ADI is a great New Brunswick company and one of the few services-based firms that actually has markets outside New Brunswick. The vast majority of architecture, engineering and other professional services firms in the province only do work in the province.
But I was disheartened by the CEO’s comments in this commentary. Particularly this comment:
In the engineering and architecture industry, a country-wide consolidation is taking place. Atlantic-based firms are becoming part of companies with head offices in larger centers with profits being invested outside our region.
He is talking about the firms that have moved in here and bought up smaller players in the province and they are now part of national or international firms. On its face this comment is pretty benign. In fact it is true that national and international firms are likely to ‘invest’ profits elsewhere (although I suspect that much of ADI’s profits are invested elsewhere too – if the owners have any RRSPs or pensions or hold any shares of stock).
But the underlying message is that same old theme that I have been hearing for years. That is – we don’t want foreign investment here. Don’t come in here and gobble up our little firms or steal our workers, etc. etc. etc.
We need to have a healthy mix of local, national and international firms. If we only had a few local engineering firms, that would stunt competition and innovation. As my CEO friend said the other day, having a big international competitor here would force him and other SMEs to get more innovative and competitive.
Finally, I’d like to say that this swipe at Stantec is a bit disappointing. Local companie selling to national firms unlocks economic value that would otherwise stay locked inside the firm. We need to have some turnover of businesses to generate the kind of wealth that gets reinvested locally. Think Speilo, Whitehill, etc. When a local company sells to a national firm, they receive a return on the investment of their life’s work. Cashing out is an one important facet of the succession process. Hopefully the new owners remain committed to New Brunswick.
But we must not bury our heads in the sand here.