The Saskatchewan Party government said Wednesday it is prepared to act — potentially through the force of law — to boost the provincial head office presence of Potash Corp. of Saskatchewan Inc., no matter who ends up owning the company.
The issue arose as the Opposition NDP called for the return of PotashCorp’s full head office and senior executives to Saskatchewan, even if the corporation isn’t acquired in a hostile takeover by Australian mining giant BHP Billiton.
PotashCorp’s head office functions are split between Saskatoon and Chicago.
BHP Billiton has said it will make Saskatoon the location of its head office for global potash operations if it is successful in its $38.6-billion US bid.
Sask. Party Energy and Resources Minister Bill Boyd told reporters at the legislature the government has made clear to both companies how important the head office issue is to the province.
The government will start with persuasion, he said, but then may turn to other remedies.
"You may look at legislation, to further strengthen the legislation around this issue," said Boyd.
"We hope there will be a voluntary move by the companies to strengthen their head office jobs here in Saskatchewan. We think that’s a very, very important thing to the people of our province and we would be moving accordingly if that doesn’t happen," he added.
Saskatchewan has few corporate head offices so the issue is of particular relevance, said Boyd.
Provincial legislation enacted when the former Crown corporation was privatized requires that PotashCorp’s head office be located in Saskatchewan.
But Boyd said the government was concerned about the "erosion" of head office functions in the province by the company.
According to a Conference Board of Canada report commissioned by the government after BHP Billiton launched its takeover bid, there are about 200 employees each in the Saskatoon and Chicago offices of PotashCorp.
Of the 15 senior executives listed on the firm’s website, nine are American nationals and six are Canadians. PotashCorp CEO Bill Doyle is an American who spends much of his time at the Chicago office.
But PotashCorp spokesperson Bill Johnson noted the company has substantial phosphate and nitrogen holdings in the United States and Trinidad, which actually employ more people than its Saskatchewan-centred potash operations. Those other fertilizer assets are managed through the Chicago office, he said.
Nevertheless, PotashCorp is willing to discuss the issue with the provincial government, said Johnson, who declined to comment specifically on the threat of legislative action.
"We have enjoyed a very long and very constructive relationship with the province and have always been able to work with the province successfully," said Johnson, who also derided BHP Billiton’s proposal as a "branch office" that offered nothing that was not already in place under PotashCorp.
The Conference Board report suggests the province could ask the federal government to make a provincial location of head office functions a condition of any approval of BHP Billiton’s bid.
While Boyd has been non-committal on the idea, NDP Leader Dwain Lingenfelter said that was that just one of many conditions the province should demand that Ottawa sets before approving any takeover of PotashCorp.
The Saskatchewan Party government also has a "historic opportunity" to demand that the current management of PotashCorp relocate in full to Saskatoon even if the deal doesn’t go through, he said.
Lingenfelter told reporters that the return of full head office functions to Saskatchewan would mean senior executives and other staff would be paying provincial income tax.
"If the executives were living in Saskatoon you would see more art, more culture, they would want the community to grow and thrive. They would want to go out at night to better and better restaurants. I think the whole atmosphere changes where the head office is," said Lingenfelter, who acknowledged the previous NDP government — in which he was a senior cabinet minister from 1991 to 2000 — did not do enough to ensure PotashCorp’s head office functions remained in Saskatchewan.
But Ken Rasmussen of the Johnson-Shoyama graduate school of public policy said legislating a greater head office presence is a "bad idea" because it simply annoys companies that can find easy ways around such restrictions in any case.
The seeming agreement on the issue by the Sask. Party and NDP "reflects the fraught nature of the politics around the Potash Corporation."
"I don’t think anybody wants to be seen as making a misstep," said Rasmussen.
The head office issue isn’t the only one where the government and the Opposition seem to be in tandem.
Boyd said he would like to see an improvement in charitable donations from PotashCorp in Saskatchewan, saying the company "may not be in the top tier."
BHP Billiton and PotashCorp have in recent days opened their wallets for projects such as the sponsorship of Saskatoon’s Enchanted Forest light show and the refurbishment of the city’s Kinsmen Park.
Lingenfelter said he would like to see the companies spread more money farther beyond the borders of Saskatoon because potash is a provincial resource.
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