Government cash helps boost PEI aerospace industry

Aerospace is now the fourth largest industry in the province

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CORNWALL, PEI Jun 30, 2015/ Troy Media/ – Whenever there is any talk about diversifying the PEI economy from its three primary industries of farming, fishing and tourism, one word usually comes to the fore – aerospace.

The island aerospace industry is a success story. Before the closure of the province’s only military base in 1989, the industry did not exist in the Cradle of Confederation. Today, it is the fourth largest industry, with annual sales of $400 million and employment for close to 1,000 people.

With federal and provincial funding, that former air force base has been turned in a 1,500-acre business park. Aerospace PEI is the umbrella organization that represents the industry.

The major player in the sector (in fact, it accounts for almost half of the jobs) is Vector Aerospace. Part of a world-wide company called the Eurocopter Group,  has its head office in Toronto. It has four other Canadian offices, as well as offices in Australia, France, Ireland, Kenya, Singapore, South Africa, United Kingdom and United States.

Aerospace industry loan sparks commitment

The company recently committed to maintaining its island operation for 15 years – the same day, in fact, that it received a $4-million loan from the PEI government that will run over the same period. Certainly, it is not uncommon for the province (or most other jurisdictions for that matter) to lend successful companies money. After all, the more successful the company, the more likely it is the government will get their money back.

Vector will also receive $1.3 million in non-repayable loans if it meets hiring targets agreed to by government and the company. The federal government is also making a $1.5-million loan to the company.

Politicians at the announcement had lavish praise for both the company and their ability to work together to distribute the taxpayer’s money. Premier Wade MacLauchlan called the company the cornerstone of the province’s aerospace industry and the second biggest private sector employer on the island.

One politician who skipped the proceedings was Green Party Leader Peter Bevan-Baker. While he too welcomes the well-paying, year-round jobs the announcement means for the island economy, Bevan-Baker questions whether taxpayers need to be involved.

“This is a hugely profitable company,” he said. “My question is whether they would have undertaken this expansion without government involvement.”

It is a legitimate question, especially in a province that has a large debt. On the day of the announcement debate in the legislature centred on the fact 28 teachers were being laid off. The Green Party leader rightly pointed out $5 million plus pays a lot of teachers.

Jobs in the balance

That is certainly true, but it is hard to believe PEI could unilaterally give up prospecting for business without a range of loans and grants in its arsenal. Since other provinces are doing the same things and they usually have more money, PEI could say goodbye to attracting any large businesses.

Before the expansion, Vector employed 440 people in the province. If those jobs disappeared, it would have a significant impact on the provincial economy and on the ability of the province to offer services to its residents.

While PEI may have a higher percentage of civil servants in its population compared to other provinces, the fact is the island government has to provide essentially the same services to its residents as the other provinces – just on a smaller scale. We have roads, schools and hospitals too and they have to be paid for.

Those 440 vector workers are helping to foot the bill. Since the company has expanded steadily since it was established in 1992, there is every reason to assume the workforce will continue to grow.

It would perhaps be desirable if all governments gave up on the idea of helping private sector companies financially, but no one jurisdiction can do it alone. As anybody who has followed Canadian politics knows all too well, getting all 13 provincial and territorial governments to act in unison is no mean feat.

A life-long resident of Prince Edward Island, Troy Media syndicated columnist Andy Walker has been a writer and commentator for more than 30 years.

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