Sigh

Read this and then my comments below:

News Release – New Brunswick Business Council
(Fredericton, June 19, 2007)

New Brunswick can’t count on reaching self-sufficiency by attracting business from elsewhere, says the New Brunswick Business Council. In a statement released today, the Council said we need more new companies with their roots and head offices here in the Province, and the only way that will happen is if we make New Brunswick “the best place in North America to Start a Business”. “Our economy wasn’t built by companies or pieces of companies headquartered elsewhere”, said the Council’s new Chairman Ed Barrett of Barrett Corporation of Woodstock.

The Council agrees with the Self-Sufficiency Task Force that we need “aggressive business attraction”, but for long term growth and stability we need “aggressive business formation”. “Head offices, not back offices” will create the type of business and entrepreneurial culture that will allow us to attract investment and build prosperity.

The Council has accepted Premier Graham’s invitation to work with Minister Greg Byrne on improving the business environment. The Council is also prepared to take a leadership role in creating a New Brunswick Roundtable on Entrepreneurship which will match people with business experience with those just starting out or expanding their enterprises. Council Members wish to work with Premier Graham and all New Brunswickers to construct a blueprint that will put New Brunswick on top in three key areas – education, wellness and entrepreneurship. In order to help our entrepreneurs prosper, the Council insists we need to be more self-reliant – to use the tools at our disposal and, as necessary, create new ones to put our own financial resources and skills to work.

New Brunswickers should be provided the means and the incentives to invest and re-invest their own funds in our Province’s future. The Council is calling for:
· a New Brunswick Development Bank to get lending decisions made here in the Province by people with business experience
· a Development Corporation to pilot development opportunities
· streamlining government agencies and making better use of credit unions and caisses populaires for loans to small business
· a competitive and consistent tax environment
·incentives for individual investors

In a world that competes fiercely for investment, New Brunswick has no choice but to make the full and best use of our own resources – personal, community, and financial to put ourselves on top. Transformational change has to come from within ourselves.

Now, if you will recall, I warned that this group would serve up this kind of self interest position. It’s funny, you know. A few years ago I went on tour of several highly successful regions in the U.S. and was impressed to find that the local Chambers of Commerce actually spent their members’ money attracting new business to the local communities. Not government money but the money collected from members. Why? Because the business leaders in these communities understood full well that if their community and state was to grow, it would need to attract its share of global business investment.

“Our economy wasn’t built by companies or pieces of companies headquartered elsewhere.”

All due respect to the Council, if you look at just about every successful economic development program in the OECD, it will have a large foreign direct investment component to it – from Alberta to British Columbia to Scotland to Alabama to Ireland. Not to mention the emerging Eastern European communities and let’s not forget India.

To Mr. Barrett – that’s exactly the point! We haven’t received our share of Canada’s FDI over the past 50 years or so and that has held us back. It has led to depressed wage rates, high unemployment, chronic out-migration and a host of other problems.

I suspected this Council would end up as a front for vested interests.

So, let’s recap.

The NB Business Council is essentially hostile to attracting global firms (look at their recommendations).

The Chambers of Commerce (at least in Moncton) is hostile to attracting global firms.

The labour movement is ambivalent to attracting global firms to New Brunswick.

Business New Brunswick itself, I am told by someone who should know, has intentionally moved its focus away from attracting foreign investment.

So, I’ll just let out one big sigh. And then another.

Talk about confusion.

Finally, let me address the Council’s recommendations one by one:

A New Brunswick Development Bank to get lending decisions made here in the Province by people with business experience
I am not sure about this. ACOA is a type of bank. The BDC is a type of bank. There are banks. For good projects, there is money out there already. I am not saying that there doesn’t need to be more coordination and marshalling of these funds but….

A Development Corporation to pilot development opportunities
I don’t know what this means so I can’t comment.

Streamlining government agencies and making better use of credit unions and caisses populaires for loans to small business
Again, 80% of all small business go out of business within five years. Less than 20% of foreign direct investors will close or downsize a plant within 20 years of setting up. I would prefer to have more locally owned global businesses but there are just not enough real entrepreneurs in New Brunswick and not enough local capital to make it happen.

A competitive and consistent tax environment
I agree with McGuire on this. Companies that are successful and making profit should want to pay their share of taxes for the public good.

Incentives for individual investors
There already was (is) a labour-sponsored fund that was supposed to invest in Atl. Canadian firms and investors would get a major tax break. They couldn’t find enough firms of investment grade to invest in. So the government took another look and said there was not enough ‘angel’ capital so they went out and funded the start up of angel capital networks (there was one in Moncton) and they couldn’t find enough ‘angel’s willing to make speculative investments to that group folded.

I have a theory that if New Brunswick could start attracting serious global players in key industry sectors, this would spur local firms. Large firms incubate talent and ideas that get expressed elsewhere. Look at the role of NBTel in Saint John. Half of the technology start ups in that city were ex-NBTelers – but you needed these guys/gals to cut their teeth with NBTel before they could go out and start their own businesses.

That’s the trick. Am I crazy? We need more large and successful national and multinational firms here to incubate the talent that will lead to more local startups. Look at Ottawa. Many of the top entrepreneural startups came out of Nortel’s downsizing. You need to big to stimulate the small.

Very few successful entrepreneurs start their business right out of high school or university. They typically start with some large firm, get disgruntled and then set up their own firm.

Finally, I feel that mine is a lost cause. With almost every major stakeholder against my position, I should probably throw in the towel.

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0 Responses to Sigh

  1. Trevor says:

    “Head offices, not back offices” will create the type of business and entrepreneurial culture that will allow us to attract investment and build prosperity.”

    I find it interesting that the council is against FDI because NB’s economy can’t be built on back office entities. Didn’t Moncton’s economy emerge from collapse because of the call centers? Aren’t customer contact centers (call center) like Exxon, UPS, RBC, Air Canada, TD, Assurion, Minacs and Rogers considered back office?

    You need a mix of both homegrown and foreign investment or your NB empire will eventually have to move the “Home Office” away from NB. The reason…there will not be anyone to work for you who has acquired the skills necessary to manage your organization because they moved elsewhere to find employment in the back office. There is no silver bullet here..

    Am I wrong?

  2. David Campbell says:

    Me thinks you are right. But I am not the majority opinion here. I read the T&T front page story on this today. The reality is that this message of supporting ‘home grown’ companies sits a lot better with most New Brunswickers than supporting the attraction of ‘branch plants’ or ‘back offices’. For me, I continue to be confused as to why ‘home grown’ companies in North Carolina, California, Toronto and Montreal are putting their own dollars into attracting firms to their communities while our ‘home grown’ companies are doing their best to ensure that the province doesn’t focus on attracting world class companies to our province.

    The Council says it’s not ‘opposed’ to attracting firms here but that more ‘focus’ should be put on local firms.

    I agree with a multi-faceted approach to this but I fear that all this crap will lead to even less focus on attracting high quality firms to the province.

    I have said it before, attracting these firms raises wage levels and fringe benefit packages. There were some ‘home grown’ firms paying $7/hour for call centre workers in the early 1990s but after the national firms moved in those wages moved to $13/hour and higher. Sure, a couple of small home grown firms went under because of this wage pressure but what would be better – having home grown call centres paying $7/hour or multinationals paying $13/hour?

    I saw the same thing with IT jobs and with manufacturing jobs. I am not crapping on local firms. I am thrilled with the quality of the employment opportunities offered by dozens of NB-based firms. I just feel strongly that not enough economic activity has led to out-migration and depressed wages.

  3. Broadcastnb says:

    Don’t buy into the ‘if Irvings paper said it then it must be the majority opinion’. I’ve been blogging the horribly biased reporting they are doing. Apparantly three quarters of New Brunswickers want private health delivery, based on a poll which didn’t release any of its findings.

    So you never know, you may get your wish, foreign health care companies from Ontario and BC will come in and start providing the health care services that the government used to run. Of course to make a profit they’ll have to cut salaries, which means less taxes for government, but there’s your ‘foreign direct investment’, and its not pretty.

    Ask any out of work or nominally employed person about who they want to work for and they won’t give a crap. A good job is a good job. Just a look at ‘foreign direct investment’, namely Molson, Nackawic, Campbellton, well, forestry, shows why NBers may be averse to blanket claims.

    That doesn’t mean that if a corporation were coming in and offering jobs that people would balk. The point for foreign companies is simply this, how much do you offer them? WHAT do you offer them?

  4. Anonymous says:

    I read this in the TJ and about halfway down the article it mentioned that Shawn Graham “in a phone call from Paris” said that he “acknowledges NBs economic strength rests on companies like JD Irving and McCain Foods, and that the province must “”do more” to ensure that base of support remains.”
    Enough said on that!
    Time to get out of here.