Profiting the Crown: Canada's Polymer Corporation, 1942-1990 (review)

Two axioms traditionally have dominated discussions of state capitalism in Canada. The first is that Canada has long been sympathetic to public enterprise, where governments of all stripes have willingly resorted to state-owned businesses to pursue a broad spectrum of public policy objectives. The second is that the unfortunate outcome of this national eccentricity has been a plethora of ineffectual crown corporations permanently dependent upon the public purse for their survival. Yet as Matthew Bellamy ably demonstrates in Profiting the Crown, the synthetic rubber producer Polymer Corporation proved a noteworthy exception to the stereotype. For almost half a century following its creation in 1942, Polymer was a model of business acumen and ingenuity, and represents an effective counterpoint to the 'neoconservative attack on the place of the state in Canadian enterprise.'

With Japan controlling most of the world's wartime supplies of natural rubber, the Canadian government under Mackenzie King formed Polymer in a desperate bid to develop a process for manufacturing synthetic rubber domestically. At a cost of fifty million dollars, Polymer's facility at Sarnia, Ontario was the government's single largest wartime expenditure. It also became one of its most successful, for not only did Polymer solve the scientific puzzle of supplying the Allied war machine with vast supplies of vital synthetic rubber products, but in the postwar decades that followed, its teams of 'scientist-managers' combined technological sophistication with entrepreneurial sagacity to transform Polymer into a world leader in the field, even as 'science-based growth was an enigma to most Canadian industry.' Bellamy's purpose is to demonstrate that Polymer, without benefit of subsidies or protective tariffs, was a model of 'hybrid capitalism, accountable to the state but equipped to operate in the free market.'

Warned at the war's end by its political master, C.D. Howe, either to 'profit or perish,' and threatened by a looming over-capacity in world rubber production, Polymer responded to forced commercialization with a multidivisional organizational structure and a diversified product line fuelled by r&d and export markets designed 'to seize the opportunities that accompanied an age of mass consumerism and the great god – Car.' With foreign competition intensifying by the 1960s, Polymer launched a multi-nationalization strategy of its own by shifting some manufacturing and marketing operations to Europe. Bellamy thereby credits Polymer as being among the first Canadian firms to go global, in 'stark contrast to Canada's traditional policy of "defensive expansionism."'

But alas, despite remaining largely free of political interference in its operations, the crown corporation could not sustain indefinitely its impressive record of growth. Polymer stumbled badly in the early 1960s when, attempting to cash in on the era's corporate diversification fad, it invested in some particularly 'presumptuous and misguided' novelties such as modular housing construction. These were unmitigated failures, and served only to jeopardize the viability of the company's core products. Soon starved for capital and suffering a declining market value, Polymer was sold to the Canada Development Corporation in 1972 in an attempt to avert its foreign takeover. This provided a temporary reprieve at best, and in 1990 the now venerable Canadian firm was absorbed by the German multinational Bayer ag.

Bellamy attributes Polymer's success to equal measures of strategic opportunism and fortuitous timing. He is particularly adept at contextualizing Polymer's corporate strategy and structure relative to concurrent developments within both the Canadian and international business communities generally, and the synthetic rubber industry specifically. He is less persuasive, however, when concluding that Polymer represents 'a template for the future relationship of state and marketplace' in Canada, not least because the overwhelming weight of his evidence points to Polymer as one of the few bright stars in an otherwise dull constellation of state enterprises. Even more fundamentally, although Polymer's story demonstrates the potential of crown corporations to turn a profit when they are permitted to operate as true commercial entities and without political constraint, Bellamy fails to...