My assertion that we need a few more big, exporting firms in our manufacturing, ICT and other sectors where there are exporting opportunities – generates a lot of criticism – many times from some of the people I have the most admiration for. Thankfully, for the most part we just agree to disagree amicably.
Usually the argument is that we don’t need to attract exporters – we need to grow our own. To that I say fine – I don’t care where they come from – we just need them. In fact, local firms are more loyal and are more likely to reinvest their profits here than multinationals.
So let it be written, so let it be done. Somewhere between $4 and $6 billion spent in New Brunswick over the past 20 years (all levels of government) trying in large part to stimulate more SME exports and 95% of all exports are still generated by less than two dozen firms in New Brunswick. Further, the total value of exports outside of those large firms is declining in real terms year over year. Admittedly that doesn’t include services exports but other than call centres and a few high profile exporting ICT firms I don’t see much growth there – in fact call centre employment peaked in 2005 and has been dropping since.
So, we can agree that growing firms like Speilo and Radian6 are wonderful but we can’t figure out the alchemy required to generate 100 of them.
I’m not going to reiterate all my arguments around supply chains, the interconnectedness of large and small firms, the inflows of investment, the role of big firms as entrepreneur incubators, the capacity of big firms to undertake R&D, etc.
I just want to again clearly state that I can find no example of strong and growing economy that isn’t attracting a share of the big firms. Even the resource-rich provinces/states are fuelling much of their growth with large firm investment (firms like Vale, BHP Billiton, ExxonMobil, etc.). There was an article in the Economist that confirmed just about every large oil & gas firm in the world is active in Alberta.
I think it comes down to a lack of belief. Whle most might not be so blunt, they worry any effort to attract industry here to set up operations and export elsewhere (no one is talking about attracting firms to compete with local firms in local markets) will be futile. They cite tepid efforts in the past as being ineffective and the only hope we have is with our local entrepreneurs.
I’m not such an unbeliever (yet). I think we haven’t properly tried to build a strong value proposition for growth sectors and then sell those to the world. For most economic developers, ‘investment attraction’ is a colourful brochure and attendence at international trade shows.
For me it is about determining a few growth opportunities and then leaning into them with tax policy, R&D spending, workforce development, infrastructure investment, supply chain buildouts – and then selling the crap out of them directly or through joint ventures or partnerships or whatever.
If we ever get around to doing that (like animation/multimedia in BC) and we fail miserably then I will fold up my tents and join the all in on the SME crowd. Until then, I will soldier on.