Collateral luck in economic development

When it comes to Moncton, Premier Lord must be thanking his lucky stars. Firstly, when he took power in 1999, the community was already growing strong. Then, during his tenure, a significant number of the call centres that are in the community announced expansion plans (of which the province was quick to take credit for). Then throw in the one project that was truly your own, Molson. This growth led to strong growth in retail, construction and other services. Presto, you have a strong economy and a grateful public and you will all but one of the seats in the Greater Moncton area (oh, and it helps to add in a bridge that takes five years to complete and probably 10 more to really be fininshed but Monctonians are a patient lot).

Now, the Premier is in town announcing 150 new jobs at Speilo. Another project that he and his economic development team were not required to go out and ‘attract’. They are here and they are expanding. But, to his good luck, the Premier will get a lot of credit.

Two points:

1) That strategy of sitting back and watching Moncton grow while intermitently throwing a few million at companies that are already here will not work in communities that did not attract these growth firms in the 1990s. It is equally true that the longer term economic growth of a place like Moncton will be in jeopardy without any new ‘call centre initiatives’ in the future. The growth of those firms will plateau and the economy will need a next round of national and international greenfield investments. And where are those coming from? Name me one sector (outside of call centres) that the province is aggressively attracting to the province?

2) To all you naysayers that crap on international firms and accuse them of ‘buying up’ local companies and then ‘closing them’, I am giving you a big, fat kick in the arse. GTech bought Speilo and then was so impressed they are now expanding it. If this isn’t a great example of why foreign investment works, then I don’t know of any.

So a note to all the gushing and giggling Monctonians: there is no new ‘call centre initiative’ on the horizon. These jobs will plateau. The retail sector will plateau. Construction will dry up. Where’s the next round of foriegn and national investments. GTech is great but how many more GTech’s are here?

The time is now to concentrate on a few strategic and viable sectors and go out and sell, sell, sell.

Or we can sit around and hope that GTech, et. al will expand again some day.

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0 Responses to Collateral luck in economic development

  1. Anonymous says:

    Let’s keep the cliche’s down shall we, I don’t think there is anybody out there saying no international firms should come here-that would be crazy. That no international firms WILL come here is more to the point, or they will come with such baggage that it may not be worth the while.

    You can’t make the call about international investment because in large part it is already done. In New Brunswick it occurred in the last decade of the 1800’s when ‘international’ meant Ontario and the states. Then all the banks got bought out and insurance companies left. Virtually every industry in NB became a ‘branch office’.

    In the ‘prosperous’ part of Canada it occurred after free trade. The numbers aren’t pretty, there is technically no such thing as a ‘canadian industry’ anymore.

    In NB NEW companies come in, but there have been very few instances I can recall of an international company coming in and competing with a local company to judge. In retail such places exist but most of those jobs are identical. In Wal Mart you will make no more than you will at Zellers, but of course NEITHER are New Brunswick companies. Whether you are better off at Kent’s or at Home Depot is anybody’s guess, but then, even the Irvings are no longer ‘local’.

    I know many in the IT industry who used to work for Aliant, then their ‘branch’ company was bought by Nortel and ‘contracts’ the work back to Aliant. So they STILL work for Aliant, just for 20 grand less and fewer benefits-and the profits go to Nortel. And of course who is Nortel’s sugardaddy-you guessed it, the feds.

    Whether ‘Molson’ is worth the investment remains to be seen. But they aren’t really ‘competing’ here with Moosehead. I’ve heard Moosehead was a fabulous place to work, it will be interesting to see whether Molsons is. Even if they are comparible though we know the Moosehead deal is far cheaper. And of course the people of Barrie aren’t quite so enrapturing by losing their union jobs. So that’s a perfect example of ‘home grown talent’ that is ignored so far as we know. If you have a tight rein through government policy then you can get maximum benefits of ALL your companies-like McCains, Cavendish, etc. However, if THEY run your government policy, you get what we have, lots of ‘international names’ but little actual ‘investment’ by them.

  2. Anonymous says:

    The economics of the molson deal can already be assessed. in fact someone on this blog did the calculation a few months ago. I forget exactly…but it was in the hundreds of thousands of dollars per job. the molson jobs will never ‘repay’ that kind of capital to taxpayers.

  3. David Campbell says:

    The Molson thing was a little weird. It worked out to be about five times more than the per job amount invested in Research in Motion in Halifax. But now, as then, I have a hard time criticizing it because at least it showed some interest in attracting a good manufacturer here.

  4. Anonymous says:

    I don’t think you can ‘accurately’ assess ANY of these business deals because we simply don’t have the facts. We have the numbers which the government supplies us, but even they are often offered in very convoluted tax deals. I know an accountant at Revenue Canada and he says that really there is no such thing as ‘corporate tax’, every company literally has their own ‘tax deal’ with the various governments. Often the government will even accept a corporations tax information with no audits whatsoever and no followup. Large oil companies literally ‘pay what they want to’-and even some of them are STILL in arrears.

  5. David Campbell says:

    It seems we have a resident historian posting to this blog. I enjoy the commentary but I will continue to maintain that we need to be on the global investment radar. Yes, sometimes Nortel will outsource to Aliant for lower salaries. But what’s the alternative? Send all the workers to Ottawa? I, for one, will take jobs at 80% salaries over the alternative – almost 100,000 people collected EI last year in New Brunswick – for those of you wondering – that’s just under 30% of the employed workforce. Note: for those of you that track the monthly workforce stats you will recall that between 35k and 40k are considered ‘unemployed’ during any given month. However, over the course of the full year, some 100,000 people collect EI. We would have to back off maybe 5% of that number for maternity leaves but I think you get the point.

  6. Anonymous says:

    I don’t think anybody has criticized your raison d’etre, just expressed pessimism that it will actually be realized.

    Quite right, it’s better that Aliant outsource for lower pay than simply leave. That is somewhat of a defeatist attitude though, and we might as well throw in the towel and accept everything that governments throw our way. It’s well enough that they throw us some crumbs.

    However, the issue needs to be brought out-Nortel is an Ontario company that is pretty much kept afloat by the federal government. How many New Brunswick companies escape bankruptcy because of a federal or provincial bailout? I suspect very few.

    Nortel of course is a privatized company that was created by taxpayers in the seventies and eighties. That even MORE New Brunswick capital is flowing to Ontario is ALWAYS a cause for concern. In fact, I’d LOVE to see a chart showing exactly how much money LEAVES New Brunswick, as much as I’d like to see how much comes in.

    By all means continue to push for global investment, criticism can and will come from those who HAVE jobs and couldn’t care less about economic growth, but if nothing else it gives you passion to keep blogging, which is half the battle right there.

    For Molson though, as a Monctonian you can well accused of being biased, I read your account of Newfoundland’s pulp deal and the RIM deal, so it’s not at all clear that you’d be so enthusiastic if it were St.John or Edmunstun. There’s no fault in rooting for the home team though.