Northern NB needs new model

I hope that the TJ is wrong in its characterization of the new Northern New Brunswick economic development fund. 

The new fund will replace three existing funds – the Restigouche-Chaleur Economic Development Fund, the Acadian Peninsula Economic Development Fund and the Miramichi Regional Economic Development Fund – that are set to expire at the end of this month.

Here’s the quote:

The fund is designed to assist small- and medium-sized businesses, entrepreneurship, innovation and skills and training. It will also help with infrastructure projects.

The article goes on to say that $105 million have been given out to firms like this over the terms of the previous funds.  And to what end?

I’m not one of these people that decries how the funds were spent.  I’ll let others pour over the projects and extract a few that raise public ire.  But on its face, these programs didn’t work.  The region keeps losing population – particularly young people – and many of the high quality jobs are lost and replaced with tourism and Walmart. 

And, if the TJ is right, we are set to do it all over again.

Let me propose an alternative model.  Tennessee.

Gov. Phil Bredesen’s Rural Opportunity Initiative is based on a three-pronged approach to local economic development. Among the initiatives:

• “Orange Carpet Tours” that prepare local officials for corporate site-selection visits.
• A series of tax incentives for companies that invest in the state’s rural areas.
• The Rural Opportunity Fund, a new line of capital for businesses in the state’s non-urban areas.

First of all this is not just about attracting industry although that is a critical part of the Tennessee program. You must understand that the fundamental goal is to foster new business investment in larger chunks.  100, 200, 300 jobs.  National and international firms that offer good wages and benefits.  That’s what Northern NB needs right now.  We can’t replace $30/hour mill jobs that offered long term stable employment in a community (remember the mill in Dalhousie was operational for 90 years) with tourism jobs.

According to a local report, successes include:

• ThyssenKrupp Waupaca breaking ground on a $162 million expansion to the company’s Etowah operation in Southeast Tennessee, doubling the size of the current facility and adding more than 100 jobs.
• Fluid Routing Solutions adding 169 jobs as it consolidates its U.S. operations and expands its plant in Lexington in West Tennessee.
• Aisin Automotive Casting Tennessee investing $67 million to double the size of its plant in Clinton in East Tennessee and add 160 jobs.
• Vifan USA Inc. has begun construction on a $72 million facility in Morristown in East Tennessee.
• The combination of state incentives and available programs from the Tennessee Valley Authority also landed Fischer Tool & Die, which is building a $45 million plant in Tullahoma in southern Middle Tennessee.
• Auto parts manufacturer Arvin Sango looked at 20 locales before deciding to build a $10 million plant in Henderson.

Just those companies – 600-700 good paying jobs with well known firms.  That’s what Northern New Brunswick needs.

Again, I can anticipate the reaction.  “We don’t need these big firms coming in and taking taxpayer money and then leaving” or “Small businesses are the lifeblood of the community” or “We need to invest in our own companies”, etc. etc. etc.

We’ve taken that approach, folks, for decades and it hasn’t helped – particularly Northern New Brunswick.

It’s frustrating as an economic developer that people in leadership positions don’t see this – or at least don’t act on it. 

We will have another fund that doles out dribs and drabs to small firms – again – probably some good projects – but in the end it will have neglible impact – just like the last three.

We need a funding mechanism coupled with a strong economic development that is open to all – local firms, national firms and international firms but the emphasis must be on demonstrable new investments that create 50, 100, 200 or more good paying jobs with good benefits.

Last point on this and I know I am a broken record but repetition is sometimes required.  There are those that say “we can’t attract firms to Northern New Brunswick”.  I have heard “it’s hard enough trying to convince firms to set up in Saint John or Fredericton.”

But to me that shows a lack of belief in the province and a lack of willingness to seriously work on the value proposition.  If there are roadblocks to attracting investment in Northern New Brunswick – let’s get them out of the way.  We spend $200 million to build roads without thinking twice.  We spend $600 million on seasonal EI payments each year and it never gets a mention.  Surely, we can address the barriers to investment in the North – which is the real issue here.

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12 Responses to Northern NB needs new model

  1. mikel says:

    As mentioned before, EI is federal, so its not so much ‘we’ spending taxpayer dollars.

    However, it certainly isn’t here, and I doubt very much that its up north that you hear these kinds of criticisms. Do readers really think those living in Campbellton are saying “we don’t want a manufacturing plant”. Again, its the people in the SOUTH that say that, because they’ve been subsidized by the taxpayers for ages.

    The states, again, are VERY different, and here we are talking about an entire state, not one region of a state. People have short memories because it was the US’ protectionist policies that largely built their economy. It also helps when you have the population base that can support it.

    So again we come back to policy. The first Tennessee recommendation is just silly. Tell the local councillors to go to the library and read a book, or go online and they can learn all about ‘preparing for corporate site selection’. You don’t need to FUND it.

    The others are mostly things that are already done-albeit badly. Dalhousie did just get a new manufacturing contract, I forget what it was now, but although it was no mill, it shows that those in power already KNOW what you are saying.

    For the others it comes down to policy. They just lowered corporate income tax to one of the lowest in canada, so what more do you want? Yes, thats somewhat facetious, but New Brunswick IS ‘business’ friendly, its just not ‘industry’ friendly, because industry is changing. Me and Richard can argue back and forth about whether you need the industry to change there first or the political policies, but in the end, you get the industry you pay for-so far that’s Irving.

    However, keep in mind that that 105 million at the very least goes into the community. When you cut Irving a cheque there is no guarantee, or even any way of knowing, whether that doesn’t get sent to a bank in the Caymans. Judging from how many new projects they are talking about, I’d suspect a good part of it IS.

    Just as a suggestion, I wonder if there is any stuff on corporate site selection on youtube. If not, it would be a neat project-then the towns could simply be sent the link. However, it’s a pretty tought sell to tell us that any town in New Brunswick isn’t corporate driven. Developers have been running canadian municipal politics for quite some time. You may hear a case of a group opposing some horrible environmentallly polluting eyesore like Bennett,but that shouldnt’ be confused with being anti development.

  2. The TJ was correct:
    http://www.gnb.ca/cnb/news/rdc/2009e0447rd.htm

    Economic development and diversification:
    small- and medium-sized businesses;
    entrepreneurship;
    skills and training; and
    innovation.

  3. richard says:

    “Tell the local councillors to go to the library and read a book, or go online and they can learn all about ‘preparing for corporate site selection’. You don’t need to FUND it.”

    That is really a marketing issue for the local people. They might need to learn how to do this, and the best way to do that is to use money as an incentive to get experts in to show them how it is done. The first step would be for the province to ensure that the local govts have bought in to this approach – otherwise it won’t fly.

    David is correct that tourism funding will not replace high-paying longterm jobs. I know of a local outfit near Fton that sells parts for thermal energy plants world-wide. They have some ancient equipment that does its job but probably needs replacing – I wonder how much effort NB or ACOA has made to offer that outfit funds to rejuvenate or expand? In addition to attracting new business, we need to make sure that the export-oriented manufacturing industries we have are helped to grow.

  4. mikel says:

    How its done isn’t rocket science, businesses are pretty transparant. They want the best deal they can get-simple. SOMETIMES it gets complicated, and impossible. I remember reading the other day about Cork, Ireland, and how one of the reasons a manufacturing company set up there was because the CEO’s grandfather was there. That’s something you can’t prepare for, and those are often the kinds of decisions that go on in the backrooms-the corporate world is often political.

    For the above, this is part of the problem that we constantly face-namely, not knowing what is going on. The above company, if it has any brains at all, is already on the gravy train. But to one person thats a ‘growth opportunity’ while to others its a gravy train. There are numerous programs to help exporters, but we need to see numbers. One of the worst things a company can do is grow too fast. Government throws money at it, the company hires people, doesn’t get many new contracts, the jobs disappear once the money runs out-or the company goes permanently ‘on the dole’. I know of a well placed business owner who regularly hits on government threatening the loss of only eight jobs but still gets regular funding.

    So this is what this blog really needs to know. Are there industries out there who AREN”T getting funding, while golf courses get new lawn mowers. Or is it simply the case that the industries are so thin nothing is going on. The brutal fact in business is that you need customers, and no government funding is going to get an exporter that. One other thing to keep in mind is that often old machinery employs more people. New Brunswick has been avante garde in technological funding-they piled on the tax credits and subsidies to the forestry industry and basically killed all the jobs.

    To state my familiar line along with David’s, IF the government were serious, they’d be funding educational institutions up north. They’d be funding tele-education and tuition grants. They’d be putting serious money into the educational system because thats where the next business owners, leaders, workers are going to come from.

    But the fact that the government says “for the last year the north has been hit by job losses” tells you just how far out in left field they are-the north has seen job losses for decades.

  5. Anonymous says:

    As long as governments get away with handing out money for political gain and calling it ED, nothing will change.

  6. Anonymous says:

    So funding educational facilities will solve the problems up north. NB is already struggling to fund its universities and generate enough population to attend them. We have 5 universities 2 with mutiple campuses making for at least 8 campuses for a population of 739,000. At that rate, Toronto would have 30 universities and Ontario would have well over 100. Ever think our problem is too many universities? Maybe 1 really good one would be effective?

    Somehow we have to stop this duplication of resources. NB cannot afford it. We have high speed internet everywhere and we are solving the forestry problem by paving the province with divided highways. We ought to be able to make universities accessible without building more.

  7. Anonymous says:

    If you look at prosperous provincial economies, they are propelled by natural resources (oil in Alberta/Newfoundland, oil, potash and uranium in Saskatchewan) or they are artifically funded by large, sustained federal investments (auto in Ontario, aerospace in Quebec). And don’t forget that the funding is only a small part of the equation; Ottawa changed tax laws, developed trade agreements and created departments dedicated to building and sustaining the auto sector.

    Announcing (apparent) large provincial ‘economic development’ funding that gets watered down into golf courses and hockey rinks is not going to make any difference in the long run. If NB is to get its economy going anywhere in the province, we need some focus and we need the federal government on board for sustained, and substantial, support. Or, we better find oil.

  8. richard says:

    “artifically funded by large, sustained federal investments (auto in Ontario, aerospace in Quebec)”

    What’s ‘artificial’ about that? The regional economies of southeat Asia grew rapidly in large part because of regulatory measures and government investments that helped nurture their industries. ON and QC used their electoral clout to get the protectionist measures in place way back in the late 1800s in order to help their manufacturers; more recently we have had the Seaway and large federal investments in sectors like autos and aerospace. There’s nothing artificial about that – its just human nature – the majority protecting their own interests.

  9. mikel says:

    For education, thats ridiculous. What one person considers ‘effective’, another considers ‘graft’. Why do we think that tailoring universities to benefit corporations is any different than political funding? Anyway, that’s besides the point, as I’ve pointed out numerous times, the two universities here in waterloo ARE actually known and recognized worldwide. These schools are largely private schools that bring in a worldwide population. Like I’ve said before, if you’re a white male walking through the University of Waterloo you are VERY much in the minority.

    There is a whole debate about that, but that’s not the issue here. THe point is that this is ONE city that has TWO universities, and nobody here is saying “maybe we have too many universities, one would be much more effective” (and it has nothing to do with local populations, because most of the students aren’t from here). There is a population of over 5 billion in the world, if enrollment in sagging, those are quality issues. But to address the issue, I’ll make a change in statement-what the north needs is a GOOD university that is run well, then you can close down all the ones in the south if so desired (good luck with that).

    What is ‘artificial’ about it is that unlike natural resources they are largely funded because of other reasons. Southeast Asia grew for the same reason most places do-the LACK of regulatory measures.

    But again, there is no point in arguing hypotheticals, the reality is that for ‘industry’, there is only one-Irving. So it better be hoped that the anonymous poster is right at 33,000 jobs come from it (even though only38,000 are employed in the auto sector in ontario).

    But Richard’s point is a salient one-if he knows a company with machinery that could be updated, then whats wrong with buying new mowers for the golf course? Or at least better yet, whats wrong with funding website work at l’acadie nouvelle-that at least is money that would largely go to workers. Does anybody think NONE of the money going to aerospace in Quebec or autos in ontario or meat in alberta gets wasted?

  10. richard says:

    “Southeast Asia grew for the same reason most places do-the LACK of regulatory measures. ”

    There was no lack of regulatory measures. There were tons of them – mainly aimed at keeping competitors out.

    “But Richard’s point is a salient one-if he knows a company with machinery that could be updated, then whats wrong with buying new mowers for the golf course?”

    Is the golf course exporting something? The company I referred to is valuable because it IS exporting globally, and creating soem good jobs in the process.

  11. mikel says:

    Well, that’s true, but those aren’t the regulations I was talking about. However, that’s only for certain things, Canadian corporations have done a TON of trade in southeast asia, nobody ‘kept them out’. For most markets it wasn’t a lack of competition, it was lack of a market. People bought chinese crap because it was slapped together by almost literal slaves in a warehouse with no building code restrictions which made it dirt cheap. So its pretty hard to try to sell coffee cups made in Canada to the chinese when they make them for OUR economy at a fraction of the price.

    The golf course also creates jobs-in an economy that doesn’t have the other companies mentioned above. So why shouldn’t taxpayers support jobs in disenfranchised economies as well as functioning ones. If we take David’s example of New Brunswick being a ‘have not’ province needing investment then it can be argued that they should get MORE. Any company doing engineering already benefits from the university in Fredericton, and again, without knowing the company we don’t know what else they might be getting. So again, the only reason a lawn mower at a golf course stands out is because of such a lack of investment in the area. And as David will tell you, many an investment deal is made on the golf course, probably more than in boardrooms.

  12. Anonymous says:

    That’s it! New Brunswick needs to build a university in every community over 500 people, build them a golf course and twin the highway. Next, deport every business that generates a profit (especially Irving) and jack taxes up to keep away any evil profit seekers. Self sufficiency here we come!

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