Municipal politicians have little impact on economic development

First published: August 26, 2006

Economic development is voodoo. Municipal leaders would like voters to believe it is actually something they control. In fact, it is not. Or more accurately, it is rare they have any major influence and it is more about luck or other external factors.

Earlier this month, Kraft-General Foods announced it sold one of its major brands, Minute Rice, to Elbro Puleva, of Spain, for $280 million. The operation will leave Cobourg, moving to a plant based in Houston. For the company, it is part of a larger strategy to focus on its biggest brands rather than smaller ones as part of a three-year plan put forward by Chief Executive Officer Irene Rosenfeld, who took charge about a month ago. The plan is to sell smaller units and increase marketing of bigger brands such as Oscar Mayer meats and Capri Sun beverages. With only 375 jobs left at the plant, this is going to hurt. Both the United Food and Commercial Workers local 1230 and the company will not say how many jobs will be lost.

Then, late last week, two crucial announcements were made. Cameco says it is here to stay and grow in Port Hope. Also, a major centre for innovation is being created at Cobourg’s GE Plastics.

Cameco Vice-President of Fuel Division Bob Steane confirmed the company’s long-term commitment to developing its facility and Zircatec, which it recently purchased, as part of an economic impact study. It will invest $100-million as part of its Vision 2010 strategic plan. With the demand for uranium hexafluoride, the firm expects another Port Hope-size plant will be needed and the local plant may need to expand to help accommodate it.

Certainly, there will be critics, but it is hard to argue when the company contributes $63 million in wages, salaries and purchases from local suppliers. The median income for Port Hope is higher than anywhere else in the county because of Cameco. And, it helps the local tax coffers by paying $1.2 million in various property and school taxes.

The next day, Cobourg was in the limelight when Premier Dalton McGuinty announced a $700,000 contribution to the Centre for Manufacturing Innovation for Advanced Polymers Technology at the GE Plastics plant, a research lab for the local plastics industry that will marry industry and academics to undertake exciting investigations.

Then, Monday of this week, General Motors announces it will begin building its Camero model at the Oshawa plant where many Northumberland County residents work. This comes as the company was planning to close a car parts plant in November. Instead, of losing 3,200 jobs, it will be able to save 2,700 and the others will be handled through attrition.

These latter announcements make municipal politicians giddy, especially with an election gearing up this fall. Campaign literature will be filled with this kind of happy news. Unfortunately, the future of the Kraft-General Foods workers will fade into the background. The operation on William Street continues to hang in the balance. As one retired worker said, the rumours of plant closings have existed since they began working in the 1970s. And, it is still here. But in the cutthroat business climate of a global economy driven by return on investment and short-term visions of increasing share prices, workers may have good reason to feel a bit more unsettled than usual. A Cameco-like announcement of commitment to the community would be helpful, but not likely.

As for the other “good news” announcements, it is truly hard to assess the extent to which municipal leaders contribute. Business acts independently of local politics. The provincial government can contribute money and lobbies hard for decisions like the one in Oshawa, since the auto industry is central to the overall economy, not just locally.

Back in the mid-1980s, municipal governments believed they could stimulate and attract industry, and with good reason. The Toyota plant in Cambridge was a major coup for the municipality at that time. Municipal staff made a serious effort to market the region seeking new manufacturing operations to help its sagging economy. After a number of stalwart businesses closed or move to Mexico, after the North American free trade deal, it was hurting.

Other municipalities salivated at the prospect of repeating such success. In Northumberland, initiatives like the Diamond Triangle, a co-operative effort by municipalities in West Northumberland, were started. Industrial lands were set aside and provided with services, as the politicians waited for marketing schemes to pay off. Some did. Many did not. As new ones came, others left, as businesses found cheaper labour in the south or as part of consolidation or mergers.

Today, while there continues to exist economic development portfolios within municipalities, the luster is gone. The high expectations of 20 years ago have merged with the bitter reality. Instead of attracting business, efforts are made to stimulate local business and entrepreneurship.

Lately, the news is great. High paying jobs with benefits are the best kind for any local economy. And, it sure beats the big box retailers ,who generally hire part-time workers at lower wages without benefits. These operations are great for municipal tax coffers but don’t deliver the same stimulation as industrial jobs.

So before buying into any campaign literature this fall, it might be wise to consider carefully the role municipal politicians really play. It may end up that you are rooting for the cheerleaders instead of the team on the field.

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