FatKat forensic review

The Miramichi Leader has been milking the FatKat story for weeks and now is launching an eight part series to stretch out their recent investment in a Right to Information Act request.    Of course, we know about the ongoing troubles with Atcon and how they are plastered on the airwaves and the broadsheets.

The Miramichi has been whalloped in recent weeks and months from plant closures and other economic hits.  I hope the ‘benefit’ to readers from bleeding this stuff all over the papers is worth the ‘cost’ to public attitude and frustration.

These are real stories that need to be told.  I would never suggest otherwise.  But how about an eight part series on the success of a specific economic development effort? 

No, that is not sexy enough.  If it bleeds it leads  applies to economic development as well.

But as the Miramichi economy tanks, I hope the Leader talks a long hard look at its role in the fall and the lost opportunity cost of not trying to elevate the conversation around economic development.

11 thoughts on “FatKat forensic review

  1. Wow, a company that employed 65 people got some scraps from the province and the bank foreclosed on them because they lost money for a couple of years. St. John loses $8 million every year on the LNG terminal and there isn’t an ‘eight part series’ on the matter, in fact its never mentioned.

    It’s clear there were problems at FatKat, but this was a measly investment by the province and like other ‘contract to contract’ businesses the environment could have changed dramatically. How many call centres operate contract to contract? I can remember when the same people used to close down an internet company only to start up a new one weeks later with a new government contract or grant.

    It’s interesting that the Lord government ‘went to the wall’ to work out a deal in Nackawic for dead end forestry jobs, but a company that employed over a hundred young people in creative jobs wasn’t worth much effort at all.

  2. Why waste time talking about what isn’t going to happen, and spend more time on why a forced bilingual Province will not see it happen? There will be no economical development, except for the transfer payments. Simply check any forced duality anywhere in the World. That, of course, doesn’t include, anywhere where duality is natural or community approved. After that, find another job!

  3. Well, since big government claims to have a good handle of economics in our province for years now (picking winners and losers instead of making their operations more efficient and effective), it’s good to see some transparency on some of the choices they’ve made, finally. Maybe now people will think twice when they see this central planning of business coming from a bloated bureaucracy, or more specific BNB, Enterprise NB and ACOA.

  4. There is transparancy available at lots of levels-don’t you think its curious that an Irving paper puts in an access to information request on FatKats piddly little financials and yet you never hear word one about Atcon or Irving business deals? Years ago CBC did a report where it looked like NBPower was buying electricity from Irving under a set contract whether they needed power or not. Did the Irving media look at it?

    This is the reverse of what David is talking about-showing people that small businesses simply can’t be trusted. That it is far better to deal with large corporations who make ‘better decisions’ (they don’t, but since we don’t read about their failures its assumed).

    One of the problems with FatKat was the software piracy issue, which became almost symbolic, yet I worked at a computer company owned by a certain well known family corporation where exactly the same thing happened-technician’s regularly put licensed software on their home computer’s and gave them to friends. That’s like downloading music, its one of those things that virtually everybody does without even thinking about it.

    While there are big problems with any government bureaucracy, private enterprise can only DREAM about being as effective and efficient as government. Government handles the most difficult tasks in our society, meanwhile financial corporations can’t even make a decent profit without outright protectionism or subsidy-even though they currently have the lowest tax rate in 50 years (interesting how the above paints the problem as being one where government is picking winners and losing, and not presenting the problem as the private market as being not able to survive without government subsidies).

  5. This is the reverse of what David is talking about-showing people that small businesses simply can’t be trusted.

    Well, I happen to be collaborating with hundreds of small business owners who happen to think the practice of corporate welfare is damaging to their bottom line. And yes, most of these small businesses owners can be trusted alright, because its their money they’re working with (and it’s their livelihood). Not everyone is like FatKat, Atcon and Atlantic Yarns living off taxpayers money. Which is why I always say, they probably don’t respect it as much as the guy or gal who has to make it work outside the friendly confines of government subsidies.

  6. I never said small businesses can’t be trusted (?). Where did that come from? I said there are bad examples of small biz and bad examples of large biz but they both have a role to play in successful economies. Corporate welfare is another issue – one I have talked about at length.

  7. And I wasn’t talking about MY view, I was saying this is a common theme in the Irving newspapers. Big corporations always want a ‘level playing field’ for everybody else. I know lots of small business owners too, and lots of farmers, and human beings are fairly myopic, its always ‘what the other guy is doing’ that is the problem. Corporate welfare is always bad…’unless I can get it’. As we saw with Lord, a non existent tax rate is the same as a subsidy for a small business. Many businesses already have the contacts that enable them to not need a direct subsidy, again, thats not the issue.

    Fatkat got something less than two million dollars over several years with almost an average of 100 employees. No other animation company was there getting jilted, virtually all their sales were online and in the states. So there are no small business owners who suffered.

    But Irving likes pushing the subsidy angle- all those ‘other companies’ usually ‘from away’ or in ‘weird industries we dont’ understand’ are specious and not in NBers best interest. As anybody can tell, Irving has no problem with corporate welfare, it couldn’t exist without it even while it has a near monopoly on so many industries. The idea is you can ‘trust Irving’, just not everybody else. Thats why they have no problem finely picking apart every bone of this $2 million deal (most of that money went to workers and assets as the owner himself is almost bankrupt) yet never mentions the dozens of aggregious deals the IRvings are involved in. How often was the second refinery EVER analyzed even superficially?

    And like David says, there are good and bad in all sizes of industrial players. I knew LOTS of business owners in NB and many I wouldn’t trust to hold my wallet while I used the can, so lets no pretend this is some angelic unified group. Government subsidies are NOT ‘friendly’, often its as much work getting those subsidies as it is to get it from the private market. In short, cases like FatKat need to be analyzed on a case by case basis. Some people may object to all corporate welfare, thats fine, those are usually entrenched businesses (often handed down for generations) who have set customers who have forgotten the subsidies that their grandfathers got to start the business in the first place. But in many cases its simply the case that government investment makes sense and is the right thing to do. We are talking about FatKat here, and if you object to an investment of 2 million for a company of this size in the industry its in, thats a whole lot different than a pizza joint that gets free government cash while the pizza joint across the street can’t get anything.

  8. I should also point out that when one opposes ‘corporate welfare’ you have to accept the fact that virtually NO scientific research would ever be done in Canada. University professors are all highly subsidized through the NSC, they get grants, and thats how they pay students and do research. Increasingly they are being motivated to commercialize that research, but its all public money. There is a differerence between political pork barreling and government investment. In fact, if anything it would have been more beneficial to have an eight part series on Atlantic Yarns, but because that involved such a huge amount, Irving may think it hits too close to home. But there is easily a case to be made that even losing money in a disenfranchised area is a loss leader IF it teaches some valuable skills, if the money goes to workers, builds infrastructure, and/or develops a commercial area. In that case a company simply becomes the vehicle for investment, rather than the alternative, which is the government building a new rink or something. We don’t know much about Atlantic Yarns so we don’t know if thats the case there, but it COULD be, or it could be crooked as all get out, which is why it would be helpful to see the documentation. That Irving has such interest in a 2 million investment in the Miramichi is frankly just bizarre, I don’t think I’ve seen such economic interest from ANY other Irving paper, business news is usually what they are worst at.

  9. On a related note, take a look at this article the Leader is running:

    Floating a rumour about a $100M project might just be a motivational tactic during difficult times but the scary part is the comments about the Enterprises.

    The city hired their own economic developers because “it is not the role of Enterprise Miramichi to seek and find” and goes on to say “They would direct people to which department or agency where they can go to obtain funding.”

    Wow. No wonder we have ED problems. That is one hell of an expensive directory. 100 employees in 15 offices to direct people to go to either ACOA or BNB.

    Now, I understand why there is a program review. We have to be seeking new business opportunities.

  10. ” I happen to be collaborating with hundreds of small business owners who happen to think the practice of corporate welfare is damaging to their bottom line”

    Are these the same small business owners who get a break on the corporate tax rate? Not sure what they have to complain about. As a small business owner, my main concern is that the local economy grows in a sustainable way; that means more business and profit for me.

    It’s far more productive to look at the data surrounding economic development and determine how that can be used to develop growth-promoting policies than it is to throw out slogans like corporate welfare. A ‘consultant’ who is worth his salt would practice the former, not the latter.

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