“Well, I guess that’s the way it goes… one out and one in.” Rick – Casablanca (1942)
Reading of the closure of The Bay in Moncton yesterday I was reminded by how much churn there is in any local economy. In 2010, Maple Leaf Foods announced it would close in Moncton laying off over 400 staff. ACOA announced a reduction of staff and another one is supposedly coming. The feds reduced employment in Shediac and DFO is on the chopping block. The Bay is a fairly big employer but conventional economic theory says that retail sales activity will be absorbed elsewhere – leaving not much of a net loss.
The big closures are visible but the reality is that businesses are opening and closing on a weekly basis in a place the size of Moncton.
For people like me that think a lot about economic development it is clear that government policy should not be tuned to try and keep companies afloat that do not have good business models. I realize in smaller communities this becomes even more difficult but there are too many examples of failure that was propped up by government only to eventually fail anyway.
The Bay, which had excellent men’s shoes, was always empty. Even during the Christmas season it seemed sparsely populated. The business model for that firm is clearly not in small urban centres.
P.S. I probably shouldn’t have used government facilities in the same breath as Maple Leaf Foods or The Bay. The ‘business model’ approach doesn’t work well when thinking about government facilities. The Public Service Pension Centre in Shediac (the one that lost 150 jobs in June of 2011) was put there as a legacy for a strong federal Minister from the riding. Local stakeholders need to lobby to try and keep those types of facilities in their communities because locational decisions are primarily political in nature.