Defending FDI

Low global demand for products fuelled by a worldwide economic downturn has forced management at the AV Nackawic mill to consider shutting the doors. It looks like this shutdown might be temporary but it is still an impact.

Some folks, including those that post here, pull a nah, nah, nah and say “see I told you FDI doesn’t work” but I respectfully disagree. I know that Oracle dropped 20 people after buying Whitehill and I know that other foreign companies have set up here and closed.

But dozens have not closed. There is an 80% failure rate among new business start ups in New Brunswick – I guarantee the failure rate among FDI investments here is far less – only they tend to be larger and make a splash.

Also, I have said far and wide that FDI is not the only solution. We do need to stimulate local entrepreneurship with an export orientation. We don’t want to become the branch plant for Toronto. But a little branch plant would be nice. GM closed its distribution facility in Moncton so did Chrysler. In fact, I would argue that Toronto-based affiliates of international companies are investing even less in the hinterland like New Brunswick (with the exception of call centres). So we will have to go far and wide to attract business investment.

I read today in the TJ that the feds are going to make $6.5 billion in infrastructure spending to prop up the economy during this downturn. This is an interesting FDRish way to handle downturns. It is doubly fun because it is ‘capital’ spending and not ‘operational’ spending so will have no significant effect on the budget deficit.

I just don’t understand why we can’t use this money to invest in economic development infrastructure. Why we always play the pothole card. I just don’t understand it. Please ‘splain it to me.

If NB is going to get its ‘share’ of that $6.5 billion that’s about $150 million. How about a $150 million environmental technologies development strategy? Matched by a provincial $150 that would mean $300 million over the next five years to start down the road of becoming an ET hub. We could set up research chairs at the universities, attract leading companies here and incubate new ideas as well.

Or we can fill up some more potholes to make the drive out of New Brunswick more comfortable.

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0 Responses to Defending FDI

  1. Anonymous says:

    David, you are missing some other great accomplishments. Not only will the drive be smooth but you can fill up with reduced tax gas, drive with low insurance rates safely behind moose fencing and now, surf for that Aberta job before leaving from your rural home.

  2. nbt says:

    FDI?? How ’bout the corporate welfare bucks these guys have rolled around in for years?

    Just another example of a business that’s not really a business. Sorta like Atlantic Beef Products INNNNNNC. or Cape Jourimain who shoulda closed down years ago (or not even opened up in the first place).

    Both products of the Liberal government business braintrust.

  3. Vincerolly says:

    There are simple explanations for the pothole strategy for infrastructure spending — the funding can be spread relatively equally among the various NB districts; north, south, cities, rural, French, English, every constituency is involved and hence each political can claim success.

    Think it through: in the absence of an economic development model that most NBers can agree on, this makes the most sense. By comparison, who would benefit from your “$150 million environmental technologies development strategy”, even with matching funds? And critically, who would NOT benefit, at least directly? This ET hub sound most likely to be a southern, English, urban investment, probably in Saint John. In the rest of NB, we are not that selfless.

  4. Rob says:

    I listened to Naomi Klein at the Commonwealth Club the other day, and she described infrastructure as the “next bubble”.

    Just think, City Bank of New York will own the new Moncton courthouse. What would one of the largest banks in the world want with a provincial courthouse on the rim of North America unless it was an absolute sure bet.

    On another infrastructure related tangent, when Saint John talked about hiking water rates, Moosehead Breweries said that they could move some operations to Moncton, where they would not need secondary treatment of water. Moncton had a private company rebuild its water supply, and now has much higher quality water. Saint John could be next in line.

  5. mikel says:

    This is policy, nobody is saying ‘nah nah nah’. You are trying to sell a policy line, and some of us are elaborating on it. I’ve never opposed it, but simply state why people believe what they believe-and why its correct.

    So let’s look at the ‘success stories’. Forget IT, without government most of that industry would cease to exist, and much of it has always been so poorly run they exist simply because corporations have so much wealth to throw around.

    The above comment about Moosehead is a good example about the problems of FDI, even on home grown companies, you are forever at their beck and call. Threaten their free water and they threaten to go to Moncton, threaten to raise their taxes, they threaten to move to Nova Scotia. I know of an example where an investor was looking at the Dalhousie mill, but to ‘invest’ in it they also wanted access to massive amounts of land. The process was for this guy to go to Newfoundland, tell them how much NB was willing to give, then come back to NB and tell them how much Nfld would give. After the tenth visit NB just gave up, the guy essentially wanted everything for free. Of course there is the question that NB perhaps would be better served giving that land to this guy because he’s running a mill-UPN doesn’t do that.

    Whether people want to GIVE stuff away for free should be a local democratic decision. If people WANT to sacrifice their potash for jobs, they should decide that locally on the basis of self interest-that was basically what ‘liberty’ always meant.

    For UPS, we don’t know the facts, so we can’t simply agree with Mr. Campbell that its one of numerous success stories. That’s because large corporations have always had the governments ear. We know how little tax these corporations pay, so its not the case they are ‘so successful’ vs. the mom and pop stores that close down-mainly because they don’t have access to massive government loans, worker training programs, etc.

    There was always the joke that running a restaurant was the entrepreneurial equivalent of winning the lottery. It was where people of SOME credit went to ‘strike it rich’. Of course a good many of those business failures are restaurants, because restaurants don’t have access to any government subsidies.

    We simply don’t know how much is spent to keep UPS happy. What we DO know is that Irving has lots of low interest loans, and everybody knows exactly how far the government goes to accommodate them,and they are filthy stinking rich-so is UPS and other ‘success stories’ really much different, or is it just that ‘we don’t hear about them’. We don’t hear about them because they are getting what they want, and of course there are only two media outlets, and Irving usually only makes a big deal if it is subsidies going to some place up north or to somebody OTHER than corporate interests.

    But again, thats not damning FDI, in the real world ideas are complicated. If some rich guy fell in love with some town and wanted to relocate, I doubt there would be much complaint. However, this is the real world, so when people HEAR about possible investment, they know darn well that it won’t be free, so it is up to government to prove that it is a sensible investment.