Another example of why the Maritimes economy will not improve without an attitude change

Fascinating stuff.

To be understated about it.

What I find amazing about newspapers is that they will let every Tom, Dick and Harrietta talk about economic development like they know about it.

Here is Karen Blotnicky, lifelong economic development expert – no, wait a minute – professor at Mount Saint Vincent University.

She states (excerpts with my comments below):

Too much is effort focused on getting new business to come from away. Nova Scotia has literally generations of experience with luring larger corporate employers who create many jobs for a short period, then pick up stakes and leave when the going gets tough. John Bragg of Oxford Frozen Foods recently offered interest-free loans to first-time homeowners who wish to buy homes in the Oxford area.

Wow. Nova Scotia and New Brunswick spend less on attracting industry than just about every other province, state or country that I have ever studied. We have sales staff residing in foreign markets and our FDI trends have bee woeful (with the recent success of NSBI as an abberation). Please name the “generations of experience”. Does she mean Michelin? Or maybe Crossley Carpets? No, she must be talking about Keane or Convergys. Hmmm. Certainly there have been firms that have came to Nova Scotia and closed but I would argue that the effect of that is amplified because there hasn’t been more FDI into those communities.

Nova Scotia has a much higher percentage of rural-based entrepreneurs than the Canadian average. Maybe it is time for Nova Scotia to start looking at who is already here when making plans for economic development.

95% – and she should friggin’ know this as a ‘marketing’ ‘professor’ of these small firms sell into the local market only. Encouraging 5000 more small, rural-based entrepreneurs to sell into the local market will only lead to 5000 bankruptcies.

The regional development agencies have long known that the secret to economic growth is as much about keeping existing entrepreneurs as it is about gaining new ones.

What regional development agencies? Of course part of any good economic development plan is business retention and expansion but at the expense of attracting new industry? Not a chance.

Yet, much government policy is focused on bringing in those new ones from away. The primary mandate of Nova Scotia Business Inc. is to attract new employers to the area. In many cases, these employers bring low-wage jobs with few benefits.

This is about the 15th article I have read in the Herald slamming the only truly successful provincial business attraction team in the Atlantic provinces (PEI is a distant second). So she thinks the $70k annual salary in the financial services firms is low wage? She thinks RIM will pay low benefits? How about Michelin in the rural area? Low wages to be sure. Cripes.

Unfortunately, when these large employers pack their bags and go, they leave Nova Scotia’s communities in a worse state than before they came.

I have said it before. Local businesses close their doors 90%+ more than foreign-owned ones. Yes, when a large employer leaves a community it does cause hardship. That’s why we should have had 10 instead of one.

At the same time, they manage to displace a lot of homegrown local entrepreneurs who are loyal to the area and who provide job opportunities close to home.

Huh? What the heck is she talking about? The vast majority of large foreign companies that set up here sub-contract to at least seven local firms up to several dozen. Who gets displaced? She’s crazy. Was there a local tire manufacturer that was put out of business by Michelin?

To lure families to job opportunities, Oxford Frozen Foods’ the blueberry processor will provide loans of up to $20,000, or 10 per cent of the property’s value. Borrowers will have up to 10 years to pay the loan off, without interest. But that’s not all: the loans are forgivable if things don’t work out. That kind of consideration is not something that you would get from a multinational corporation.

Huh? If we had a dozen more Oxfords we wouldn’t need foreign investment. That’s the friggin point. John Braggs aren’t just sitting out there waiting for a $5,000 grant.

Credit unions across Canada are also offering a microcredit program to help small entrepreneurs get started. If you are looking for $10,000 or less, and you have a viable business plan, you may be able to get money for starting a business, even if your credit is not perfect. This is not the first time that microcredit has been used to facilitate the growth and development of small-scale entrepreneurship. But it is the first time that a financial organization as trusted and as stable as the credit union has fully embraced the notion of microcredit.

All I will say is that we need macro solutions not microcredit. I am not against trying to find high impact, high potential entrepreneurs but more dough to create more small businesses to compete for less and less business in the local market is friggin’ crazy. And if the professor thinks that all these firms are going to take their business global – she’s nuts.

It is time that Nova Scotia did more to keep our homegrown businesses viable while encouraging the development of new businesses among those who are already here.

Final point. As I have said before. This stuff is feed for the grist mill. It sounds great. Support local biz. Bad multinationals. How dare we? Listen folks. Nova Scotia is going down. Another major national recession and there may be little left. The only hedge we have is to make hay while the sun shines. NSBI needs to double/triple its efforts and help grow real, durable and successful new sectors in Nova Scotia – urban and rural – and start to help regrowing the population. If NSBI can attract 4-5 new good sized manufacturers to the Debert Industrial Park you will see a dozen thriving local small businesses spring up to service them.

This is not about local or foreign control. Obviously I prefer local ownership. They are more loyal to community. Sure. But there are trillions of dollars in global investment that are all but passing Nova Scotia and the Maritimes by. Once in while we get something like offshore oil or gas and that sector gets an investment boost. We need to build grounded, local industries. Ontario has auto, financial, etc. Quebec has aerospace, biotech, etc. These sectors were seeded with billions in foreign investment and hundreds of millions in public sector investment. If Nova Scotia had leveraged the success with Michelin to attract 100 more – what a different province Nova Scotia would be today. Sure 10 would have closed – maybe 15. And there would be hardship. Sure. But think of it. Tens of thousands of good paying jobs keeping our people here.

If this marketing professor has a way to incubate more John Braggs – bring it on. Other than that shut up and stop playing to people’s fears and prejudices. It’s this attitude that will lead Nova Scotia further down the path it is already on. When they close MSVU because of a lack of students, Professor Blotnicky will just go on down the road. No skin of her teeth. But I wonder if she will look back and regret her comments as she moves to Calgary (one of the top destinations for FDI in the past 10 years in the
world) or Vancouver (beneficiary of billions in Hong Kong investment in the 1990s) or Toronto (one of the most foreign investment intensive cities in the world).

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0 Responses to Another example of why the Maritimes economy will not improve without an attitude change

  1. scott says:

    Great post, David.

    I wonder if Karen Blotnicky remembers the days of Progressive Conservative Bob Stanfield when he was opposition leader in the provincial legislature during the 50s? If she did, then she would remember that excellent ideas are born from the thoughts of visionaries who see past the rigid boundries and borders which one lives in.

    In other words, like any good leader, Stanfield had realized that Nova Scotia was “riding along on the coatails of the rest of Canada” and he pledged to do something about it. In turn, he advanced two great ideas which were included in his nine-point program on industrial development during the 1956 election campaign. The first was to form a “Maritime House” in Europe to attract more industry to Atlantic Canada from “AWAY” (emphasis for Karen). As well, he proposed that the province create a Nova Scotia Industrial Development Corporation to assist Industry, from outside the province, locate in Nova Scotia. The agency would be operated, not by government, but rather by an independent board of prominent NS business leaders. Though neither idea became reality during that time, I think it’s fair to say that the latter was instrumental in the formation of today’s Nova Scotia’s business development agency, Nova Scotia Business Inc. (NSBI).

    So to the dimay of people like Blotnicky, I think it’s safe to say that some form of a “Maritime House” is next on the government’s business development agenda. Let’s hope it’s sooner rather than later. That’s unless, you are one that celebates the attitude which “plays to people’s fears and prejudices”. An attitude that, as David mentioned in his post above and the late Bob Stanfield mentioned fifty or so years ago, will solidify Nova Scotia’s reliance on the rest of Canada wherein they will continue to lag behind the rest of the country and the world when it comes to economic development.

  2. Anonymous says:

    If you’ve read 15 articles that are the same then that reaction is understandable, but the crux of what she says is this:

    “In the midst of all of this sit thousands of entrepreneurs…maybe it is time for Nova Scotia to start looking at who is already here when making plans for economic development…much government policy is focused on bringing in those new ones from away….the primary mandate of Nova Scotia Business Inc. is to attract new employers to the area. In many cases, these employers bring low-wage jobs with few benefits.”

    That’s her argument, and there is nothing wrong with it. That is the problem with politics, its divisive. That’s why I wish all you economists and economic developers would get more involved in actually talking about policy.

    We don’t have the numbers on Michelin, but I can guarantee they aren’t sticking around because they like the weather in Annapolis. I’ve heard stories in the past that the government keeps paying them more and more to stay put, but at some point, either it becomes not worth the money, or else they leave.

    This isn’t just the maritimes, its happening all across canada, even in southern ontario. Manufacturing jobs are simply leaving.

    So let’s stop the ideological bickering and look at actual policy. While it may be true that small companies sell locally, its not true that they HAVE to. Setting up a website and an account with paypal is pretty bloody easy.

    As mentioned a company like Sabian is a rural employer that ships worldwide. There is absolutely no reason this can’t be duplicated, but first you need the know how and the support.

    So let’s look at policy, the above poster has an interesting history lesson about this ‘maritime house’. Here would be an interesting spot to ask “why can’t all four provinces put together an organization to push the maritimes?”

    True, not every province will benefit from every case, but theres more a chance it will be equal, and of course its far less expensive. And of course the provinces already do this in regards to trade with the US, so why not internationally? Why not for immigration?

    Now, YOU may say “hurray for maritime house because they are getting out there and getting foreign direct investment”.

    However, if you have such a team in, lets say europe or asia, there is absolutely no reason that group can’t also be testing THEIR markets for maritime entrepreneurs.

    In other words, the EXACT SAME POLICY satisfies both groups, which kind of makes it irrelevant to be arguing the two different ideologies. People know where I stand, however, when the same policy works for both, then it kind of makes it dumb to be flinging mud and one another when ultimately there is agreement on at least one of the major policies. On other areas the two sides may differ, say, in the amount of direct funding or type of funding, however, ‘marketing’ the area worldwide would bring the world to the maritimes AND bring the maritimes to the world.

    I found her arguments as compelling as yours. She is perfectly ‘right’, but as usual its not the whole story. Oxford may be a great company, but for every Oxford you can also find an Irving. Not every corporation is evil, and nobody claims that local pot dealers are wonderful people because they grow and sell locally.

    The common thread here is ‘atlantica’. If the provinces can’t afford a team, then unite. However, once again that takes political involvement…these people aren’t going to change their emphasis on a whim.

  3. scott says:

    We don’t have the numbers on Michelin, but I can guarantee they aren’t sticking around because they like the weather in Annapolis.

    Michelin is an example of a large assembly line type manufacturing plant, it’s not part of the knowledged based economy [KBE].

    Moreover, I also heard that many Ontario high tech and knowledged based companies [Toronto] are in the midst of considering a move to Alberta [Calgary] and BC [Vancouver] mostly due to the fact that the commute, air quality and standard of living are better there than in Toronto and surrounding.

    So don’t kid yourself, they are important selling points. Just ask Burnbrae or Moneris.

  4. David Campbell says:

    Two well written and well thought out posts. Thank you for your contributions.