In Manitoba, Still Waiting to Compete

Commentary, Frontier Centre, Information Technology, Uncategorized

We live in an era of unprecedented global change. The viability of virtually every sector of the Canadian economy is being challenged by the emergence of global economic superpowers, particularly India and China.

Some provinces are rising to the challenge by developing strategies to attract and develop high-end industries, as well as holding onto their traditional jobs, but Manitoba's government seems stuck in the past, unaware of the seismic shifts taking place in the world.

Most people know that thousands of high-tech jobs are moving to countries where labour and taxes are cheaper, but today even so-called "hard products" produced in old-fashioned resource-based sectors are fighting to create niche markets to compete. In the forestry sector in the past year alone, there have been 31 partial or total shutdowns of pulp mills across Canada because of intense overseas competition.

In the fishing industry, a visit to the local supermarket will explain why Newfoundland is so concerned about the viability of the sector. It seems that all of a sudden, today's North American fish catch is being processed off shore in some foreign land. When it becomes cheaper to transport fish caught in Newfoundland, process it in China and ship it back to consumers in North America, you know the world is changing at warp speed.

Corporations are going through a radical transformation because work is being redirected to other parts of the globe to optimize efficiency, increase productivity, enhance quality, access new markets, increase revenues and develop new business synergies.

Where is it all going and what are the ramifications for North American jobs? In today's world, if "soft products" or intellectual processes can be digitized, then this work can be moved offshore or outsourced via optical fibre or satellite networks to labour markets in India and China. It is estimated that $550 billion of work in human resources, engineering, information technology, analytics, customer care, manufacturing, finance and accounting, logistics and procurement is now capable of being outsourced. The life insurance sector is a big employer in Manitoba, but those jobs are increasingly at risk because of the advances in technology and the potential for outsourcing. James Prieur, president of Sun Life, announced late last year his company was launching "a pilot" to underwrite some of its life insurance policies in India. This strategy is seen as "a first step" that could lead to the movement of more back office work overseas.

Clearly, the need to compete, to innovate, to forge global partnerships and synergies among communities, states and provinces will be crucial for our future economic well being and continued prosperity.

The trend and its implications were outlined by Thomas Friedman in his current bestseller, The World Is Flat. Rajesh Rao, founder and CAO of Dhruma Interactive, told Friedman: "Jobs are going to corners of the world where there is the least resistance, least barriers, greatest opportunity. Every individual, every jurisdiction must improve themselves to compete."

Friedman's book provides a comprehensive explanation of the global events that are empowering cities like Mumbai and Shanghai to compete directly for jobs in Boston, Indiana and Winnipeg. This global job-creation transformation is not just about cutting costs. It is about being competitive in a global economy. It is about accessing new emerging consumer markets. It is about accessing vast pools of highly educated and motivated workers. It is about the aspirations of emerging and rapidly expanding middle classes in countries like India, where enterpreneurs are hungry to compete with Manitoba and everyone else on the planet.

As Manitobans, it is critical that we sharpen our competitive instincts, that we dedicate ourselves to the achievement of excellence in our educational systems, that we remove the barriers to attracting investment and business. Moreover, it is high time that we articulated a grand vision for the economic development of the province of Manitoba.

Other provincial governments see the challenge ahead. Some, such as the current NDP government in Manitoba, do not see the need to compete. More disconcerting, it appears to believe that we can no longer compete in ways that will create high-paying, career-fulfilling careers for our citizens.

In Alberta, officials understand that they must compete more than ever, despite the province's current economic boom. Greg Melchin, Alberta's energy minister, said in a February address to the Economic Club of Ontario that "it's not so much about just Canada. We know we're competitive in Canada. You've got to be competitive with the world to attract people and attract capital." Unlike Manitoba, Alberta has not given up in its efforts to attract high-tech investment to the province. To the contrary, it is using its oil and gas wealth to further diversify its economy.

In New Brunswick, 13 business leaders and two university presidents met last month as a non-partisan body and aligned themselves with Premier Bernard Lord and Liberal Leader Shawn Graham on the subject of creating an economic development strategy to compete with the emergence of the Indian and Chinese economic superpowers. These leaders know that 25 per cent of manufacturing jobs have been lost in New Brunswick to other countries since 2004. They know what lies ahead in terms of accelerated competition. New Brunswick business and government leaders agree that the greatest threat to their economic future is complacency. They believe they must develop the ability to compete and to innovate. Gerry Pond, a spokesman for the group, is the former president of NB Tel and is recognized internationally as the visionary who created the province's economic development strategy in the 1990s. He said New Brunswickers "must think bigger and for the longer term." Unfortunately, the story is entirely different in Manitoba.

A senior civil servant who works in the Manitoba government's technology sector told me recently the province has no strategy for attracting high-tech jobs. The province, he said, was "no longer actively trying to attract technology businesses because the political mandarins believe that Manitoba can no longer compete with the East and the West."

A young Winnipeg entrepreneur, Michael Legary, president of Seccuris Inc., tells a story that illustrates Manitoba's problem. Legary said that virtually all of his clients and most of his company's future potential were outside Manitoba. He said he had been trying to hire an additional four electrical engineers and was experiencing great difficulties in hiring new staff because "they do not want to start careers, get into personal relationships, and start building equity in a province that they perceive as having limited career growth options."

Research In Motion –inventor of the popular Blackberry — announced recently that it will expand in Nova Scotia, resulting in 1,200 high-tech jobs. Legary said the deal had the potential to add a million dollars in sales to his Manitoba-based business.

Today, other Canadian jurisdictions are mobilizing to innovate, and to compete globally. How many more alarm bells must go off before Premier Gary Doer and his government realize the dire long-term consequences of their administration's inertia and complacency in fostering economic development strategies that ensure our future economic prosperity?

Steve Demmings is president of Site Selection Canada, which helps technology firms seeking new Canadian locations and advises communities on job creation and investment strategies.