For the economic development smile-a-day file

You may find this funny or possibly annoying or both. It’s a story in the Arkansas News that concludes there is political advantage to encourage Toyota to build its next auto plant in Arkansas (the New Brunswick of the south) over Texas (the Ontario of the south). Here’s the conclusion:

If Toyota builds its next plant in Texas, no one is added to its “political team.” I am not sure how that helps. (President Bush is on his way out.) If, on the other hand, they build the next plant in Marion, the company could count on having two more sympathetic U.S. senators, Blanche Lincoln and Mark Pryor, who could help them avoid any future trade friction.

The 2,100-acre super project site near Marion is a great location; the company’s executives have said so in the past. Toyota should add to its “team” in Washington by building its next plant in Arkansas.

Now, put aside the notion of a triple E Senate in Canada which might make this a bit more interesting in the Canadian context.

Think about the politics of this thing. Can you imagine any scenario in Atlantic Canada where a local writer (say Alec Bruce) would argue that there would be political advantage to encouraging Toyota to locate in, say, New Brunswick over Ontario.

That is why this makes the smile-a-day file. And that is why I prefer American economic development models. The Feds basically stay out of things (and they won’t lobby Toyota) except for the SBA and some trade stuff. I have never seen direct federal money in an ‘investment’ project (i.e. Toyota moves to the US). That means that states compete just on their own ability to serve up incentive packages. In Canada, all the big investment deals in Ontario have massive Federal dollars in them. I can’t say for sure about Atlantic Canada as the last massive deal was Michelin – decades ago (had federal dollars in).

Imagine that. Political advantage nationally to supporting economic development in Atlantic Canada.

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0 Responses to For the economic development smile-a-day file

  1. Anonymous says:

    You are missing the obvious if you think the feds don’t get involved-why else would they want two more senators on their ‘team’? As they say, to lobby the feds.

    The US economy is very highly tied to their military and their pentagon system. I’ve seen stats that said that close to 70% of their economy is tied into those two systems.

    For example, in Maine, much of the southern economy-which is their only ‘real’ economy, is tied into shipbuilding. Not private sector ships but simply Navy Frigates. That’s pretty much federal dollars. I remember reading where that great ‘libertarian’ Newt Gengrich’s riding receives more federal money than any state outside Virginia and DC, which are essentially american versions of Ottawa.

    I remember reading that the republican -or ‘red’ states, on average get far more funding than democratic ones. More funding makes it far easier to attract companies, obviously.

    The auto sector is just one sector to the americans, of course here it’s become almost symbolic because our entire national economy essentially rests on one commodity-cars.

    Of course that’s the real pickle for the maritimes. What do you do when you NEED federal involvement to better the economy, yet it is the federal government that is the problem. Again, go read AIMS studies on Atlantica, virtually in one breath they say “its time we stood on our own without Ottawa” and then follow it with “but we need them to change equalization and invest in our ports and transportation infrastructure”.

    That has always been the problem.

  2. Anonymous says:

    All you need for a strong New Brunswick economy is a provincial government that encourages the right businesses to settle there. Wow!

    Forget about people working, creating new wealth, innnovating; you just need the provinces to take their money and give it to a big company!

  3. David Campbell says:

    Exactly! If you can’t grasp the reality that economies need investment to grow, you should try and boil it down to a trivial statement.

  4. David Campbell says:

    I never understood what you guys have against ‘big companies’. Sure, there are some that are not good employers. Sure, there are some that break the rules. Sure, there are some that are environmentally irresponsible. But every study I have seen would indicate that ‘big companies’ are better than ‘small companies’ if you are interested in the welfare of the average citizen. They pay more, on average, than smaller firms. They offer more benefits and pensions than smaller firms. They are 80% less likely to go out of business than small firms.

    Finally, you guys hate ‘big business’ but you love ‘big government’.

    Now, that’s a position worth reflection.

  5. Anonymous says:

    How big is Irving? McCain? They are MONSTERS. They are GIGANTIC. So with a population of under a million, why is New Brunswick the backwater of Canada? Most provinces and states would LOVE to be headquarters to two of the largest companies in the world. Again, why is it with companies in virtually every industry, they employ so few people?

    We’ve said 50 million times that if you can get a big company, fine, more power to you. Nobody here has wasted much time badmouthing Molson, even though that was millions of dollars that will essentially go to Moncton, nobody even spends any time badmouthing Tempec for the even more specious deal in Nackawic that costs New Brunswickers, well, we don’t know.

    Personally, I don’t waste much time talking about it, because you might as well talk about the lottery. And of course that doesn’t even get into whether its beneficial in the long run. Look at Ontario, next to the auto industry, there isn’t a single other growth industry that isn’t tied to provincial and federal dollars. In fact, that’s pretty much the story across the hemisphere-corporations move to where they can give slave wages. Why do you think APEC says Canada’s ONLY hope is to build up knowledge industries?

    It’s pretty obvious, New Brunswick is very highly tied to exports in commodities, NOT value added materials. With manufacturing mostly being done in Mexico and overseas, well, there goes your industries.

    Consider this, for the past twenty years IBM has been the largest employer in Vermont. They employed something like 8500 people in their hayday. Now, with chinese competition IBM just can’t compete so they’ve been laying people off.

    IBM doesn’t care about the people in Vermont. The feds do at least a little, they gave IBM a ten million dollar contract to keep the plant open.

    But go check out Vermont’s economic statistics. The majority of industries are small scale and many are tied to manufacturing at a low level, yet still tied to exports. By the way, the population is about 100,000 smaller.

    So, for example, exports from Vermont a couple years ago was 2.6 billion dollars. Compare that with New Brunswick where exports are valued at 4 times that. Look at other indicators-unemployment in Vermont usually hovers around 3.6%, almost a third of NB’s. Starting to see a picture?

    The poverty rate is about half, and the illiteracy rate in this largely rural state is also half. Like NB, Vermont does not border any markets, but is relatively close to Montreal-which is a large trading partner and leading receiver of exports. But not really THAT much farther than Montreal from northern New Brunswick. Boston is also not real far. However, it’s a good shipping day, much like NB to Toronto is.

    What’s they’re second largest employer? It’s Ben and Jerry’s. A homegrown company that started locally and stays locally even though they could make more elsewhere. Ben and Jerry’s makes employment a main concern, even encouraging union membership-all because they are from Vermont and like it there.

    Compare that with well known ‘local boys’ McCain and Irving. Both go out of their way to control not only product, but also distribution, manufacturing, and retail through their gas stations. Both are notoriously hard on unions, and neither is satisfied with ‘just one product’.

    Heck, why do you think Atlantica is talking about rail so much? Both CP and CN are growing in Maine, due to investment, but why do you think AIMS recommends a rail transit route through the US instead of through Northern New Brunswick? (where at least those up there will benefit from increases in a line that already travels through there)

    Well, duh, of course because Irving OWNS the Southern New Brunswick Railroad. It controls all the rail traffic and shipping through southern New Brunswick.

    So if you need to ask ‘what’s wrong with big companies?’ clearly you’ve got your eyes shut to the major political-economic force in New Brunswick.

    That’ doesn’t necessarily mean you don’t deal with big companies. As we saw with the Maine referendum, by voting the town extracted the maximum amount of benefits possible for an LNG terminal. That’s far different than Saint John, which would be devastated if an accident occurred-all for the long term benefits of 8 jobs and 5 million dollars a year. You think Irving would clean it up? I guess you don’t remember the Irving Whale.

    But take a look at Phat Cats, the animation company we talked about. I don’t know the specifics, I had heard they were hiring 20 more people. Imagine, that’s a permanent workforce over triple the size of the LNG terminal and it costs us nothing. So can you imagine with a little investment-or even with a New Brunswick television channel that could show their content-and others.

    THEN you’re talking WOW. You aren’t talking, “well, gee, maybe if we send NB hookers and free booze and tons of money then Screwuover Enterprises will come and set up here” You can keep hoping that some more large scale companies head our way, while you’re waiting for Santa Claus, those of us who see places all over the world building industries are taking cues from them and building up the economy here.

    The ones that have been ‘bought’ to come here, namely Tembec, Molson, and Bennett Environmental, haven’t exactly been boon creations. Whether they will pay off, or WE”LL keep having to pay them off isn’t known at this point. We know what concessions the forestry companies demanded-and got, we know what Bennett demanded, and got. Molson at least seems a decent deal but I don’t know the specifics, except that taxpayers in Campbellton helped pay off a company to increase the industry in Moncton.

    So, again, if you have ASK what’s wrong with big companies, then I guess it comes down to what Louis Armstrong said about jazz: “Man, if you gotta ask, then you’ll never know”