Canadian construction companies alarmed about Chinese bid

An Aecon employee looks over Toronto’s new airport terminal check-in on Dec. 2, 2003. The federal cabinet has told Aecon Group Inc. that it will take more time to complete a national security review of the proposed takeover of the Canadian construction company by a Chinese state-owned business. (Tobin Grimshaw/The Canadian Press)

Canadian construction companies alarmed about Chinese bid

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Canada’s construction industry is the latest to express alarm over efforts by a Chinese state-owned company to take over Canada’s third-largest construction firm. China Communications Construction Co. has bid $1.5 billion to buy 100 per cent of Aecon group.

Aecon is involved in Canadian critical infrastructure projects that include nuclear-energy installations, transit and hydroelectric projects and pipelines. Urging the Canadian government to block the takeover is the Canadian Construction Association which represents 20,000 Canadian construction companies. As a whole, Canada’s construction industry employs 1.4 million workers.

Unfair advantage could kill Canadian industry, says advocate

The association’s biggest concern is that the takeover would give Aecon an unfair advantage over Canadian firms by giving it easier and cheaper access to money from the Chinese government.  And that could push Canadian companies out of business.

“There would be the possibility that the (Chinese) government who owns the state-owned enterprise could make available to it greater amounts of capital at little or no cost,” says Chris McNally, chair of the Canadian Construction Association.

“As a result, they would be able to out compete the Canadian… possibly doing work for less than what it costs them to do the work…If the Canadian corporations tried to compete with them in that they would eventually go bankrupt and we would lose the construction industry.”

Chris McNally says a Chinese-owned Aecon could have access to state money and out compete Canadian companies.

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McNally points to a recent deal where the same Chinese firm bought the major Australian engineering and construction company, John Holland Group Pty Ltd. The Australian company said it would hire 1,500 new workers over the next 15 months. McNally concludes: “If one company is growing rapidly in a marketplace, there is a likelihood that they’re squeezing other privately-held companies out of the marketplace.”

National security worries expressed

Beyond these business concerns, there are national security worries. Former Canadian intelligence officer Michel Juneau-Katsuya has expressed his to Radio Canada International and intelligence expert Prof. Wesley Wark of the University of Ottawa wrote of his today’s Globe and Mail newspaper.

Wark wrote that while the Canadian government is currently reviewing the deal to buy Aecon it must call for a full national security review or “make a mockery of its own rules.” He goes on to say: “It is difficult to imagine a bigger negative impact to the security of Canada’s critical infrastructure than to have a Chinese state-owned enterprise, close to the Beijing government, deeply embedded in both military and civilian critical infrastructure projects in Canada, including nuclear power. Loss of intellectual property, aggressive influence operations, avenues for Chinese sponsored espionage and hacking would all be in play…The Aecon takeover would also fatally undermine Canada-U.S. cross-border co-operation on critical infrastructure protection. The United States, especially the Trump administration, simply wouldn’t play with a Chinese SOE (state-owned enterprise) in Canada.”

Wark notes the decision on whether to allow the Chinese takeover to go through comes at a sensitive time when Canada is trying to start free-trade talks with China. Improving trade relations with China takes on new importance now that the U.S. Trump administration is threatening to tear up the free trade agreement with Canada and Mexico.

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