Just a quick note on the closure of Atlantic Yarns’ two plants in northern New Brunswick on the heals of a Fraser closure.
This stuff happens. In the economy, some businesses fail and others succeed. Government’s should not be in the business of subsidizing losers. But this is a lesson not learned by Danny Williams in Newfoundland and apparently by our guys in New Brunswick who are owed something like $29 million in loands from this company.
For a government with no concrete strategy to attract business investment into the province, panicking and trying to subsidize a company that is here already but with a terrible business model, is commonplace. This seems easier.
But if there had been five new plants open in that area, losing one – one with a bad business model – would not seem so bad.
But there was no effort to bring in the five so we now are desperately trying to protect the one.
Don’t forget one simple but very potent fact. The $120 million that Danny Williams will dole out to Abitibi over the next 12 years will not create one single new job. Not one ounce of new economic activity.
It’s a Cape Breton coal industry economic development strategy all over again. Spend taxpayer dollars to delay the problem to the ‘next government’. They then try the same thing. And the next thing you know you have Cape Breton – 30 years of subsidies running into the billions and still the poorest economy in Canada. Now, they are starting to get serious and are attracting new industries that will hopefully sustain the economic with a proper foundation for the next generation.
Just a note on the Williams Abitibi deal. If you look at the opportunity cost associated with $120 million – just for fun:
The $120 million for Abitibi would have bought:
-A brand new airport for the town plus money to subsidize three flights a day for 15 years.
-Six luxory resorts for the region.
-A personal cheque for $400,000 for every worker in the plant ($120M spread over 300 employees).
-A Toyota plant (that’s what Ontario paid – whether Toyota would locate in rural NL is more problematic)
-A personal cheque for $15,000 for every man, woman and child in Stephenville.