As I have written about here many times New Brunswick does have a productivity challenge. We have to be a little careful we talk about productivity because different industries have different mixes of labour, capital and technology so comparing productivity measures in jurisdictions with fundamentally different industrial structures is not particularly valuable. For example, the oil and gas extraction sector generates $653 in labour productivity per hour while the accommodation and food services sector generates $18 per hour. Comparing an oil and gas-based economy to a tourism-based economy on productivity measures wouldn’t make sense. But comparing the tourism economy in various jurisdictions should help us understand which jurisdictions are more productive because it is more apples to apples – at least MacIntosh to Cortland and not avocados to blueberries.
With that caveat in place, New Brunswick still has a productivity challenge. As shown in the following table across a wide variety of industries there are big gaps – across all business sectors (again beware!) the gap is over 27 percent between New Brunswick and Canada. BTW there are a few where we have a productivity advantage – such as accounting services – which should be a hint that we may be able to offer these services nationally…..
There are many theories about the productivity gap. Some say it’s because we don’t have enough larger firms with the scale to drive productivity. Some say it’s because we historically had access to a lot of cheap labour so we drove a labour-intensive economic development model (governments still mostly support firms that create more jobs). Some say its because many of our industries were shielded from competition because they serviced small, local niche markets and were not exposed to global competition. Some say our business owners systemically haven’t invested enough in cpaital and technology. Whatever the reason (s), the problem exists and as we become even more exposed to global competition (think Amazon, Fiverr and other gig economy platforms) we will need to become more productive as a province.
So what do we do about this productivity challenge? I would propose we take what I call the Merv and Cook show on the road. Merv, of course, is Merv Symes representing Sympicity Designs which is an NB-based firm that is great at helping companies redesign their strategy and processes to drive better outcomes. Cook, of course, is Eric Cook, head of RPC – the largest R&D support organization in New Brunswick by a wide margin.
If you need a system and process redesign, Merv will put you on the rack and stretch until you get it done. If you need an engineered or science-based solution to your productivity challenge, Eric’s team will tinker until a solution is found.
So what we need then is for every small to medium-sized firm (and many large too) to take advantage of the Merv and Cook show. The ones that do mostly achieve significant productivity gains. But as with all things in New Brunswick we have a scale problem. Instead of dozens of firms deliberately moving on productivity – we need hundreds – even thousands to do so.
Disclaimer: Merv and Cook is actually not a thing (that I know of). They are two separate entities developing their own businesses. I just like the combo because they come at the same problems from substantially different angles.