After the Recession: Strategies for the '90s

Since becoming minister for small business I have had the opportunity to talk to entrepreneurs all across the country. I have listened to their problems and shared their enthusiasms as a former owner and manager of two small businesses before I entered politics.

I believe we in public life must understand what drives entrepreneurs. As Canadians we must encourage their ingenuity and determination. The most striking characteristic of entrepreneurs is surely their independence, their self-reliance. The other side of that coin, however, is the sense of isolation, the loneliness that only the small business owner can experience.

Let me quote Max Carey, a noted entrepreneur, who preceded me recently at a conference speaking to 500 of the United States' most successful small business owners. This was an interesting audience. They were all entrepreneurs who had started from scratch.

None of them had inherited a business.

"Only the entrepreneur," Carey said, "knows the loneliness that descends on you when business is down, when you know you're not bringing enough home for your family. Who are you going to tell that things are going from bad to worse? That a competitor or a recession has moved you from the fast lane to the oncoming lane?"

"We entrepreneurs sleep like babies. Every three hours we wake up and cry!"

Carey's message found great resonance with his audience because all of them, in varying degrees, had experienced the sense of isolation that was being described. When it comes to shouldering the risks of business enterprise, you are on your own.

Indeed, in my experience, the model of economic life that so many of us carry around in our heads is one in which business enterprises are independent atoms ricocheting around the marketplace, each one trying to be competitive in order to survive.

This is a far too primitive view. In fact, my message today is that almost all businesses are going to have to extend their access to information, to resources, to expertise and to markets by reaching out to other institutions, to enable each enterprise to do with others what one cannot possibly do separately.

That is why I am focusing on what should be a key strategy as we emerge from the recession: partnerships. Partnerships of business with other businesses; business with labour; business with research and training institutes; business with government; and finally, government with government.

I am going to speak of partnerships not as a social or moral duty but as good business. Our government's prosperity agenda, which will shortly be announced, will place great emphasis on this. My business mind, political mind and my analytical mind tell me that all sorts and conditions of partnerships will be necessary if Canada is to achieve prosperity in the 1990s.

Strategic partnering with other businesses makes eminent sense, especially for small businesses. It can help to reduce risks. It can extend the scope of what a firm does. It can accelerate growth. Above all, it can add new knowledge.

For Canada, partnering can result in a better-balanced economy. Ours is presently an "hour-glass economy" with a preponderance of large and small firms. We have proportionately far fewer medium-size businesses than the U.S. Partnering with customers, partnering with suppliers and service providers can be the key to the maturation and growth of many of our small businesses.

What exactly is meant by partnering? When most of us think of partnerships we think first of joint ventures or strategic alliances. It is stunning how relatively small companies are able, working together, to magnify their reach. My next annual report to Parliament on small business will contain many examples of this.

One such example is that of several consulting engineering firms in British Columbia which have joined forces to market their services abroad. They have been able to place a representative in Manila to prospect for contracts as well as keep in close touch with the Asian Development Bank.

Another example is a Canadian-owned freight forwarding service (located here in Toronto) which has concluded an exclusive agreement with an independent carrier. Unlike other freight forwarders we know, that company can now guarantee its delivery times!

We have encouraged partnerships in our financial institution reform package. Our investment houses needed access to capital. This is what we made possible in our reforms a few years ago.

Business with Research and Training Institutes

There are also gains to be made by acquiring partners from outside the business world. With educational institutions to develop training programs. Or with universities, research centres, or institutions such as the National Research Council, which enables smaller firms to benefit from research and to keep track of technological developments.

A good example is that of Jutras Die Casting, a Toronto manufacturer of auto parts that turned to the Ontario Centre for Advanced Manufacturing (OCAM) in Cambridge, Ontario, for assistance in recommending low-cost ways of improving quality. The improvements OCAM recommended were easy for employees to learn and resulted in a dramatic reduction in the company's reject rate.

Partnering, however, involves more than just a business decision. In many cases, it's a lifestyle decision too. It takes a wrenching adjustment on the part of business people who, through hard experience, have learned the lesson that they are on their own. Our business culture has to keep in step with the times, to accommodate new relationships of trust, sometimes even with competitors, and a new sense of shared values.

I believe the culture can be transformed, even in the case of business joining forces with unions. This may be the most acrid week in labour relations for many months but we do have excellent examples of partnerships that break down labour-management antagonism. Increasingly, at a time of profound adjustment in our industrial structure, both sides are coming to see that they must rise above ingrained attitudes of hostility, defensiveness and self-protection.

Think, for example, of the joint efforts being made by the Cape Breton Development Corporation, for which I report to Parliament, and its unions, particularly the United Mine Workers (UMW), to keep their industry viable and provide secure, long-term employment for its work force.

The history of the Cape Breton coal industry is stained by a continuous pattern of labour-management strife. Yet recently workers and executives have come together to develop a plan for restructuring the company and the UMW district president participated in a successful marketing mission to Mexico.

But you know as I do that it is not just up to business and labour to break out of the old mold and forge partnerships. The obligation rests heavily on government as well, and the Federal Government is, in fact, finding new ways to work with the private sector. We can't afford an expensive subsidy approach to partnering, but we can create partnerships in other ways.

Let me give you an interesting example of how we promote tourism in Canada. A recent study conducted by Coopers & Lybrand and commissioned, in part, by my department, has shown that the level of satisfaction on the part of U.S. travellers who have holidayed in Canada is extraordinarily high, as is the likelihood that they will be making a return trip. Ninety-six per cent say that their trip to Canada was as good as, or better than, their last vacation in the U.S.

Yet you may ask how is Tourism Canada, for which I am responsible, going to get full value from this huge market with the modest resources that can be made available at a time of government restraint? We have zeroed in on this problem by forming a wide variety of partnerships--with the provincial governments, of course, but also with the major airlines, with hotels and with tour operators.

Undoubtedly, we in government can do much to join forces with the private sector in pursuit of our mutual goals. But perhaps the greatest challenge is for governments to become effective partners of each other.

Are Canadians from coast to coast not now looking to their governments to show a spirit of partnership and cooperation at this time of national self-examination and renewal?

Speaking as a federal minister from Ontario, I naturally believe this lesson applies particularly to relations between our government and the government of this province. Working together, the governments of Canada and Ontario can do an enormous amount to support one another's objectives--in the realm of fiscal policy particularly but also in environmental regulation, tax collection, and many, many other areas.

For example, if we achieve a better-trained work force, one of the building blocks of competitiveness as the Federal Government sees it, this will be in major part due to the Ontario educational system.

Working at odds with one another, however, the wastage in effort and resources by both levels of government is enormous and tragic.

You will understand when I say that, as minister for small business in Canada, I am very troubled by some of the policy directions being taken by the present government of Ontario.

Not only am I concerned by a fiscal stance that runs counter to our own. I am troubled by policies that appear to undercut what the Federal Government has been trying to do to moderate the regulatory burden on business, to augment sources of finance to start new businesses, to, in short, enable business people to make business decisions based solely on business criteria.

I am concerned that, when the Federal Government has been limiting program spending in the past years to less than inflation, the Ontario government has just announced an increase of program spending of over 13 per cent and an even higher increase in the government's bill for salaries and wages.

I know also that many of you share the views recently expressed by Diane Francis about "Bob Rae's anti-business, anti-development, anti-enterprise, anti taxpayer policy positions to date."

I am, however, heartened when I read some of the views expressed by Premier Rae about the kind of cooperation and trust that he believes should characterize relations between his government and the major institutions of society. I am even more encouraged by comments indicating that he perceives the link between economic activity and social programs.

As he said recently, his government "...understands that there must be a marriage and an understanding between those who are involved in the creation of wealth and those who are preoccupied with issues of social justice."

The Premier's words could have been taken right out of the Federal Government's prosperity agenda. A central point that we are trying to get across is that increasing the size of the economic pie is the surest way to attaining our social policy objectives.

If there is a mutual realization that a thriving business community is absolutely crucial to our social advancement, then we have the basis for a partnership between the Conservative Government of Canada and the New Democratic Party Government of Ontario. That is the objective towards which my colleagues and I are going to be working in the months ahead.

But both of our governments are going to have to keep uppermost in mind the way business actually works. Business does have a social role and business does benefit greatly from social programs. But the strength of our economy and our society depends on our businesses knowing precisely what their task is and being able to set about it with the least encumbrance possible.

That means we should constantly be asking ourselves: "Is Ontario or Canada considered a hospitable place to start a business?" That means we should always have clearly in view the impact that new social programs are going to have on our economic competitiveness.

We already have environmental assessments, employment equity assessments and so forth. Why not competitiveness assessments of every new social program?

As minister of small businesses and tourism I know that the Federal Government too must do a better job at relieving the government imposed burden on small business. The paper burden must be decreased. Especially close to my heart is to decrease the administrative aspects of the GST. I believe we can make the GST work better and more simply, now that we have had some experience with it.

In the past few minutes I have tried to make the case for more partnership and cooperation in the Canadian economy. Yet I cannot make the assumption that partnerships and co-operation always come easily. They don't.

Indeed, Meech Lake and some of the outbursts resulting from fiscal restraint have shown us how difficult it is to break loose from our parochial associations--our region, our group, our occupation and so forth.

We confront what the political theorist Sheldon Wolin has called "the chopping up of political man." We tend to view the world as business persons, trade unionists, Westerners, Easterners, bureaucrats, occupants of a certain income tax bracket, rather than taking a larger view of national citizenship.

A Canadian view of this blinkered approach was given in a recent newspaper article by Robert Miller, who criticized his fellow citizens for showing "chronic disinterest in the affairs of the community until and unless one's ox is gored."

In the final analysis, I believe the strategy of partnering is attractive because out of it can come a more mature sense of citizenship. What could be more needed today as we mobilize our energies and skill to keep whole the country that enshrines our hopes and dreams and common history?

This is a challenging time not only to be a politician but to be a citizen. We must build a sense of citizenship in a time of scarcity and this means that we must look beyond our own particular circumstance and be aware of what others are facing as well.

A larger vision is what we need when we tackle the problems of the economy just as when we tackle the problems of national unity. A larger vision that can sustain partnerships and co-operation by small businesses and by constitution makers alike.

I began my comments today by quoting the entrepreneur Max Carey on the loneliness of being an entrepreneur. I believe not just entrepreneurs are caught in this prison of isolation. I am suggesting today that this loneliness can be overcome in part through a wider view of partnerships.

This will also lead to a larger view of citizenship. Thank YOU.

The appreciation of the meeting was expressed by Harry Seymour, President and CEO, Pathfinder Learning Systems Corporation, and a Past President, The Empire Club of Canada.