Transcript of President McGuire interview on Insights with Don Mills and David Campbell

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Don: Welcome to this edition of the Insights podcast on the huddle network. I am Don Mills.

David: and I am David Campbell.

Don: You know we have been wanting to talk to Francis McGuire for a while David, the President of ACOA. They play a big role within the region and have for some time and part of the discussion was also about Francis's career which has really been quite substantial no matter how you look at it. He has been in the public sector. He has led a big private sector organization. He really has had a very interesting career and as he told us, he came out of retirement at the urging of some insignificant people including Frank McKenna, I believe and Donald Savoie, the father of ACOA is who we talked to not that long ago, to take on this role. He is obviously moving the organization in a different direction than where it was going before.

David: Yeah that is right and I think it was an inspired pick. I think normally that role would have been taken by a senior bureaucrat in the federal government system historically and so to come outside of government and pull Francis out of retirement, a guy that is known to be a bit of a maverick and to shake things up, I think was a was a really wise decision. His sort of general vision that any problem is our problem right, if it is a barrier to economic growth in the region having that as a sort of stated vision for ACOA. He did say some things are not going to be able to solve but at least they understand now that if there are roadblocks to economic growth in the region, ACOA should be thinking about those and working with partners. I think that is a very important vision for ACOA.

Don: We started the conversation with the discussion about his time as the CEO of Major Drilling, one of only three publicly traded companies in New Brunswick. When he started as he indicated, the company was basically in financial trouble. It had revenues about $100,000,000 a year, and 15 years later, it had revenues of $800,000,000 and had become the second largest mineral drilling company in the world. It was fascinating to talk to him about the strategies that they employed, and I think that that will be a very interesting part of the conversation for those people looking internationally to grow their businesses. His strategy was really excellent obviously to lead to that success.

David: Yeah when I worked for him back in the mid-90s he brought in Ken Wong from Queens to sort of lecture all of the staff at the department and I think, you know, being simplistic and clear about what you are trying to do is very very important for a CEO. One of the things that Francis MaGuire was known for was his hard work.

When I started in the early 90s to sort of make my point, I would stay till seven eight o'clock every night, you know, to work myself into a position where they could not let me go but every time I would leave Francis would still be there. He would be the last person in that building of the fifth floor of the Centennial building in Fredericton every night. He is an extremely hard-working guy and I think the example you cited is proof that subject matter expertise is not necessarily needed for these CEO roles.

You can bring an expertise, a style, and an approach into a different completely different industry and get great results and I think that was his concern right, when he took that job he said I am not sure I have the industry skills but that was not what was needed. You needed to have the strategic skills and the strategic understanding about how you are going to grow that business and he obviously did incredibly well at Major Drilling.

Don: That is right. We talked about why there are not more publicly traded companies. He said something that I had not thought about. He said that the companies that go public really have a need for ongoing capital. It is not a one-time, you know, need. It is an ongoing need and that is why banks are more interested in supporting companies that have that need for capital on a regular basis and I had not thought about that but that makes sense does it not?

David: I think it makes sense although I would say there is probably a lot of companies in Atlantic Canada that could use a lot more capital if they wanted to take more risk and they wanted to grow their business. I think that the point is well taken but I still think this idea of trying to foster a few more publicly traded companies in the region is not necessarily a bad idea particularly when you compare, you know, to the rest of the country. That is one thing that sort of stands out particularly in New Brunswick but also across Atlantic Canada is this very few, very low number of publicly traded companies so that is a bit of a red flag for me but his answer made a lot of sense. Major Drilling when we talked to Denis Larocque a few weeks ago, you will recall that his growth strategy was also capital intensive. He wanted to buy other firms, you know, buying equipment and so on. Having access to that capital market is incredibly important for firms like that.

Don: Then moving on to his new role as the President of ACOA, we had a very interesting conversation I think that clearly he is focused, they are focused on a couple of issues. Labor shortages is key. The digitalization of the economy is key, you know. He mentioned demographics, I must as an aside mention that I had presented over the last decade numerous time to senior people at ACOA talking about demographics and labor shortages and I am hopeful that I might have influenced their thinking in that regard, maybe not, but I would like to think so anyway but you know.

The whole issue that he mentions around automation where to his numbers he has got about 30% of the people in the private sector thinking about automation right now but we need more obviously. It is one way to deal with the labor shortages but at the same time, I am not really sure that there is focus on narrowing the GDP gap that this region has with the rest of Canada by my really rough calculation. You are way better at this than I am, but if you look at the last decade as an example, on average Atlantic Canada has trailed GDP growth in the rest of the country by about 1%. It does not sound like a lot obviously but it accumulates and compounds and it just means that every year we continue to shrink as a percentage of the economy in Canada. That is a big issue. Now with growing population that is going to abate a bit going forward surely but I am quite surprised that that is still not a big measure, a metric for them in terms of success.

David: Yeah I think that of course ACOA’s budget is greater than all four provincial economic development agency budgets combined so they do have a very relatively large budget compared to the Federal Government overall, it is just a drop in the bucket, but in terms of this region it is a big number. I think that, you know, my sense of it from talking to senior people around the region is they feel, well we cannot control the GDP, you know, that it is hubris to think that an economic development agency control the GDP but I agree with you. You need to put it out there as a target because then it influences the decisions you make then you know you need population growth because it is very hard to drive GDP growth without household spending and you know you need more productive companies because then they can compete better in export markets. I agree with you, I would love to see all of the provinces and ACOA have a target GDP growth rate and it should be close to the national average. There is no reason why we cannot in this region particularly if the Premier of Nova Scotia is successful and he gets his 2,000,000 population by 2060; he is going to need GDP growth that mirrors the national average. I think that makes a lot of sense to me and I do not know what the reluctance there is in the part of these agencies.

Don: Yeah so one of the challenges that we have in our region is that our population has not grown as quickly as the rest of Canada until now, you know. In Canada we have grown 1% a year on average for 60 years, and that 1% a year contributes to economic growth because, you know, at a minimum people need to eat and they need to be housed, and that creates jobs and economic activity. Now at least in the three Maritime Provinces, you know, we are keeping pace with population growth, which on its own will reduce the gap, I am positive. It will reduce the gap automatically but we need to keep focused on the fact that we continue to have labor shortages in this region. The issues that Francis indicated that they are focused on productivity is important as well because we are less productive than other parts of the country, you know, a lot of the right things are being looked at. Again, we still have to focus on being at least average. Let us be average in Atlantic Canada in terms of economic growth and then we can lead the country in economic growth. One step at a time.

David: Yeah that is right but productivity and workforce growth are not in mutually independent nationally between the last great recession in 2008 and before Covid-19, the workforce nationally added a 1,000,000 people across the country and that drove a lot of economic growth and in this region, the workforce barely budged. If it had not been for PEI it probably would have shrunk. I think it is both. You need to be more productive but you also need to have the workforce feedstock for growth as well.

Don: A very interesting conversation with Francis. Let us get to that conversation. We would love feedback from people who are listening to this podcast to see what their thoughts are. Thanks for listening.

Don: Francis welcome to the podcast.

Francis: Thank you very much. Hi Don! Hi David!

David: Francis you have had a very interesting career from being a Deputy Minister in the New Brunswick government during Frank McKenna's administration to the CEO of Major Drilling, one of only three publicly traded companies in New Brunswick and now President of the Atlantic Canada Opportunities Agency. Let us start by finding a little bit more about your career and journey. Where did you get your start in your career and how did you end up where you are today?

Francis: I went to Dal then went to university in France and ended up studying at the Johns Hopkins School of Advanced International Studies, which takes a lot of people into international banking. I started working for a bank where I learned everything I know about financial calculations etc. which is not a heck of a lot and from there went to work for the Council of Maritime Premiers and that is the first time I started to really get involved in what I would call regional development theory. People like Tom Kent. There was a committee with people like Tom Kent, Eldon Thompson and others looking at the region and what could be done.

From there I went to work with NBTel. I was not really suited for that but ended up working in Ottawa for four years in employment and immigration then transportation. In transport I had all the key crown agencies; Air Canada, CN, Via Rail but was working a lot in community development when I was at ENI and one of the people that was in Ottawa at the same time was Don Savoie. Don Savoie and I became friends as political assistants on the Hill and obviously had a big interest both of us in regional development and Atlantic economy etc. From there actually ended up working for CN for a little while but then got recruited by Frank McKenna when he was leader of the opposition and started working with him two years before he came to government and then a decade in government. When Frank left, I left shortly after. Worked for an IT firm that was a very high growth. Actually, I think Atlantic Magazine had it as the highest growth company. From there when the Telcos were merged it was clear that oh uh there is going to be people leaving so I went to see Frank. I said: “Frank I think my number is probably up.” He said: “Well listen we are looking for a CEO for a company called Major Drilling, are you interested?” I said: “Frank, Frank I do not know anything about drilling.” He said: “Francis you do not know anything about call centers, tourism, or business, what is your problem?” Good point!

I actually went to work at Major Drilling for 15 years and we grew it from $100,000,000 to an $800,000,000 company. It is the second biggest drilling company in the world still today. More importantly because somebody asked do you want to be the biggest, I said nope, we want to be the most profitable. From there retired after 15 years. Mainly because of travel around the world. That was half the time I was in another continent and just got tired, retired, and then got talked into coming back to ACOA partly by Scott Bryson was probably the first person to put pressure on me, then Don Savoie put pressure on me, and then Frank McKenna put pressure on me, and finally I said sure why not. That was in 2017 so here I am.

Don: Francis we would like to find out more about your role as CEO of Major Drilling. Very interesting story obviously over the tenure with the company from 2000 to 2015, the company grew dramatically as you outlined to become the second largest mineral drilling company in the world and all managed from a head office in Moncton. Can you talk about the strategies that led to the phenomenal growth of Major Drilling and its success?

Francis: I do a lot of, I do not know what you call lecturing or appearing in front of the groups at the Wallace McCain Institute and I teach them the way I look at businesses of any kind and give them examples. Basically my premises and I have taken this from a prophet at Queen called Ken Wong, there are only three business strategies in the world period. You just got to figure out which one you are. One is being the cheapest. You will understand and has all kinds of consequences so look at Walmart etc. The most difficult one is one based on value, and value means you are going to charge the same price as your competitor but offer something a little more, a little different etc., which is a difficult one or you have to be unique.

When I came in to Major Drilling, we were basically bankrupt. The bank had us in special accounts, we could not do things but I noticed that we were competing against every mom and pop in the world. This was during a down cycle and getting beaten up pretty badly but I noticed that every now and again there would be a manager saying listen if I can buy this $1,000,0000 machine, I can get this really good contract with a good margin and I said well what is that about. Then I looked and you know, in Chile it might have been high altitude, in the arctic was ice drilling, and I realized that geez, you know, all these things create barriers to entry, and if there are barriers to entry you can create something unique and so we actually sold the concept of specialized drilling. When we did that, nobody in the industry knew what that was and all our competitors thought we were crazy. They did not know what we were talking about, but the investment market really liked the idea and understood it, and so we focused on specialized drilling and said we are going to dominate that part of the industry. Not all the industry to be the biggest etc. but we are going to be the biggest because that is the area where you really have control over pricing.

We done holes that are three kilometers deep in the Gobi Desert. There are only two drills in the world that can do that. We own both of them and therefore this is what you are going to pay if you want to do it, and you know, we had quite a cultural issue in terms of teaching our managers say do not be afraid to charge high fees for specialized drilling. Now we also still, you know, specialized drilling at our peak would have been 70% of what we did so when we are in either underground drilling or just traditional drilling you have to understand well I cannot do that and so we had to train our people to think in terms of two basic strategies. One, unique this is what you charge and if you are into, you know price competitiveness well all we have to do is beat theirs and add value. A lot of the value we would add are little things like extra inventory on site, really high safety standards all of which was for the same price they were getting a little extra.

We actually had on the sleeves of our managers V=QR². You know value equals quantity, reliability, I forget what the other one was but it was an indoctrination thing, in a sense. You learn when you, and this would have been true, it is true of ACOA today. Often you need to change people's way of thinking and mentality and approach to things and when you do that you got to repeat, repeat, repeat, repeat, repeat until you are totally sick of hearing yourself, which happens to me a lot.

David: As I recall it was a strategy you employed when you were with the provincial government as well.

Francis just as an aside Don and I are very interested in trying to understand why there are so few publicly traded companies based in New Brunswick. Do you have any thoughts as to why it seems to be either difficult or why we do not have more companies getting to a size where they decide to offer initial public offering and go into the public markets? Do you have any thoughts as to why we do not?

Francis: When you go to the public markets, what the market wants to really know, you know, the bankers etc. is that you are going to continue going. You have to have a continuous requirement for capital or else they will forget about you. They might do one deal and then it is done and you languish down there. If you have a 10-year, what I tell people and I ask if you have a 10-year perspective where you know you are going to require more capital in each of the next three years and so for the next 10 years but every three years that is what you need to do. That is why you would go to market is to be able to raise, not continual, but at least a series of raises otherwise the market forgets about you. You can do, you know, you might have a thing so there are very few companies that really look to saying I am going to continue building equity or giving away equity or stuff to do that. Unless you are doing that then do not go in the public markets. It is very expensive and it will take 30% of the CEO's time.

When I was at Major Drilling, I would be all over North America. I would have to go to Paris and to London, pour me, to see shareholders etc. All of a sudden and the skills you need are partly storytelling, you know. You got to tell a good yarn to get people interested and our yarn was we are specialized. This is why, this is how, this is what we are doing and here are the results. We had a yarn. Between those two things prepare to spend 30% of your time on the market and second you have a continual need to raise capital. Most people, mostly businesses here have not got or do not think they need that much capital. A few do but they have been able to manage without going public and going to the essentially the bond market.

David: Francis when I worked for you briefly, when you were running Economic Development and Tourism back in the mid-90s and you had a pretty clear vision at that time of where you wanted to take that Department. I distinctly remember an all hands meeting, where you castigated anybody that used the term the pitcher province a number of folks like McKenna and Savoie encouraged you to take the job at ACOA but what was your vision? Like you did not need to take that job. You were coming out of retirement. What was your vision? Why did you agree to take that job?

Francis: Well at first, I was reluctant because when you get in the federal service sometimes things are so slow and, you know, I was really afraid of that. It turns out it has not been that much of an issue but that is what I was afraid of and reluctance. Frank used to say this is my moral duty to take this job. I cut my income by a third when I took the job too. My wife said: “jeez you know most people look for a raise not to cut their salaries” but anyway that is what I did.

I came in with very clear vision. The very very first day we had all the employees in, you know, virtually etc. and I said there are two things that are going to drive our agenda. One it is the labor force, and what do we do about it and two automation and digitization, and what are we going to do about it. That is the future and also a view that ACOA any economic problem in Atlantic Canada is our problem. We may not be able to deal with it with our own budgets and our own programs but then we have to lobby other federal departments and others to make them aware. That took us into some really brand new directions that ACOA had never been involved with including immigration.

I know that Jupia has done some work that we have been financing around New Brunswick and others but that never happened before. It is saying well part of our solution has to be immigration so let us get into the settlement business let us start working with a social group. Also a lot of our programming started into well what do we do in terms of helping skill work things and all of a sudden, we are into funding much more universities, community colleges because we need throughput. This understanding that everything in this decade, not like the decade we were in David, is about labor shortages and how do you solve them.

Now you take it a step further in saying if we focus on creating jobs at $15 an hour we are not going to get anywhere. You talked about GDP and others and where we need to focus is on jobs that start at 50, 60, 70,000. You start thinking about where are the opportunities. We started I think be fair to say before I got there, ACOA would receive ideas from entrepreneurs and help them etc. and quite successfully but it was never aggressive in saying here are some areas we are going to go and promote and push people to. They include things, and I call these Champion Files and we are organized now around those so it includes automation. It has dropped off a little bit since Covid but it was half of what we ended up doing. We spent time training our staff on automation. We had four days seminars for our staff, you have to understand, you have to go promote it. We started with understanding entrepreneurs and that they were understood but they were, you know, frightened essentially because they had not done it before. We started saying well we will give you a $50,000 grant to plan it. Do not buy anything. Do not do anything. Just get some people to understand because this is going to be a five-year voyage. How do you ease people in and then how do you push them and then you know finance them etc. so that was one. Immigration is another.

Oceans is an area that we are pushing very hard today because everything in ocean tech is hi-tech. The idea and this is what gets me, the picture province thing. Man, another picture everybody in the world thinks of us as Peggy's Cove. That drives me…. We promote tourism but Jesus! Man that is… Because you know whether it is robotics, AI, these are all the ocean technologies. They are very much…and anybody coming out of school starts at 60 70 80,000. Those are the jobs we have got to create.

Another one is food. Believe it or not, I did not know this until the we had an Atlantic Growth Strategy and the premier said well we need a food strategy. Everybody sat around the table, my first meeting by the way, and nobody put up their hand and so I said ACOA we will put one together. We went around and talked to 75 people in the food industry and when you look at food from blueberries to fish to potatoes etc., it happens to be the single biggest industry sector in Atlantic Canada and it affects everybody in different ways but equally everybody here and it is primarily rural so ticks all the boxes.

When we went and asked those 75 people we were stunned and we spent a couple of hours individually with each person because that is when they will….and they all had to my great surprise all of them had the same top three priorities. Number one was lack of labor, number two we do not know how to automate and number three was trucking. I said well there is where the food and automation strategies start to overlap and half of the automation we do today is in the food industries. Now whether it is lobsters, potatoes, others, bagging all those things. All of which will improve and is a necessary part of improving productivity and also scaling up to exports. There is a definitive clear line. We just did a review by the way of people that we have been assisting and seeing how their sales growth have gone up and they have gone up substantially because if I get an order and I got to hire 20 people to fill it today you are never going to fill it. You cannot find 20 people. If I got to buy another robot, yeah okay, I might have a six month delay but I can do it.

Scaling up getting and part of I think my vision is in terms of what we do now today is I got a $20,000,000 company, I need to make it a $40,000,000 company. I probably have a few more employees and so the measure that we used to have for good reason in the 1990s which was job creation, you know, any kind of job was a good job, today it is wealth creation, it is profit, productivity. Those are the things and that is the future. We might have no greater number of businesses but if everybody grows by 50% now we are catching up to the rest of Canada. We can only do it through automation, digitization that becomes key.

The startup is another area where we really did focus since I have been there. Whether it is in biotech we have seen, you know, Verafin, you know, people forget that that is the biggest venture deal ever done in Canada, but because it is in St. John's Newfoundland it is a one-day story and everybody forgets other than the Newfoundlanders. They are focused on that, they understand, and it is encouraging more people to go into IT and startups but there are just tons of them. Whether it is bioscience or IT there is a whole area. Here David you will appreciate why it fits into the labor market so we fund a lot of companies. Some are extremely successful. Some not so much and are the walking wounded for the next decade and some fail. If you are a bank or a venture capitalist, the failures are well part of, you know, that is how the industry goes. If you are a development agency, it is a little bit different. If I can get four, five, six young people working in a company for three years and it does not work well with a little bit of luck they either got married, bought a house, cannot afford to go to Waterloo or Toronto, now they are stuck here and they will go work for somebody else. It becomes important.

I can think of one company here in Fredericton that hires people out of the gate. It was a failed company. It got restarted and now the average employee makes over a $100,000 a year and they got about 60 and those people live in Fredericton and that is the kind of wealth creation that we need here.

We work on that. What else do we work on? We work a lot on, you know, lobbying other departments.

When I say immigration, we work very closely, which we never did before, with Immigration Canada. We work with the Department of Defense on procurement and so I think Marshall's a little while ago announced a $60,000,000 plant well that came through the procurement side and we worked closely with DND on lobbying those things. With the Industry Department, the biggest investment in Biovectra on the island came through two years of work. The SMR thing, which is in NRCAN or ISDED money, working on that internally, working with the proponents and the stuff. The lobbying part is part of it as well.

Anyway those are the kind of things, but and I should say organizationally, because all this comes down to when I came I would think, it would be fair to say that ACOA operated as four distinct silos; New Brunswick, Nova Scotia, PEI, and Newfoundland and not much exchange. By creating these Champion Files, we created regional teams but also I call it my red dot in the middle of somebody's head. I would say to the VP in New Brunswick; here is a red dot in the middle of your head, if it does not go well I am holding you responsible, I do not care about the other VPs. Now each VP has a red dot so that they do not help the other and it has worked marvelously well. There is a clear lead among the VPs.  People, others want to follow because they understand why it is important, they are totally bought in but they have people under their payroll etc. that are working on this that they do not control the day-to-day anymore of those people, another VP does. Because everybody, like I said, like the guy on the island our VP has the food file and so he has got to make sure that that is moving forward so he will cooperate. It has worked very well. There has been more integration that way on these files that I believe, hopefully other people, that these can move the needle, and the needle is wealth creation, many more people and I am talking thousands, you know, small numbers do not count, thousands that can be earning 60, 70, 80,000 out of the gate.

Don: ACOA provides various financial support programs for various reasons including the Tourism Relief Fund that was established by the Federal Government that will provide a 500,000,000 investment to tourism entities over the next two years. ACOA is managing that in the region as well as the Job and Growth Fund, which is another $700,000,000 that the Feds have put aside for the next three years, which is also administered in the region by ACOA. Can you just give us a bit of a quick overview of kind of what some of the examples of how those funds will be use within our region?

Francis: They are going to be used very much like we have always used them. In some sense, it is not different. I think the important part of those is that typically our budget is about 350,000,000 last year, the year just behind us, went up to 550,000,000 and it is going to settle this year and next at about 450 so we are a little bit of the decline. We keep on looking at people saying do not look at our programs because we can hardly figure them out. Come in here and tell us what your problem is. What is your challenge? A lot of them were used differently as we went through so it was everything from let us say aquaculture. How do we help our customers move from, well first we thought it was all going to collapse for the first three months so it was panic, and it was just kind of oh what do we do to keep you alive to oh big shift from the restaurant trade to retail but what does that mean. That means all of a sudden I need new packaging, some new processing but particularly new packaging etc. or I have to, in case of some of them, I need more freezer capacity etc. to do things. Instead of saying; well we are going to just give you, you know, a subsidy that so you can pay people to stay on board, we are actually going to invest these so you can shift to this new side and where there are permanent benefits. You know, what is happening on whether we are out of Covid or not and whether the restaurants do come back fully. They came back short term or what is going to happen but at least now we have got some diversification and so we did that.

With the tourism operators last year really what they needed was pure out and out subsidies, and so what they wanted was the rent relief, they wanted the wage subsidy, and they still continue to want some of that and the new program just got passed last week provides some although under strict reviews. Our role though is that we have noticed a really clear shift in the tourism industry because of stay vacations but to what I call the active economy, the active tourism. We have a lot of operators had a couple of bad years. Not a lot of cash. Cannot go back to the bank. Have already, you know, increase their debt but they do not have the money to actually say you know, I am going to actually create a cycling project, but for that I got to buy ten thousand dollars, you know, I do not do much biking, but I have got to get twenty thousand dollars of biking. I need this inventory. I need tires etc.  Where do I get my 40, 50,000 bucks to do that?

On the tourism side, although we can do liquidity if we want to, we really want to focus on how do we let people make the shift. You know what is the market telling them that they have a hard time adapting to, let us help them adapt to it. It could be, you know, a hotel saying well I am on a river, I am going to have a canoeing project and I am going to hire a couple of young people to take guided tours and stuff but I need canoes and I am a little cash strap. That is the kind of stuff we want to encourage.  Again, we are able to do liquidity so i.e. just got to stay alive but then we also get into sustainability, you know. Some people unfortunately will not make it but, you know, it is important to drive the economy whether it is tourism or others forward. If you do not have that view then you get into the very old style well I will just throw money at you and probably lose it and get nothing out of it although, yeah, anyway.

David: Francis that leads nicely into our question about metrics. It is a big issue today if you look at the overall economy particularly in New Brunswick and Nova Scotia. There was about a decade there with very little population growth, very little GDP growth, the size of the workforce actually shrank and there did not seem to be a lot of hue and cry from the economic development agencies. The folks at ACOA would say well the companies we work with are doing fine. The folks at ONB were saying well the projects we are working on we are doing fine but there was not this overall sort of connection between economic development agencies and the overall economy. I love what you said earlier about any problem is our problem because that allows you at ACOA to think about the broader economy, things like immigration and so on. I guess the question for you is, what metrics are you currently using at ACOA to indicate whether or not you are being successful with the deployment of those funds and the initiatives that you undertake.

Francis: It basically comes down to a new measure that people did not have before is the quality of the jobs, you know. We want to get out of this problem of not enough GDP etc. You can create thousands of thousands of jobs at 15 bucks an hour. These are valuable jobs. People have to do it. There is a lot of dignity that comes with those jobs but that will not help the big picture. That big picture macroeconomic is wealth creation. Those are the people. By the way the people that earn 100, 120, 000, they keep the restaurants going. They get the dry cleaners going. They get all that going, you know. You can only do so much. Like I said the only limitation we have is our budget so how do we focus that on the best part of growth development but we do get into things like, you know, we got into immigration. Well now, immigration, one of the biggest issue is housing. Now we are scratching our heads saying okay what can we do about housing and particularly rural housing. In the cities, you know, there are some issues for sure but the market is pretty active. The market does not work all that well in rural communities and that is where you know intervention of some kind, you know.

With our new Minister we are thinking about okay what could we do? It will be marginal but sometimes if we could lead or get other departments to really focus a little bit better because I think it would be fair to say in Canada, Government of Canada, provinces focuses on the urban housing problem. Those are synonymous. They do forget about the rural housing issue and you cannot attract immigrants. I do not know how many businesses, I can name a dozen that are having a problem bringing immigrants, not because the recruitment, not because they cannot get them, but they get here and there is no place for them to live at a reasonable cost. If you do not solve that you are not going to get the immigration, you are not going to get the population. Sometimes you kind of fall back and you got to then move forward and say okay well what can we do, and yeah, you know, we are certainly I hope in the new year we are going to come up with a few little good things to at least help along.

Those are the macro stuff so what we measure is, you know, the salary mass if there is a good salary mass and by the way when you automate you typically have to pay people more. You need a community college degree, you need some upgrading maybe not, you know, maybe it is a six-week course. When they do that, you got to pay them more because if you do not you are going to lose them in a heartbeat. I think all that, you know, it is kind of a virtuous circle in a way.

David: Francis we had Donald Savoie on a few weeks ago and he seemed to indicate that he would like more focus put on rural Atlantic Canada. In other words, he said Moncton is doing well, Halifax is doing well, Fredericton is doing well and that the focus of economic development should be on smaller urban centers and rural areas even suggesting that I think maybe tongue-in-cheek but that the ACOA’s offices or the economic development agencies should move and focus more in these rural areas. Does he have a point? What is your thought on this sort of growing disparity between the successful urban centers like Charlottetown and the sort of more challenged areas like say Prince County on PEI?

Francis: First presence is really important. We have 31 offices across Atlantic Canada so we are in a lot of smaller communities as well. We are there I would say more than half of what we do is in rural Atlantic Canada. Then some files such as the food file is by definition rural. Don and I have talked and he thinks food should be there, I said yeah we agree. We have been at it for three, four years and the issues are automation and now housing coming up. There is a lot being done but I would not give up on the cities though either and it depends what you call cities too. David you and I both agree that yes our definition of cities does not stop at the city limit. I mean is Saint John a city well so is Grand Bay and that is all part of the economic unit. People that live out halfway to Norton they are part of the economic unit often too. I agree that there is a lot to be done I do not think it can just like oceans tends to be much more rural. It is hi-tech it is very capital-intensive but it is rural.

I mean if you look at aquaculture none of that happening downtown Halifax or Saint John but it has got great growth potential and it is hi-tech. I mean people forget some of these nets are 10 stories high, like these are really huge structures, and you say well how do you clean them, well robots and interesting. They have robots which they control from the shore which by the way has allowed many more women to work in aquaculture than before which is kind of interesting, right. I know a lot of firms went from zero women because they do not want to be out in the boat for five days with a bunch of guys, putting it crudely. Boy if I can work even if it is shift work from shore in a nice warm office, and I am controlling these robots, and I can get home with the kids and do what I have to do because often they do, they can. All of a sudden, technology is taking this rural although they could control it from city of Saint John or they can do it from St George. It does not matter as long as they are connected; now connectivity becomes an issue, you know. You see this evolution and these robot operators they do not get paid 15 bucks an hour because if they lose that $500, 000 robot or rips and net all to pieces, there is hell to pay and so these are really sensitive jobs. Just think of all the communication skills. There has got to be some communication, some techies running the connectivity but again that is a job you do not start at 20 bucks an hour, you start at 40 bucks an hour, that is the kind of stuff we need to see.

Don: Francis I recently wrote a column for Brunswick News and the Saltwater Network that questioned the effectiveness of the economic development efforts in Atlantic Canada, where the economy continues to shrink as a percentage of the Canadian economy, and trail the rest of the country in terms of GDP growth by about one percent a year on average by the way. I estimated that there is about a $1,000,000,000 spent by various levels of governments and communities on economic development activities yet the region continues to underperform economically. Why is this the case, and why does Atlantic Canada continue to underperform relative to the rest of the country?

Francis: It is pretty darn simple, our degrees and levels of automation and digitization is lower and as long as it is lower you are not going to catch up. You want to focus on what can we do, where do we have to put the emphasis and it has been difficult. I mean David would know this, I have been harping about labor shortages and demographics for geez eight years and I will tell you the first four years it felt like does it not anybody see this, like what is up, why am I the only one. I mean it is demographics. You are not guessing. It is coming. Then take that in and say; what does it mean? Okay they got immigration, people and stuff but it also means automation. I do not meet a single businessperson saying if you are not automating you cannot grow period, and you cannot get productivity up and you cannot pay bigger salaries. People say well you know can I pay bigger salaries, well when you get productivity up, you can. By the way, to get your productivity up you got to pay more because you got to get this community college or this engineer.

I was at the Craig Manufacturing, and excuse me for using this example, they may say do not say that, but going in and because they cannot get enough welders, they have been to the US to try to get in Woodstock first-class welders but not enough of them. They started buying robots to do the welding. You walk in and see these two guys operating the machines and they got jeans on, they got hunter's camo on, etc. pretty relaxed and stuff and you say; oh okay these are good old boys working out of here but both of them had one thing, a steel ring. So not paying somebody with a steel ring you know 15 bucks an hour and that is what it took. I am saying now there is an example of two people that are earning good money helping productivity, helping Craig Manufacturing grow, this is an example.

There is a guy up in Dartmouth or up there, Greg Hargrove, he runs a maple sugar operation. He is totally automated. He has fiber optics going out to his trees, and how many employees does he have well every spring he has got to hire a few but basically three employees and he runs it from a control center. That is out in the woods! Like you are thinking man if they could or I look at the Beausoleil Oysters they have done the same thing. They have automated. They have used AI. Some things have worked some have not, you know. There is not a clean clear shot. There is a lot of failures and stuff but jeez you find Beausoleil Oysters all over the world now. How did that happen? Well in my own view is you cannot do it unless you automate when you cannot find enough people. When you go to the Bank Canada studies etc., our number one failure is that we are not up to speed with the rest of Canada and even worse vis-a-vis the US in terms of productivity, automation, digitization. End of lecture. Sorry!

Don: I have argued that there are really too many economic development agencies in the region, often overlapping and duplicating their efforts, many with no measurable means to track their performance to be held accountable. I mean I take your point about the need to digitize and automate. I think that that with the labor challenges that we have clearly important but at the same time, you know. How do we still have to close the economic gap with the rest of the country? There has got to be some measures that we can hold economic agencies accountable for don't you think Francis, you know, at a minimum if it is not going to be job growth.

Francis: Sure.

Don: It is going to be, you know, digitization and automation that is fine but there is still going to be, you know.

Francis: it is all part of productivity, if you measure productivity.

Don: We should still at least average economic growth with the rest of the country, don't you think?

Francis: No. You come back to what you can do and so you get down to productivity enhancement and we measure that. We look at our customers and say; all right two years ago you did X, where are you now? For those, now that is for the people you say well great if you are one of our customers. One of the things we try to do and then these Champion Files we do not just sit back and wait for people. We actually have officers going out trying to say; hey listen you have not even thought about this, want to come to a seminar, you want to do this, you want to start and we will help you financially, we will do whatever. We are on, and David would understand these, remember the old days we are trying to change people's minds. This is about changing entrepreneurs’ minds. We have got to get them into I am going to do this. It is difficult. It is scary. We get it. It is expensive too. Like there is no doubt about that. We have to help you do that and so we measure that. I would say it has been a struggle trying to get the provincial arms. I say well PEI is pretty good. They are pretty aggressive with us. Innovacorp is pretty aggressive on that too but it is a struggle to get everybody on that page.

Now one of the things anyway….so that has got to be the measure. It is how many people do I have in these productivity programs and are they doing better which we are measuring, and how many people are still not in and it is like 30% are well that is 70% that are not. How do we get to all right now I got to change that with time by being aggressive and get 70% of people in not 30. That is a mind change. It is repetition, repetition, say it again, push people, give them incentives, finance them, do whatever you can to get them there.

David: Francis we have been talking a lot today about labor shortages and immigration and population growth. It is a big theme here on the Insights podcast but you know, as we pointed out most immigration still occurs in the largest urban centers, Fredericton, Charlottetown, Moncton, Halifax, lesser extent St. John. What is ACOA’s role there? I mean I think you touched on a little bit earlier but you have got a number of challenges in these smaller communities. You have got housing issues. You have got settlement service issues. You have got retention issues, you know. You have got immigrants coming from far-flung places around the world. It is hard enough to get them to settle in Halifax let alone in Parrsboro. What is the role for ACOA and I really appreciate the fact that you even identified that as a role because I think if you went back ten years, you know, ACOA was not in that space at all even if you go back five years ACOA was not in that space. What is the role of ACOA in helping ensure that you know employers in Parrsboro or Minto have the workers they need moving forward?

Francis: You are almost there, how would Chipman? One of the things we have done in Chipman for instance is getting the housing thing. Because they did not have a project manager to develop their housing stuff, we said well we will pay for the project manager because, you know, there is not enough resources or expertise there and then got in helping that way. We have in several centers, we are actually funding through our community development stuff, centers for immigrants so that they are actually, you know, there is a gym and a room and it is a place where they can get together. We do that in conjunction, doing that in Chipman. We will do a number of those things saying; all right what are the community centers so it is more our community programming so we have been doing that in rural communities not, you know, we do multicultural association for Moncton and YMCA in St. John but you are right, the number one issue in those rural communities is housing. That is why we are now trying to get our heads around, you know, what can we do more than just provide a planner. Of course that is really very often in a small community, the absolutely critical first step that somebody understands zoning, and land research, and what do I need for infrastructure like sewers, etc. I just cannot go willy-nilly and our smaller communities for good reason just do not have the resources to do that so you can provide that. That is the first step and we are going to see what we can come up with for a second step because something is needed there for sure. Francophone immigration in the same way because it is moral rural is also difficult and so we have got to figure out ways to improve that.

Don: Just a couple more questions before we end the podcast Francis. Our podcasts have tried to focus on successful cluster segments in the regions as models for other parts of Atlantic Canada including the biosciences sector in PEI and the ocean industry sector in both Nova Scotia and Newfoundland, cyber security as one in New Brunswick. What are the other clusters within the region that, you know, provide opportunity that ACOA may be focused on and helping to develop?

Francis: First of the enabling technologies around, you know, things like robotics and others so, you know, we invested in robotic centers in various universities, the university of Moncton among others. AI as well. Some of them are just enabling technologies if you would and not clusters but they are necessary everywhere. Part of what you need to do is to make sure that that exists and it is growing and we have some that is way too small.

When you look about, you know, we are talking about some universities doubling the size of their computer science output from a hundred a year to 200 a year, that is really good but man that is far short of the mark in terms of what you need to do. There is first the enabling ones but then, you know, we do have strengths and food, which is rural, but, you know, whether it is apples, potatoes, or aquaculture. These are things that your centers of excellence, I do not know if I would call them that, but there are industries of real sophistication that, you know, we are talking about precision aquaculture well that is science and tech. It is not just going out there hoeing your garden. Those are the kind of things. Genetics for instance is a really important part of forestry, of potatoes, etc., these are really fundamental stuff. You know the clusters yeah they develop.

There is a little bit of an IT cluster in Fredericton, always has been, it is rich, we support it, cyber included in there. I do not know, you know, you have to go too too much further in terms of, you know, ocean sure, biotech sure, but you know biotech is trying to train 500 people right now. I think all we need to do is focus on how we are going to solve that issue or resolve that. The IT industry, I mean, I think, New Brunswick is looking at over, well of course David has involved in this, but over 4 000 jobs that have to be filled I think. David you can correct me in like four or five years. I mean where are we going to find these people? I do not think we have to go looking too much further for another challenge. We have got lots of challenges here that we are not meeting, that we need to really focus hard on those and make them work.

David: Francis we always ask our guests at the end of the interview whether they are optimistic or pessimistic about the future of the region. Now we are going to go on a limb here and say because you are the CEO of ACOA and sort of the chief sales guy for the whole region that you are pretty optimistic of the future but what, if you are, optimistic about the future of the region? What makes you the most optimistic, you know, that as we move forward will have strong and thriving economy across this region?

Francis: I will tell you why I am worried and why I am optimistic. I think what I just described and you know having a clear view of what the issues are makes me optimistic. Like four years ago, David you know, nobody wanted to talk about labor shortages. I am saying I just do not like; this is coming like a train at you. It is demographics. It is not guessing. Yes, people are starting to understand that. They are starting to understand some of the solutions.

What scares me is that we do not move fast enough. I talked about 30% of the people get automation 70% do not. I find that frustrating but I also say; oh well there is something I can do about that. Now I can get out there, pound the drum, and do things. Food has got great potential for growth right through. How do we pound that but food is genetics and robotics and all those kind of sciences so how do we drive that. Oceans is the same thing.  We have lots here that I think we have started on the road to convince people that there is something ahead of us. There is a way to start getting young people into these industries. I think we are there. I think like four years ago when I joined, I do not think we are there at all. If I look at the last four years saying we have made some real progress in changing that mentality. I would say though, you know, I look at the provinces that I will be critical of some of my colleagues saying; yeah if they get it, they are not acting on it and they have got to start acting on it. Some are much better than others and stuff.

I am optimistic if we can have because I think we are moving towards a consensus on what sustainable growth and wealth creation is. Where I get pessimistic is when nobody wants to recognize that you have to have wealth creation. Totally, I am a civil servant so I will say I am a small liberal. I have got to be careful here, somebody might say otherwise, but anyways small liberal but I really do believe in sharing the wealth but you got to have the wealth and we have got to focus on it.

A friend of mine actually said: “Wealth gives you freedom, the freedom to choose where you want to spend the money. If you do not have it, you have no freedom because you cannot make any choices.” I say oh that is pretty profound. You want to be free then you have to have the resources to be free.

David: Francis a liberal that likes wealth that is the kind of liberal we like here, Don and, I on the Insights podcast. It has been a great pleasure to have you join us today. We thank you very very much for your insights.

Francis: Thank you. It was a pleasure.

Unknown voice: You have been listening to the latest episode of Insights on the Huddle podcast network. Mark Leger and Tyler McLean helped produce this episode. You can subscribe to the show by searching for Huddle Insights on podcast platforms like Apple and Spotify and if you have enjoyed listening please give the show a rating and a review. Don and David will be back again next week.