Patriotism: The Last Refuge of the Unprofitable

Steve Maich writes for the Canadian news magazine MacLeans. In this week's issue, he points out that a pair of Canadian companies, household names both, have come a-crupper and may wind up getting run from America. To proud Canadians, this is an emotional issue, but Mr. Maich points out that the final straw for both Molson and Hudson Bay was when they started emphasizing their nationality. He offers a very fine rule for investors, "When a company starts draping itself in the Canadian flag to attract customers, sell the stock." Drop the word "Canadian," and one has a useful investment standard.

Mr. Maich notes that Hudson Bay could trace its roots to 1670, while Molson was a youngster founding in 1786 (making it older than the US constitution). Hudson's stores were festooned with fur trapper gear and copies of the company's original charter, while shoppers went elsewhere. Molson's dying ad campaign was "Joe Canadian" back in 2000. Mr. Maich reports "The ads were a rousing success by all measures but one: they didn't sell much beer."

Moving outside of Canada, Lee Iacocca tried to revive the fortunes of Chrysler car company by obtaining a government bail-out, fat contracts to provide the US government with fleets of K-cars and a "Made in America" ad campaign. If any proof that the Maich Factor works in the US were needed, just look what happened. The company is now Daimler-Chrysler.

For those old enough, there used to be an electronics industry in the US. Then, the Japanese and the rest of the Asian giants in this business turned up, making better products cheaper, and now, Zenith was the last real American player in the TV and video market before surrendering to LG Electronics in 1995. And what is the motto that sticks from Zenith? "The quality goes in before the name goes on." Never was it "Made in America."

Consumers do have a taste for local goods, and they will often by the domestic brand even if its slightly inferior to imported alternatives. But the true success stories in business don't wear their nationality on their sleeve. Yes, Coke and Microsoft are American, Toyota is Japanese, and Philips is Dutch. And consumers don't buy the product because of that; they buy the product because they like it.


© Copyright 2004 by The Kensington Review, J. Myhre, Editor. No part of this publication may be reproduced without written consent.


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