Fredericton’s Marriott Call Centre: The $150 million mistake?

Invariably, when a call centre closes or cuts its staff I get an email or two decrying the McKenna call centre effort with the usual “big companies come here exploit our people, take our tax dollars (incentives) and then leave”.

Sigh.

If you read my earliest writings on this years ago you will find I said total employment in this sector would peak and then start to level off and slowly decline as a result of customer interaction moving online.  In 1999 when Marriott set up in Freddy how many hotel rooms were booked online?

However, this certainly doesn’t invalidate the call centre initiative.

CBC reports that Marriott employed 265 in Freddy.    The company started smaller but added 95 in 2001.  Assuming the majority of those were full time and at the industry average wage that means somewhere between $50 and $70 million in direct payroll between 1999 and 2012 and if you roll that up to operating costs and put a very conservative multiplier on it you are looking at around $150 million worth of economic activity for the Freddy area during that time period.

Not a bad return on investment for whatever the government put in (usually a few thousand per worker – one time).    I can’t give you an exact amount of public investment because the Lord government was known for being particularly vague about the public investment in these projects.   The press release from 2001 doesn’t mention government incentives.    There may have been n0ne – but I suspect there were.

Every year in New Brunswick, hundreds of businesses shut their doors or go bankrupt – from mom and pops to large firms.

In general, the government should do nothing to try and stop this.  Businesses close because of business conditions and trying to prop them up makes no sense.

There is an exception, of course.  The CBC report states that the “Marriott also has call centres in Saskatoon, Sask. and Sarnia, Ont., as well as several centres in the United States.”   This is an important statement.  The question for economic developers (and his Worship) needs to be why close Fredericton and not Saskatoon or Sarnia.  The U.S. equation is more complicated.

The broader point is that we need to be marching on.  What are the new growth sectors?  Where is the investment coming from?   What is the most intelligent role for government to play?

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16 Responses to Fredericton’s Marriott Call Centre: The $150 million mistake?

  1. David F. says:

    I agree. People get their back up at the thought of millions of dollars of incentives going to corporations who leave, forgetting of course that over the last 13-ish years, both the corporation and their employees have paid a variety of taxes that positively contributed to the public purse.

    Nothing lasts forever, especially work that is mobile by nature. The tendency is to focus on what can be done locally when a business pulls out of town, but I think you’re right; we need to be looking at what areas are growing and how your region can attract that type of investment.

  2. Derrick says:

    The question is why they decided to close the freddy one ? Anybody ask
    the company for the reasons ? They must have some, must be a cost or quality reason.

  3. mikel says:

    I was going to skip this one, but since it was asked I did a little research. The company only gave the ‘cost cutting’ reason, although I looked at their financials and its all bragging about how well they are doing financially.

    The company got over a million dollars in government money (that we know of), and the problem for a lot of people is that all you did was postpone the inevitable. So government money was used to ‘buy off’this company. It employed lots of people, who then went on to buy houses, develop a lifestyle, and with those tax dollars the government then added to its social costs.

    Then the boom drops and those people are out of work anyway, just when they need the job the most. And its not like they are trained for other jobs.

    I wouldn’t be surprised if they expanded in Saskatoon, its a newer facility and they got provincial money AND a municipal deal on their building. In a 2005 article they talked about what an up and comer Saskatchewan was in the call centre field, and they made the point that call centres like LOTS of qualified people to choose from. I’ll bet there are more of them in Saskatchewan than in New Brunswick. However, they also might go back to the states because much of the call centre work moved to canada because of the dollar disparity and uncertainty overseas. The former has evaporated, and with high unemployment in the US, thats the probable destination.

    One more point on Saskatoon is that in the article about ‘groundbreakers’ for the call centre industry was the fact that it was being led by a home grown company which was expanding. It was developing in Saskatoon because the owners were FROM Saskatoon and had a vested interest there.

    Its doubtful they would leave even IF some costs were higher than elsewhere, and thats the root of people’s ultimate complaint. The ‘natural’ growth of a region is due to the fact that people WANT to be there. If you have to ‘pay them off’ then you will get only short term gains for long term pains.

  4. Marriott Employee says:

    It might interest people to know (I read the same error mentioned in the CBC article), that the Marriott Centre in Saskatoon closed a couple of years ago. I know this because I work at the reservation centre in Sarnia.

  5. mikel says:

    Any word on how safe the Sarnia jobs are? When did the Saskatoon office close? I really can’t find ANY online mention of it and they still list it in their careers. It was there as late as 2010.

    I looked through their careers and found another reason-the only reservation jobs they are currently listing are ‘work at home’ jobs in Nebraska. Although some sites have said there are a few other states that have had that availability in the past. Considering they are advertising a starting salary of $9 and you “can earn as much as $12 eventually” then you can certainly see how it would be hard for ANY municipality to compete with that. There’s a link to ‘mommiesathome’ or something like that, where dozens of women are basically begging for more info on how to apply.

    Even a tax holiday or free building makes it hard to compete with that. That’s less than minimium wage in New Brunswick, and Canada for that matter.

  6. mikel says:

    Just for comparison, while researching this I found that ‘big viking games’ is hiring. The difference between the two companies was so telling that I just had to post it. BV is based in London,Ontario- a new startup that already has ten employees. It gets NO government money, its basically two guys from London who really want to stay in London, so they designed three of those dumb little games you see on Facebook. Counting up all social media you are looking at a LOT of potential games out there.

    What was telling though was Marriott is basically scraping the bottom of the barrel for workers (wage wise), wants you to fly to their training centre to be trained, then work at home in a place you set up where you can be on call til 2aM.

    Big Viking is also hiring. They have competitive salary and benefits, ergonomic chairs, gym membership, foosball table,and order in breakfast, dinner and supper. Of course they don’t hire 200 people (yet?), however, it only takes 20 Big Vikings to make up one marriott. And there is no cost to the various levels of government, and these are people who WANT to stay put. I’m not saying that attracting a Marriott is a bad investment, I’m just saying that its pretty easy to see why some people think it is-everything is relative.

  7. Derrick says:

    That is a problem with a minimum wage, we can never get the true wage floor, the wage works for local services, as it fails to set a market floor. I do believe that wages in general are in a downward trend, except in government where there is no market, government wages will follow due to lack of borrowing capacity, which is in our future, it will be hard on the kids.

  8. Belinda says:

    Just an update. The Marriott Saskatoon reservation centre closed in March 2010. What Marriott did offer was that all the workers who wished had a job as Home agents. 83 out of 110 people took the opportunity to be home agents. The home agent program is expanding for all types of call centres.

  9. mikel says:

    Just to add to Belinda’s point, the followup on CBC has stated that the home agent program WON”T be available for Fredericton workers. Although the Marriot rep said they’d ‘help them find a job’-whatever that means.

  10. For any Marriot call center employee that may be looking for a networking opportunity that is on the ground floor in New Brunswick, please check the website, and then call the phone number within. I am sure you’ll see the opportunity.

  11. John says:

    In 2010, the HR Manager at the Fredericton Centre had a series of meetings with the employees just prior to the annual “Engagement Survey”. She said that the center could close if the employees didn’t say they were satisfied. The employees weren’t satisfied.

  12. I used to work for the Marriott call center in Saskatoon. They closed it back in 2010. I also know why. Money,Obama was giving companies tax breaks in the US for creating jobs down there. So they closed the centers here and took those jobs and put them in San Antonio,TX. Min wage there is 7.25 is the standard but there are no written laws to make it that, so they could pay them as little as possible to do the same job. Unlike Canada who has min wage laws in place.
    The only reason they had the call centers in Canada to begin with was because of the low dollar here and the huge tax breaks the Conservatives were giving them.

  13. MarriottGirl says:

    I worked at the Marriott Call center in Fredericton. We were told at the time we did the engagement survey that it would in no way risk our jobs. But, the results from the survey showed a huge descrease in satisfaction from previous years. Just from things that happened in the center in months leading up to the day we were told it was closing, I am sure that there were people there that knew it was closing before they announced it to us in late August. They did help the employees by having several job fairs, and some employees transfered to Sarnia. In my opinion, Marriott was a great place to work, unfortunately, I guess not everyone thought that way, because of the results of the engagement survey. My life basically got turned upside down by the closure. But I’m sure no one cares about that.

  14. MarriottGirl says:

    I’m not sure who told you that John, I don’t remember once being told by anyone in HR that the results of the engagement survey could risk our jobs. We were told just the opposite.

  15. john doe says:

    marriott center in Sarnia just announced they are closing down also.

  16. Former res monkey says:

    Yes indeed HR did tell us the correct answers for the engagement survey .

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