Ignatieff picks up Nortel gauntlet

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In Nortel Networks, Liberal leader Michael Ignatieff may just have a club he can use to pound out his party's objections to the Conservatives' hands-off approach to business.

With a federal election very much a possibility this fall, Mr. Ignatieff showed Monday how the Liberals plan to do business differently. In a speech to a packed house at the Toronto Board of Trade, the demise of Nortel featured prominently in his remarks.

Before getting to Mr. Ignatieff's thoughts on this corporate catastrophe, which will see Nortel's remains sold off to foreign buyers, a bit of background: Last week, Avaya won Nortel's enterprise unit, which makes routers and telecom hardware, for $900-million (U.S.) The New Jersey-based company plans to move head office functions south of the border.

Rival Siemens Enterprise Communications made a cash-and-debt offer that proved weaker than the pitch from Avaya. However, Siemens Enterprise planned to combine its Munich head office and Nortel executives currently based in North Carolina at a new global headquarters in Toronto. The resulting Canadian company was expected to employ thousands, and boast $5-billion annual revenue. The Ontario government was willing to put up to $75-million into that plan.

But the federal government declined to provide post-merger loans or even verbal backing for either side. Sources close to Siemens Enterprise say that lack of support from Ottawa doomed a Made-in-Canada solution to this take of woe at Nortel.

The sale of Nortel's enterprise unit to a foreign buyer followed on the $1.1-billion purchase of Nortel's wireless division by Sweden's Ericsson. Industry Canada is not planning to review that transaction. The Avaya deal is expected to get federal government scrutiny.

Now, there may be a broad swath of the population that's sick and tired of hearing about Nortel. There are voters of all stripes who would likely be just as happy to see the failed tech giant fade way. That view, while understandable, is short-sighted.

For all Nortel's well-documented problems, there are units within this company that continue to do first-class work. The open question is where these high tech jobs will be located, and where employees will look for head office direction. Which brings us to Mr. Ignatieff's speech on Monday.

"A Liberal government will stand up for flagship Canadian companies," said Mr. Ignatieff, and that sentiment will play well on the Street, not because it is protectionist, but simply because business leaders want to see a degree of support from politicians.

"Stephen Harper dropped the ball on Nortel. He let a Canadian champion fail, and sat back while invaluable pieces of intellectual property were sold off to foreign bidders," said the Liberal Leader. "The fact that the Conservatives have refused to even review that sale is astounding. It's dereliction of duty. It's the Avro Arrow all over again."

"Nortel wasn't a one-off mistake," Mr. Ignatieff said. "There is a pattern of dereliction. Inco and Faconbridge, Stelco, Alcan, Canadian nuclear medicine. The Conservatives are not standing up for Canadian industries and Canadian workers."

The greater theme of Mr. Ignatieff's remarks was that Prime Minister Harper isn't articulating a coherent industrial policy "because he believes that the only good government is no government at all."

Now, Mr. Harper would take a different view. He will clearly be thrilled to run in a campaign that focuses on business issues. But to date, the Prime Minister and his colleagues have steered clear of commenting on the Nortel auction, other than to say that the government does not wish to appear protectionist.

In an election campaign, or even as the sitting Prime Minister, Hr. Harper does need to prove he can be a trusted steward of a troubled economy. On Monday, the Liberal leader made a case that the Prime Minister lacks a deft economic touch on the Nortel file.

Industry Canada still has an opportunity to review Avaya's Nortel takeover, to ensure there is a net benefit to Canada. Mr. Ignatieff clearly plans to keep the political spotlight on these deals.