FRIDAY’S news that South Korean manufacturing giant Daewoo Shipbuilding and Marine Engineering Ltd. will soon be building wind turbines in the old TrentonWorks plant in Pictou County is good news, and it’s about time.
It means instead of just being an importer of wind turbines to generate power, Nova Scotia will soon become a manufacturer of the high-tech windmills.
But this is not the first time Nova Scotia had a crack at the potentially lucrative business. Back in the 1990s, I was told a European manufacturer, which was then on the cutting edge of the turbine business, wanted to set up a manufacturing facility in the Amherst area.
It had the technology and the markets but the company needed government backing, and that was where the deal ended. Needless to say, the plant went elsewhere.
So it’s difficult to argue that the provincial government shouldn’t invest in the Daewoo project this time around. The choice is to invest or see the jobs go elsewhere.
But now the taxpayers of Nova Scotia are the minority owners of a turbine manufacturing plant to be operated by Daewoo. It is supposed to employ 120 people in the first year making turbine towers and blades, and up to 500 within three years.
Daewoo will hold 51 per cent of the plant with its investment of $20.4 million, and the province will be spending $19.6 million securing the remaining 49 per cent stake. The province is also using the Industrial Expansion Fund to provide a $30-million loan for equipment, up to $6 million for working capital and a $4-million forgivable loan to acquire land and buildings.
This will be Daewoo’s first manufacturing facility in North America, and the company is reported to be interested in building more than just wind turbine components in Trenton. It is also said to be interested in manufacturing offshore oil and gas platforms, and potentially tidal turbines.
As good as the deal looks today, there is always concern when government ventures into business territory. Past provincial governments have had difficulty extracting themselves from various businesses.
And there are some who will argue that Daewoo should be treated like other major companies interested in coming here to do business. BlackBerry-maker Research in Motion, for example, came to Nova Scotia in 2005 with the help of the province’s arm’s-length development agency, Nova Scotia Business Inc.
RIM agreed to bring its customer support facility to the Halifax area in 2005 with the help of a maximum $14-million performance-based payroll rebate and a $5-million financial package to assist with the cost of recruitment and training.
The government’s critics say the Daewoo investment should have been handled by NSBI too. They argue the agency endures greater public oversight than the Industrial Expansion Fund, which is controlled by the provincial cabinet.
According to the government’s own report on the Industrial Expansion Fund, the fund is used to support economic development and is important to helping industries involved in innovation and technology.
The expansion fund has considerable flexibility in the amount and type of funding it can provide, according to the report. And that was demonstrated recently.
It was used to provide a $20-million loan guarantee for Irving-owned Halifax Shipyard Ltd. That money will be used to help cover the cost of rebuilding wharfs, refurbishing and replacing cranes, and improving fabrication areas and offices.
The government also loaned Pictou County pulp maker Northern Pulp Ltd. $75 million to allow it to buy land from Neenah Paper, the plant’s former owner. The land purchase is supposed to guarantee the plant has a supply of raw materials for at least the next 30 years.
The government should be careful not to undermine the effectiveness of NSBI in bringing business to the province. Why would a company settle for a payroll rebate when they can get the money upfront from cabinet?
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