The Loss Of NBTel Hurt Saint John, But The City Could Be Poised For A Comeback
David Campbell is a Moncton-based economic development consultant and co-host of the Huddle podcast, Insights. The following piece was originally published on his blog, It’s the Economy, Stupid!, on Substack.
Stop any Saint Johner on the street and you will get any number of reasons why the region’s economy has not performed as well as many of its peers in the past 25 years. Among the typical reasons are municipal politics or politicians, the Irvings, deindustrialization, the environment, climate, provincial government bias towards other parts of New Brunswick, the fact that Saint John is not on the Trans-Canada Highway, a lack of immigration, and even the general culture.
There may be truth to some of these. I am skeptical but it’s not my area of expertise and I don’t like dealing in speculation. I do deal in the analysis of economies and, it seems to me, the Saint John economy has been roiled more than many others across Canada over the past 30 years.
Yes, Moncton did lose the CN Shops and several large manufacturers in the 80s and 90s, but in my analysis of NAICS and NOC employment changes between the 1990s and 2016, I believe the Saint John economy faced even more turbulence.
First, it was the loss of shipbuilding. But then an even bigger impact was the loss of NBTel. The reverberations of that are still being felt.
Saint John lost a net of more than 1,000 high-paying jobs in the telecommunications sector after the Bell takeover–but the impacts go well beyond that. Take a look at the telecommunications sector’s supply chain spending in New Brunswick; this chart shows how much spending occurs indirectly for every $1.00 of direct spending in the sector. For example, the purchase of marketing services or consulting services from in-province suppliers is an indirect expenditure. I don’t have the multipliers from when NBTel was headquartered in SJ but we do know that New Brunswick’s telecom sector has the second-lowest in-province supply chain spending.
Anecdotally, I have heard many stories over the years from local firms that lost large contracts, from marketing to consulting to engineering services.
And another important fact was the high-paying jobs that were lost. In 2005, the total compensation per hour worked in the telecom sector in New Brunswick was 85 percent above the level for the total workforce. That was the highest spread in the country among the 10 provinces. Fifteen years later, New Brunswick registered the steepest collapse in the telecom compensation levels.
To put this into even more perspective, in 2005, the total compensation per hour worked in the telecom sector in New Brunswick was the highest among the 10 provinces—considerably higher than Ontario. By 2020, only PEI had a lower total compensation per hour worked. There are lots of things going on here: New Brunswick has more telecom-related call centre jobs now, for one, but the bottom line is that this sector went from one of the highest-wage sectors in New Brunswick to an above-average wage sector that’s still below where it once was.
And, of course, Saint John did not benefit from the call centre/back office/business services boom as Moncton did over the past 25 years.
So, what about now?
There have been green shoots in the economy and demographic trends over the past three-to-four years, but Saint John will still need export-focused growth industries in the years ahead if it wants to get growth to the level of its peers.
The energy sector holds potential but what happens with the refinery is an open question. If the company transitions the billions in capital invested into new energy sources (like hydrogen) that could blunt the loss of refining oil. The idea that Saint John could become a centre of excellence in SMR development is a longer shot but looks more promising by the day.
Information and communications technology has been a big driver of growth in Saint John – led by Mariner Partners and Gerry Pond. The ICT cluster in Saint John has almost as many jobs as those lost at NBTel.
But there are questions.
Most of the successful IT startups in the city were former NBTel employees. Many of them are now retired and fishing on the Miramichi, or close to packing it in. Where will the next generation of ICT entrepreneurs come from?
Professional services could be a dark horse—especially now with the rise of remote working. Just about anything can be done this way, from graphic design to accounting services, but I’m not clear how Saint John carves out a niche here.
I think the university and community college have a much larger role to play in the years ahead and may need sharp elbows to get there. There is no doubt that communities with a large talent pipeline and research and development infrastructure are better positioned for growth.
Tourism is another sector with potential. The Fundy Trail is the largest new tourism draw for New Brunswick in years. Saint John should be positioned to benefit from this, assuming it is leveraged to its full potential. My initial read is that many locals don’t want a lot more tourists flooding that area.
Health innovation is another area but the local leaders on this file need to be deliberate in efforts to grow export-focused business activity. UNB Saint John should be a catalyst but the real potential needs to be private sector-focused.
And what about the port?
It is incredibly important for the community to focus on the fundamentals, like population growth, the talent pipeline, startup incubation and support, and attracting national and international firms into sectors where there is a clear value proposition for the community.
Economic developers get pulled in all directions and there is a natural draw towards doing things that are generic: capacity building, training, conferences, brochures, general marketing, and such. Some of that is good but the primary focus must be on the fundamentals.
As Donald Savoie once said, economic development is about only two things: people and money. If the Saint John region is to grow, it will need billions in new investment over the next 10-20 years. Much of that will need to be tied to export-focused sectors, and it will need a lot of new talent to ensure that investment pays off.
Economic development, then, is simple. What are government and community stakeholders doing to support the attraction of those billions in new investment and the development of that talent pipeline?
A great answer to that question will be key to the Saint John trajectory in the years ahead.
Huddle publishes commentaries from groups and individuals on important business issues facing the Maritimes. These commentaries do not necessarily reflect the opinion of Huddle. To submit a commentary for consideration, contact editor Mark Leger: [email protected].