The government announced its new and anticipated export strategy this week and I wrote some thoughts about it in my Telegraph-Journal column this morning. I awoke to an email criticizing my views and suggesting that I don’t understand the purpose of an export strategy. My views, I was told, are more appropriately placed in a heading called ‘sector strategy’.
Semantics aside, I will summarize my position here.
It just seemed to me after reading the strategy that it was something you might have expected 25-30 years ago. Almost all of the 10 action items are focused on those firms that need a hand from a government agency to figure out how to export. The ten are:
1. Develop a Marketing and Communications Plan for Exports
2. Transition to an Account Manager Support Model
3. Deliver a Suite of Export Training
4. Provide Export Information and Advice
5. Connect Buyers with Sellers
6. Leveraging Transportation Infrastructure
7. Establish an Export Readiness Unit
8. Engage Major Exporters
9. Partner Collaboration
10. Rebuild Assistance Programs
Another way to look at it is to think about the ideal company that this approach would support (you may have to read the full document for the essence). It looks to me like the ideal company is the same old target of economic development at least as long as I have been around – the small firm that is either pre-export, export ready or undertaking limited exports. A larger firm with well developed markets and sales channels wouldn’t need the government to provide advice, training, etc. (engage major exporters is a notable exception here).
My point is that this looks like a strategy to find and support new exporters which is not an export strategy. It might be one objective of a strategy.
If I had been asked, I would have started from the premise -who is exporting now and what firms/sectors have a well developed capacity to export. For example:
National and international insurance firms in New Brunswick have been ramping up their ‘exports’ for years. A number of them export 50% or more of their activity outside New Brunswick.
Most of the larger engineering firms – Hatch Mott MacDonald, Stantec, ADI, etc. are exporters. They are sending New Brunswick based engineers to work on projects around the world.
New Brunswick’s call centres are almost entirely export-based – something like 97% of the activity is exported.
The majority of the larger IT firms are primarily exporters.
Not to mention the fact that a dozen primarily natural resources-based firms account for 85% or more of merchandise exports from NB.
I hope this makes my point. The government needs to decide if they want to grow exports or develop and support small exporters. Those are not the same thing. There may be some overlap but they are not the same thing. An LNG export terminal would generate $1billion in export sales. A new fertilizer plant would generate $500 million in export sales. One national computer support help desk would generate $25 million or more in export ‘sales’. If we could see the insurance industry double its out of province work that would add tens of millions of dollars worth of ‘exports’.
Again, there certainly is a place for supporting small exporters but I really want government to get out of the mindset that its role in economic development is doling out cash and support to small businesses. My export strategy would be summarized on one page (unlike my verbosity here):
David Campbell export strategy:
Go to the fishing and seafood industry and ask them if there is potential to grow exports. If yes, how can we help?
Go to the forest products industry and ask them if there is potential to grow exports. If yes, how can we help?
Go to the engineering industry and ask them if New Brunswick could be a base to service projects in Labrador, Western Canada and beyond. If yes, how can we help?
Go to the transportation and logistics industry and ask them…..
Go to the finance and insurance sector and ask them….
Go to the NBITC and ask them…..
Go to the NBADA and ask them….
Go to the Alliance of Manufacturers and Exporters and ask them…..
And, work with local Chambers of Commerce, Conseil Economique, CFIB, etc. on a small business export strategy that may include the kinds of services in the current export strategy if there is demand and clearly definable value.
Finally, I worry about their ability to deliver on their objectives. If I am reading this right, they are calling for a $2.4 billion increase in the value of total exports over five years. That is an incredible – self-sufficiency like – objective – unless they have baked an outbound LNG terminal and one or more fertilizer plans (or an oil pipeline) into their plans. Although that is very unlikely, given the are also calling for 15,000 new jobs as a result of these exports so they must be primarily value added. An export LNG terminal would only add a few dozen jobs and a new fertilizer plant – even with supply chain – is only in the hundreds of jobs.
Of course as my cranky friend pointed out this morning, nothing in the export strategy precludes anything I have said here. But there is no direct indication in the plan. No mention of the engineering industry’s export potential. No mention of the insurance industry’s potential, etc.
I wish them well. They are bang on to focus on the export economy. I’m just not sure they will ever break out of the support for small business mindset.