Nova Scotia government invests $10-million in BlackBerry jobs
On Thursday, Nova Scotia Premier Darrell Dexter announced that the province would be investing $10-million in BlackBerry — formerly Research In Motion Ltd. — as part of a promise to employ 400 workers in the province.
BlackBerry plans to employe at least 400 people annually with an average salary of at least $60,000,
“These partnerships help to foster innovation and support BlackBerry’s competitiveness on a global scale,” Mr. MacLeod said.
With the government rescue, the following messages are being spoken to the 400 employees of Blackberry:
1.
Your job does not exist because you are generating wealth;
it exists because the government wrote a cheque on your behalf.
2.
Your skills and abilities are insufficient to keep your
job: if you want proof, turn down the $10 million.
3.
Blackberry did not want you…until the government paid
them to want you.
4.
You are not ‘worth’ what Blackberry pays you. The
government is hiding this by propping up your employment and wage.
5.
Your hard work will not advance you; the government
will.
6.
You did not earn your keep. You were given your keep.
If I am wrong, then say ‘no’ to the $10 million with a collective response, “Thanks,
but no thanks…we can make it on our own.”
7.
Your employer is actually the taxpayer, masqueraded by
a Blackberry logo.
8.
“Partnership” between the Nova Scotia government and
Blackberry literally means $10 million wired from the governments bank, to
Blackberry’s, resulting in an “offset” for the deficiency of productivity
pertaining to each employee’s existence. (Daddy bought your car and paid for
your school…how ‘accomplished’ do you feel?)
9.
To keep your moral high, we lied to you and ‘played
pretend’ that you are increasing global competitiveness. To prove this is true, simply forgo the $10 million and see how much you increase global competitiveness.
10. As
long as supply/demand is not a factor and government cheques flow, your job is
safe…but worry not, should Blackberry not sustain you...the government will
find another suitor. For its reach is broad and heart ever so big. Trust in the government, not yourself.
While I don't like government handouts into the private sector as a rule, your conclusions here are incorrect. Simple arithmetic shows this.
ReplyDeleteThe annual cost of these employees to Blackberry is $24M. So, the $10M from the government doesn't even pay for the first six months (that's not including the fully loaded costs like facilities, equipment, benefits, EI, ...). So the government is "paying" for the first four months of employment for these workers. I read this as Blackberry was going to put 400 workers somewhere and Nova Scotia won the bidding war. Obviously, the $10M is a paltry sum for an ongoing group of this size.
Secondly, using the tax rates here (http://www.cra-arc.gc.ca/tx/ndvdls/fq/txrts-eng.html) and assuming the $60K per person, Nova Scotia will receive PROVINCIAL income tax of about $7,147 per person, or about $2.85M per year. This is only provincial income tax; it does not include additional sales tax and corporate tax as a result. If as a result, people come of EI, even more benefit.
I think Nova Scotia made a good business decision in this case; there is a reasonable ROI here.
No doubt, governments have made bad "investments" in the private sector (TARP is a prime example) and good examples are few and far between. However, I think that this may be one of those.
..Erik
Thanks for the comment. A good roi does not mean its okay. Messages to employees remain, when gov "wins the bidding war". Is it the gov's job to jump in? "If it makes roi sense"???? Thats some pretty scary thinking
ReplyDeleteLet's look at this from the business (i.e., Blackberry's) perspective. They are going to build an office of 400 people somewhere. Since this is in the east coast, I'm going to guess call centre. If true, other options would include India. So, what determines where I'm going to build this. Cost of labour, availability of labour, infrastructure quality and government policies (e.g., taxation, trade laws) to name a few.
DeleteSo, in a free market, the company chooses where to put this group, weighing these and other factors. Perhaps Nova Scotia was a close second, but some policy or other kept them out of being #1 and the cost to Blackberry was about $9M. So, Nova Scotia did was businesses often do to win large deals; they offered a discount.
Now, I made all of the above up as I don't know the facts (just what you've shared). However, as a fiscal conservative I can't argue that a government should be more fiscally responsible and then complain when it makes a good business decision.
I think it's demonstrable that Nova Scotia will benefit financially from this transaction. They're calling it an investment and it appears that it actually is one as they will be receiving a return. Many times government giveaways are called "investments" when really they're nothing of the sort.
I think this is exactly the kind of decision you would make as a CEO. I'm happy to see a government make good business decisions.
..Erik
Hi Erik,
ReplyDeleteI am not disputing that it's a "good investment". I am questioning if that is the gov's job. Discounts/investments...gov's partnering with business typically = disaster...as you noted...this particular case, sure it's a 'good investment'. I get the economics and agree with that aspect of your point.