Avis and the stereotypes

“I’m shocked, shocked to find there is gambling going on in here.”

Upon hearing the news that Avis is closing a 220 person call centre in Fredericton, here is the reaction of Liberal MLA T.J. Burke.

Federicton-Nashwaaksis MLA T.J. Burke says he’s tired of U.S. companies that set up shop in New Brunswick and exploit Canadians when they suddenly pull the plug, leaving hundreds jobless and an economy reeling. “It sickens me, quite truthfully,” Burke said yesterday, reacting to the news that the Avis Budget Group call centre at the Brookside Mall was closing. The call centre employs 220 people. “It’s a pretty big shock … nothing short of a catastrophe,” Burke said. “It’s a giant, gaping hole at the Brookside Mall.”

The timing of the job losses couldn’t be worse, he said, given that the Christmas season is approaching and the economy has struggled lately. “Jobs are scarce enough as it is in this city,” Burke said. U.S. firms establish operations such as call centres in Canada because it’s cheaper, work their employees to the bone and then pull out when things get rough, the MLA said.

I expect this kind of silly rhetoric from local business people who want the government to spend all their subsidy dollars on local firms.  I would expect it from the Opposition and from sniping groups that do not offer any other solutions.  But from a guy like Burke?   This is disappointing.

I have just shown data that 85% of all firms that start in New Brunswick die within 9 years of opening.  Those evil “U.S. firms” that Burke talks about have a 90% success rate in New Brunswick (i.e. they are still in operations – most well after a decade of operations here).

“… work their employees to the bone and then pull out when things get rough, the MLA said”.  Is that MLA Michael Moore speaking?

It is sad and frustrating that Burke would say such things and, in fact, if you want to know why New Brunswick’s economy has underperformed the rest of North America for generations – go ask T.J. Burke. 

It’s exactly that kind of attitude that fans negative public perceptions about large, stable and globally connected international firms.

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17 Responses to Avis and the stereotypes

  1. Jon Doe says:

    How, exactly, do you work soemone to the bone at a call center?

  2. Paul says:

    First of all, I have some sympathy for TJ’s outburst. It may not be well thought out, but the people in his riding need something other than the idea that “It’s the economy stupid”. It’s cold comfort when your out of a job, and not the kind of response one wants to hear from an MLA. A little indignation will serve him well.

    There is a also a case to be made that the flexibility for the call center’s to leave a market quickly when costs start creeping up. Staff, management all get paid more, and unless they can keep people at the low income of the pay-scale, eventually, as people make simple cost of living raises, they price themselves out of a job. After ten years it is probably cheaper to move to a greenfield location, where people need jobs, and that happens to be the USof A right now.

    I realize they create jobs, but it does not develop local economy in a sustainable way. That’s been my experience in Northern New Brunswick. Call Center’s come and go. The latest is Bellaliant, the exact kind of companies all the ED people say we should be attracting. Oh well.

    So when you look for a workforce, who have now worked for several different call center’s, there is some cynicism, which is reflected in TJ’s outburst.

  3. You make the same mistake as Burke. The NBTel call centres were in place far longer than even above average firms in northern NB. Companies come and go and the large ones have far more staying power than the ones you romantice.

  4. Paul says:

    Bellaliant was always here, as you point out, but you have to admit when you were here one of the things you said was we have to have some power over our own destiny, but all the critical decisions are made elsewhere.

    I am not by a long shot romanticizing, I am saying that the call center industry does not create sustainable long term employment. It may have in southern NB, but call centers have comer and gone like the fly by operators they appear to be. People invest alot in companies….Sitel being the largest….and they left like the ones before that, and the ones before that….3 to 5 year jobs and they are gone……

  5. People seem really bitter about this closing. Business is business. If it made economic sense, they would stay in Fredericton.

    From a personal standpoint it is very difficult for the people and families that are impacted and I really feel bad for them. From an economic impact viewpoint, it is a big blow to the call centre industry in Fredericton, the north side and Brookside mall.

    However, people should be glad that they employed over 220 people for quite a long period of time. They gave people a chance to earn a living and be productive. If the “come from away” companies aren’t invited and welcomed in the first place, we would have never those 220 jobs.

    I’d much rather see a call centre (or other business) set up shop for 5 years and close down than never set up shop at all. Fredericton has benefited greatly by UPS’s presence in the city.

  6. Anonymous says:

    A disappointing development and a tough blow for the employees. However, they were given more than the required notice and as far as we know, Avis is in good standing wiþh their suppliers. Far better than some of the homegrown failures that were shut down.

  7. John Doe says:

    Perhaps the employees can move to Miramichi and work at the soon-to-be-sold OSB mill. TAG and Weyerhaeuser just announced that they have reached an agreement to have the mill sold by approximately Christmas. It is all contingent on receiving a letter from the Provincial government. At least that is what my outdated french reading comprehension skills have led me to believe, as the article has only been published in Quebec thus far. This is a perfect example of a global company closing down and a company from a neighboring company moving in. by TJ Burke’s logic, if TAg goes out of business we should treat the owners with far less hostility, as they were merely a small provincial company trying to make a difference rather than a profit.

  8. This is what you expect from large companies based elsewhere. We cannot import our way into a successful economy.

    > Those evil “U.S. firms” that Burke talks about have a 90% success rate in New Brunswick (i.e. they are still in operations – most well after a decade of operations here).

    How many of those are firms that actually produce wealth in the province – even wealth as visceral as call centre jobs – and how many are retail outlets?

    And, for that matter, what’s the source of that 90 percent figure?

  9. Not to spend too much time on this because you don’t listen (Downes) to what I say but there are over 50 customer contact centres in the province and by my count 5 have closed – not including the four New Brunswick-based ones that have closed. In fact, I am not sure that any of the call centres that started in New Brunswick are still operational – but I could be wrong.

  10. Anonymous says:

    Wow, people have very short memories. Remember that the contact center business got people working when the economy in New Brunswick was dismal and unemployment rates were well into double digits.
    I agree that that after 20 years it is time for a new ED strategy but trashing the one significant successful economic initiative we have had in the last 20 years is not justified simply because the idea has matured. Besides the direct economic benefits, it got people working, changed our culture and attitude and garner frequent national media attention. Can someone identify another ED initiative with that kind of impact? Would it be paving roads or buiding a tourism information booth or renovating a hockey rink? I don’t think so.

    Let’s focus our attention on identifying the next initiative that will lead our economy to a 5 point drop in our UI rate and provide 20 years of ED activity.

  11. Anonymous says:

    Danny D’Amours got it 100% right (“Business is business. If it made economic sense, they would stay in Fredericton.”)

    Like I have said over and over again in this blog, what NB needs is a serious discussion about how to make the province TRULY attractive. Avis’ decision says only one thing: NB is losing its allure even to low-end sectors such as call centres.

    Instead of those silly rants, TJ Burke and his pals on both sides of the aisle should be concentrating their energy on thinking about what needs to be done to bring NB to a point where it makes economic sense for companies (large and small, foreign and local) to do business here.

  12. Samonymous says:

    Avis Budget Group suffered its sixth loss in the past seven quarters so they had to cut back on some of their activities. As well, I think it had little to do with New Brunswick and more to do with companies, like this, restructuring for the up-and-coming fiscal year in a down economy. Many of these companies, as you know, had expanded into countries to utilize their cheap labour. However, as they soon found to their dismay was that tax laws (World system) employed by Washington, which taxed repatriated capital, were not only unproductive but unfavorably to their future growth. So until a territorial system is adopted, like the one we have in Canada, it doesn’t make sense for Avis to pay tax in Canada as well as in the United States regardless of the set up (gov’t subsidies) or labour costs.

  13. Samonymous says:

    In contrast to the nostalgia regarding cut backs of labour-intensive investments from the US in lower paying sectors like NB, not to mention, the outcry of “old school” economist over the impact of a declining manufacturing sector, it is important to note that the Canadian middle class are earning their keep from better paying service sector jobs (mostly non-unionized). Knock on the doors of any typical middle class neighbourhood in Ottawa, Toronto, Vancouver or Calgary and you will find people who work not in factories and mills, but in the service sector as teachers, carpenters, construction, engineers, architects, managers, consultants, computer specialist, truck drivers, loan officers, mortgage makers, PR specialist, automotive service technicians, vocational counselors, registered nurses, physical therapists, dental hygienist, health care professionals, firefighters, lawyers, police officers, insurance and real estate agents, accountants and financial planners and small biz owners. Those, to name a few, are the occupations which form the backbone of a North American middle class economy. Those are jobs our kids will aspire to fill. So if you are an economy reliant on mills and manufacturing beware of the negative spillover coming your way.

  14. S.Jim says:

    @John Doe
    Jon,
    What Quebec newspaper did you read this news about Tag in?
    Thanks

  15. Jon Doe says:

    http://www.radio-canada.ca/regions/atlantique/2009/10/21/007-NB-usine-miramichi.shtml

    French version of CBC. Here is a translation using Google Translate:
    ———————————————————————
    An investor in Quebec, TAG Enterprises, acquired the former Weyerhaeuser forest plant in Miramichi, New Brunswick. The plant was closed in early 2007 could reopen next year and employ 150 workers.

    It would certainly confirm that the provincial government on wood supply from Crown land to complete the transaction, as the president of TAG, Cardinal Jean-Yves.

    “As soon as we receive this letter, we should complete the transaction with Weyerhaeuser Miramichi,” said Cardinal Jean-Yves.

    The plant then resume the manufacture of oriented strand board. This product is intended for the construction industry.

    Business TAG will also feed raw material from owners of private woodlots, according to spokesman Jean-Guy Comeau. “We will have a market for 30% of our products. It is very important for woodlot owners, “he said.

    Including indirect jobs, this project could create 350 jobs in total. Miramichi Mayor Gerry Cormier, rejoices rightly. The region has been hit hard by the closure of logging companies in recent years.

    Mayor Cormier called the news of encouraging. He says it will give people hope.

    If everything progresses as planned, hopes to become TAG Business officially owned the factory in time for Christmas.
    ———————————————————————

    Somehow it has gotten zero press in New Brunswick. Miramichi Mayor, Gerry Cormier, is quoted in the article, yet there hasn’t been a peep in NB. The online version of the Miramichi Leader is still down, and I’m unable to get a hard copy here in NS.

  16. S.Jim says:

    The political BS here in Miramichi is unbelievable. This should have been done months ago. This is the first I have heard of Cormier since Arbec was involved. Hes quite a leader.
    Thanks for the article.

  17. Jon Doe says:

    I actually enjoy Cormier and the new council, with the exception of one councillor. Yes, there is a lot of closed door discussions, however they seem to result in the best outcome for the city. Roads are finally bein paved, a mill re-opening, Jaff McTavish has apprently landed a significant company, the re-branding campaign is about to begin and it looks very professional (not they typical “Nanny’s Country Cookies and Haircut” type of efforts in the past that painted the city like a bunch of rednecks), and Umoe is finally progressing.

    Many of the aforementioned achievements were never brought fourth by the previous council and mayor.

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