Look to Halifax

I know that some snide remarks will be forthcoming but I still think that we should be impressed with the financial services back office sector development strategy in Halifax right now. While Premier MacDonald was ringing the NYSE bell on Wall Street, a major deal was getting put to bed:

Citco, the leading global provider to the hedge fund industry, has chosen Nova Scotia again. The international financial services company is making Halifax one of its key locations for Citco’s industry-specific technology development, creating up to 325 new jobs over the next six years. Positions will range from technical support to software and application development.

The province, through Nova Scotia Business Inc., is investing in the expansion with a payroll rebate set at a maximum $7 million over six years. The rebate will be invested incrementally as the company achieves hiring targets. The Department of Economic Development is investing $1.47 million to support start-up costs and training.

This is tailor-made economic development in the new 2008 context. Nova Scotia is not selling cheap labour and not attracting low wage jobs. These are $70k+ jobs that pay serious taxes into the provincial coffers. And it proves that a highly targeted effort with highly professional people can lead to good results. Halifax wasn’t on anyone’s radar until Lund and the gang came calling.

Actually I am quite disallusioned with these trips to ‘Toronto’. All the politicians make them and get relatively little out of them (IMO). The problem is that most of the Bay Streeters already have well formed opinions of Atlantic Canada as a backwater sucking on the hind teet of Confederation. Maybe Lund is right. Maybe the ‘trips’ should be to Bermuda or Helsinki or Dubai.

Don’t get me wrong. I have written before and extensively that corporate Canada should be investing more in Atlantic Canada – their little part for the good of the country. But these days you are just as likely to see a GM Canada closing its Moncton warehouse and moving the jobs back to central Canada as you are some Bay Street firm setting up a new facility here.

For the most part – and there are some exceptions – corporate Canada is investing almost exclusively in the 4-5 major urban markets. They will put retail stores in Atl. Canada and offices that absolutely have to be here to get access to the local market but to put manufacturing here, IT development, back offices, etc. – very unlikely.

If corporate Canada continues to treat this region like an annoying hinterland, maybe the Bermudans will be more receptive or the Finns or the Danes.

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0 Responses to Look to Halifax

  1. mikel says:

    One thing there isn’t true, and thats that NS ‘wasn’t on their radar’. Nova Scotia has always had very strong business connections in Bermuda and the caribbean. There have been many of these jobs for decades, thats why Halifax is so huge.

    But there isn’t much discussion of things like that, if financial backoffice’s can bring in over 300 jobs, then why would anybody want another stinky polluting oil refinery?

  2. Gawain says:

    Mikel’s right: Nova Scotia has strong historical ties to Bermuda. The It shop in former MT&T (now xwave), former SHL Systemhouse (acquired by EDS), Sierra and others out of Halifax have been working with Bermuda business, such as Bermuda Tel and several banks, for years.

    Does this highlight a fundamental difference between the outward-looking firms of NS in distinction to NB’s inward-focused IT sector? And why we keep going to Central Canada on bogus “trade missions” that yield little except photo opps for politicians?

  3. richard says:

    Depends on what you mean by historical connections; Saint John, after all, once had strong trade with the Caribbean.

    The recent growth of Halifax is likely strongly connected to the energy industry; this growth has resulted in Halifax becoming the strong urban centre in Atlantic Canada. When growth is strong and jobs are being created, small business prospers along with the big guys. As a growth market, it has talent and supporting infrastructure to offer new business.

    NS does relatively better than NB because of the influence of Halifax. Outlying NS communities benefit from that growth as well. Nothing to do with inward looking vs outward looking, nothing to do with tax rates, and everyting to do with the opportunities provided by the energy sector.

  4. mikel says:

    Saint John still has VERY strong connections with the Caribbean, but that needs to be changed to ‘the irvings’. Just go to the Port of Saint John’s website and you can read the list of all the ships leaving. The vast majority of them are bound for the caribbean.

    But that’s not the kind of ‘exchange’ that we’re talking about. As the poster above says, when Nova Scotia looks for investment, they go to the carribbean-which has lots of money thanks to tax havens.

    It can be debated, but the criticism has often been made that IT companies in NB generally get most of their business from the government.

    Halifax was ‘big’ long before natural gas. Of course its also big because its a main port. It’s ‘big’ for many reasons, energy is only one of them-having four universities certainly adds to it.

    But David has been good enough to post, in the last year, about six new backoffice initiatives with the caribbean in the last year alone. If they can do six, there is certainly no reason NB can’t do one.

    But connections are a big part of business, as just about anybody in any kind of business knows. What David posts as a good thing isn’t always popular or above board, at hawkeyenews.blogspot.com you get all kinds of info about all these deals simply being crooked deals to line governments pockets.

    But as for ‘doing better’, thats a relative question. In general I think the last time I checked taxes were a little lower in NB. NB also has much lower debt and therefore debt payments.

    It depends what you mean by ‘better’. David certainly makes at least an arguable case that payroll tax rebates are far more successful than the ‘here’s a cheque’ technique used by the NB government. Although perhaps its true that NB simply isn’t known by enough players to have the same success.

    But Halifax has always been a financial connection for the caribbean into canada and the US-thats partly why they opposed confederation so much, they felt they had a good chance of ‘making it on their own’. NB has never had those connections, its loyalist heritage largely tied it to britain and central canada, which also partly explains why Graham goes to Toronto, and MacDonald goes to Bermuda and New York.

    But you go where your connections are, as mentioned on some blog, the Toronto trip seemed just for show. The press ate it up, but the press does that about anything political. From my reading, if I were a wealthy investor and a Premier showed up and took up my valuable time by saying “I want you to invest, but I’m not giving you any info, I just want you to keep watching” then I’d punch the pissant in the face. Time is money they say, and its a global world and investors don’t like having their time wasted-thats what politicians and CEO’s do.

    That the were meeting ex pats is another sure sign that a meeting was a wash, they seemed to just connect with the ex pat organization in Toronto and asked them to come and spent an hour with people ‘yelling out ideas’ while the Premier replied ‘good idea’. That’s a colossal waste of time, if this guy literally has NO ideas then the province is in big trouble, but as mentioned above the whole thing was probably just for show because every idea that was ‘yelled out’ has been heard in the media. Whew, well, that turned into a rant and it wasn’t supposed to, but since I wasted ten minutes typing I might as well keep it there and waste your time too (I doubt too many investors are reading this:)