BlackBerry Ltd. is shutting a site in Bedford, N.S., laying off more than 350 people and returning $2-million the provincial government paid to the company this year to support its BlackBerry 10 platform.
The layoffs and closure of an associated “centre of excellence facility” in the Halifax-area community are part of a broader move by the troubled smartphone company to cut 40 per cent of its work force and halve spending levels by next year.
But the move also comes just two days after outgoing Premier Darrell Dexter, who was criticized for generous handouts to corporations, was soundly beaten in an election by the Liberals led by Stephen McNeil. Several observers speculated BlackBerry delayed announcing the move until after the election to avoid influencing the campaign.
The decision is a blow to economically challenged Nova Scotia, where BlackBerry was expected to pay $24-million a year in salaries over the next five years and millions more in training and equipment purchases.
“We know that our employees in the Halifax area have worked hard on behalf of our company and we are grateful for their commitment and contributions,” the company said in a statement. “This is difficult news for them. … However, these changes are necessary in order to refocus our business to drive the company towards profitability and success in a maturing and more competitive mobile industry.”
“Certainly everyone knew BlackBerry was in difficulty,” said Kelly Regan, the Liberal MLA-elect for the Bedford riding, who grew up in the Kitchener-Waterloo area where BlackBerry is based. “While the BlackBerry facility had escaped massive layoffs [previously], I wasn’t sure it would escape that this time. It’s a really sad day for the people here and in the BlackBerry family around the world.”
Corporate welfare critics said the layoffs were a reminder of the shortcomings of the practice of selectively subsidizing companies to encourage job creation, common in Atlantic Canada. “Hats off to BlackBerry” for returning the money, said Brian Lee Crowley, managing director of the Macdonald-Laurier Institute, a non-partisan public policy think tank in Ottawa.
Past analysis by Mr. Crowley and others have shown that government handouts to corporations in various forms rarely deliver the promised payback, and often don’t create sustainable, long-term jobs. “Corporate handouts are no guarantee that jobs get created,” said Jack Mintz, director of the school of public policy at the University of Calgary. “I wish governments would learn.” Instead, he said Nova Scotia should focus on fixing its “very uncompetitive tax system,” which includes one of the highest corporate taxation rates among all Canadian provinces.
BlackBerry has received millions of dollars from the province since 2005, when it announced plans to open in the province. Its facility in Bedford, which opened in 2008, reaped $5-million in aid from the province for recruitment and training, and a further $11-million in payroll rebates over five years from the province’s business development agency, Nova Scotia Business Inc. Under the new five-year deal inked last February, BlackBerry was to receive $2-million a year for employing at least 400 people, paying an average salary of $60,000 a person – about 50 per cent higher than the provincial average – and investing millions annually in skills training and equipment.
Ms. Regan criticized the outgoing government for “having a habit of just giving money to companies without actual jobs being created,” but added: “What happened here was the world-wide collapse of an international company, and sometimes that happens.”