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.