Canadians, too, grow wary of takeovers. Last year's try for Goodyear meant closing a plant in Toronto
In Canada as in the United States, corporate takeovers have sparked debate among everyone from bank chairmen to union leaders. When Sir James Goldsmith took a run at Goodyear Tire and Rubber of Akron, Ohio, last year, he put a lot of people in Toronto out of work. In the wake of the raid, Goodyear Canada announced it was closing its factory here, with the loss of 1,557 jobs.Skip to next paragraph
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``Unfortunately, our parent corporation in the course of fighting off Sir James Goldsmith has acquired a tremendous debt load,'' said a letter to employees from Goodyear Canada president, Scott Buzby.
To pay the costs of the takeover battle, Goodyear will close the factory in May, even though Goodyear Canada had been doing well, having posted a third-quarter profit of C$3.78 million (US$2.83 million).
Some union members believed the company was using the Goldsmith debt gambit as an excuse to close the plant. There had been threats to shut down in 1980, but the union accepted lower wages and benefits to keep it open.
Now there is concern in some Canadian business circles that corporate raiding, greenmail, and stock market abuses such as those perpetrated by Ivan Boesky are giving capitalism a bad name. One of the nation's top bank executives is worried that the public will grow to dislike takeovers, to see them as harmful to the economy.
William Mullholland, chairman of the Bank of Montreal, Canada's second-largest bank (which, in turn, controls Harris Bank in Chicago), wrote to shareholders that ``corporate takeovers are not, per se, bad or even necessarily unconstructive.''
He noted, however, that recent events have created a ``growing sense of public unease,'' referring both to ``the wave of corporate takeovers and to disclosures of breaches of trust by parties directly or peripherally involved in the financial industry.''
Mullholland contends that if the public does not like what it sees, politicians will be quick to act. He makes a veiled reference to the Goodyear battle with Sir James. ``Those engaged in takeovers and acquisitions argue, sometimes correctly, that they serve a legitimate economic and social purpose. They identify areas of opportunity and by their actions force a more efficient use of capital.
``Even when true, this is a tough argument to sell. But try selling it to the employees of a business that is dismembered or a plant that is shut down to help finance the acquisitor's purchase or to turn a quick profit.''
David Birrell, president of Local 232 of the United Rubber Workers, the union at the Toronto plant, says it more directly. He accuses Sir James of ``walking away with almost $100 million, and we're left with no plant and no jobs.''