Residents of Cornwallis last week received an unwelcome Christmas gift: The town’s largest employer, Convergys Corporation, announced that it would soon close its call centre operation, throwing 300 people out of work. This isn’t the first time Convergys has disrupted a Nova Scotian workforce; in June, the company shut its Millbrook operation, which had employed 200 people.
Convergys is closing in Cornwallis as a $3.8 million payroll rebate program with the province expires; the company had received $3.9 million in payroll rebates for its Millbrook location. A similar $3.18 million agreement for Convergys’ New Glasgow location, with 350 employees, runs out in September.
As these Nova Scotian payroll subsidies end, the company is vastly expanding its overseas operations— already the largest private employer in the Philippines, with 20,000 employees, Convergys announced December 9 it is hiring 3,000 more people.
This is how “job creation” works in Nova Scotia: A bunch of mucky mucks get together in a back office at Nova Scotia Business, Inc. and decide to go after highly portable jobs like those at call centres. They then offer a multi-million dollar kickback to a company to locate here, issue a press release congratulating themselves on “economic development” and find some other company to give millions to, justifying their own six-figure salaries.
Meanwhile, in the real world people sign leases, enroll their kids in school, form long-term commitments in their communities. But as the provincial kickbacks run out, the companies up and leave, taking those highly portable jobs to some low-wage paradise on the opposite side of the globe where people work for peanuts and governments give even bigger kickbacks. Nova Scotians are left reeling by the real-world consequences.
This happens time and again. A handful of examples (there are more): Earlier this year, the Indian firm Aditya Birla Minacs laid off 200 people in Port Hawkesbury. The company had received $780,000 in payroll rebates. It has recently announced that it will expand its Indian call centre workforce by 2,000 people.
In April 2008, Teletech Holdings (promised up to $11.8 million in rebates) laid off 485 people in Halifax, just as it expanded in South Africa.
In October 2009, Acrobat Research Ltd. ($1.27 million in rebates, $450,000 in loans) closed its call centres in Cheticamp and Canso, putting 86 people out of work, months after advertising for data analysts in Nairobi, Kenya.
In June 2006, Lightbridge Inc. ($1.6 million in rebates) closed its Liverpool operation, putting 200 people out of work, then expanded in Costa Rica.
Thankfully, the province is “reviewing” its strategy of going after call centre jobs. But it’s full-steam ahead on an equally stupid strategy of going after highly portable jobs in the financial services industry. The province has promised Bermuda-based Butterfield Bank $9.1 million, Bermuda-based Olympia Capital $1.5 million and Cayman Island-based Citco Fund Services $7.35 million to set up shop in Halifax.
Sure, with salaries around $70,000, jobs at these companies are more attractive than near-minimum wage call centre jobs. But while NSBI puts out a lot of nonsense about these companies moving here because of our university-educated workforce and—really!—our time zone, make no mistake: Besides the lure of government kickback dough, the companies are moving their operations here primarily to save on labour costs—the same jobs would pay $200,000 in New York.
And, when the kickbacks run out, just like the call centres, the financial service firms will up and leave and set up shop overseas. People in India and South Africa and the Philippines and Kenya speak English and go to university, too, and thanks to the wonders of the internet can service clients in North America. They might even figure out those pesky time zone issues by, gee, I don’t know, working at night?
Fact is, paying for jobs is a sucker’s game. There is no silver bullet for real, long-term economic development. It takes investing in our own people, not foreign corporations with no allegiance to anything but the bottom line.
And it starts with the mundane necessities of life: agriculture; energy efficiency; education; social services. Only after that solid foundation is built, can the private sector grow strong above it.
This article appears in Dec 23-29, 2010.
We should be building navy ships for the next 20 years.
The Trudeau Liberals, and their bureacrat sympathisers in Ottawa, hated shipbuilding. They believed it was a dying industry and not a high tech industry, unlike building aircraft where a different type of metal bashing was deemed high tech and it was in Quebec. So they massively subsidised Bombardier and Quebec was a smidgeon less unhappy.
Replacing the navy could be a long term job provider provided the unions would agree to no strikes, labour flexibility and 1% annual raises. Not too much to ask for in exchange for a guranteed job.
Unions will never agree to something that benefits everyone – they are in it for themselves, greedy fuckers. Nova Scotia is in the toilet, and the big flush is coming. No NDP government will have the tools to fix this problem. Goodbye Nova Scotia, it’s been “fun” while you lasted.
This is made more annoying because it is not exactly a new pattern. The same concept of “economic development” has been active in NS for so long, I think the people involved actually believe it is a good thing. Meanwhile a small startup in the knowledge based service sector, with local people who want to live here and grow a company here, can’t get any help to create something real. Only companies that manufacture things can find assistance. The primary criteria for government payroll assistance and other funding has to be a long term commitment to stay here, and the only people really able to make a believable commitment are Nova Scotians. Let’s look after our own first, before throwing good money away on people and businesses with no attachment to this place we call home.
Mr. Bouesquet, I’m surprised you didn’t mention the Snair’s Bread fiasco from a few years ago. It seems to me that longtime local company needed a few dollars for some new equipment but were turned down and moved to PEI. I guess bread isn’t as sexy as call centres, banks and convention centres.
Oops! Please forgive the spelling error in “Bousquet.”
I notice that you fail to comment on the contribution those jobs made to the economy during the time they were here. Since they were attracted with payroll tax rebates, all they cost us was the opportunity cost in terms of taxes — taxes that we never had the opportunity to collect in the first place because those jobs didn’t exist previously. Yes, it’s sad that they didn’t stay longer. But those folks got years of employment that they would not have had otherwise, and would either have been on the welfare rolls costing us money, or would have left the province, taking their spending with them. The only problem with the rebates is that they weren’t extended.
Bo Gus: you make a valid point. I agree with it even. But let’s extend your argument to the next level – what was/is the cost of locking thousands of people into relatively unskilled, and poorly paid, jobs for a number of years? Because that’s all that call centre jobs are – low-paid and low-skill service jobs. A weeks’ worth of training to learn the scripts and HS kids and grannies can do it…for a buck above minimum wage.
Don’t you think it would have been better economically, long-term, to make the hard choices, and figure out what medium and high-value jobs could have been created? And suffer some short-term structural pain?
Western World low paying service workers are crap out of luck, everything is moving to China, India, and other discount slave labor paradises. Watch for unemployment to continue to sky rocket. Interesting numbers to ponder. Canadian workers (jobs) making $150,000 a year or more have a 3% level of unemployment, $50,000 or more 8.6% , and those making less than $30,000 22% unemployment exists. The rich get richer and the poor get much poorer. The new depression economy. When the real estate bubble pops this spring these numbers will expand, as will govt subsidies and lies.
From the article: “The province has promised Bermuda-based Butterfield Bank $9.1 million, Bermuda-based Olympia Capital $1.5 million and Cayman Island-based Citco Fund Services $7.35 million to set up shop in Halifax.”
Anyone familiar with the Global Criminal Financial System, headed by US Wall Street Banksters, knows that Bermuda and the Caymans are centers for money laundering, tax evasion and other financial crimes. So, maybe there is some other reason for Bermuda and Cayman based financial companies to move onshore. In any case, why is Nova Scotia getting in bed with such entities?
In other outrageous Pork News, Double Dippin Darrell Dexter has appointed himself and a flunky minister to head the new Bluenose II Slush Fund. Hail Nova Scotia, onward and upwards to new heights of greed, cronyism, patronage and incompetence!
Hey.. you know what.. this is a no loss situation. Convergy’s is a sucky place to work, and 300 people will find other jobs or their way thru life’s curves. We are Nova Scotian’s. We’ll survive, and another Call centre will open up their doors anyway.. they always do.
These articles read like a ultra left wing version Fox News editorials and are about equal as “Fair and Balanced”. Don’t you consider it misleading to say Buterfield was lured here with a promise of $9.1 million if they set up shop? It’s far from reality, your overly careful vague wording ironically gives it away.
The reality of the situation is it’s up to $9.1m only if they create jobs and it’s on a per job basis, not a $9.1m cheque on day 1 like you skilfully make it look.
And if that’s not the worst of it, it was only weeks ago you criticized these same companies for not creating the jobs that *you* stated they would (the numbers released by NSBI are max job positions they will subsidize, not what the company actually plans on creating, for something you comment on constantly I don’t know why you haven’t explained this anywhere (oh wait, it works against your agenda…). Also not to mention the number of jobs-created you quoted were completely wrong and you make no mention of talking to anyone at any of these companies or verifying any of your numbers.
I’d like to be able to read these business articles and actually believe homework was done and you didn’t start these off by writing a headline and a conclusion and filling the rest with the info that makes it work. A serious weak point in The Coast.
And before you dismiss me as a “hate everything Tim writes” guy, I actual agree with you on the call centers, I think a lot of people saw this 12th hour pullout the day each of these shops opened up and the funding of these needs another look. On the other hand, you seem off-base with the finance companies (can’t exactly just move to India), and I’d like to seem some actually reporting on them.
Has it been too long since Journalism 101, refresher time maybe?
It is well known that small business is the best generator of jobs. Unfortunately the focus of NSBI and the province seems to be big job creation, which in Nova Scotia too often turns out to be short term. I guess there’s not enough of a kick to announcing assistance that helped create 5 new jobs for a small business, even though those 5 jobs are much more likely to still be there in 10 years. Multiply that 5 by 100 small businesses and we’re talking something meaningful. Maybe its time to refocus the NSBI (and provincial) mandate.
NSBI doesn’t just need to be re-focused, it needs to have its “leadership” purged. Personally I think it should be eliminated altogether, but that’s another discussion. In any case, a CBC article from yesterday quotes Stephen Lund as saying that “his biggest disappointment was the loss of jobs in the province this year, including hundreds in call centres that his agency fostered with millions of dollars in payroll rebates.” And then Lund is quoted as blaming things like the debt crisis and the slow US economy, further proving that he’s pathetically deluded; stuff like that is going to hurt the *Indian* or *Kenyan* or *Phillippines* economy, not the Nova Scotian economy.
Lund just doesn’t get it. He’s got plenty of company; there’s all the convention centre boosters, and the Atlantic Gateway “visionaries” (Karen Oldfield comes to mind). All of these people are stuck in the middle part of the 20th century (hell, the thought processes of some are stuck in the 19th century). To them it’s bricks & mortar, factories, ships and trucks – they don’t get the 21st century. I’ll bet that most of them would even have been good businesspeople 50 years ago, but they sure as hell aren’t now.
Government, and its tightly or loosely affiliated agencies and corporations, are not going to help us out of this. We need small business, and we need local business, and we need Nova Scotians to be employed doing things that Nova Scotians do best or that only Nova Scotians can economically do here. We cannot compete for the foreseeable future in portable cookie-cutter service jobs. Any service job that can be done over the Internet is effectively permanently lost to us – we may as well start with that premise – we are too expensive.
In a nutshell, *we* need to generate these jobs. Locally. Not have the out-of-touch 20th century government pay to import subsidized work.
Here’s an idea – get rid of NSBI altogether, use the savings to lower the corporate tax rate. Questions?
We need both – local small businesses and…everything else. While I’m sure Tim B is a genius about the financial services sector, take it from a veteran of that industry – NSBI is doing it right.
And yes, skills matter, as does the “time zone.” Pick up the phone and call someone in financial services in NYC or London.
Because despite Tim thinking only local businesses hire for reasons beyond “bottom line,” he’s wrong.
Even significant employers in Halifax, like, say, The Coast, are ok paying Tim too much for columns they could get from smarter people for free.