Eaton’s fall a wake-up call

The story of the decline and fall of Eaton’s, while it has Canadian content, is not strictly a Canadian story. Thousands of once-indomitable companies, large and small, have endured the same fate. Bad business practices know no border.

Yet Eaton’s bankruptcy offers lessons that are, or should be, especially instructive for Canadian companies because it comes at a time when Canada and its businesses are at a crossroads between the old and the new ways of thinking, planning and acting. It is, in essence, a wake up call for all Canadian business people, whether their line is consumer retailing or plastics processing.

The wake up call is timely because, despite 10 years of free trade, many bright and influential people in Canadian business, education and politics have yet to fully come to terms with the realities of a global economy. In the minds of these well-intentioned but confused people, it is still circa late ’60s, Trudeau has just pirouetted behind the Queen’s back and les Canadiens are the odds-on favorite to win another Stanley Cup. The Wal-Marts and Starbucks of the world are still safely “on the other side”, and the Canadian consumer has yet to be corrupted by the unpatriotic notions of low price, wide selection and good service.

I exaggerate? Perhaps. But I also think it is perfectly obvious that the 60’s-style fantasy of Canadian economic nationalism continues to be clung to stubbornly at many levels of government and business in this country. This stubborness, more an attitude really, is often a factor in poor decisions that paralyze Canadian companies, and the economy as a whole.

At the risk of being inflammatory, I’d say that the difference between those who have and haven’t truly accepted the new mindset, rules, constraints and opportunities of a global market, is to a great extent the difference between an older, more homogenous generation and a younger, more multi-cultural generation. Those seeming to make the most of free trade and a global economy are generally younger or (in a uniquely Canadian twist) recent immigrants to Canada. Those fumbling things up and nostalgic for the all the old security blankets of the past are usually, but not always, older. For examples of the former think of Royal Group Technology’s founder Vic de Zen or Les Industries Rocand’s Andre Rochette (see Quebec Report). For an example of the latter think Canada’s new governor-general, Adrienne Clarkson. Whatever fine personal or intellectual qualities Ms. Clarkson may have, she is the very symbol of Canada’s past, not its future.

It is not surprising then that Eaton’s ship was being captained by a group of established, middle-aged heirs to the family empire when it ran aground. It’s a shame because it didn’t have to happen. Eaton’s had everything going for it–brand name, flagship status in most major malls and purchasing power. What it no longer had was the vision and competitive instincts of its founder.

Plastics processors usually don’t have to deal with the public, as retailers do, but they do have to satisfy a customer, who in turn most probably has to deal with the public. In a global economy, it is the customers of customers who continue to raise the bar on expectations for quality, service and value for manufacturers. Those processors who appreciate and respond to the new demands being placed on their customers will prosper. Those too stubborn or lethargic to respond will, like the Eatons, get to watch Adrienne Clarkson making speeches on daytime TV.

e-mail: mlegault@southam.ca