The importance of anchor employers

Believe it or not this is actually one of my more controversial views.  I think it is important for communities large and small to have a few large, anchor employers – respecting the fact that ‘large’ is a moving target.

I read this morning in the TJ that a company is looking to set up in Bathurst and hire something like 1,300 people.  I have no idea if that is a good project but as a general rule if it is a good firm paying good wages that would be really good for the Bathurst area as it has lost a number of its large, anchor employers in recent years.

When the Miramichi lost UPM, a number of folks told me they would replace it with small businesses.  I didn’t see that working then and I don’t see it now.  As we have discussed 95%+ of small businesses generate all their business (or substantially all) in the local market.  If a large anchor leaves and pulls $50 million in payroll and supply chain spending out of a community how do you replace that with small businesses?  As one KPMG guy told me yesterday when commenting on why they were in a local community “we come to feed”.  They go where there is a local market for their services.  That’s a good metaphor for small business.  The come to feed.  If there is no local market for them or a diminishing one many will close and that is exactly what has happened in New Brunswick.

Now it is true that a small cohort of small businesses do export and do have growth potential and we have numerous programs to help them do so.  But to replace a UPM you would need dozens of small business exporters to boost their exports big time.  It’s a tough proposition.

I’m not saying anchors are a panacea and I’m not saying we should ‘buy them’ to move into local communities.  There still has to be a firm business case under any project – large or small.

But we have to understand the framework for successful and vibrant communities in the long term and I believe anchor employers are a key part of that.