Ontario's government last made a jobs announcement in mid-April, when the Economic Development Minister Eric Hoskins pledged $796,672 to two local companies that plan to create 34 jobs – and retain 458 – in Simcoe and Owen Sound.
The dry spell could have something to do with the election campaign, although that really doesn't matter, even if it's the excuse. The world didn't stop for Ontario's politicking. Since the beginning of May, South Carolina Governor Nikki Haley has announced that 10 companies plan to invest or expand in her state, bringing pledges of 7,400 jobs in a period of less than two months. Ontario Premier Kathleen Wynne and Mr. Hoskins have managed less than half that amount over the entire calendar year.
Investment announcements by politicians must be seen for what they are. Most of the jobs are aspirational; approximations of how many hands and brains that will be needed if a company's plans come to fruition. Ms. Haley's hot streak doesn't mean life in Greenville, S.C., is better than life in St. Thomas, Ont.
But the massive gap between the number of jobs being announced by Ontario and the number of jobs being announced by South Carolina and other states is suggestive of something: In the hyper-competitive game of attracting investment, Ontario is getting whipped.
Ontario still sees itself as a place that makes things. The new hotbeds for global manufacturing are the southern states. In this calendar year, Ontario has announced significantly more jobs than only one of those states: little Kentucky, which has a population that is three times smaller than Canada's biggest province.
Ontario's budget could help even the score – or at least make the score less lopsided. The eye-catching plan to set aside $2.5-billion to attract investment is important because it could help Ontario get the attention of global companies looking for a base of operations in North America. With governors such as Ms. Haley and Rick Perry of Texas running around after every job they see, Ms. Wynne needs something to get back in the game. A huge sack of cash could do it.
Money won't be enough on its own.
Few companies will base a business plan on incentives; and if Ms. Wynne and Mr. Hoskins ever catch one that does, they should throw it back. There's reason to worry that the Ontario government is too generous with its subsidies. An analysis of its job announcements this year shows Ms. Wynne's government doled out $56,000 for every new job the recipients promised to create. Kentucky spent about $26,000 (U.S.) and North Carolina spent only about $9,000. (To their credit, Ontario, Kentucky and North Carolina are among the few jurisdictions that publish enough data to make such a calculation. South Carolina's is haphazard and most other states' are non-existent.)
Ontario doesn't necessarily need to overspend on free-agent companies. Incentives could be useful to lessen the sting of higher labour costs. But executives who do business in both the U.S. and Ontario say there is no great difference between doing business in the two places. What the U.S. offers in cheaper wages, it gives up in forcing a (compassionate) employer to pay the health benefits of his or her employees. The decision about where to invest comes down to intangibles. The ability of Ontario to get the attention of prospective employers, and keep it, will determine the success of Ms. Wynne's plan to turnaround her province's economy over the decade.
Details are thin, as they tend to be in budgets. But Finance Minister Charles Sousa's budget at least hits the right notes. Among Ms. Haley's jobs haul this spring was a big tire maker from Singapore and bearings maker from Italy, both of which moved to South Carolina because it will put them close to all the big automobile assembly plants that have sprung up in the South in recent years. Ontario talks of the need to win and retain such "anchor" companies, and one assumes the $2.5-billion fund will be put to that use.
The budget also importantly promises to tailor training programs to suit the specific needs of employers. If there is one thing that Ontario could do to strengthen its hand, this is it. The states that are having the most success at attracting investment are bending over backward to train companies' workers in whatever fashion the employer sees fit.
Ontario's promise to do so is a bullet point among many other commitments. If Ms. Wynne's pledge to revive Ontario's manufacturing industry is to succeed, that little promise must become a much bigger element of her sales pitch.