Supporting Entrepreneurial Success
Posted May 23, 2014
The Ivany Report strongly emphasized a need for urgency. Those who do not foresee any problems should pay attention to Cape Breton Regional Municipality (CBRM). Its challenges tell us a lot about the entire province’s potential future.
Since 2001 CBRM’s population has shrunk by 8% to 97,398. Its shape is changing rapidly. The number between 15 and 64 has reduced by 5.4%. Many of those still calling Cape Breton home commute to Fort MacMurray and elsewhere for work. The unemployment rate there is nevertheless 15.9%, the highest in Nova Scotia.
The number of children under 15 is down by more than a quarter from ten years earlier. It is almost heartbreaking that the area school board had three times the number of students in 1970 than it has today.
At the same time the number of seniors has grown by 12%. The median age increased to 47.5 years, compared to 39.9 in Halifax. Unsurprisingly health care and social assistance is the biggest employer. In the whole island of Cape Breton it has three times as many employees as agriculture, forestry, fishing and hunting combined. There is not a lot of manufacturing and the service sector represents 80% of the economy.
The mayor and council found it very difficult to balance the budget. It is not easy to continually downsize a civic establishment, nor to adapt resources designed for children to the needs of seniors.
A primary focus of the Ivany report is the need for greatly increased immigration. Pollster Don Mills reports a disappointingly tepid enthusiasm for welcoming newcomers. But even if Cape Bretoners were firmly united in support it is hard to see what economic core would form the basis of attraction.
Historically the immigrants to Cape Breton came to dig coal and make steel. Nothing has since replaced them and government efforts to create industries have ended badly. Big public works spending has had no lasting impact. The right role for government can be learned from an example at the other end of the province.
In and around Digby county entrepreneurs have established a successful mink farming industry. By 2011 the number of farms had grown to 118 from 68 ten years earlier. The industry employs perhaps 1,000 people, which is a lot in a county that has only 18,000 people.
But it is a fraction of what is possible. A recent Economist article highlighted the mink industry in Denmark:
“Denmark is home to 1,500 mink farmers who together rear about 17.2m of the mammals a year—about one-fifth of the world’s supply. …Danish food companies produce the world’s most nutritious mink food… Danish design firms drive fur fashions. And the auction house sells fur from all over the world: last year it auctioned 21m pelts and had a turnover of €2.1 billion ($2.8 billion)… Farmers use sophisticated machines that squirt exactly the right amount of mink food into each cage on the basis of the animal’s size and stage in the breeding cycle. They also boast that nothing is wasted. In Aarhus, Denmark’s second city, the local bus fleet powers itself with biofuel that is created, in part, from the bodies of slaughtered mink.”
Denmark is about the same size as mainland Nova Scotia and has six times our population. Yet it has found room to support an industry that is more than 20 times as big as ours. Some of Denmark’s result has come from its natural advantages as a coastal nation with plenty of access to fish byproduct. But far more important has been the drive to vertically integrate.
There is enormous opportunity for the industry to expand here with improved industrial engineering, agricultural innovation, marketing, and fashion design—all areas where our universities can contribute research effort. A burst of immigration from Denmark would also be welcome, in more ways than one.
What is now a useful but small part of our economy could become a major driver. Both levels of government made a contribution in 2012, providing funds to companies that plan to recycle waste as compost or biofuel. Better provincial regulations have been created. The good farmers are happy to see those who would behave irresponsibly kept out of the business.
Government should support and celebrate success, for example pointing out to critics that farming mink is cleaner than many manufacturing or extractive industries. Government should likewise encourage our post-secondary institutions to find ways to contribute to the mink industry’s further development.
This is not to suggest that Cape Breton’s salvation lies in mink farming. Maybe it is in areas like aquaculture, or mining, or something unexpected. The thrust of this article is that the starting point for economic renewal is not normally found in the heads of politicians and bureaucrats. Rather it is found in entrepreneurs who are willing to try an improbable idea and make it succeed. When it does government should notice, support, and properly regulate, but keep its hands off the steering wheel.
Cape Breton’s challenges today foreshadow the province’s challenges in the near future. Without a change in direction we will have 100,000 fewer workers in 2030 than we did in 2010. We need much more immigration and to attract them we need successful economic hubs. The beauty of it is that, having arrived, the immigrants will, as they always have, create more jobs than they take.
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