Odds, oddities, ends and endings

It’s late Sunday night but there are a few interesting end of week facts for you to chew on.

1. Dion and economic development in the Maritimes
I don’t know Dion’s position on regional economic development. He made some reference to ensuring regions’ don’t fall behind and some such boilerplate but no real specifics. Because he cut his teeth under Chretien, Martin and Manley, one would assume a similar approach, namely, talk a lot but do very little. When Chretien and Martin took power they said “no more mega projects” such as Hibernia. Then they proceeded to pour billions into the Ottawa/Montreal/Toronto triangle through the TPC and other Industry Canada programs. And one shouldn’t forget the hundreds of millions into the auto sector. The strategy for Atlantic Canada? Initially SME support and then the fabulously early 2000s theme of ‘innovation’. I suspect that in the absence of any real strategy, we can expect more of the same. Although Dion’s environmental focus may cause problems for the energy sector projects in Saint John.

2. Darrell Dexter, head of Nova Scotia’s NDP, was in Cape Breton last week complaining that Nova Scotia didn’t need any more ‘branch plants’ and that fostering small business was the right way to go. He was commenting on EDS’ plan to reduce the size of one of its call centres in Cape Breton. Interesting that when one multinational firm closes its doors, it’s a greedy multinational firm trying to pillage and exploit poor Maritimers and their tax dollars but when 10 local businesses close it’s a whole different story. Dexter should learn from Manitoba:

Hogs vs. BlackBerries Manitoba misses the call to develop high-tech industry
11/30/2006 05:08:16 AM EST
Winnipeg Free Press


ABOUT two years ago, Premier Gary Doer said he was putting an end to the use of subsidies to attract new business because he did not believe government handouts were a solid long-term economic strategy.

It’s “getting to the point where every job was costing $7,000,” Doer said, commenting on the cost of developing the customer contact centre business. “Our economic vision is broader than that.”

As the Winnipeg Free Press reported at the time: “It is not often that such a defined start and stop can be detected in an industry’s growth, as has occurred in the customer contact centre business in Manitoba.”

However, it appears that excessive subsidies are now the only tools that Doer and the NDP have left to attract business to Manitoba, while other jurisdictions offer compelling business environments to attract and retain educated youth.

Doer’s predecessor, Tory premier Gary Filmon, developed a strategic economic development plan that initially utilized financial incentives to create a customer contact centre industry. Filmon’s vision was to create a technology cluster that yielded 10,000 jobs, a strategy realized by 1999, the year the Progressive Conservatives were defeated and replaced by the NDP.

The Filmon government established such a strong reputation internationally (along with New Brunswick) for attracting technology business that it was in the process of weaning itself from the necessity of using incentives to attract companies. In fact, when the Tories announced the successful agreement to develop a new 53,000-square-foot facility to employ 600 employees for the RBC Royal Bank Customer Contact Centre in Winnipeg, the deal was negotiated without the necessity of incentives. Manitoba’s growing reputation in job creation and contact centre infrastructure had created a competitive advantage for Manitoba.

But both our reputation and our infrastructure have been squandered by Doer. Today, the customer-contact or call-centre industry in Manitoba has stalled at an estimated 11,000 jobs, while Nova Scotia (15,500 jobs) and New Brunswick (20,000 jobs) have surged ahead. The NDP has failed to optimize the potential to create more lucrative and fulfilling careers for Manitobans because of its abandonment of the sector.

In 2001, Manitoba had a wonderful economic development opportunity handed to it on a silver platter. That’s when the province successfully competed against its chief rival at the time (New Brunswick) for the right to create 1,200 new jobs with CanWest Global Communications. This came at a potential cost of $5,500 per job or $6.6 million. The jobs involved a customer contact centre, financial services centre and digital specialty television channels in Manitoba.

The CanWest expansion was great news for Manitobans. It offered enormous opportunity to leverage the existing customer contact initiative. It created the opportunity for Manitoba to go up the food chain. A cluster of new media businesses could have grown from CanWest’s expansion. It was an opportunity lost on the NDP.

Unfortunately, word has spread about Manitoba’s diminished interest in the industry. Specifically, we should ask ourselves why Research in Motion (developer of the BlackBerry) did not even consider Manitoba as an expansion option among 30 possible sites it considered. It located in Nova Scotia, instead. Only seven years ago, Manitoba would have been in the bull’s-eye for such an international competition, but not anymore.

Nova Scotia aggressively went after RIM, which represented the direction they wished to take their economy. RIM was the type of world-leading hi-tech firm that would help re-brand the province as a technology cluster and a perfect match for its educated, under-employed workforce. Their sales team “cold-called” RIM’s head offices in September 2005 in Waterloo, Ont., and delivered a compelling business case for bringing RIM to Nova Scotia.

In Nova Scotia, the recruitment process is well under way to staff the tech-support centre that will create 1,200 careers for graduates of the province’s universities and colleges. Nova Scotians are even more excited following RIM’s announcement last month in Bedford that it had purchased a site to build a 150,000 square-foot building on a new technology campus to be completed by the spring of 2008. One can only imagine how easily this sod turning could have occurred on the remaining undeveloped lands at the University of Manitoba’s Smart Park if Mr. Doer had had the vision and the marketing savvy to compete for the RIM business.

RIM will make a $230 million investment in the new project. In return, Nova Scotia expended $19 million in incentives. Salaries will be offered from $45,000 to $48,000 annually at a one-time cost of $15,833 per job.

Meanwhile, let’s consider the OlyWest pork processing plant deal in Manitoba. It reportedly represents one of the largest single private-sector job creation projects in the province’s history and will secure Manitoba as the third largest pork producer in Canada. It is estimated that once the plant is open, 16,000 Manitobans will be employed in the pork industry.

The media have reported that OlyWest will create 1,100 new jobs with annual wages ranging from $21,500 to $27,300 and that the province is contributing $27.5 million of $31 million of incentives — 89 per cent — to seal the deal.

The RIM deal cost Nova Scotians $15,833 per job versus $28,182 per job for Manitoba’s OlyWest deal, which will pay salaries that are 48 per cent to 57 per cent of those offered for Nova Scotia’s youth.

The hog industry is a significant part of Manitoba’s efforts to diversify its agricultural economy, but Doer has failed to realize the potential of the technology sector.

Doer said two years ago he was “committed to putting an end to government subsidies,” but the opposite has occurred and he lacks a coherent economic development strategy for their application.

The NDP has failed to capitalize on the momentum created by the CanWest expansion. Equally disappointing, it has failed to elevate Manitoba on the radar screen for other technology prospects, such as RIM.

Steve Demmings
is president of Site Selection Canada www.siteselectioncanada.com based in Winnipeg. Site Selection Canada advises technology firms seeking new Canadian locations for expansion. The company also advises communities on developing strategies to attain economic development.

Sorry for the long cut and paste but Demmings is right on the money. He’s an old 1990s fart like me that remembers a day when Manitoba was aggressively trying to grow new industries and develop a vibrant economy. Manitoba is the only province west of Ontario that is a ‘have not’ province and their have not position is getting worse. Is it any wonder that Doer and Lord were such good friends? No doubt they were exchanging strategies on how to bring down their respective economies. I’m only partially kidding. Manitoba under Doer and New Brunswick under Lord required the largest increases – by far – in Canada for Equalization payments.

Maybe Dexter, Doer and Lord should all go bowling together.

The truth is that I am tired of Canada’s richest provinces spending the most money on economic development while the have nots are supposed to sit back and hope that small businesses will rise up and grow the economy back into a strong position.

When Alberta and the Feds cut off the hundreds of millions in tax incentives to develop the oil sector, when Quebec and the Feds stop spending hundreds of millions to grow the high tech, aerospace and pharma sectors and when Ontario and the Feds stop spending billions to grow the auto, high tech and R&D sectors in that province, I’ll start listening to guys like Dexter, Lord and Doer (DLD).

Until that time, I will look for brave souls willing to stand up and say enough is enough. We are going to get our economy back on the rails. We are going to bring people back. We are going to ensure that our province gets its fair share of global business investment.

And until we get those brave souls, we can expect more of the same crap coming out of the DLD types of the world.

You would think that the friggin’ NDP would get it. They are the ones that want to spend taxpayer dollars like its going out of style. You would think they would see at the most basic level that they need to grow the taxes to pay for the social spending.

One of the greatest ironies of all is that the big unions in Ontario and Quebec (which are supposed to be the base of the NDP) are demanding more government investment in industry development and guys like Dexter are complaining about industrial development in Nova Scotia.

Tisk. Tisk. Tisk.