Apple is the largest company in the world by market capitalization, they also just reported record growth and a plan to spend $100 billion to buy back shares from the public while increasing dividends by 16%.
So why is Justin Trudeau giving Apple your money?
Trudeau was in the Saguenay region of Quebec on Thursday announcing that the Government of Canada will make “an investment of $60 million in support of Elysis.” Right about now you are rightly asking what Elysis is.
This is a new company started by Apple along with two of the biggest, and richest mining companies in the world, Rio Tinto and Alcoa. The plan from these three industrial giants is to develop new technology to produce a zero-carbon smelting process for aluminum.
I have no problem with the idea, and if successful, it could become highly profitable but why do these massive companies need $60 million from Canadian taxpayers plus another $60 million from the Government of Quebec?
By comparison Apple is dropping $13 million into the $188 million research project and Rio Tinto and Alcoa will put in a combined $55 million. Notice that the federal government is putting in more money than all the rest and won’t even profit if this works.
Apple could have funded the whole thing themselves and considered it a rounding error on their balance sheet. In the quarter that just ended on March 31, Apple posted $61.1 billion in revenue.
None of these companies needed government money for this.
Any single one of these companies could have funded this project on their own, Apple uses a lot of aluminum and has more cash than it knows what to do with. Rio and Alcoa are competitors but know the future of their industry would be brighter with this tech. They all have reasons for doing this, but the government?
What is in it for the feds?
According to the PM’s news release, this is about creating jobs, thousands of jobs, according to Trudeau. Yet his own news release says it will create 100 direct jobs at Elysis.
That means each job of the $188 million project will cost $1.8 million or from the federal government, Trudeau is handing over $600,000 per job. The money comes from the Strategic Innovation Fund which hands out “repayable and non-repayable contributions” to all kinds of companies the government finds favour with.
Meaning we may never see a penny from this, even if it is successful. Quebec could do quite well though, they got a stake in the company with their $60 million investment.
Read this related story, while Trudeau funds these companies and more, still no cash for veterans.