I just got back from an overnight canoeing trip on the Miramichi with a couple of ED buddies. By my count, we spent about 13 hours straight talking about economic development. I felt like Russian dissidents circa the 1970s plotting the downfall of communism (although our issues in NB are not nearly as grandiose).

But I am not going to talk about that discussion. I want to talk this evening about communications in government. I know it's an old theme on this blog but I want to revisit it in light of several conversations I have had lately.

First, I think we need to completely rethink how government 'communicates' with its public. Right now the only communications is pried out of government officials by the media or served up via highly sanitized and vetted press communiques. In fact, sometimes I think the role of the communications people in government is to restrict the information that the public sees on its activities.

And that is crazy. The government of NB spends $6 billion tax dollars each year and you would be hard pressed to find a handful of people that actually know what the government does.

I would flip it on its ear. I would encourage the Premier to write a blog - a heartfelt communication with the public. Not the crap we hear now. An honest personal assessment from the guy about the challenges and struggles of trying to change things in this province. I would have BNB employees writing "dispatches from the road" where they tell the public about recent trips to Prague and Dallas and some of the exciting things they are working on. Not private information or confidential company names but the things they are doing on a daily basis to try and make things better for all New Brunswickers.

And I would apply that to every department and agency of government. I would start an ongoing and personal dialogue with the people.

Now some are going to say that it would be a waste of time and money. That only a few people would ever read the stuff and it would take valuable time away from 'real' work. I say that is bullcrap. Ask the average New Brunswicker. They will tell you that the government almost nothing and has no real impact on their daily lives. Why? Because they haven't a clue what is being done.

And even if only a few folks tune in. So what? I have always thought that we need a ground swell of support from the people for a real economic development agenda. One that causes pain in certain areas. One that will require risk and one that will require far more focus from across government and its agencies. That is why you need this interactivity.

Cripes. Between Communications New Brunswick and the dozens if not a hundred or more communications types in each and every department of government. What is the point of their millions of dollars spent?

I am talking about the Fraser Institute quoted in the T&T today led by the big bold black headline "Lower taxes create jobs". Glad that Al Hogan is joining the discussion. Wish the piece was a little more nuanced.

Our GDP per worker is second worst among the 60 states/provinces. This is Fraser's measurement of productivity. This is one measure of productivity but certainly not a comprehensive understanding of productivity. For example, public services tend to have very low GDP per worker ratios and NB has among the highest percentages of public workers in the workforce. Now, I am not a defender of a swelled civil service but I am just saying that you can't assume that public sector workers are not productive because they don't have a high GDP per worker ratio. We don't measure the success of public service on its GDP.

And as for the boilerplate about cutting taxes, Fraser economists get paid a commission for every time they can work the term "cut taxes" into their vocabulary. As I (and many others) have pointed out, taxes are only one factor in determining business investment and if tax cuts erode further education quality, infrastructure, economic development activities, etc. they would likely lead to worse business investment outcomes.

But I am beginning to appreciate the value of mantra. Give Fraser and AIMS their due - they do stay on message - decades of staying on message.

We all know where Fraser is coming from but they do put together some interesting comparative data. This is their latest review of North American labour markets.

I was actually impressed with New Brunswick's ranking of 43rd out of 60 states and provinces on the broad labour market index. However, some of the sub indices give me serious cause for concern:

NB rans 56th out of 60 provinces/states for the percentage of the workforce employed by the provincial/local public sector. 53rd for unionization and 56th for flexibility of labour relations laws. Why does a poor province like New Brunswick have the most inflexible labour relations laws?

We have the third highest unemployment rate in North America.

We rank 7th for "average duration of unemployment" (which incidentially helps bring NB up to the 43rd ranking overally). Fraser lists this as a good thing because people are unemployed for smaller durations. However, read their own analysis. They say that seasonal employment is driving these good rankings. How many of you out there believe that New Brunswick's very high ratio of seasonal jobs is a good thing?

We are second last in North America for "Average GDP per worker". Alabama's is $99,614. New Brunswick's is $72,365 (both in Canadian dollars). The average GDP per worker in NB is 21% lower than in Alabama.

I still have Lizzy Weir's snappy intonation from the mid 1990s in my head. "If we don't stop them, this Liberal government will turn New Brunswick into Alabama North".

Please.

I am not a huge fan of this metric but it does hold some interest. Here is the lead in Macleans:

If you were to imagine Canada's smartest city — a place filled with fascinating people, cultural delights and endless learning opportunities — what would it be like?


It is Macleans-level over the top to claim that a ranking on this little test will make your town filled with fascinating people, cultural delgihts and endless learning opportunities. In fact, in my quick scroll of some of the higher ranking places, many of the ones I have visited are actually quite boring and shallow (comparatively). Then again, I like my cities scrappy, a bit on the gritty side and just humming with stuff going on.

I will say this. Many places in Alberta place very high on this list and I believe it must have something to do with the billions more poured into education, broadband telecom, etc. The oil money is having an impact.

You know I write reports for a living. Dozens of them per year ranging from 5 page briefing notes to 100 page reports that only a handful of folks ever read.

One of the central themes I have learned over the years when it comes to report writing is the importance of comparison. Specifically comparing what you are proposing to what is being done in other companies or jurisdictions.

For example, take the Erdle Report entitled "Management Alternatives for New Brunswick’s Public Forest" that was released today. 108 pages of very technical analysis - detailed forecasts, multiple scenarios all designed to help the government decide how best to manage the public forest into the future. I didn't read the whole thing yet but early media reports suggests Erdle is putting more focus on conservation.

But my point is simple. 108 pages. Not one reference to how other similar jursidictions are doing it. Now, I realize that the Yakov Smirnoff (what was that report guy's name?) report back in 2002 made recommendations that modelled some of the Scandanavian countries - but it was perceived that Jaakko Pöyry (I was quite far off with Yakov Smirnoff wasn't I?) was too much 'industry' focused his well written comparative analysis was discarded.

Now maybe the great UNB experts will say that wasn't in the terms of reference. Maybe so. I don't know. But as someone who looks at the intersection of public policy and economic development on a daily basis, I can tell you that this report doesn't set anything in the broader context. I would far rather have another comparative look - in similar environments - and then have the context. Policy makers may still go another route - opting for something non-conventional but at least they would have understood how things are done elsewhere.

This is heady stuff. Thousands of jobs are on the line. Just not David Coon's.

Ooops. Did I say that out loud?

I sat a meeting no less than 15 years ago where the topic was "evolving the call centre industry". We were in a room talking about how New Brunswick could leverage its success at attracting call centres to attract higher end back offices, technology services and other service functions that were no longer tied to the head office.

Fast forward to 2008 and we haven't had much success at that. Since the mid 1990s we have attracted dozens of call centres but not much else.

My column today in the TJ makes the case that we should make more of an effort.

I don't know if political 'machines' are as well oiled as some people like to think. For example, some folks have told me that 'top' potential candidates will stay out of a leadership race if they don't think the party has a chance to win. Then you get a so-called caretaker leader to shepherd the party through a losing election, resign and then allow those top candidates to come forward.

However, I have talked with several involved Tories in New Brunswick who say they have a real chance at winning the provincial election 2010. If this is the case then why have only three - essentially unilingual anglos stepped up as potential leaders? The convention is in two months so it would seem unlikely that many more will be getting in.

Thanks to Jacques Poitras' new blog on the upcoming Tory leadership, I was prompted to visit all three hopeful websites.

We are two months from the convention and one of the three doesn't even have a website yet (just a picture of himself with a coming soon message) and the other two don't have anything on their websites about policy positions.

There doesn't seem to be much there. Maybe the machine has determined the Tories can't win after all.

15 years ago, there was very little 'seek and find' activity undertaken by local economic development agencies. Those were the heady days of Frank McKenna.

Then slowly, in response to perceived underperformance from provincial economic development efforts, local ED agencies started to undertake seek and find and in fact a national program was put in place called CISP to provide money to support these efforts.

Now I see that more local agencies are backing away from seek and find. On one hand this makes perfect sense. There is a team (10 or so?) in Fredericton doing this with travel budgets, etc. It is enormously hard for a small local agency to do seek and find of new business. However, I do know a few that have done it quite well - mainly because they actually hired a real sales guy/gal to lead the effort.

But what is missing from this article is the lack of discussion around building the local value proposition for economic development. That should be the sweet spot for local economic developers. Finding the gaps and then working with the players to fill them in.

Every community - large or small - has the potential to witness economic development.

Just a quick follow up to my last post because I can already hear the response of some: "Economic developers shouldn't be in the business of real estate development competing with the private sector". How many times have I heard this - or a variant of it. "We aren't in the business of workforce development." "It's not our job to fix the problem at the airport." "That's not our responsibility".


Well, what is the responsibility of an economic developer? To publish a brochure, attend a few golf tournaments, counsel a few small businesses and then complain that economic development is not happening in the community because of someone else?


Economic developers need to be in the business of economic development. What are the barriers to economic development in this community and how do we get beyond them. If going into the local hospital and performing brain surgery will lead to successful economic development, I say do it (although my professional advice would be to go and recruit a qualified brain surgeon).

At some point, economic development became about putting in time. Punching the clock. Attending the trade show. Writing the annual report. Hosting the golf tourny.

The best economic development organizations are the ones that can perceive what is holding up economic development and then catalyzing solutions. Obviously, the idea is to leverage existing community assets as much as you can but if they are not getting it done -get in there and do it.

Interesting article in the G&M today about an historic building in Summerside, PEI that was redeveloped into a softwar

One of Summerside's oldest structures, the former Holman's department store, has been gutted and is being retrofitted to serve as a high-tech centre, aiming for businesses such as Carestream that need the wiring, open office concepts and improved heating and ventilation. The 100,000-square-foot building comprises two brick structures built for merchant R.T. Holman.

Summerside Regional Development bought the building in 2007 and began a three-year project to create a home for high-tech and IT tenants in particular. The budget for the purchase and renovation is $7.2-million. ACOA has put a million into the project.

I'm all for this type of project. High tech companies need office space and 95% of them don't want to own it - they want to lease. Yet, in many cases, the 'market' hasn't stepped up to develop the office space needed to support the attraction of industry. So why not do this type of deal? It is likely the SRD will charge a reasonable rent for the facility but even if they don't - so what? If they attract 500-600 high tech workers paying upwards of $1-2 million or more in local property tax and $3-5 million per year in provincial income tax - isn't the ROI there?

Back when there were old, heritage buildings in Moncton a developer picked them up for virtually nothing (Marvins, Eatons, etc.) - in many cases from the province for a buck. The developer redeveloped them and then landed the call centres brought in by the province.

Fast forward to today. If a community isn't 'lucky' enough to have a bunch of old buildings laying around, what can be done?

My point is that buildings are needed infrastructure too.

Norwegian solar company Renewable Energy Corp. plans to build a silicon plant in Quebec, to take advantage of that province's cheap and abundant electricity. REC, one of the world's biggest manufacturers of silicon and wafers for solar power applications, will build the plant in Bécancour, just across the St. Lawrence river from Trois Rivières. Bécancour is also the home of the silicon plant run by Timminco Corp., the controversial Canadian company that claims to have created a revolutionary method of producing silicon for use in solar cells at very low cost. REC will eventually spend up to $1.2-billion (U.S.) on its plant, which will employ more than 300 people. Construction will start in 2010.


You know what is interesting? Last year I took a look at the legislation, regulation and annual reports associated with NB Power, HydroQuebec, Ontario Power Generation and a few others. Guess which utility has an explicit mandate to support economic development? I'll give you a hint. It's not NB Power.

This is kind of interesting. The following table shows the change in employment by industry from 2001 to 2006 in New Brunswick (you may have to click to see it better). Overall, the economy added 11,165 employed persons from 2001-2006 of which about 41% of the net new jobs were public sector jobs (thanks Bernie!). Jobs in the 'Adminstrative Support' sector - this is call centres (not all though because some call centre activity is found in other industries) - made up 37% of the net new employment. Manufacturing shed over 5,000 during the time frame but don't worry - they were made up by 3,300 retail jobs (tongue firmly implanted in cheek).

This kind of thing in my opinion is emblematic of what is wrong with economic development in New Brunswick. This is a CBC story from a couple of days ago:

Seven months after the creation of a federal fund directed at single-industry towns suffering from economic downturns, forestry communities in New Brunswick are questioning when they will see any of the money. Prime Minister Stephen Harper announced the $1-billion national aid package in January. New Brunswick is receiving $30 million of the money over the next three years to help communities transition after the downturn that impacted the province's forestry sector. Approximately $8 million of the money has already been allocated to the Dalhousie area, which is the riding of Natural Resources Minister Donald Arseneault. Dalhousie was hard hit when AbitibiBowater Inc. closed its mill in the small coastal community and 330 people lost their jobs. The rest of the money has not yet been allocated.

It's what I have talked about at length before. Economic development should not be about getting $30 million from the Feds and the blowing through it on whatever projects cpme along in the community. In fact, when these types of programs come along, people dust off old non-viable business plans and hope they can get a big chunk of cheese to prime the pump. They can take advantage of a mill closure to get funding for a bad business model.

In my opinion, it should be the opposite. Economic development official should be prowling around looking for really good projects for the community (both ED supporting infrastructure and potential new business investments). They should have a long term plan and be executing that plan. If they are able to attract a high value project that will create hundreds of good paying jobs in the community then they should have access to various programs (tax abatements, training grants, etc.) just like 95% of communities in Canada and the United Sates.

But just allocating $30 million and then finding ways to spend it could - and I say could - lead to funding bad projects - or short term projects - or trying to replace forestry with tourism - to show the community that 'something' 'anything' is being done.

If Miramichi officials got KIA interested, I would certainly hope they wouldn't be restrained by some small funding program. If someone wants to make a billion dollar investment in the community, you make it work.

I don't want to post another blog about data centres but there is a good article that was sent to me (with some good links) about Iowa's ability to attract big name data centres. I have posted at least 20-30 blogs and wrote several columns touching on this issue. I won't go into it again in much detail. I will say this. Those large data centres are energy hogs. They need the electricity of a small pulp mill. Iowa has some of the cheapest electricity in the U.S. - and has anchored much of its economic development around that - first for power intensive agrifood prodution, now increasingly biofuels (which require significant electricity in the production process) and now data centres.

As far as I can tell, very few of these large scale data centre are locating in large urban centres. They are locating in upstate New York, Iowa and the farmers' fields of Washington State. There is increasingly proof that smaller urban and rural areas can take advantage of IT-based economic development. The issue, as usual, is the ability to develop a compelling value proposition for those small urban/rural regions. That can be cheap power, it must include skilled workers, etc.

There is hope for a place like New Brunswick - which will not be able to base its economic development on natural resources - to have succssful economic growth but it will be based on this province's ability to be a great place to do business - for specific industry sectors. It would be impossible to build a broad value proposition that was attractive to all industries. We need to focus - and in fact we always have - now we need to refocus on new 21st century industries. Think about the 20th Century. NB's economy was based primarily on natural resources and much of the infrastructure developed to support those industries. Now, natural resources are in decline as a percentage of the overall economy and will likely decline even further (although always remaining a major contributor to the economy). So the issue for NB is where will we go next?

Some will argue energy - nuclear, LNG, Eider Rock (oil), wind, etc. I tend to agree with the energy focus but my issue is engineeing the energy hub to mean cheap energy here in New Brunswick - to attract power intensive industries.

Some say - and have told me - that it is Soviet-style planning to 'pick' one industry over another and focus on it. I disagree - wholeheartedly. Government has access to scarce resources. It can only direct them in certain ways. If the government is going to invest in areas that influence economic development (from tax policy to education policy to infrastructure) it should make those investments in ways that will generate the best return to the public on those investments and focus must be the key. Ontario has spent billions to develop the auto sector. Quebec billions on pharma. BC billions on new media/film. Alberta billions (in forgone royalties/taxes) to develop the oilsands. All could have said "We can't focus. That's Soviet-style planning". But all didn't and have strong value propositions to develop those industries in their provinces.

What industries have a compelling value proposition to invest in New Brunswick?

That's the question.

This is key to taking advantage of alternative energy from an economic development perspective:

State investments of $9 million helped a Germany-based company choose Allegheny County for its first solar mirror production facility in the United States, creating 300 manufacturing jobs and strengthening Pennsylvania's position as a leader in clean energy development, Governor Edward G. Rendell said today. Flabeg, a global leader in high-tech glass and mirror applications, will use the facility to manufacture parabolic solar mirrors, which are used to help generate electricity at large-scale solar power plants. It will be the company's first U.S. facility of this type.

If you followed the U.S. primary process you will agree that Rendell is quite a blowhard but he got elected on an economic development platform. On a plan to re-establish PA as a serious economic engine. I would say results have been mixed to date but I appreciate his proactivity.

Do you think Danny Williams will be in power in Newfoundland for just about as long as he wants? Hugo Chavez is constitutionally bound to serve only two terms. No such prohibition for Danny. He'll stay until he gets bored.

Danny got his Hebron deal today. He said in the press release the province will get at least $20 billion over the 25 year life of the project.

But this is important to understanding the overall scope of the economic challenge facing New Brunswick. To get a new revenue stream of $800 million per year from traditional sources like income or sales tax would require an unachievable level of growth. You would have to double the HST revenue or quadruple corporate income tax revenue. And don't forget this would have to be done in one shot because if you double the workforce to get double the HST, you add double the costs whereas with Hebron you add very little government 'cost' to get the $800 million a year in revenue.

Ultimately New Brunswick must soldier on in the realization that it will not be able to compete with Newfoundland and possibly even Nova Scotia will pull away. In fact, we will get some of that Newfoundland revenue through Equalization.

I've been to NL twice recently and I hope that Danny reinvests more of the proceeds of this oil into economic development. Remember my chart on R&D last week? Guess which provincial government spends the most - by far - on R&D out of provincial coffers? Alberta. Guess who spends the most on education? Alberta. Guess which province is investing the most in telecom infrastructure? Alberta. Guess who is leading CAnada and maybe North America for online learning? Alberta. In fact, the Alberta budget has been skyrocketing recently even with PC governments.

Newfoundland should do the same. It should invest in Memorial. It should become a hotbed for alternative energy. It should build infrastructure.

According to the Daily Gleaner, Croatia's ambassador to Canada hopes that a city from her country can twin up with New Brunswick's capital. Vesela Korac met with Fredericton Mayor Brad Woodside on Tuesday and floated the idea. Korac said her government is considering the possibility of matching the Croatian city of Makarska with Fredericton.

If you have been reading my blog you know I am keen on this region looking for opportunity in eastern Europe. It seems to me that several European countries are playing the role of a 'nearshore' option to higher cost urban areas in western Europe. That's the role that we should be playing in North America.

Here is a link to my column this morning on the importance of R&D. I take a little swipe at the NBIF in the column - but not really. The NBIF could have never been the 'cornerstone' (as former Premier Bernard Lord called it) of the innovation agenda that was supposed to see New Brunswick join the top four provinces in Canada for R&D spending. It wasn't given even a fraction of the funds or the mandate for this.

The TJ has an article today on the importance of rail transportation. I have thought for the last 20 years that investing and developing the rail system made perfect sense - particularly in a place like Atl. Canada where the cost of road shipping goods to market is considerably higher than if a manufacturing plant was close to the market. Rail shipping levels the playing field at least a little but we decided (led by the nose by CN) to tear up the rail and make bike trails. Hmmm.

A company hoping to turn so-called energy beets into ethanol has toured the idle TrentonWorks lant in central Nova Scotia for a third time. Ron Coles, spokesman for Atlantec BioEnergy, says the company has officially expressed interest in acquiring a section of the plant. I have a couple of points here: 1) TrentonWorks employed several hundred people at above average wages. I think that any reuse of that facility should try to keep the economic bar high. 30 people being paid $14/hour to work in a beet plant would not be the best use - IMO. However, you might argue there would be a significant value chain from the project because of the beet farming and harvesting. True enough - but again - these things have to make sense - we can't just jump at projects because there is a desperate need to replace those jobs.

APEC tells us the forestry industry in New Brunswick has shed 3,000 jobs and the bottom has not yet been reached. I think that is a fair statement in more ways than one. I'll bet at least half of those 3,000 are working in Alberta/Saskatchewan and sending paycheques back to New Brunswick. When they decide a) to move back and go on pogie or b) move out to Alberta permanently, then we will have come full circle on it.

I agree there needed to be some structural changes in the forestry sector and I agree there are some opportunities for future growth - but let's not get crazy. I talked with a guy very knowledgeable about the industry who says the current level of sawmills is about right for the available saw longs in the province. He further said there is likely some additional room for an expanded chemical pulp operation in Northern NB and some limited opportunity for things like pellet mills. But biomass into electricity or biofuels or some type of massively expanded wood furniture manufacturing activity is not viable. Let's make sure our existing sawmills and forest product mills are competitive and successful and lets try and ensure that the wood is not being exported to be used in mills in other countries (as was reported recently).

If you have ever met this guy, you would agree with me. Back in the 1980s and 1990s, government in Atlantic Canada had the 'bright' to encourage unemployed people to start their own businesses and put a number of programs in place to help them do so. The naive thinking was they would create a class of 'entrepreneurs' in New Brunswick. 25 years on, we have less 'entrepreneurs' - by my definition - than the rest of Canada. What they did was create a class of small business owners with a failure rate of close to 80%.

I could name a dozen real entrepreneurs - guys/gals with a passion to build a business - to take their products national and international. To risk it all. And from an economic development perspective, governments must realize the difference between the guy/gal who wants to run a small lifestyle business and an entrepreneur. I am not complaining about the lifestyle business - far from it but those types of businesses will not lead to growth in the economy. Only those that are exporting products or services (or in some cases import substitution) will lead to economic growth.