Big guys have feelings, too
Published Saturday November 28th, 2009
When the paper mill closed in Dalhousie not that long ago a local politician talked about how frustrated he was that these large companies come into town, take government money, exploit workers and then leave. This was a particularly interesting observation, given that mill had operated in the community for more than 90, years providing generations of northern New Brunswickers with good employment. It must have looked kind of funny as the manager of that mill left town in his Model T Ford.
More recently, MLA T.J. Burke went apoplectic he heard that Avis Budget was closing a customer contact centre in his riding in Fredericton. It made him 'sick' that these big U.S. companies come to the province and exploit New Brunswickers. I wonder if Burke is equally sick at the dozens of U.S. companies with names like ExxonMobil, UPS and Xerox that have been the backbone of job creation in New Brunswick over the past 15 years?
Of course, the potential sale of NB Power to Hydro-Québec has provided a perfect platform to once again attack the evil big business. The leader of the Opposition has roared that the deal to sell NB Power was just another example of the "Shawn Graham government always [putting] big business ahead of people."
The idea of the greedy, evil exploitative big business is not limited to New Brunswick politicians. Virtually every dystopian vision of the future coming out of Hollywood includes a giant, malevolent corporation wreaking havoc on the poor citizen.
So who is to save us from the big business and their puppets in government? Into this breech comes the noble Mom 'n Pop small business - the romantic entrepreneur who can do no wrong in the public mind and will stand against big business and corporate tyranny.
This fantasy makes great copy for B-grade Hollywood movies and political rhetoric but has very little grounding in reality. The fact is that strong economies have a good mix of large and small business. The relationship between the two is mostly symbiotic. The majority of small businesses serve niche markets in the local community and play an important role in the supply chain of larger businesses. A large manufacturer, for example, will have 30 to 40 local suppliers or more of one type or another - mostly small businesses.
According to the global consulting firm PricewaterhouseCoopers, a forest products mill has an employment multiplier of three to one. For every job in the forest products mill, there are three in the community - mostly in small, rural suppliers providing contract logging, trucking, tree planting and other vital services. The same applies to the larger service firms although the local multiplier effect is not nearly as large.
From 2000 to 2008, 72 per cent of all net new jobs created in New Brunswick came from organizations with at least 500 employees. Large employers (500 employees) grew their total workforce in the province by 15 per cent over the eight-year period. They account for less than one half of one per cent of the total establishments in the province but employ almost 50 per cent of the workforce.
They pay higher wages on average, provide more formal training and offer a wider variety of career options than their counterparts in the small business sector and account for at least 98 per cent of the value of exports from the province.
I am not a cheerleader for big business. There are large businesses that are not particularly good corporate citizens, but the same applies to the small business sector. I would be equally frustrated if T.J. Burke or David Alward came out raging against small businesses in the province, decrying them as low paying, tax avoiding, dead-end companies. Of course that would be silly, but it sounds exactly the same to me when this type of rhetoric is used against the big firms in this province.
It's time to stop criticizing big companies and start viewing them as part of the solution to New Brunswick's economic woes.
As I mentioned above, organizations in New Brunswick with 500 or more employees grew their employment by 15 per cent from 2000 to 2008. That was a strong growth rate, but fell well short of the national employment growth rate among large employers of 24 per cent.
In fact, if New Brunswick had reached the national employment growth rate among large employers from 2000-2008, it would have added more than 12,000 more workers in the province and tens of millions in new tax revenues for government.
So instead of bashing big business, we should be working with them to figure how they can ramp up their employment even further over the next 10 to 20 years.
David Campbell is an economic development consultant based in Moncton. He writes a daily blog It's the Economy Stupid, at www.davidwcampbell.com.
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