Ontario's economy is ailing and it will take more than massive subsidies to already profitable businesses to rebuild.
Handing hundreds of millions (Cisco) or billions of dollars (Samsung) to private, profitable global businesses is not an economic development strategy. It is a financially unsustainable, lazy attempt at bandaging a festering economic wound.
Small business owners in Ontario don't need to wait for Stats Canada's economic indicator reports to know what is happening in the economy, we feel it every day. When the economy slows, we feel it as sales cycles lengthen, due diligence on deals increases, and pricing or payment terms become key elements of negotiation, where they had not been before.
When you sell to other businesses, it becomes clear when decision makers are losing confidence in the economy's ability to perform. The ripple effect of massive job loss announcements spooks other business leaders and can discourage business owners and decision makers from taking the risk of investing in growth or improvements.
And that hurts everyone.
It is no accident that Heinz decided to pull out of Leamington, Ontario and took 740 jobs with them, just weeks before Kelloggs announced its plans to pull out of London, Ontario resulting in 500 more job losses. The same goes for Novartis closing a plant in Mississauga and laying off 300 employees there. These aren't layoffs prompted by seasonal or short-term downturns. These are plant closures. These are strong, viable companies that are pulling all or part of their operation out of the province, with no plan, desire or hope of returning.
Just as a business seeking new customers would, the Province of Ontario needs to look at its value proposition and articulate why investing in this province makes sense, without relying on handouts to close the deal.
That is Marketing 101.
Sales and marketing strategies that rely on ongoing deep discounts are less successful than those that focus on value and benefits. Handouts are the province's equivalent of price slashing.
If the province wants to see organic, ongoing investment by the private sector, then the focus should be on keeping taxes competitive, infrastructure modern and in good repair, and providing quality services to residents, like healthcare and education.
That is the path to prosperity.
The corporate giveaways the province has handed to businesses like Cisco and Samsung would be better invested in solving some of the largest barriers to economic growth our province is facing.
Businesses gravitate to their customers and invest accordingly. Strengthening the province's economy by making it a jurisdiction that can complete without relying cash handouts has the best potential of creating and encouraging long term investment in Ontario.
Premier Wynne has a responsibility to develop and implement a solid economic plan to encourage investment from the private sector to create wealth in Ontario. Ontario's opposition leaders also have a responsibility to develop their own ideas to do the same.
Job creation and investment isn't just about creating bragging rights for politicians, although that is often what they do when jobs are created or investments occur, it is about creating conditions that make a province's economy viable, which in turn makes government services viable for residents as well.
Five years out from the start of the largest global recession the world has seen since the Great Depression, creating conditions to solve the anemic jobs rebound is key to moving past the economic damage of the last half-decade.