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A bias against excellence

I talked with a couple of university based researchers this week (I won’t mention their names because it’s a relatively small community but they are not in New Brunswick) and received confirmation once again the bias against any attempt to attract large multinational firms to this region.

The example is the A.I.F. which has been biased towards small local Atl. Canadian firms.  In two cases that were relayed to me this week, the small firms went bankrupt before the AIF project was even completed leaving the university partner scrambling to find a substitute.  I was told by both researchers that the AIF prefers they partner with local firms rather than a big, established firm outside this market.

This is nuts.  I am sorry but this reminds me of a conversation I had lately where a senior person in the federal economic development system in Atl. Canada told me flat out that they were there to help smaller firms that really need help not the big firms that are well established.

Many of these AIF projects had the potential to attract world class private sector research dollars and capacity to Atl. Canada but we would rather fund small start ups – at least two of which went under before the AIF project was even completed.

The AIF is supposed to be a catalyst R&D in Atlantic Canada.  If a university researcher can get a world leader in a specific area of research to partner with them on an R&D effort in this region, we should be jumping for joy. 

I am all for providing R&D support to great, small companies in Atl. Canada that have reall good ideas that need commercialization research.  Sure.  I am not opposed to that but I am deeply opposed to a bias against reserach projects that would end up familiarizing a world leading company with this region and give them a starting point for eventually investing in this region.

It seems to me we have a bunch of social workers posing as economic developers – and that is a dangerous thing indeed.

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  1. Anonymous
    July 26th, 2009 at 22:11 | #1

    AIF was supposed to stimulate the Atlantic economy by facilitating innovation. It was not intended to be yet another fund for university researchers. ACOA advocates Atlantic business partnering with universities but exactly the opposite has happened; universities take the lead to pursue their interests and coax business to partner with them. No wonder they are frustrated; they need to pursue one of the many university programs such as NSERC, CFI, NSERC etc.

  2. richard
    July 26th, 2009 at 22:55 | #2

    Most firms, large and small, lack their own research capacity. That is why they need university partners. Its quite true that the uni researchers prefer to pursue their own interests – who wouldn’t? Its up to the industry and the funding agencies to get them to act in the industry’s interest. If it wasn’t for the uni partners, very little innovation money would be spent, and very little innovation would get on the table. Fact is, without strong R&D programs in unis, there is very little real innovation available for industry to run with. Its true NB is lacking strong R&D unis; that is a political and social issue.

  3. Anonymous
    July 27th, 2009 at 02:04 | #3

    Exactly why we have so many solutions in search of problems.

  4. mikel
    July 27th, 2009 at 11:59 | #4

    A few more details would be nice before judgements are made. As any reader of the news ought to know, it isn’t just small firms going bankrupt, so that really is a moot point-being ‘established’ means almost nothing nowadays.
    Second, you say these people are NOT in New Brunswick, then say ACOA would prefer they not partner with large firms from ‘outside this market’ (I assume that means geographic). So the question is…what type of ‘investment’ would actually be in the province? And wouldn’t it be natural that they ‘prefer’ they invest with NB partners rather than Toronto ones?
    So I”m not clear from that just how the NB researcher figures into your example-you say they are NOT from New Brunswick. OK, even if that’s symbolic, do you KNOW there are examples where a university researcher IN NB actually HAD a ‘world leader’ partner in research and the government told them to bugger off? IF it was a world leader then that leader would contact the province and then the dollars would come in if they are desired.
    This is a really tough subject because the fact is that we are still at the stage where Universities aren’t ‘programmed’ to be market generators. They were never meant to be directly commercial. That is starting to change (unfortunately) as the feds are putting more and more commercial emphasis on scientific research. But again, I know from experience just how hard it is to get money for scientific research. Commercial interests, ironically, tend to ‘eat their own’ and short term planning usually ends up killing the hand that feeds them.
    I don’t know what ‘research’ is being talked about here, but in most cases of research you have an established professor and his students doing research with ‘usually’ university provided equipment, so I really don’t see how they can go ‘bankrupt’, unless we are talking about two different things.
    One other point though, businesses are OFTEN left ‘scrambling’-that’s part of the business process and I don’t think local investment should be decided just on the basis of what company X would think is ‘most convenient’.

    I’ll make this long rather than two statements, but there’s a good clue from ACOA on problems in funding. In the past five data years, 627 projects worth 2 billion sought ACOA funding. Only 192 of those got funding (which means over 60% were rejected) worth $500 million. That’s one quarter of the funding, for one third the projects, meaning that SMALL projects were most likely excluded, and often research needs only small dollars to top them up.
    The percentage of projects between institutional partners and the private sector has increased to 92%, which means that the ‘entrepreneur’ outside institutions has essentially been shut out of funding. So there’s some real concrete problems besides the ‘bias’.

  5. Samonymous
    July 27th, 2009 at 22:38 | #5

    It seems to me we have a bunch of social workers posing as economic developers – and that is a dangerous thing indeed.

    So true. It’s no secret that money outside the government realm (private investors) usually follows really good, new ideas. RIM was a good example of that as Industry Canada (TPC loans) came late to the game (as I explained in an earlier post a few weeks back).

    Not to mention, we see great green projects south of the border getting approved and funded via hedge funds from BP Capital Management thanks to the visions of T. Boone Pickens.

    Unfortunately, here in New Brunswick, we have a bunch of “social workers (as you say)” picking winners and losers at all business levels. And the success rate speaks for itself. Not surprising, since government (or central planning agencies) do a heck of a job picking losers. They just can’t seem to get the politics out of the decision making process, which normally ends up clouding their good judgment.

  6. mikel
    July 28th, 2009 at 01:11 | #6

    The problem there is that the governments JOB is to ‘pick losers’-meaning its to pick business ventures with different criteria than private investment. Actually, if you compare private investment with public investment, I doubt you’d get much of a different ratio of ‘winners’ and ‘losers’. Like I said, why the heck would ACOA fund a venture made up of researchers outside of New Brunswick and corporations outside of New Brunswick? Where is the New Brunswick connection? A building? Anything?
    As I explained weeks ago, RIM was built up at the University of Waterloo and its initial funding came through LABOUR funds, which are guaranteed by government with tax credits thrown in. Virtually NO company survives without government largesse-name ONE.
    The problem with private investment is simply that there is very little of it. Again, New Brunswick could EASILY give Ontario a run for its money with ONE difference-namely if Irving and McCain invested money in R&D the way Lazaridis and that other guy does. Or, if even there were organizations that functioned like they did in Sudbury, where townspeople, municipal, provincial and federal governments and mining companies got together and built Science North, and then a new Cancer Research Centre. That was done at the LOCAL level, starting with grassroots organization. If you’ve ever been to Science North then you know what an embarassment ‘Science East’ is.
    But its partly that eastern complex that focuses on ‘losers’ and not winners. There are numerous success stories, they just don’t get much public attention (or want it). Had FatKat gotten a couple more Hollywood contracts or was still viable, and we’d all be singing their praises, but as soon as somebody goes bankrupt, then everybody is saying ‘I told you so’.
    What would be VERY interesting is to know what those 400 or so projects worth $1.5 billion were. IF we know what they looked like, then we could have some verification of David’s frequent complaint that the area is getting shortchanged. Again, it certainly SOUNDS like it is, considering that $500 million over five years is $100 million per year, and that doesn’t even say that that is all New Brunswick, in fact I’m pretty sure its not. Again, the Perimeter Research Centre here in Waterloo got $57 million funding for the year JUST THIS YEAR.

  7. Samonymous
    July 28th, 2009 at 16:28 | #7

    Actually, if you compare private investment with public investment, I doubt you’d get much of a different ratio of ‘winners’ and ‘losers’.

    Although, the “losers” picked by government die a slow death or are propped up for years because they have close ties to ministers pulling the strings (i.e. Atlantic Fine Yarns). Anyway, I won’t beat that to death as you know where I stand on corporate welfare.

    But further to my original point of politicians being unable to “get the politics out of the decision making process, which normally ends up clouding their good judgment(on economic decisions)”, I believe it’s a must that we find true leadership on the issue of economic development. For far too long our government has its first priority of re-election. The surest way to re-election is to pay close attention to issues that occupy the public consciousness, the issues that are not invisible, such as health care and education. That is how politics should work, but as I am claiming, it does nothing for true debate in our province. In other words, not all the issues that are important to the public’s well being find their way into the public consciousness. The questions of outmigration, lack of legitimate investment and economic strategy usually hit the back pages of the dailys in favour of big ticket items like health facility closures and education reform (not to mention, useless political drama). Thus, the former remain out of the public’s consciousness (and never get discussed around the dinner table). A true suppression of the micro issues that are holding the provinces productivity and growth back.

    Moreover, as long as politics remains a decision maker in the future of our province’s economy, the more we will see the status quo continue (i.e. the funding of projects against the evidence that market forces are working against such a decision). I guess sometimes a photo op offering short-term job relief is sexy, unfortunately, the sustainability of such projects is very unlikely.

  8. richard
    July 28th, 2009 at 20:05 | #8

    “and never get discussed around the dinner table”

    They do get discussed around quite a few dinner tables, but rarely do we see such discussions in the NB hard copy media. It perhaps needs to start there; more frequent dinner table discussions would follow. However, we have a corporate press whose interests are those of its owners – when the number of sports columnists outnumbers the investigative journalists, we have a problem. When the opinion pages are filled with AIMS and Fraser rubbish, we have a problem. NB needs another LJR, who would drag NB in the right direction, whether the press or the public want to go there or not.

  9. Samonymous
    July 29th, 2009 at 00:52 | #9

    NB needs another LJR, who would drag NB in the right direction, whether the press or the public want to go there or not.

    If he were alive, I think LJR would realize that democracy is in peril, much like the state of language inequities back when he was in power.

    Let’s face it, too many so-called experts and politicos think they know what’s best for NBers, like unilaterally “dragging” them to somewhere they are not even certain they want to go.

    Here’s a novel idea, how about asking them? I’m sure they would appreciate that better than a study being rammed down their throats that they had very little impact in forming or another consultant led agenda being cooked up behind their backs. Remember, governments and oppositions are formed by people, not university economist, consultants or political partisan hacks.

  10. richard
    July 29th, 2009 at 21:37 | #10

    “how about asking them?”

    Fine, but 1) no one (ie no politician, no media) is going to do that; 2) governments are indeed formed by hacks and consultants. Nearly all the talking points in the media on NB issues are supplied by hackmasters from AIMS. Unless that changes, there can be no real discussion and no democratic change.

    We need another LJR.

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