On Greg Byrne and romantic notions

A couple of emails yesterday on why I am picking on Greg Byrne. My TJ column was entitled “What Keeps Greg Byrne Up At Night” and I was also quoted on the CBC yesterday questionning the advertising campaign in New Brunswick to attract people to New Brunswick.

So, for the record, I actually like Greg Byrne. I think he is far mor active and dynamic (as well as knowledgeable) compared to previous BNB ministers (think Captain Kirk MacDonald and his billion with a ‘b’). The TJ column was designed to inform the broader public about the challenges facing Minister Byrne. Nowhere in that column did actually chastise or criticize the Minister nor BNB.

The reality is that the province needs a strong and active BNB that is globally connected and is working with the plethora of provincial and local stakeholders to ensure we have a strong value proposition for business investment.

BNB (and its Minister) need to be the feedback loop for the rest of the government when it comes to economic development. If BNB realizes we will need 500 new animation graduates over the next three years in order to have any hope of attracting animation firms, it needs to provide that feedback to the Dept. of Training. If BNB realizes that without cheaper large industrial electricty rates, we will continue to see declines in forestry (and not able to attract other projecjts), it should provide that feedback to the Dept. of Energy. If BNB realizes that its incentive/tax break programs are not competitive for its targeted industries, it needs to provide that feedback to the Dept. of Finance.

It’s all about value proposition today and about effectively communicating that proposition to companies that could be targets for business investment in the province (both inside and external to the province).

On another note, I see the province and ACOA ponied up $1.2 million for this new start up firm in Northern New Brunswick. It said on the news that there were, I believe, 12 jobs involved.

That’s about $100k in grants and loans per job for a start up firm.

I can tell you that no large, stable, multinational firm has ever received such money from government to set up in New Brunswick (on a per job basis). They have in Ontario, in Quebec and elsewhere (I think I calculated Michelin in Nova Scotia was $93k per job).

I am not criticizing the start up but I think you can see that giving $100k/job to a startup when there is an over 50% chance of failure (they might boom but the facts are the facts) and not offering similar deals to larger projects is problematic.

But it goes to the systemic problem facing economic development in New Brunswick. We romanticize the small start up and cast a skeptical eye towards the large multinational firm. Don’t deny it. Some of you cringe when I even make this kind of analysis.

But I could give you a list of dozens of multinational expansions across North American in 2008 that were achieved at less than $100k per job. Projects creating hundreds of new, high paying jobs and providing long term economic anchors to local communities. And the failure rate (and there is one for sure), among the larger multinationals is a small fraction of the small business failure rate.

Now, I appreciate the loyalty of local entrepreneurs and realize that you will never replicate that with multinational firms who will pull out of communities because of a twitch in their financial projections. But I think we need to be realistic and understand that a healthly local economy will have both – national and international investment as well as local startups.