LOUD AND CLEAR by Denzil Doyle

Just as it made no sense to try and prop up the buggy whip industry in the early 1900s, we must be careful about propping up our “traditional” industries today.

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Get used to the buck at parity, it could be around a long time
From SCAN's Print Edition

Both of the higher levels of government are making noises about assisting the country’s manufacturing sector in coping with the loss of jobs due to the strong Canadian dollar. While this attention is laudable, they must be careful in the steps they take to address the situation. In a statement to the Riviere-du-Loup Chamber of Commerce on Dec. 7, Prime Minister Stephen Harper said, “Our government is committed to defend traditional industries that face serious challenges.” At about the same time, Finance Minister Jim Flaherty made a speech in Fredericton where he was quoted as saying, “We’re concerned about job losses, particularly in communities where … the major employer closes down” (Ottawa Citizen, Dec. 8).While such statements may be reassuring to politicians at the local level and to the population at large, they probably set off alarm bells among economists, particularly those who have taken the time to understand the make-up of Canada’s economy.

The fact of the matter is that Canada’s economy has always been too dependent on resource-based products like lumber and petroleum and we have never learned how to diversify the economies of one-industry towns during their boom years so that when the bloom goes off the resources, they will survive and prosper. While much of the blame can be laid at the door of the federal and provincial governments, a large portion of the problem (and the opportunity) is at the municipal level.

Most municipalities across the country with a population of more than about 5,000 people have some form of economic development office (EDO) but the people who staff them do not understand the role that technology is now playing in diversifying economies around the world. They spend most of their time pursuing low-technology companies rather that mine the local pool of entrepreneurship in order to build technology-based companies that will have a little more staying power.

The people who do know something about mining the pools of entrepreneurship are the IRAP technical personnel out of the National Research Council, who operate across the country. If I were the mayor of Fort McMurray or Yellowknife, I would get to know the local IRAP people and I would make sure they are working closely with the local economic development people. I would put an ad in the local paper stating that if an entrepreneur has an idea for a new company, he or she should bring it to the local EDO and they will receive advice on how to write a business plan, do the necessary market research, access capital, and launch the company.

In fact, maybe IRAP should be reorganized so that its officers act as advisors to the EDOs and not just to the entrepreneurs. Some of the money that is being spent on industrial parks and junkets to attract low technology companies could go toward the seeding of local pools of risk capital. The focus would be on a grow-your-own strategy as opposed to an importation strategy.

If a more aggressive and enlightened approach was taken towards economic development at the local level during the boom years, our politicians at the higher levels would have something to work with during the downturns. Just as it made no sense to try and prop up the buggy whip industry in the early 1900s, we must be careful about propping up our “traditional” industries today. And above all, we must not put all of the blame on the dollar. My prediction is that if we have a stable political environment and a low national debt over the next 50 years, our dollar will remain at par with the U.S. We had better get used to it.

Guru in one guise, angel in another, Denzil Doyle is a member of the Order of Canada, a professional engineer, founder and former CEO of Digital Equipment Corp. in Canada, company director, mentor, consultant, investor and author of the best-selling ‘Making Technology Happen’. He can be reached at ddoyle@doyletechcorp.com.

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