Where’s the bailout, Canada?

What is the rationality by the Canadian government against bailing out the tech sector, while bailouts for the banking and auto sector gets an easy green light? Are tech workers any less Canadian who’s jobs do not matter?
BlackBerry (TSE: BB) recently had one of the worst quarters with almost a $1 billion loss in write-downs. BlackBerry, which was ahead of the curve in the invention of smartphones, are now at the brink of bankruptcy with $2-$3 billion in cash – and that’s running out fast! BlackBerry announced last week that they will be cutting 4,500 jobs (source), about a third of the workforce.
The Canadian government has bailed out the banking sector with $114 billion (source), auto industry with $4 billion (source) during the economic crisis five years ago, but why no such bailouts for the tech sector?
BlackBerry is not the first tech company that is in this situation. In the past, Canada had the opportunity to save jobs with a bailout of Nortel Networks, but it was decided that the company is not worth saving (source). BlackBerry may as well face the same verdict in the coming months. Both Nortel and BlackBerry were leaders in their heyday, and being the giants that they once were, have spawned off a number of other startups across the country. So, why the hatred and ignorance towards the tech sector by the Canadian government? Are the tech workers any less Canadian than bankers and auto-sector workers?
I am not advocating that every company that fails should be bailed out with taxpayer money, but what is the rationality behind saving some industries and letting others fail? This is not made clear by the politicians.
What are your thoughts on this topic? 

2 thoughts on “Where’s the bailout, Canada?

  1. The rational is that a company and sector has to be critical to the health of the country. The collapse of banking and its removal of liquidity is what caused the Great Depression in the U.S. not the stock market crash. Companies could not get overnight lending for their needs and it bankrupt them. The auto industry was bailed out because there were millions of jobs tied to it. Not only the workers that make them but the secondardy companies making parts, mechanics, shipping. It would have cascaded into a bigger problem. These were industry problems.

    Blackberry on the other hand… is one company. Its not as critical to the health of Canada as other entire industries. And they aren’t going away, just going public so no need to spend taxes to save them.

    • Pulling Myself Up,
      Thanks for stopping by. You are right: that the banking sector is essential – without the liquidity, our economy will grind to a halt. With regards to auto sector – car manufacturing in Canada is an extremely tiny percentage – its the secondary market, as you said, that of suppliers, mechanics, shipping which is worth saving.
      That is exactly the point I am making with the tech industry. At their peak, Nortel was worth $400B and BB about $75B. When you have such huge companies, they spawn and set off secondary markets like wildfire. Half of the Ottawa tech sector traces its roots to Nortel (with the other half attributed to the government). I am certain that the same holds true for BB and the tech sector in Kitchener-Waterloo region.

Leave a Reply

Your email address will not be published. Required fields are marked *