Daulton in Italy

Just heard on the news that the Ontario Premier is in Turin, Italy today making the case that Ontario is the best location for the new Fiat plant that is likely going to be announced in a few months. I appreciate Daulton’s ambition but given the downturn in the US and the low value of the US dollar, I suspect that the usual U.S. suspects – Kentucky, Indiana, South Carolina, Alabama, etc. are al heavily courting Fiat. The financial deal that will win this project will be $200 million+ in incentives. Mark my words on this. But a typical auto plant will generate (direct, indirect and induced) incremental taxes of between $30 million and $70 million per year so the tax payback on a $200 million investment would be between 3 to 7 years on a plant like this.

Not to mention the 1,000 high paying jobs and the fact that the average lifespan of an auto manufacturing plant is between 25-30 years.

Corporate tax cuts
I got a couple of good emails this morning on my TJ column regarding corporate tax cuts. One said I should have mentioned that U.S. companies pay the bulk of employee health care costs whereas in New Brunswick they don’t. This is not an insignificant figure. GM estimates it is around $10,000 per employee. Even Walmart offers a basic health care plan to its U.S. employees.

Maybe that should be the pitch to Fiat. Save $10 grand per employee in health care costs by locating in Ontario (or New Brunswick?).

Someone else said I should have mentioned that most of the firms that New Brunswick might want to attract wouldn’t pay much corporate income tax here anyway so cutting the rate wouldn’t matter much. I believe that a US corporation that puts a back office in New Brunswick doesn’t pay any corporate income tax here anyway. Good points.

Finally, this AM, an old friend asked me about Moncton’s new status as ‘sin city’. He pointed out the Molson plant (booze) and the casino (gambling) and suggested the third leg on the stool should be prostitution.

I don’t see Moncton as sin city. It’s actually a fairly conservative place. 92% claimed some religious affiliation on the Census compared to 90% in Saint John, 86.5% in Fredericton and 83.8% across Canada. For crying out loud, there are 16,000 Baptists in Greater Moncton. That’s a lot of potluck suppers, sheesh.

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0 Responses to Daulton in Italy

  1. mikel says:

    Keep in mind that most corporations, wal mart in particular, charge to belong to health plans, and usually those plans are way too expensive for employee’s. The vast majority of walmart employee’s rely on medicaid. As globalization has worked its way through the states those plans cover fewer people, with far fewer contributions from employers.

    I hate to tell you but Moncton has long been noted for its prostitution. I’ve never even lived in Moncton and even I know that. There are neighbourhoods that had started their own ‘johnwatch’ programs. I remember reading an article that talked about how they rounded up guys who were coming from Nova Scotia and PEI.

    I just typed in child prostitution and moncton, and came up with a load of stories. Those neighbourhood groups ALREADY want a ‘red light’ district. Report a john programs have been set up in Moncton as well as large western cities and a message parlour was recently indicted for operating a bawdy house.

    And that was just the first page. The brewery has nothing to do with it, its not like they give away free booze. But with increased national and international tourist travel comes all kinds of problems that tourist shy NB has never had to deal with.

  2. Anonymous says:

    re: religious affiliation – there are a lot of “culturally catholic” francophones, who don’t take it very seriously but always call themselves catholic.

  3. Anonymous says:

    We discount these large auto-type of opportunities too quickly.

    RDC has $100M get ACOA to match it and we can offer Fiat the incentives they are looking for.

    I realize there are transportation and supplier issues to address but the point is, withappropriate strategy and targeting, we can go after some ‘big fish’

  4. nbt says:

    McGuinty has had a lot of trade missions since taking office. Which he should. But I’m still not convinced he is a closer.

    ABC…Always Be Closing.

  5. Anonymous says:

    I agree that government incentives can attract corporate low-lifes and create dependency. Like social programs, there will be abusers and addicts. Wathing out for this is where our ED people (should) earn their pay.

    However, David frequently promotes the attraction of an anchor company or industry and I agree that is needed to spur growth to the next level. We are consistently behind the growth rates of other economies and to close the gap, we need a seed industry/company that can spur new mom&pop businesses and provide some accelerated growth.

  6. mikel says:

    To be fair, that is a matter of OPINION, not fact. Anchor industries are ‘nice’ in theory-getting them in today’s world, especially GOOD ones, is a far different matter.

    We KNOW that those handouts create , not dependancy, but simply greed. Companies will do whatever it takes to save money, especially if it involves as little as a ‘threat’ of moving to cut their bottom line. It’s no surprise that american corporations during the last twenty years saw MASSIVE new profits, yet very little of that was actually from new sales. I remember that in 1995 profits increased 40% while sales only increased by 1% at the largest US corporations.

    I do agree with NBT about the ‘level playing field’, however, we have to be realistic and remember that PRIVATE power is far more coercive than public power (there’s a reason five generations worked at making more public power). Graham wants to be re-elected, but as we’ve talked about before, most of the big policies have almost zero to do with creating jobs, and zero to do with creating LONG TERM jobs.

    Why they don’t do it is because of the influence of private power. That’s obvious, these few penny ante subsidies are NOTHING compared to what Irving gets. It’s not like IF the government hadn’t invested in Atlantic Yarns then New Brunswick would now have a thriving entrepreneurial fabric industry-the opposite is true.

    It’s not like if they DIDN”T invest in Atlantic Beef that some small privately run industry would spring up. That’s simply crazy, what would happen is those industries simply wouldn’t exist.

    But that doesn’t NECESSARILY mean that those anchors are ‘needed’. You can look at Vermont as a good example of that. They are now finding out what a mixed blessing it was getting an IBM plant back in the seventies, as they gradually cut back and out of state. However, the state is largely made up of small and medium sized manufacturers.

    The difference is that the companies stay small and medium sized within the state. They each grow OUTSIDE the state. Call it ‘state unity’ if you like. The state is also very good at purchasing everything locally before going outside.

    That happens because there is a ‘balance’. Until New Brunswick deals with the Irvings it will remain the same. As I’ve said before, there are TONS of ‘anchors’-Irving owns over 300 of them at last count.

    However, how much have those anchors ‘helped’ or ‘hurted’? That’s something we don’t know, because provincial books are like fort knox and the media never talks about it. We know things like IF they pack up and move their sawmills to Quebec then those jobs and money is instantly lost. Some say ‘good riddance’ but the IRvings would still be around will all their political power-they just wouldn’t have sawmills there. So its’ lose-lose.

    Long term I suspect it would be a good thing. It says WAY too much about New Brunswick that at its single environmentally unique tourist draw is a massive mill that has turned it from an amazingly beautiful ‘tourist draw’ into one of the ugliest sites in the city. If New Brunswickers were really as religious as Mr. Campbell indicates then would be protesting in revulsion at the openly heretical mocking of one of God’s most beautiful creations. Instead, all we hear is ‘at least it provides jobs’.

    Anchors are ‘nice’ but not necessary, and ESPECIALLY not necessary in the way mentioned here. Maine’s economy is ‘anchored’ on US government shipbuilding, an industry protected by legislation and propped up by taxpayers-not private industry. The government CAN provide that anchor, and usually does much better than private power. Again though, thats POLITICAL, not economic.

    Places that KNOW that, are the places doing much better under globalization (I mean their people, not their bottom line).