16 January 2007

NL productivity up; oil a major driver

A new Statistics Canada report on labour productivity shows Newfoundland and Labrador's productivity grew at twice the national rate between 1997 and 2005.

The story is covered by the Globe. As the Globe explains:
Labour productivity, measured as the amount of gross domestic product in constant dollars per hour worked, is considered an underpinning of a prosperous economy, which should bode well for Canada's most eastern province.
The Globe story opens with a quote from Jerry Byrne, president of D.F. Barnes, a company that has prospered in recent years in the offshore oil supply sector.
Since leading a 2002 management buyout of the 74-year-old company, Mr. Byrne has guided it to a 30-fold increase in annual revenue in just four years -- and he expects to hit a threshold of about 50 times 2002 revenue some time in the next year.
At the same time, the story also quotes Trevor Adey, president of high-tech firm Consilient. Adey notes that the gains from the oil sector haven't necessarily filtered down in a province where workers are still leaving in large numbers to find work elsewhere. Adey's right, of course. The oil and gas sector is such a capital intensive business that the apparent good news in the labour productivity numbers masks productivity shortcomings in other sectors of the economy.

That said, Byrne's success at D.F. Barnes is indeed remarkable. It has come about through some smart deal-making and a good measure of competence and ability. Local offshore companies have been known to compete successfully around the globe based on their experience in local offshore and Barnes is certainly one of the prime examples of successful local entrepreneurship.

Unfortunately, local companies have to look overseas for work these days. They had been planning on the Hebron project but that project has now been shelved indefinitely.

At the same time, though, D.F. Barnes has had its share of financial help from the provincial government.

In June, Byrne announced a major contract for launch and recovery systems for remotely-operated vehicle. The work is being done through a Barnes subsidiary, Orphan Industries.

In December, 2006 - six months after the launch and recovery system contract was announced - the provincial government provided Orphan with $970,000 "to expand the manufacturing facilities of Orphan Industries Limited to become the preferred supplier of Launch and Recovery Systems (LARS)."

Notice that the provincial government release doesn't mention D.F. Barnes once and - very unusually - doesn't include a quote from the company.


It just has comments from Kevin O'Brien, the logo guy the business minister, and Kathy Dunderdale, the Premier's natural resources minister.