Dispatches from the road: Bangor

I am sitting in a hotel room in Bangor, Maine. I have been driving in my car over the past couple of days listening to the radio and getting a kick out of the difference between our talk radio (the new Rogers news station), Canada’s version of the thinking man’s talk radio (Rex Murphy and Cross Country Checkup) and the American Shock Radio (Bill O’Reilly, et. al). Anyway, after a while I had to turn it off – O’Reilly began to educate his audience about his knowledge of the Soviet political system – as it can get really hard on the head.

But I digress.

What I was thinking about post Bill O’Reilly was a chat I had recently with one of Atlantic Canada’s top economic development thinkers – Fred Morley of the Greater Halifax Partnership. Fred these days is thinking more and more about corporate social responsibility and its potential implications for community economic development.

You see, corporate social responsibility is a new buzzword in the corporate world. Many firms have made it an executive level issue – appointing Vice Presidents in charge of corporate social responsibility. CSR is all about how a company interacts with its environment – be it the physical environment, the work environment (employees) and the communities in which the company’s operate.

Wouldn’t it be interesting if corporations added economic development to its list of CSR endeavours?

Think about it. This is not too far fetched. Consider all the large firms that generate revenue from places like New Brunswick. Banks, large retailers, oil companies, software companies, service firms, media, etc.. Literally the vast majority of Canada’s top 2000 firms generate revenue from the poorest regions in Canada.

But how many of them create economic activity in these poor regions beyond what is necessary to service their local markets?

Don’t these companies have a vested, market interest in a strong and healthy economy across Canada?

Consider the example of the Royal Bank. It has 600 people in Moncton with good jobs, benefits and career advancement opportunities. These jobs could have been located in Toronto or Montreal or Vancouver – but they are in Moncton, New Brunswick.

There was, in fact, a business case reason for RBC to set up in Moncton – but most national firms just automatically set up back office, call centre, information technology, legal, public relations and all other front and back office jobs in the large urban areas -it’s convenient – if not overly cost effective.

But for me economic development considerations should be placed on the table the same as environmental or ethical considerations. These companies have, I think, a responsibility to support a strong, national economy.

Consider Research in Motion. They could have established that 1,200 person facility in a large urban area but they chose Halifax. Sure, the Waterloo IT economy is overheating pushing up wage rates and recruitment costs. Sure, Halifax made good economic sense. But far too often companies don’t consider Atlantic Canada because it’s not close to the mother ship – the head office usually in Toronto.

Thomas d’Aquino of the Canadian Council of Chief Executives (CCCE) gets a lot of flak for standing up (lobbying for) the concerns of Canada’s top corporations. But this could be one way for the CCCE to build a more positive reputation – beyond just looking for tax breaks, less regulation, open borders, etc.

In fact, the CCCE even has a regional development policy – although it says nothing about the responsibility of Canada’s large corporations to support regional development.

I suggest the d’Aquino’s members audit their corporations to see just how much economic activity their firms are generating in Atlantic Canada (again beyond just servicing a local market). Then, how about a policy to strategically invest in the region to support their national and even global markets.

In reality, this is supposed to happen naturally. In traditional laissez-faire economics, when one local economy overheats (costs rise, labour markets tighten, regulation gets burdensome), the market reacts by shifting labour and capital to other more virgin markets. However, that is not the case in Canada. Labour and capital has been primarily pooled in four areas and has stuck there for at least 30 years (according to Statistics Canada). When the labour market in these areas overheats, we just turn on the immigration tap.

Now, I know what you are thinking. We can’t even get the federal government – which should be the easiest – to allocate some of its jobs down here so how can we expect Canada’s top corporations to invest here?

Good question but remember the point of this blog. It’s to spur debate and discussion.

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0 Responses to Dispatches from the road: Bangor

  1. Anonymous says:

    Don’t mean to rain on your parade, but you think that 600 jobs in Moncton out of a canadian workforce of 30,000 is a GOOD thing? Sure, I suppose they could have less, but 2% sure ain’t much.

    We always see corporate ‘buzzwords’ floating around, it gives business journals something to talk about.

    What has been proven to be far more effective is a little thing called ‘legislation’. In the states banks are legislated to spend a specific amount locally, and on disenfranchised populations. We almost never hear about this in Canada, where we’re supposedly ‘big government’. Which of course means all the insurance, investment, and banking money goes to southern ontario.

    That’s what really cheeses me about the chamber of commerce and southern ontarians, they would be FAR worse off if financial and cultural institutions weren’t protected from the vagaries of NAFTA. Funny how when we hear about the joys of the ‘market’, it’s not in financial services.

    For the life of me I can’t understand why people keep money in the big five. These guys make the sponsorship scandal seem like a sunday sermon. As for the Royal, three different manufacturers I know of couldn’t get loans even with excellent credit, it was later discovered that they would be in competition to one of Royal’s biggest Toronto clients.

    In the 1800’s when new political systems were being constructed it was well known that it makes no difference how democratic a country is if one segment of the population controls the money.

    It’s a better system in the states, to FORCE banks to invest locally, I was at least happy to hear that woman on the radio say that credit unions were the fastest growing economic units in the east.

    Anybody reading this, if your money isn’t in a credit union, you certainly aren’t doing your part for the maritimes. Talk is cheap, and money should be put where priorities are.

  2. Anonymous says:

    Corporate Social Responsibility has great potential but companies don’t see the immediate ROI. When it comes down to it, firms look out for their shareholders.

    In a global economy, companies are concerned about the next quarter not the next 40 years of a community that represents .003% of their entire global market.

    Quick question… When you invest how many of you look at CSR has an investment criteria?

  3. Anonymous says:

    Good question, people all too often ‘talk the talk’ but that’s it. We ONLY invest in Ethical Funds, oddly enough they have also paid off with a better ROI than most funds. They aren’t perfect, but better than nothing.

    It would be nice if some people sent around to the wealthier people in the province the company that is providing 50% of the funds for the Grand Manan wind power. I can’t remember what they are called but they are basically an income trust, however, because so far they’ve been building intensely (I think), their ‘share price’ has been going down.

    However, virtually every forestry company and even Dell and RIM were dropping at a quicker rate, so I don’t think it necessarily is a bad thing. But it is a tax loss which can be carried forward, and more importantly, its a New Brunswick investment.

    If there were an NB fund I’d easily consider investing in it. Oddly enough, you don’t even hear about New Brunswick Bonds-are there even such things? Again, to go to the states even cities and counties offer bonds, its odd we don’t even hear about it at a provincial level. It’s like they don’t even WANT people to invest in their own province.

    That’s one thing I try to do, it’s like a new religion, which is to get friends and family to think of where every penny they spend goes and who it goes to. It makes me sound preachy, but hell, it’s less preachy than mormons!

    The one thing I’m researching right now is Co-op groceries. The one flaw seems to be that the ‘co op brand’ is designed to be a low cost alternative, which means that they go to the same manufacturer of other foods. It would be nice if they had a ‘co op local’ brand line which may cost a little more but is manufactured locally. Anybody with info on that just pass it along.

    We may not be able to change government policy, but we can change our own bad habits, and educate our kids better than we were. It’s going to get even worse though if the new provisions go through the WTO, dairy and egg production is next on the chopping block.

    As for the above statement, that is true that many corporations are so rich that they simply don’t know what to do with the money. So the next thing is taking over social programs. You already see canadian tire doing this, while they are making up for some of the shortfalls in government spending, governments use this as an excuse not to re-invest in ‘families’ because corporations are doing it.

    However, we can’t find out what they are doing because its private (they could be just stealing the money, who knows?) and you can go down to Philly and see the low income housing that Pfizer bought into before their share price took a tumble. Which means the ‘social safety net’ of people is the first to go.

  4. alec says:

    Nice to see that ‘anonymous’ has a forum to discuss the important isues of the day with himself (herself?)