And its way was that Space Systems Loral (SSL) of Palo Alto, California, should be given the opportunity to administer the affairs of a company that the Canadian taxpayer is on the hook for. MDS did an end-run around government notice of its activities.

It brought in a new chief executive officer, an American citizen who now operates the company remotely, from its San Francisco headquarters. Registered as a corporation in Delaware, SSL MDA Holdings, Inc. is de facto now an American company funded by the Canadian Export Development Canada, but posing as a Canadian business operating in both the U.S. and Canada. Early this month a series of senior appointments was announced. A retired U.S. air force general with a background in space operations and a former American defence intelligence official with a background at the Central Intelligence Agency were brought on board as senior appointments.

Export Development Canada made a March 2015 announcement that $190-million for a satellite to be built in California by SSL for a Spanish telecommunications operator was going forward. How this enterprise could be interpreted as being beneficial to Canada relates as a mystery. And yet seven months later it was revealed by Azerbaijan that EDC was once again financing yet another telecommunications satellite at the same American facility costing $190-million for the Azerbaijan satellite. MDA emphasizes that SSL is an American company, so there are no illusions there.

Only Export Development Canada appears to be suffering under the delusion that the pride of Canada's space technology industry is no longer Canadian, yet it steadfastly remains loyal to financing its construction of satellites, as though building them in California, providing critical jobs to American experts in the field somehow benefits Canada, and therefore Canadian taxpayers should be paying their salaries for the production of the satellites benefiting Spain and Azerbaijan.

According to Steve Staples, vice-president of the Rideau Institute think tank in Ottawa, instrumental in the 2008 decision to halt the American purchase of MDA's space division, the latest moves by the company represent a "stealth takeover of sensitive technology that Canadian taxpayers paid for". How that can be intelligently rationalized is anyone's mad guess.

Handout/Space Systems/Loral
Handout/Space Systems/Loral    Export Development Canada has financed several satellites being built at Space Systems Loral in Palo Alto, California.

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