Monday, January 28, 2008

What's economic develoment got to do with an Economic Development Corporation?

When the Board of Control approved a request for a 19 per cent increase in the London Economic Development Corp. (LEDC) budget for this year, it as much as guaranteed that the hike would be approved by Council as a whole on February 21. After all, what councillor would want to take a stand against economic development? But one, Cont. Bud Polhill, is at least still asking questions about the budget increase — appropriately enough, as it turns out, since controllers who passed the request hadn't even seen the LEDC budget itself. What price oversight at City Hall? Apparently more than $355,000 at least.

In advance of dismantling or at least completely overhauling the LEDC after its audit in the spring, Council should make the first step in freezing its current budget of $1.86 million this year. After that, Council must begin to review the returns to economic development for the city from that investment, which would certainly appear questionable at best. While the LEDC would like to tout the creation of 150 jobs from the recent arrival of a luxury home countertop manufacturer, Hanwah L&C Canada, as evidence of success, it is telling that the announcement should be the single centrepiece of the Mayor’s State of the City address while other local manufacturers released workers in 2007 — 253 from Accuride, 253 from MCormick-Beta, and 120 from Mega Plas, to name but a few. Council must also ask, as does Polhill, why the LEDC appears to be trying to duplicate services that other agencies already provide, such as acting as a downtown realtor.

For all its extravagant budget requests, the LEDC is conspicuously short on successes, or specific strategies for that matter, unless one counts a gaming conference. Instead, the LEDC's principal trade is in the buzzwords and the old game of picking winners and losers in the market that appeal so much to politicians but which have always and necessarily worked so poorly in actually creating economic development. But even well-intentioned powerpoints and conferences will only go so far when high taxes, regulatory hurdles and political wrangles are the prominent features on London's development landscape. If the City were serious about promoting economic development, it will only succeed by getting out its way.

Update, Jan. 29: More questions about the LEDC budget request are finally being raised by councillors. Not only did Board of Control approve the LEDC's request for a 19 per cent increase without having a budget to review or an up-to-date audit, it did so without having any account of the agency's surplus.

See also:
LED balloon
London high-tech plan to create phoney-baloney jobs and
Losing economic opportunities by Kim Ainslie

2 comments:

Jake said...

The LEDC wants to spend $200,000 trying to lure corporate head offices from the Greater Toronto Area--talk about futility at its finest.

After the LEDC makes a presentation to a board of directors for a GTA corporation, the CEO likely will laugh his ass off and say, "that was a waste of time".

Corporate head offices try to locate around major metropolitan areas--typically the largest city in a country--so they can be where the financial 'action' is. Why doesn't city council and the LEDC get this through their minds? This is why companies that used to have their head offices here have packed up and left town for Toronto.

Smaller cities like London will never be able to compete with companies in the GTA for head offices. London instead should focus on smaller, more diverse companies and not on trying to lure corporate offices. Hanwah L&C and Brose are a good examples at what London needs more of--small manufacturing.

Going after head offices from a city that is less than two hours away is cash in the trash.

Anonymous said...

If anyone remembers when the LEDC was first created it was stated that the it would only be temporarily funded by the Taxpayers .... eventually the " Private Sector " would fully fund it. Back then the LEDC used to disclose it's employees in the $100,000 as legistlated provincially. Mysteriously they stopped reporting this because the City changed their status to a " Purchasing Contract ".

Being a " Purchasing Contract " the City is supposed to tender this according to the Municipal Act ...... How do they get away with this crime ? And how amny LEDC employees have exceeded the $100,000 mark ?

Someone should call the cops.