TORONTO-Quebec plastics companies survived a near-separation experience and are trying to get business back to normal - for the short term, at least. Executives for nearly a quarter of Canada's plastics sector watched a cliff-hanging vote tally on Oct. 30 after Quebecers went to the polls to decide whether to take their province out of Canada. It wasn't until about 10:30 p.m. EST before they and other Canadians knew the province voted to stay within Canada.
``It was like a great load was lifted off my shoulders,'' said Placide Poulin the day after separation was rejected. ``I am very happy to stay in Canada.''
Poulin, president of bathware producer Maax Inc. of Ste. Marie de Beauce, was one of the few plastics executives in the province who took a public stand against separation. Most stayed out of the emotionally charged campaign or worked behind the scenes to avoid ``pouring fuel on the fire.'' Many still won't talk on the record for fear of alienating customers, employees or officials who hold different visions of Quebec.
Poulin's relief may be only short-lived before the separation issue blows up again. With about 94 percent of the province's 5 million eligible voters casting ballots, only 50.6 percent rejected separation. A lot of Quebecers still want to wrest the province from Canada to protect their culture and language. Quebec's Parti Quebecois majority government made it clear it wants to hold another referendum soon.
The narrow victory ``won't help business confidence in Quebec over the near term,'' said James Allen, president and chief operating officer of Twinpak Inc., a major plastic packaging producer based in the Montreal suburb of Dorval.
Most Quebec executives hoped the voters would reject separation by a wide margin to calm jittery investors and customers. They complained separation anxiety was sapping consumer confidence and stifling investment. A majority of Quebec plastics firms that responded to a Plastics News fax poll in February said separation would hurt them. Until a few weeks ago, most observers felt separatists wouldn't even come close in a vote.
Allen said the close victory ``gives us some reassurance but uncertainty is still there. As [Twinpak looks] at options to grow, it will remain an issue.''
International investors initially gave a thumbs up to the vote results. On Oct. 31 the Canadian dollar jumped about a cent to close at US $0.734 atn Tornto and Montreal stock exchange indexed rose during heavy trading. Canadian interest rates plunged to recent lows.
Investor euphoria, however, might not last long, according to Patti Croft, senior economist at CIBC Wood Gundy Securities Inc. of Toronto.
"Quebec is deeply divided and political infrastructure. Other provinces, too, want more power and less duplication between federal an dprovincial governments, Dubois said in an interview from SPI canada's Quebec division office in Montreal.
Dubois, a French-Canadian and former executive with Twinpak who was elected SPI Canada's president this past summer, avoided stating his postition on Quebec's future.
SPI Canada has tried to stay out of the political fray buy it is a member of Quebec business group Conseil du Patronat, which has promoted continued union with Canada.
Quebec's plastics industry had sales of nearly C$4 billion (US $3 billion) last year, estimated SPI Canada. Packaging accounted for about 43 percent of sales, followed by building materials at 27 percent.
Some of Canada's largest plastics processors have operations in Quebec, mainly in the Montreal area where most voters rejected separation. Major processors with plants in Quebec include vinyl building products giant Royal Plastics Group Ltd.; pipe extruder Ipex Inc.; packaging producers Twinpak Inc., Great Pacific Enterprises Inc. and Intertape Polymer Group Inc.; and injection molder IPL Inc. Resin producers in the province include Monsanto Canada Inc., Petro-mont Inc. and Montell Canada Inc.
Most of the province's plastics plants are small to medium in size. Among its 650 plastics plants, about 500 have 30 or fewer employees.
Quebec's plastics companies trade heavily with the rest of Canada and the United States. U.S. and Canadian officials have questioned how fast Quebec could join the North American Free Trade Agreement if it declared independence. A host of plastics products would be affected while an independent Quebec's trade status would be uncertain.
Quebec's auto and auto parts industry is particularly susceptible to political uncertainty, according to Chris Sands, a Canada analyst at the think tank Center for Strategic and International Studies in Washington. An independent Quebec would not automatically qualify for
NAFTA's duty structure, forcing auto majors to have escape clauses or to award parallel contracts outside the province when dealing with Quebec parts producers.
Sands and other analysts fear Canada's federal government and Quebec could be drawn into lengthy negotiations on power sharing and other constitutional issues, delaying action on pressing economic issues such as debt reduction and creating employment.
``There is no clear process with an end-point in sight,'' Sands said from Washington.
Dubois said governments should pursue constitutional and economic issues at the same time to provide a stable business climate.
``Quebec's demands are complex and won't go away,'' concluded Allen. ``Identity is a passionate issue.''
