Jobs on the move or - business on the mooch

Whiners out! Since when don't governments drive the economy?

The Straight Goods Cyber Forum
with Larry Solway

Commentary:

  Don't stop me even if you've heard this one: most of the same people who say government has no place in business also say when it comes to economic success, government should participate with tax breaks, subsidies, and promotion campaigns. What's wrong with this picture? What isn't??
  I remember the shiver-down-the-back I felt a few years ago when I read how the state of South Carolina had campaigned and won in the race to get BMW to locate an American plant there. Good for South Carolina. There isn't a lot, when you get tired of coon huntin' and fishin', to do with your time.
  I didn't feel the same way though when Chicago "beat out" two other major U.S. cities to become the location of the new head office of Boeing.
  It's all about tax breaks stupid!
  Fast forward to last week. Chancellor Schroeder, a Blair-type Social Democrat, pragmatic to the core, is intruding and maybe intervening in the decision by Bombardier to vacate its biggest rail-car factory in East Germany. Unlike Canada, where the union, to give Buzz his due, is agitating for action against auto plant closings, and Ottawa stays mum. You can't tread on toes or they'll all leave and go to Mexico, from where they will leave to go to Thailand, from where they will soon leave to go to - who knows - Afghanistan? In the rush-to-the-bottom atmosphere of industry cost -cutting, no one is safe.

The media would like us to believe that Gerhard Schroeder put his foot down. He may have. But he also put some honey on his foot

  It took only a few days for Bombardier to cave in and keep their railcar plant open, saving 800 jobs. The media would like us to believe that Gerhard Schroeder put his foot down. He may have. But he also put some honey on his foot. Not subsidies, that would be too easy. All he had to do was guarantee that Bombardier would build a quantity of new rail cars. The Germans didn't take it lying down. Not the way perhaps Ottawa is letting General Motors (Ste Therese closing) or Ford (Oakville closing) get away with it.
  For everyone who believes that government has no place in the business councils of the nation, take a second look. I'm betting that Schroeder has sweetened the deal to keep Beaudoin and his guys building railcars in East Germany. Big companies don't move without a sweetener. But that overt bribery doesn't guarantee anything. It's good only until the next time the company decides it can do better by building stuff in Pakistan. (fill in your own choice for the neediest country willing to wink at environmental standards and close their eyes to labour and safety practices.)
  Canada comes as close as any country to making deals that keep business at home. Sometimes they are selling their soul - pardon me - our soul. Hands up everyone in Montreal who thinks government indulgence of Pratt and Whitney is bad for the economy. Millions are "invested" in P&W to allow them to do Research and Development on engines that will keep Canada in the forefront of the aerospace industry.
  It's the same reason that got the Ontario government into helping Bombardier by making a gift of DeHavilland to them. The plant was on the verge of disappearing. Now they (with a few stumbles) build Dash 8 aircraft for world consumption. (But as short-range jets take over, DeHavilland may be in for more trouble.)
  The point is: we got our money's worth. But without any guarantees. Bombardier goes wherever they can get help. They took over the moribund Shorts aircraft company in Belfast. They couldn't do it without generous tax and subsidy breaks.
  We must go farther. Germans may show us how the strings-attached deal with Bombardier commits the company to stay put. Schroeder might be the guy who will convince Laurent Beaudoin that he should give them a piece of the company and seats on the Board of Directors.
  Aha! More stinkin' Socialism! More government involvement. Creeping Communism. Run for your lives.
  But we have to start making deals with strings attached. Remember the deal we made with Massey Ferguson to keep them in Toronto? They took the money, dissolved the company, renamed it and fled to Buffalo. And we could not do a thing about it.
  Time for a change. They want subsidies and tax breaks. We want a piece of the action.

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