Saint John could learn from the Algoma lesson

You might have been living under a rock if you were oblivious to Saint John's financial issues. Problems that began decades ago. I wrote the following article March 1st 2008 in the New Brunswick Telegraph-Journal under the opinion column entitled the Silent Majority, you the consumer, taxpayer or spectator decide as to it's merit or relevance 13 years later in Saint John.

"I decided to attend the public consultation session this week on the north of Union development not knowing what to expect. Last week in my column, I provided what I thought was a fairly good overview of the buildings with heritage value in the proposed development area. As it turns out, what I provided was a mere sketch, compared with a virtual masterpiece presented by Jim Bezanson, the city's heritage development officer. Many of the buildings are among the only remaining structures that survived the great fire of 1877. Bezanson's presentation was refreshing and in stark contrast to the many easels that represented what many city officials consider to be 'urban renewal'. Perhaps he's one of the few at City Hall with both the vision and courage to resist an 'urban development' plan that borders on heritage genocide. Thumbs up to Bezanson and thumbs down to those who are hell-bent on pushing this absurd and irrational plan.

The 1980s and '90s were accompanied by severe economic conditions. Particularly hard hit was the steel industry. Algoma Steel was, at the time, the smallest of the three primary steel producers in Canada. Contracts negotiated with unions over the years had increased overhead costs to the point where Algoma Steel was no longer competitive. Customers left and sought steel from other providers, sales fell, overhead remained high and so the downward spiral began. Perhaps management had given in too readily to union demands over the years.

There was little trust between management and the union, and little willingness on the part of the unions to grant concessions during a difficult period. Faced with certain bankruptcy and the loss of thousands of jobs, the Ontario provincial government came to the rescue with loan guarantees and with some strings attached. Algoma was a publicly traded company and its share value had declined to about one dollar per share. Few investors gave the struggling company much chance of surviving.

Contained in the provincial agreement was a requirement that the workers become the owners of Algoma Steel. The government basically said, 'you the employees/owners will be the over-riding consideration as to your success or failure, your future is in your hands.' Algoma became a smaller restructured and reorganized company. It took about a year for the workers-turned-managers to achieve a realignment of attitudes at the company. Those that would not or could not make the adjustment were no longer a part of the company. That is the politically correct way of saying they got rid of the deadwood. It wasn't easy, but they came back from the brink.

So, what changed? They were in the same location, producing the same product with the same workers. What changed was management, accountability and attitude. So, let's fast forward. There have been ups and downs but where is Algoma Steel today?

Essar Steel Holdings Limited last year signed a definitive arrangement agreement providing for the acquisition of all of the common shares of Algoma for $56 per share or $1.85 billion. I would call that a success story.

So what does the Algoma Steel story have in common with Saint John? Both have managers, employees and shareholders but in the case of the city the shareholders are called citizens. What if, as in the case of Algoma, Saint John city employees were required to become 'shareholders'? I wonder if the change would have the same beneficial effect that it had on Algoma? Perhaps we would have a little more deliberation, diligence and scrutiny when it came to looking at management practices, the quality of services delivered, performance standards and investment decisions such as the proposed police headquarters for north of Union.

A critically important point to reflect on is when shareholders and/or customers are not happy with the performance of a company, they leave or sell their shares and invest elsewhere, and when citizens are not happy with the performance of a city, they sell and leave for greener pastures. That's what's been happening in Saint John for decades.

Unfortunately, the approach taken by city management and council is rather than take a critical look at all aspects of operations, they have historically chosen to increase the tax burden on those who remain.

That's comparable to a company increasing the price of their product or services to their remaining customers in order to maintain the same revenue. I think most people will agree this course of action would only accelerate the downward spiral.

SimCity is a challenging simulation computer game where you have an opportunity to build a city that continues to attract people, establishes competitive rates of taxation, has quality of life, low crime, low poverty and good infrastructure.

Perhaps at the next common council meeting someone will make a motion to provide each member of council and city management with their very own copy of SimCity".

Think about it.