I didn’t need those Christmas cards anyway

I suspect after what I say this morning, I will likely be removed from a few Christmas card lists. However, there are a couple of things in the media this a.m. that cause my causticity this morning.

First, I hear the opening of the Molson Brewery was a grand success. 2,000 people involved. Parties all night. Good stuff.

Actually, I am happy the brewery is here. I think this company is a good employer (wages/benefits/working conditions) and a good community citizen (they are known for sponsoring local events, investing in the community). This is mostly a good news story.

But I objected to the bidding war with Nova Scotia to get them here and I still do. Don’t get me wrong, I don’t have a problem with strategic investments in company infrastructure and training to attract good employers with a strong tax ROI for the community and provincial government. But I think there should be consistency and logic in the approach. The Lord government threw something like $80k to $100k per job at Molson (and this doesn’t include the water deal) in cash to land the plant. This is the highest per job investment probably since Bricklin (unless Lord’s Nackawic deal goes sour than you are looking at $200k+ per job). What galls a lot of economic developers is that for this level of public investment, New Brunswick could have competed for the 1,000 job Ubisoft animation studio(s) in Quebec or anyone of a number of other large projects (remember the project I told you about from the late 1990s where there were 1,200 jobs on the line and the government ‘package’ totalled about $24k per job.

So, the bottom line here is the Lord wanted a win – politically – and he got it (though it didn’t seem to reap the political dividends). My thinking on this is that the government should be a lot more transparent and consistent with their economic development incentive programs. We don’t even get on the radar for hundreds of potentially beneficial projects with our “we can’t compete” attitude and then we give up the store for a Molson plant that might create 50 jobs. Wrong headed.

Second thing this morning is the naming of ‘ambassadors’ for promoting New Brunswick abroad. This has been done with relative success by a number of jurisdictions and it makes sense. However, I still think the issue these days is what are we selling? We have a tightening labour market, an operating cost environment that is now more expensive than the vast majority of U.S. communities, and very few ‘clusters’ of economic activity (other than call centres). If I was advising the powers that be my focus would be much more these days on answering the question “what are we selling” than going out and sell, sell, sell. Sometimes, you gotta pull the sales guys off the road and regroup. This, IMO, is one of those times.

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0 Responses to I didn’t need those Christmas cards anyway

  1. mikel says:

    Geesh, ya complain about the lack of foreign investment, and ya complain about the foreign investment!:)

    We see your point, but isn’t it possible that what the ‘ambassadors’ are selling is exactly THAT scenario? All the other advantages are gone, so literally all that is left is paying a good percentage of the salaries.

    I suspect Ubisoft got some of that kind of money from Quebec as well. My complaint, as always, is that if there is a bidding war then new investments like that should go to northern New Brunswick first, since they are suffering far more than Moncton. However, what exactly are all of these they SHOULD be pushing now-under average investment in education, monopolized media, a continuing emphasis on resources?

    Animation won’t save the kinds of workers who need work. Not many mill workers are going to go home and say ‘I think I’ll start cartooning’. If the government is spending that money on these jobs, then who is to say they wouldn’t on an animation company?

  2. Anonymous says:

    I agree, Mikel and David. What do we have to sell indeed? Where currency exchange rates are non competitive it rules us out of the selling of our natural resources (how much is the gas deal costing us now?).
    The point has been well made here that we need to diversify our industries and seek out investment that are new and different economic generators. I will refer you to the graph of economic drivers that you blogged about a while back and reference the resort industry as a case in point. We already know that one of the resort directors is a New Brunswicker so there is an ‘Ambassador’ in place already. We are not in any position to turn our noses up at this size of investment and I think this could be a good kick start with something new in the province.
    I don’t know what your view of this ambassador thing is but hasn’t Frank McKenna been doing this for some years already? Why can’t we get Frank to make the call on the resort business? Didnt I read somewhere that the developers did not look for government money? I suggest someone offer them some and get them back here……fast!

  3. Anonymous says:

    I would not wager that those develepors will return but it would be good for NB if they did. They would need processed lumber which would assist the mills, they would probably have access to foreign labour, there are many industries here that would be able to offer a service to them so I say go get them too. Maybe McKenna could talk to them or that Enterprise guy that was involved with the developers.
    Who is the ambassador from center beam in SJ? Isnt that an Irving operation? Do we need Irving involved in everything around here? HAs anyone seen the CBC article about the Feds looking at the Irving media monopoly? Its an interesting article.

  4. NB taxpayer says:

    Great post, David. And for the record, you’re still on my Christmas card list!

    Just to add to the post above, it really goes to show you that market decisions should be left to the market, not politicians and bureaucrats.

    The function of private capital markets is to direct investments to projects, industries or firms that offer the best possible rate of return. First, you have to ask yourself, does it make sense to attempt to move an animation firm[s] or industry to an area where illiteracy rates are through the roof, the economy is slow and government dependent, not to mention, less modern in a technological sense. My answer would be a resounding “NO”!

    History has demonstrated to New Brunswickers over and over again that attempting to replace or mimic this judgement through government intervention is fundamentally flawed and unnecessary.

    The part that citizens don’t see when these deals are signed is that there is little risk involved when it is done with other ppls $$$. In the real world, the difference between a good investment and a bad investment for a private investor can be the difference between a life of luxury and permanent unemployment; no comparable discipline exists for government bureaucrats or politicians.

    To mikel point that “investments like that should go to northern New Brunswick first”. It’s probably the right thing to do as that region is hurting economically, however, from a business perspective (and like I said above), it would be suicide for anybody to attempt to lure an industry like animation to the northern part of this province. It’s simply not sustainable.

  5. mikel says:

    My position on that has been said before, however, NBT has a far different view of the private market than most. Animation doesn’t go to Quebec simply because they like the food. As David has said, a company can always relocate workers and good jobs usually have people quite willing to move to any area.

    I also disagree with the idea that its business suicide. From a centrist point of view moving Molson to New Brunswick is ‘economic suicide’, the entire region is marginalized and has no real local market for the product.

    It does have something though, lower wages than the UNION jobs that got axed from Molsons in Barrie, and a desparate government which put up more cash than anybody else, and that factory could sit in Miramichi just as easily as Moncton.

    The simple rule of foreign investment is this-companies want to make profit but don’t want to take risk. Simple as that. That’s why governments are asked to subsidize the risk. In this, NB is no different than Quebec or Ontario.

    However, getting back to it, government can clearly have a very direct positive affect on the private market-again, that view of what the government SHOULD do is a personal opinion-even corporations don’t share that.

    So as I mentioned before, I know a couple of people who moved to Miramichi to work at Phatkat from Toronto. Most absolutely love it because it is so different from Toronto. Obviously not everyone will love that, however, lots of people are no fans of huge cities and their problems.

    As for fostering, of course it costs money, but lets compare. In Ontario it costs the government about 50 million to run TVO. That’s for a huge massive province. Take a place like NB and you can easily cut that back, even something like 5 million to set up a TNB and get it on the public dial would have a huge effect. Flash and other animation software costs about $400 and other ones are free. With students competing for prizes in drama, comedy, documentaries, you name it, you have a ready made industry.

    It takes only ONE success out of all that big mess to basically reimburse any costs. Sudbury built its animation centre on the success of Chilly Beach, a cartoon that was begun by a couple of guys messing around with Flash animation.

    Content doesn’t cost money, but the infrastructure does. So again we are talking about choosing WHICH infrastructure to build. As we’ve seen, the feds are putting money into roads and rail, pretty much what they always have put money into. As the post above shows, the feds have tons of cash they are stuffing into various infrastructure ‘centres’-the problem has been (at least in good part) that New Brunswick doesn’t have the centres!

    If you build it, they will come as they say. That’s already been proven in MOncton with the medical research investment group.

  6. NB taxpayer says:

    Animation doesn’t go to Quebec simply because they like the food.

    Point taken. Although, you may want to revisit your facts on that area as well because many talented individuals are leaving Quebec for greener pastures. And they’re not leaving because of the food.

    Maybe things will turn around in the subsidy pit now that they have a debate on issues going on instead of being all consumed on talks of separation. Not sure how long that will last though? Right now, as it stands, I’m convinced their last election was nothing more than an anomaly.

  7. mikel says:

    Some people may be leaving, but thats irrelevant, in knowledge sectors labour is very mobile and can change very quickly. Whenever you have a government that will hand over resources to corporations, you will find corporations. You may have seen the latest P3 announcements in NB-there’s a reason the newspaper crows about how many companies have put in bids. THey know a cash cow when they see one, and its been shown repeatedly that public private partnerships usually cost MORE money than public investments.

    And of course theres a reason why Irving makes NB their base of operations. And it isn’t because of the food.