Retention: economic development’s blob

Do you remember that old movie The Blob with Steve McQueen?   It flashes through my mind these days whenever I hear an economic development official talk about ‘retention’. 

A few years ago, this notion of ‘retention’ started to become popular.  In economic development terms, it basically is defined as retaining a company or a certain number of jobs.  Many economic developers will say that it is easier to keep 100 than to attract 100.

I have blogged about this in the past so I won’t dwell on the theory except to reiterate my growing concern with this term and its use.   10 years ago you could go through 50 government press releases (BNB) and not see the word retain or maintain jobs a single time.  Now every second BNB press release talks about how xx dollars will retain yy jobs or support zz jobs or maintain them.

Again, I am not against this in every case but if we are bailing out companies with bad business models, I worry that we end up doing the opposite of economic development.  Economic development should first and foremost be about public policy and action that leads to growth.  If it becomes primarily about maintenance – at best we are just maintaining the status quo and at worst we are creating significant inefficiences by propping up bad companies.

I am not going to talk about Atcon because I know how important that firm is to the Miramichi and I know the kind of Gordian Knot facing the government on this.

But I am going to talk about BNB Ryan Donaghy’s comment in the TJ article:

Donaghy said. “We’re in the business of maintaining and creating jobs, and we were there yesterday and we’re going to be there in the future.”

Not to parse words here but to lead with “we’re in the business of maintaining ….  jobs” is concerning to me.  The first verb to describe BNB should not be maintaining. 

Where does this philosophy end?  Will every company going out of business get money from the government to be maintained? What is the standard used to provide funding for retention?  80% of all new start ups go out of business within five years.  You could end up spending a pile of taxpayer cash propping up hundreds of firms around the province with no growth.

I realize I am simplifying this a lot but I still think the underlying principle needs to be strengthened.  Grants and loans to troubled companies should be a very small part of what business NB does.  And people like Ryan Donaghy should be very clear on this point.

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3 Responses to Retention: economic development’s blob

  1. Samonymous says:

    “Grants and loans to troubled companies should be a very small part of what business NB does.”

    I agree. And as for Donaghy’s notion that the government’s job is to create jobs, he’s dead wrong. If the government can do anything they can stay out of the way of business and allow the market to decide what will fail and succeed. Hopefully, if the government creates the right economic environment, there will be much more success than failure. Success that other potential entrepreneurs can see as inspiration to open a business themselves without the worry of paying for grants and loans with their earnings/tax dollars in the critical early stages upon starting up.

  2. Samonymous says:

    I guess what I’m trying to say above is that massive fissures have widened the realities of social and economic life in this province and the routines which we are governed by. A reality where solutions to these new problems are no longer resting on the shelves of BNB officials, awaiting availability. Let’s face it, if solutions are to ever materialize, and soon, they will come in the form of true reform. Whether that reform resembles what you have always called for here David (a forensic account to rate what is worth keeping and tossing within BNB) as well as overhaul of the entire department so that the directive comes more from outside, experiences input than it does currently from the government realm (i.e. the NSBI model you so adamantly tout).

    As we’ve seen with NB Power reforms, there are struggles to any ambitious policy initiative. So laying out the nuts and bolts of policy change once again at BNB should be like showing off the bins in a hardware store. A story must be told, and better yet, a place in history needs to be located.

    Let’s hope it doesn’t materialize due to Graham’s over stacking of the policy agenda, doing to much, which could lead to more caution moving forward in the months and years ahead.

  3. TOM HICKIE says:

    Hi this is a comment about using Tims as a political forum. Great idea but not likely to happen. Most politicians know what the public thinks but often those wishes are unpalatable to very powerful interests. The reason so many good plans do not work is that our politicians try to insure that the right area, the right group or the right family benefits. The deal to sell the power company is a perfect example of this behavior, in the rush to make sure the wealthiest families benefitted the most the government failed to structure and sell the deal to the public.In this case the Irvings have become the tail that wags the dog. Atcon is an other good example, too much effort has been made to make sure that bobby tozer benefits as oppossed to helping the area. This attitude will keep the north poor and the government unwilling to address problems. tom hickie fredericton

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