NS: Michelin lesson — StFX prof warns 'don't hang economy on one employer'

John Brannen, The News
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Dr. Greg Tkacz of St. Francis Xavier University’s department of economics said he, like many in the county, was shocked after hearing Monday’s news that the Granton Michelin plant would be shedding 500 jobs and downsizing.

Michelin's Granton, Pictou County, plant

[NEW GLASGOW, NS] - When it comes to your local economy, you can’t put your eggs in one basket.

That’s according to Dr. Greg Tkacz, associate professor and chair of St. Francis Xavier University’s department of economics. He, like many in the county, was shocked after hearing Monday’s news that the Granton Michelin plant would be shedding 500 jobs and downsizing.

That’s saying a lot, since his research is in economic forecasting and nowcasting. However, there are few who could have foreseen this recent decision taken by Michelin.

"This is just a situation that’s bad luck," Tkacz said. "The fact the product is no longer in demand seems to be the factor here."

He likened the situation to a typewriter factory that was working well, produced a good product had an excellent staff and great facilities.

“But if people aren’t buying typewriters and there’s no demand for this product, the other factors don’t really matter. Perhaps Michelin may be able to retool the plant for another purpose, but we’re not sure. The loss of jobs will have a big impact, without a doubt.”

Michelin noted that it will be accommodating employees in their other Nova Scotia facilities when possible and granting early retirement packages for others. But Monday’s announcement was a particularly hard pill to swallow due to the fact the business has had a good track record for the several decades it’s been operating in Granton.

“By all accounts we hadn’t heard any reports of cracks in the business. In fact, with the Canadian dollar falling in recent months and a stronger American economy, one would have thought exports would be on the rise.”

He noted that the planned partial closure of Michelin serves as a warning to countless other communities in Nova Scotia that have relied on one or two employers.

“If there are only one or two employers in the area, the results can be disastrous if one closes,” said Tkacz. “There’s a need to diversify the economic base and get away from the high-risk, high-reward scenarios.”

While government funding can sometimes prop up business as they explore their options, in this case, Tkacz noted that there are few things government can do in this case.

“It serves as a wake up call to certain towns in Nova Scotia and elsewhere,” he said. “There’s got to be a diversification of the working base so that smaller businesses can thrive in the absence of big business.”

The professor joins the throngs of politicians, academics and business leaders who said the province is in need of new kinds of industry. He noted that now more than ever, provincial politicians need to look at what would make Nova Scotia a desirable and great place to live and do business.

The Ivany Report, released less than a month ago, called for urgent changes in Nova Scotia’s business climate. With a large employer like Michelin closing up some of its shop, the report's recommendations come to mind.

“There’s a need to change the culture around the perception of business. Often, there’s a negative connotation and not-in-my-backyard approach to new ideas,” said Tkacz. “There’s got to be some due process, of course, but we need to get onboard if the benefits out weigh the costs.”

Organizations: St. Francis Xavier University

Geographic location: Nova Scotia, Granton

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  • West Coast
    March 06, 2014 - 17:22

    Michelin tires have become luxury purchase. As an ex resident I have tried to, "buy Pictou County and Nova Scotia" whenever possible. Last fall when I bought new snow tires I could no longer take the $500+ hit to purchase Michelin’s, when other brands offered similar performance at half the cost.

  • Seemore Shenanigans
    March 06, 2014 - 10:33

    They didn't "hang their hopes" on one large business. There were no economically viable businesses left. The fact that Michelin came there was a god send. Were they supposed to say, " No,no.... no thanks. What we need is to have several small diverse businesses, because our associate professor and chair of St. Francis Xavier University’s department of economics, ( who was surprised by the downsizing decision of the ONLY big business in the community), says so. Interestingly, I've never heard of this professor until now. Perhaps because hindsight is 20-20. Too little too late.

    • Lex Dunn
      March 07, 2014 - 06:35

      Did you read the article? He didn't say that Pictou should have said no. He said that they should have used that anchor as an opportunity to diversify. Your anti-intellectual screed demonstrates the very problem he alludes to. The old model isn't working but you dismiss new thinking – typical of Nova Scotia and the reason we're in the state we're in.