It's The Economy, Stupid

Believe it or not my colleagues and I have great debates about old Danny Williams and his tactics on Newfoundland and Labrador.  There is no doubt that he has tapped into a long standing but latent view among residents on the Rock that their province has been constantly receiving the short end of the stick.  His posture towards the mining, oil and now forestry interests on the Rock has renewed a sense of pride and worthiness among residents and his approval rating is an unbelievable 90%+.

But these kind of heavy handed efforts – for example writing legislation to take back property rights without any negotiation with the company – are problematic. 

I wish we could have strong leaders like Williams but channel that strength into building new industrial sectors to replace the old.  Alberta is buying its way into nanotechnology, film & media and other 21st century industries by throwing hundrds of millions of dollars at them.  Shouldn’t Newfoundland use the proceeds of its oil wealth for the same objective?  There must be some interesting, nascent sectors that could be exploited with the help of oil money, Memorial University and some of the talented smaller firms over there.  

I know that some of you cringe at the notion of government trying to engineer economic development with taxpayer dollars (or royalties), favourable legislation and policies.  But that is how the auto sector was started in southern Ontario. That is how the film and media sector was grown from nothing to a billion dollar industry in British Columbia and that is how the pharma and aerospace sectors were grown in Quebec. 

You can pour money into dying sectors.  You can do nothing and rely on more Equalization from Ottawa or you can be proactive about economic development.  I prefer the latter approach and again just to make the point I don’t think you have to subsidize uncompetitive firms or industries to build clusters.  Endowing a $50 million chair in a specific research area can be just as effective an ecoomic development lever as enticing Google to set up here.  But the overall objective of economic development must be the catalzying of new business investment in sectors that have a long term perspective and that offer above average wages.  That way you have sectors with a 20-30 year time horizon, good sources of new tax revenue and the quality of jobs that keep people here and that will attract people from afar.

Uncategorized business investment, Danny Williams, Economic development, Google, Newfoundland

This is a good story.  Mariner is adding 30 new well paid IT positions in New Brunswick.  The firm is headed up by former NBTel boss Gerry Pond and other ex-NBTelers.  This is an important story on several levels.  First, it confirms that talented people will stay in New Brunswick.  My worry was that all that NBTel expertise was going to vanish after the Aliant merger.  Many of them stayed and you can find them in the management teams of a number of successful firms.  Second, they are bringing people back to New Brunswick for the jobs.  Again, I contend that it is the quality of jobs that matters.  In my experience, New Brunswick firms can recruit nationally and even beyond if the jobs are well paying career path oriented ones.

Finally, I think this is a good example of the importance of having both large anchor firms and small start ups in a healthy industry ecosystem.  If there had not been an NBTel, there would not have been several of the smartest startup firms in New Brunswick (Genesys, Mariner, Radian6, among others).  If there had not been a Nortel in Ottawa, dozens of the brightest startup firms in that city would not have existed.  Some economic developers think they can grow a cluster of small firms into big ones by supporting the necessary infrastructure like access to VC, education, incubation, etc. 

I can’t find many examples where this approach has worked.  In the successful ICT clusters that I have reviewed, they all have a healthy mix of large firms, small firms, good university linkages and supportive industry infrastructure. 

Some of my sincere colleagues in the ICT industry in New Brunswick believe the larger firms are a negative influence, raiding staff, repatriating the best jobs back to their HQs somewhere else, pushing up cost structures, etc.  I realize there is some truth to this but I hold to the belief that in the longer term, we need that healthy mix.  A couple of years ago I looked at a couple of dozen of my favorite ICT firms.  I did a scan of the management and found that all but a small handful of the senior management had done time in a larger firm (NBTel, MT&T, IBM, Nortel, Google, etc.) before starting their entrepreneurial venture.  If we don’t have those firms here, how will we get those spinoff firms.  If there was no NBTel, there would be no Mariner, no Radian6, no Genesys).

Don’t forget to check out the video version of the podcast.  I guess we have to decide whether or not to keep doing it.  The first one got less than 200 views.  I did a little YouTube surfing on similar topic (commentaries about the economy and such) and there are some of the most inane and even strange videos that are getting 5,000 or more views.  They are well tagged but there must be something more at play.

Uncategorized Economic development, ecosystem, Genesys, Google, IBM, Mariner Partners, Nortel, Radian6