Big versus small

I had a very interesting chat yesterday with a former provincial economic development guy. He was musing about the election, economic development and the province’s future. Good insight to be sure.

But almost by accident, I casually asked him what his prescription would be for economic development in northern New Brunswick?

And it was like looking in a mirror.

He said what the north needs is ‘anchor’ economic development projects.

Sound familiar?

He said over the last six years or so, the Lord government has spent at least $100 million in ‘economic development’ in the north and what has it achieved? A few Tory friendly firms got some money and there were a number of new start up firms. Start ups, he said, that have a 15% chance of survival.

Anchor project, because of the sheer size of capital investment ($500m+), have a 98% chance of survival and further have a shelf life of typically between 25-30 years.

He went further.

He said it would have been distinctly possible to attract an automobile manufacturing plant to northern New Brunswick during Lord’s tenure as Premier. He said that it could have been located somewhere outside Bathurst and it would have drawn workers from across the region.

He had it well thought out. The Port of Belledune would have to be upgraded to handle auto parts shipments but the port would become relevant. The rail line goes right through the region so parts shipped by rail would have no problem and the cars shipped out by rail would also have no problem.

Between the plant, the suppliers that set up and the other spinoff jobs in the economy, this would create between 2,000 and 3,000 high paying jobs in the region. Jobs with a 25-30 year shelf life.

He also thought the Feds would have supported the project if the province had brought them a good proposal. After all, they put billions into the auto, aero and high tech sectors in Ontario and Quebec since Lord came to power.

But it didn’t happen and we both lamented that fact.

But my points are these:

There would be tremendous political advantage to the party that could make this happen. Yeah, to be sure, Ontario would freak. NB-born Buzz Hargrove would fight it every step of the way. But ultimately, every new auto plant in the US over the past 15 years has gone into economically challenged areas such as Louisiana, South Carolina, Alabama and Kentucky. In Canada over the past 15 years every new auto investment has gone into the economically challenged area of southern Ontario.

I have said this on may occasions. It’s up to the province to come up with good ideas and ask the Feds to partner with them. Waiting for the Feds to ‘impose’ economic development on Atlantic Canada has been a 125 year wait, Mr. Rip Van Winkle.

That’s what I hate about ‘polls’. Sure, matters of the economy rank 5th or 6th in most of the polls – the polls that the Tories ruled by (judging by their priorities). But no poll every asked the question:

Do you support your government attracting 2,500 new, high paying jobs that will reinvigorate your economy and give your kids the opportunity to stay home and work rather than move to Alberta?

What do you think would be the response rate in Tracadie to that?

I know that’s an absurd question but I am trying to – in a sarcastic way – highlight that voters are not really given clear choices in those generic polls about what concerns them.

Finally, to all those who would say a plant like this should go in Sussex or Saint John or somewhere south – that’s not the point of this blog.

Where plants get sited is almost always a matter of politics.

I just want them in New Brunswick.

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0 Responses to Big versus small

  1. Anonymous says:

    Good point, but which auto maker? Keep in mind that there is no such thing as a ‘car maker’, there are only ‘car assemblers’. All of the parts are manufactured in ONtario, mostly by two companies. In other words, you don’t need a port, you need ontario shipments. For parts made in mexico, obviously those makers are going to choose southern US, not ship to Canada for cars to be brought back down.

    So that’s a BIG investment. You need magna to ship parts to you, and since that is a private company, you could well have an owner refuse to provide you with parts based on what his other customers tell him.

    So that sounds like a pipe dream. A NICE dream, but still a pipe one. If there were one to gamble on, I’d still say the Smart Car. But to do that you need to first start an auto parts MAKER. Because X amount of parts and assembly must be done in Canada. Then not only could you maybe undercut Magna with cheaper labour, but offer incentives for auto assemblers, in this case Smart. Then Smarts could be sold even cheaper, which would be a huge bonus.

    THe problem is, who has the investment for auto parts? Nobody. Irving, but they clearly don’t like to deviate. Some shopping could be done to find a small one somewhere and then offer them incentives to move. Of course as none of us are experts in the auto sector that definitely needs some thought.

    However, what doesn’t is what was mentioned in the newspaper yesterday, and thats wind power. That’s something thats completely up to government. They mentioned Memramcook as being a prime area, but lots of the northeast is also prime. Here, perhaps YOU can help as they just had a meeting in M’cook where industry insiders showed up.

    Thats because here its MUNICIPALITIES that need to make the investment and come to province for ponying up the dough. That, at least, is up to New Brunswickers and we can do something aboutit, like come up with a proposal for various locations to invest in their own energy needs.

    If you think the feds are going to help fund an ontario competitor you’re dreaming, likewise they won’t get involved in energy, but equalization can be used for anything and as said, the government is getting ready to start handing out big cheques.

    So for ‘anchor projects’ you can look at a distant vague possibility, or you can do something concrete with concrete guaranteed results-low local power rates. That’s all up to local and NB government, not somebody out there who may or may not set up in Bathurst.

    However, does your friend have a source for that 100 million? I’ve done some calculations and it doesn’t come to CLOSE to that.