Very instructive example

If you read this blog at all, you will know my biggest bugaboo is people who say that New Brunswick’s problem is that we are “far from the market” which leads, invariably, to “why would company x ever want to set up here?”

I had this conversation one time by email with a CAW economist. Anyway, needless to say the position of the CAW on the auto industry in Canada is clear. I guess Michelin must be an aberration.

But I digress.

While the world is replete with places like New Brunswick building strong economies, I would like to offer this example.

Now, it may seem odd to be citing the example of Orlando, Florida. After all, there is Disney and all that jazz and not too far away is a large NASA facility. But I like this example.

Mitsubishi Power Systems Americas, Inc. recently announced that it will proceed with plans to build a new turbine parts manufacturing facility in Orlando, Fla., which will dramatically enhance its ongoing power generation service and component repair operations.

The new manufacturing operation will be located adjacent to the present MPS Orlando Service Center and will feature new center of excellence capabilities for combustion turbine blade and vane component manufacturing. In addition, to demonstrate Mitsubishi’s commitment to renewable energy technology, the new manufacturing facility will include a state-of-the-art high efficiency photovoltaic solar generating system manufactured by Mitsubishi.

Here’s why I like this example and why it is relevant to New Brunswick.

1. Orlando, Florida is farther from the dominant population centres in the U.S. than New Brunswick. Putting a turbine manufacturing facility there has nothing to do with geography.

2. The NASA operations at Cape Canaveral likely influenced this decision – or at least their original decision to setup there. Lesson? Government R&D or other activities should be leveraged into significant private sector development. The NRC has significant aerospace R&D facilities – where? – right smack in the middle of Montreal’s aerospace cluster.

Question? How many large, multinational ICT firms have set up in Fredericton as a result of their collaboration with the NRC ITT lab in Fredericton? How many e-Learning firms have set up in Moncton as a result of their collaboration with the NRC in Moncton?

I believe a primary – not a secondary – a primary component of the NRC’s mandate should be to attract private sector collaborators – large players with R&D budgets to set up in the communities in which they operate.

3. That’s what I love about the U.S. Industries pop up in the strangest places. Auto in Alabama. Aerospace in Florida. Data centres in Northern Texas. It should give places like New Brunswick hope that they can attract industries themselves.

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0 Responses to Very instructive example

  1. NB taxpayer says:

    nice get.

    However, industries (subsidized by government) in the US have always been known to bulkanize their organizations/manufacturing plants. This is not always of their own doing, it’s an old political tactic.

    It’s primarily due to the fact that congressman and senators on both sides of the aisle have realized over the years that if they are going to shell out billions in corporate welfare loans to these multi-national firms, then spreading them around the country makes it more difficult for company A to pull out and move it’s business elsewhere (to another country). Because if they do, they will have to deal with hundreds of federal, state and local politicians who forked over the subsidies (and have a stake in their future transactions).

    Not to mention, you can buy more votes if you divide up one industry and move it into many smaller locations across the country. (each region can specialize in a particular part or technology)

    And you wonder why I loathe political interference in corporate transactions.

  2. David Campbell says:

    Actually, I dont’ wonder. I would fully support a complete ban across North America on direct corporate incentives. But then communities would just compete on lower tax rates or they would indirectly subsidize through back door ways such as ‘R&D’ support or ‘training’ or ‘cheap land’.

  3. Anonymous says:

    Just look at who the governor is if you want that explained. The only place there is a ‘free market’ in the states is the bidding by governments to capture the industries. In this case, its definitely the space centre, I don’t think there is much more to it than that-its in close proximity to the cash cow its meant to milk.

    The far scarier reality is that most of these companies can literally go anywhere in North America and name their terms, which means you never know what may prompt them. The Nova Scotia-RIM example is a good one of hard work, luck, and politics aligning to a positive investment story. When you notice ‘what it takes’ then you should notice from looking at the NB government for five seconds that that isn’t their interest. If it falls in their lap they may address it, but as we saw with the resort development, even if things fall in their lap unless it falls in a very specific development model then they aren’t interested.

    So none of this is any surprise, if PEI can build industry, then obviously NB, with a bilingual workforce, closer proximitiy to markets, lower taxes and more infrastructure CAN do it, but again, governments develop policies for those with political clout.

    Just take a look at the video game meeting last weekend where all they got was a “we’re thinking about it”. Gee, what happened to all that BNB talk about developing subsidies and tax breaks for whoever comes calling?