Where are NB’s entrepreneurs?

This is the Opinion piece in the TJ today. Here is a excerpt:

New Brunswickers are skeptical of the idea that prosperity lies in increasing exports of manufactured goods and attracting new out-of-province employers. New Brunswick’s most reliable employers and corporate taxpayers are locally controlled businesses, whose operations have grown from family enterprises to commercial empires. That is the kind of economic development New Brunswick should be encouraging. McCain Foods, which celebrates its 50th anniversary today, is a model of what N.B.’s entrepreneurs can accomplish. Its headquarters are here, its profits are reinvested here, and its brands are exported all over the globe.

Again, I don’t want to beat this foreign investment versus local business debate to death but it is central to this discussion about self-sufficiency.

So let’s deconstruct the TJ logic piece by piece.

1. It is true that New Brunswickers are skeptical of foreign companies moving in here. But this has been systematically reinforced by the media. Funny how the most successful provinces and states (not to mention countries) are those that are able to attract an above average share of foreign investment.

2. The TJ talks about the value of locally ownd ‘corporate taxpayers’ yet anyone with a computer and the Internet can got to the Dept. of Finance website and see that New Brunswick companies contribute among the lowest amounts in all of North America to the provincial budget. – less than 3% of the total budget of the provincial government comes from corporate taxes. I do not want to complain about McCain’s – this is a wonderful company and a great New Brunswick employer but the TJ is just plain wrong. The New Brunswick government took in $217 million in corporate income tax from all companies in the province (close to 10,000 firms). McCain’s made about $5 billion in sales last year. The corporate income taxes they would have paid on this – assuming they made an average rate of profit would be almost the whole amount of all the firms in New Brunswick combined – and let’s not forget Irving, etc. So, it is pretty clear that only a fraction of the taxes paid by these firms are ending up in New Brunswick.

3. The Province of New Brunswick (and ACOA) has had a local entrepreneur focus for almost 30 years and where has it got us?

4. As I said before, most successful entrepreneurs start in large multinationals, get disgruntled, leave and start their own business. Who are the large multinational firms in New Brunswick that are acting as incubators for entrepreneurs? Certainly NBTel as I mentioned before. Atlantic Lottery is one – several firms have been started by ex ALCers. Whom else?

We are missing the fundamental point and it is frustrating as heck. There is a symbiotic relationship between multinational firms and local entrepreneurs. It’s in the supply chains (some multinational manufacturers will have upwards of a dozen or more local firms as suppliers). It’s in the incubation of entrpeneurs. It’s in the partnerships. It’s in the calibration of wage rates and fringe benefits. It’s in the career pathing. People will move to New Brunswick if they know there are multiple other options if the specific job they are looking at doesn’t work out.

If the TJ has any real ideas to foster more McCains – bring them on. New Brunswick’s history is clear. McCains come along only once a generation or more. Crossing our fingers or trying to tweak the tax code and hoping that another Wallace McCain or Irving or other will just pop out of the woodwork seems to me more wildly ambitious than those of us who think we can attract multinational firms here.

McGuire is right. The TJ is wrong. Dead wrong. When Irving went out and got ‘foreign’ investment in the form of Repsol for the LNG plant – the TJ wasn’t ranting about the need to foster local entrepreneurs. When Irving announced last year that it would likely need an external financial partner for the second Refinery – the TJ wasn’t ranting about the poisons of foreign investment. When the Tories announced $250 million for the forestry sector (of which both Irving and foreign-owned firms would benefit) – the TJ wasn’t complaining about supporting foreign firms. In fact, the TJ praised the Lord government for this bailout.

It’s not one or the other, folks. The NB Biz Council should know better.

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0 Responses to Where are NB’s entrepreneurs?

  1. mikel says:

    Since you don’t like to say it, I will. McCains are a ‘model’, just not a good one-like most corporate models.

    It’s no surprise that McCain’s rise was in parrallel with the ‘corporatization’ of NB farms. Now, NB farmers are essentially managers for McCain. McCain does financinng on their equipment even.

    And as we’ve seen, New Brunswick has seen the largest centralization of the farming industry in the country, and along with that has seen the largest decrease in the number of farms, AND the number of farm workers. Even though land area for farming has stayed the same.

    I don’t want to incur Alec’s wrath, but go talk to the New Zealand farmers union and see how much they love the McCains. Of course in NB there is hardly even an association to complain, let alone get media coverage so people know about it. So let’s just pick a recent example, like when McCain ‘suddenly’ decided to advertise they would only use ‘non GMO potatoes’. That’s nice for consumers (maybe), however, it was done in the middle of the year and put many farmers out of business. They had to swallow the loss.

    However, you have to love that thinking. Just because there are four large ‘family owned’ industries hardly makes a claim about New Brunswickers in general. Take a look at the Patel’s selling their Samosas. They weren’t ‘from NB’ yet made it their home and place of business. Meanwhile of course, as every New Brunswicker knows (and don’t sell them short on this, common sense and personal experience is a powerful force), the Irvings are famous for abandoning the province so they don’t have to pay taxes, while still ‘sticking around’ to rob the province blind.

    So McCain or Irving are hardly the examples you want to tout. I’d put the Oland family there perhaps, but maybe thats because I don’t know much about their operations. I do know that I’ve seen few complaints about Moosehead and their jobs are the equivalent of working for the government, they are considered the holy grail of employment.

    However, take a look at UPS in Fredericton. We don’t know the cost, but then we are only vaguely aware of the cost of keeping Irving and McCains happy enough to stay put. Yet UPS has their national headquarters in Fredericton. They do tons of charity work and have good paying jobs.

    More importantly, they don’t rob New Brunswickers of their forests and massively pollute their environment to do it. IF they packed up and left, unlike the above companies, they wouldn’t leave a devastated resource economy and environment.

    More importantly, apart from govenrment subsidies, we can find out what the company is up to and affect its operations by purchasing shares. As mentioned numerous times, there are people working their jobs out there right now who may not even KNOW they are working for Irving.

    So in a nutshell, these guys are protecting their own. So no, you CANT count on them to change their tune in the media, because of course they own it. To prove that, try applying for one of their blogging jobs and see what happens.

  2. Kit says:

    I am unsure as to what the average is, but it seems to me that from a population of about half a million, NB has produced two world class enterprenuerial families whose companies successfully compete internationally, is a better than average statistic. I don’t think we can expect to increase that anytime soon and would sugest that that the key to future growth is with small to mid sized business. Consequently, we need to offer an environment that fosters and supports small to mid sized business. This would include taxes and incentives. It also includes infrastructure and quality of life issues so that those people who are successful or who come in from outside the province have a similar (not the same) quality of life they could expect in any other jurisdiction, province, state or city. Otherwise they will vote with their feet and move.