Saturday, December 14, 2013

Ontario Partners With CISCO $250,000,000

The Cost Of Attracting Business

There is much ado in the news from Ontario that multinational giant CISCO has accepted a partnering agreement with the province of Ontario that should see the addition of 1700 jobs over the next six years.

For their part, the Ontario government is kicking in $220,000,000 in government grants in order to seal the deal with a company that is being courted by governments and countries around the world.

Why did CISCO settle on Ontario, when basically they could locate anywhere in the world, and for that matter any other province in Canada?

 An article in the Toronto Star quotes CISCO's California-based president of development and sales as saying many countries, states and provinces woo him "to have us bring the kind of knowledge-based jobs that we bring to an economy."

“They come to us with different ideas — the president of Poland or the governor of North Carolina, they’re visiting us every day,” said Lloyd, a Canadian.

“We look at those investments or opportunities to partner with a very clear filter: do we see a supportive government? Do we see rich capabilities in the university system? Do we see a very competitive tax rate for a company to do business in? Do we see a great business climate and a predictable environment? Do we find loyal employees that like to stay and develop inside a company?” he said.

“We find all of that in Ontario. That’s exactly why we made this decision over all other choices we have every day.”

Why Are Corporate Incentives Needed?

While this story is certainly good news for Ontario during a week which has seen Heinz close a 100 year old plant right on the heels of Kelloggs announcing a plant closure it does raise the question of why governments have to compete for such 'plums'? Is is because they simply have to compensate for the ever increasing burdens out of control spending has put on government taxes and fees? Is it because they realize that it is only the private sector that can generate an economy?

Arguably this should be a good investment for the government of Ontario if in fact it produces 1700 good paying jobs, which would generate a payroll of $170,000,000 if each of those jobs were paid only $100,000/yr.

How Do We Compete?

Governments and economic development departments are always signing the praises of attracting high tech jobs to our community. In addition to offering a first class outdoor lifestyle and low housing costs, how does Nanaimo compare when looked at through the 'very clear filter' used by CISCO to decide on investing heavily in Ontario?


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