Enterprise Agencies

Someone sent me note:

Waiting for your comments on the city of Saint John looking at trimming Enterprise Saint John’s budget and the relations between cities and their respective CEDA’s.

Ask and ye shall receive. You should note in advance, however; that I have done work (and hope to do more) for a number of the Enterprise Agencies in New Brunswick.

First point. When the Greater Moncton Economic Commission (now Enterprise Greater Moncton) was created in 1990 written into the wording of the organizing document was that GMEC should never become an entrenched part of local government. If it ever was deemed to have lost its value as an organization it should be scrapped. This was probably the best wording in the document and should also be the case for a lot of government agenices and divisions within Departments. They get set up for an initial reason and then become entrenched bureaucracies.

I like to use the call centre analogy here. In the 1950s, someone would have set up a Department of Call Centres in the provincial government. After all, the industry employs 22,000 people. But in the 2000s we don’t think so big and now we get one person half time at BNB to do ‘after care’ or something like that. In the 50s, there would have been management programs, HR programs, research, etc. etc. etc.

That’s off topic but it is to illustrate my point about ED needing to show relevancy in the community over time.

Now to specifics. Saint John is at a critical juncture in its economic development. It could be turning into another in a series of boom-bust cycles (like the shipbuilding, refinery/lepreau before) or it could be about to become a durable energy hub that will anchor its economy for the next 50 years or so. A lot of that will have to do with the people on the ground. It would seem to me that ESJ should be front and centre.

I do think (and this is not about SJ) that many Enterprise Agencies get tempted to focus on things like ‘small business counselling’, small business training, brochure development, maybe the occasional HR fair or recruitment activity and a current favourite ‘youth and the labour market’. I don’t have a problem with these functions (although many of them could fit elsewhere but that is a discussion for another day). I do believe, however, that the Enterprise Agencies should be more focused on leading a broader economic development vision for their communities. If a community is going down because a mill closed, and the Enterprise Agency is spending 90% of its effort on the things I just mentioned, that’s a problem. A big problem.

I’d like to see these agencies more integrated into the bigger, longer term stuff and with the business of building the value proposition for business investment into a community.

That is key. The first thing people say to me is “why would company x ever want to locate in community y”? That, my friends, is the foundational statement for economic development. Throw out everything else.

If an economic developer can’t answer that question or can’t show the exact things they are doign to build the value proposition, then they have failed or are in the process of failing.

I will say this. There are communities that don’t seem to have any ambition to grow their business and if that is the case, then who am I to judge? My comments are for folks who want to see their communities moving ahead economically.

All communities, big and small, need to have a clear value proposition. It can be as basic as “on the highway with enough traffic for a convenience store” or as complex as “having a broad mix of infrastructure assets and capacities to be attractive to companies doing nanotechnology”. Ideally, communities would have a strong value proposition for a few key industries.

And for those of you who love to talk about “growth from within” and focusing on the ‘local’ business community this stuff applies to you as well. If there are companies in your community that are located there ‘just because’ then you had better figure out what will keep them there because ‘just because’ is a recipe for long term disaster.

Now as to the question of the relationship between the cities/towns and their respective Enterprise Agencies here is my thinking.

First, municipalities should be spending at least 5% of their budgets directly on economic development. Spending more on garbage removal than you do on economic development is not a good precedent. Have you ever read this document? The Annual Report of Municipal Statistics? It has all the spending of local government broken down by category. You will be pleased to know that there are 12 spending categories and not one for economic development. In fact, the word ‘economic’ doesn’t appear anywhere in this document. It would be funny if it wasn’t so serious.

Listen folks. The buck stops in the local community. The provincial government cares about the province. The federal government cares about Canada. The only level of government that is uniquely focused on your community is the local government. I have always believed that without local leadership, economic development is almost impossible.

So, as to the relationship between the Enterprise Agencies and the municipalities – this is a little tricky because there are usually many municipalities under each Enterprise Agency. Ideally, economic development is a function that reports to a City Manager – don’t have a cow – hear me out. The politics of trying to herd together multiple municipalities with a board of many times politically motivated individuals is difficult. I urge the Enterprise Agencies to keep it as neat and tidy as possible.

In the larger NB cities you have ED in City Hall and a regional agency. That’s fine as long as they work closely together. The ED in City Hall can work on the municipality value proposition in a way that a regional agency has a harder time. Think about a downtown or a business park. Think about something like the availability of commercial real estate. At the enterprise level that would be tantamount to ‘choosing’ one municipality over another to get directly involved.

But City Hall needs to work closely with the Enterprise Agency and I hope that power or political issues don’t intrude.