Winnipeg has lost another of its larger headquarter companies after Ontario-based Toromont purchased Powell Equipment. Seemingly it’s another isolated case where a larger company from the East swallows a local company. The good news is that it will not affect the greater body of employees who will remain in the Province. The body remains but the brains-executives, treasury folks and information workers— have been extracted and are on their way to the Big Smoke, Toronto.
The news is not just bad, it’s a harbinger of an eviscerating malady that is eating away at the foundations of Manitoba’s largest city. From the vantage point of the “old economy” it is a disease that emerges in unexpected places, odourless, and invisible to Manitoba’s politicians and community leaders, it spreads at all times of the night and day and draws its energy from the creative minds and the hard driving energies of citizens in far away places. It’s the Digital Economy, unknown in the Buffalo Province but being ridden hard by those who are roping our most valuable contributors and highest contributing taxpayers—the knowledge workers-into high paying corrals.
It’s Powell’s attributes—a manufacturer, wholesaler, retailer, and distributor of bulldozer types of equipment— that make its hollowing out illustrative. Here is the best example of a private sector company that needs to be located near its geographical base, and hence captive of the territory within which it is located. The ability to move vast quantities of information—e-mails, voice, presentations and videos—instantly and all but costlessly has changed all that. Owners and managers can now outsource any function from human resources to R&D. This means that every type of knowledge-based job can gravitate to cities and towns that give these workers the quality of life and job opportunities they desire. Why keep Powell’s Treasury and I. T. in Winnipeg when the task can be done better and cheaper in Toronto?
Powell is a company with a larger group of workers involved with the movement of physical products than with information. There are three other categories of companies where Manitoba’s hold on high-value adding workers is even more tenuous:
- Moffat Communications confronted with the technical and financing challenges of making the change to digital broadband has sold to Shaw with the subsequent loss of a couple of dozen high paying jobs among the cable, television and special networking parts of their business. MTS faces similar structural challenges adopting its infrastructure to the imperatives of the broadband optical network.
- Information Companies. Many other companies, of the informational sort—finance, educational, consulting and even government—are staffed by knowledge workers and can move holus bolus to any place they find attractive. Not long ago Winnipeg had four banking Senior-Vice Presidents and their staffs located at Portage & Main. No longer. They have decamped taking with them dozens of high paying jobs. In the meantime upwards of a hundred Bank and Trust company branches have shuttered their doors and Security companies have winnowed their staffs. Both Investors and Great West Life will need to undergo structural changes of their own within the next few years ensuring that the stream of senior-level executive talent from Winnipeg will continue from within the finance industry.
New Digital-based Industries:
These are industries that would have been impossible within the Industrial Society but are in the process of being born, breached by the negligible costs of information transfer. Three can easily be identified as having the potential to further erode Winnipeg’s number of high paid earners:
- Electronic data bases will consolidate information pertaining to the grain trade and it will tend to move to the marketplace. There will be fewer high placed grain-based workers and many will transfer to other cities.
- Education and training are moving progressively to the Internet. Companies such as Polar Bear Software, a once widely respected Winnipeg company has already succumbed. MIT, the world’s most respected engineering school has recently stated it will place all of its course material on the Internet. Over the next 5 years many people will be taking grade school, university, and college courses diplomas and degrees directly from the World Wide Web. Professorial and educational jobs will be lost;
- Health Telematics, or the ability to do diagnostics and even minor operations from afar will begin to erode the physician and nursing populations in the 3-5 year period.
It’s not that Manitoba wouldn’t have been capable of building skill sets and creating new industries that would have distinguished itself as a competitor for high-valued and high paying jobs. But truth will have it, it hasn’t. The Province is a full decade behind other small provinces such as New Brunswick in vying for its share of the new knowledge-based industries. Success depends upon vision, leadership and the political willpower to create a more competitive mix of quality public services and lower taxes for the talent base that make up the foundation of the digital economy. Past is prologue.
Talented Winnipeggers with marketable job skills and an eye to their future prospects are preparing their escape routes. As one top Winnipeg lawyer mentioned to me: “It’s different around here now. The tone is not the same”.