Evaluating the Viability of the Viability Study

It’s not like I had high hopes for that “viability” study Grant Thornton has just completed for the CBRM — frankly, I viewed it as a $219,000 hoop we had to jump through to get the province to recognize our difficult financial situation —  but I hadn’t expected to find myself quite as deeply unimpressed by it as I am.

My problem is partly inane recommendations like:

Support the creation of 4,000 employment opportunities within the next five years.

(Damn, why didn’t we think of that?)

And partly it’s a seeming lack of understanding of the community it purports to study:

The economic identity of regions are often characterized by clusters of specialized industrial sectors (i.e. Silicon Valley, Alberta’s oil and gas sector). The CBRM doesn’t exhibit a strong focused cluster in a specific area.

(Um, do you suppose — and I’m just throwing this out there — that’s because we’ve already been there, done that? Because we used to be characterized by a “coal and steel” cluster until it went bust shortly after amalgamation — a fact you actually acknowledged in your introduction?)

But what really set me off was the opening section in which the authors kick things off by disavowing any responsibility for verifying any of the information upon which they’ve based their analysis:

Much of the information was gathered from interviews with and documents provided by Steering Committee members and key CBRM staff. As such, Grant Thornton assumes no responsibility and makes no representations with respect to the accuracy or completeness of any information provided to us. We are not guarantors of the information  which we have relied upon in preparing our report, and except as stated, we have not attempted to verify any of the underlying information or data contained in this report.

I assume there were limits to how far the authors were willing to trust without verifying. If, for instance,  “key CBRM staff” had told them the container terminal existed but was invisible to the naked eye, they would surely have balked.

But some of the information they have taken on board about the Port of Sydney without question seems quite dubious to me, and while there is a lot of apparent expertise on display in this study — the authors offer opinions on everything from encouraging aquaculture to revising the CBRM’s electoral boundaries — I thought I’d focus on the port as a lens through which to critique the full report because I know something about the port.

So what does Grant Thornton have to say about the Port of Sydney’s role in the CBRM’s future “viability?” Why, it’s a “key pillar” that will anchor “subsequent growth strategies.”

Indeed.

 

Feasibility

A table labeled “opportunities” states:

Port Commercialization – Background documentation revealed the continued planning and feasibility assessment of developing a container facility to support the advancement of the areas [sic] transportation and warehousing capacities.

What they mean by “background documentation” is anybody’s guess, but it sounds like they mean “we read a bunch of news articles and press releases about the port.” (I mean, they can’t have been made privy to any “confidential” information, right? Albert Barbusci would not want his secrets revealed to consultants who might later work for one of his “rivals,” right?)

And there’s something weird about the phrasing — it makes it sound like we already have significant transportation and warehousing capacities which a container terminal would “advance,” when in fact we have no significant transportation and warehousing capacities and were hoping the container terminal would spark their development.

But the  big reveal is that we’re still assessing the “feasibility” of developing  a container facility. I thought the feasibility study was supposed to have happened over three years ago? Did the consultants not read  this December 2015 news release from what was then known as Harbor Port Development Partners?

[China Communications Construction Company] plans to undertake the design and construction of Sydney’s container terminal including all required infrastructure. In addition, CCCC will provide container cranes, gantries and other port related equipment, including any required design and engineering. Concurrently, CCCC will undertake a feasibility study on the development of the overall container terminal, [emphasis mine] and define the development plan for this facility to be located on the Greenfield site.

I know Barbusci, of what is now Sydney Harbour Investment Partners, is telling us the Chinese are out of the equation, but did they not have time to conduct the feasibility study before they abandoned SHIP? And if no feasibility study has been conducted, then what exactly has been happening since 2015?

 

Logistics

Elsewhere, at least, the authors do come to grips with some of the challenges facing the container terminal project. As part of “Recommendation 5: Improve Accessibility to the Region,” they write:

The CBRM’s relatively remote location provides both opportunities and challenges. The port offers an ideal location for international trade access, yet weather conditions are known to present uncertainty during specific times of the year.

Are the authors also shipping experts or is that evaluation of us as an “ideal location” for international trade access one of those facts they didn’t bother verifying?

And can they really not bring themselves to say “sometimes in winter the harbor ices over” or do they actually believe Marine Atlantic’s MV Highlander got stuck in uncertainty in 2017?

Repairs to the rail-line could require as much as $100M in [sic] to make it viable, a key aspect for the potential development of a future container facility. Without improved connections to international transportation networks, further investment will likely be required to make the CBRM a viable logistics and warehousing destination.

Trying to parse these sentences is like trying to eat soup with a fork but the authors seem to be suggesting that even if we don’t repair the rail line and fail to land a container terminal we could still, somehow, become a “viable logistics and warehousing destination” although it would require “further investment” (in what, exactly?)

And what is a “warehousing and logistics destination?” Warehouses, in terms of international transportation, are surely transit points, not “destinations.” And doesn’t “logistics” refer to the flow of goods?

So what are they talking about?

There’s actually another odd reference to logistics and warehousing  divorced from any mention of transportation links elsewhere in the study — in one of the (innumerable) charts, under “economic strengths,” they say:

Investment in logistics and warehousing infrastructure is generating optimism and attracting potential investment.

I’m not sure what investments they are referring to, I don’t see why they need to be so mysterious about everything and I don’t understand how you attract “potential” investment.

This is really starting to make me mad and instead of clearing things up they are now going to start talking about air cargo and advise us to follow the example of Moncton.

Brace yourself.

 

Hub City

The authors continue:

Additionally, the cost to directly access the region from major Canadian airports remains comparatively high, a barrier for tourism and potential investors.

They then inform us that the Port of Sydney Development Corporation has a mandate to develop the harbor and all its infrastructure, including air and rail, before pivoting to this:

Evidence: Moncton, New Brunswick
Moncton’s nickname of “Hub City” provides some history to the City’s focus on transportation and logistics. The historic investment in transportation and the City’s strategic location have continued to benefit the region’s activity as a transportation hub and exemplifies working towards this recommended strategy of influencing greater regional access. Some of the area’s largest employers are directly related to warehousing and logistics and are benefiting from the increase in global trade and e-commerce.

I wish I had the nerve to write a sentence like “Moncton’s nickname of ‘Hub City’ provides some history to the City’s focus on transportation and logistics,” in a $219,000 report and then just leave it there — like it’s a perfectly good sentence, like it actually expresses a helpful and coherent thought — and move along to my next sentence which (I think) explains how the CBRM can become Moncton (home to New Brunswick’s only cargo airport and a CN intermodal terminal and located three hours from the US border.)

First, we’ll have to, “Consult with the airport to assess the process for increasing seasonal low-cost carriers and increased cargo traffic.” (Is it just me, or do you see a possible future assignment for a consultant in there somewhere? Also, why exactly, would shippers be interested in moving more air cargo through Sydney?)

Then we’ll need to “Work with provincial and regional governments to bolster feasibility of increasing accessibility via the Sydney Airport” and “Assess the forecasted costs of incentivizing or attracting low-cost carriers during specific months and potential sources of funding.” (I think — although I’m not sure because I don’t speak consultant — we’ll have to convince some level of government to subsidize the flights. Maybe we could hire Ben Cowan-Dewar to lead that charge.)

Next we must “Assess the projected costs and schedule of repairing and maintaining the rail line to Truro.” (Yeah, I’m pretty sure we’ve already done that like, twice already.)

And finally, we must “Expand and Improve and broadband connectivity needs.” (I think they must mean “expand and improve broadband connectivity” period and really, why not — I mean when you pay for recommendations you want the most fabulous recommendations possible, am I right?)

 

Second berth

Before we give up and tear this report into small pieces (with our teeth), we must consider the other great “opportunity” represented by the Port of Sydney:

Development of the Second Port Berth–Increasing the accessibility to the region bolsters the destinations [sic] tourism potential and external influx of capital. As a destination for Cruise ships, the port has increased significantly following redevelopment.

“External influx of capital” sounds so much more important than “money spent by passengers and crew members who a) disembark and b) open their wallets.” But there’s an anticipated problem with the second berth:

The development of the second cruise ship berth is a leading economic initiative for the CBRM and closely tied to the redevelopment of waterfront areas. Similarly, any return on investment in increasing accessibility is dependent on utilization and demand for external services and won’t necessarily translate to a direct return for the municipal region.

You mean, just because we built it doesn’t mean they will come?!

Never fear, however, Grant Thornton has a mitigation strategy:

The importance of due-diligence, market studies, and dedicated resources that will contribute to the planning and implementation of critical economic strategies will support assessing and managing risks inherent in economic growth and infrastructure projects.

We actually commissioned market studies (from a firm with such close ties to the cruise industry it’s basically part of it) and a due diligence report on the second berth. I don’t think they contributed to the planning and implementation of critical economic strategies that supported assessing and managing the risk of the project but then again, I don’t actually know what any of that means, so I’m hesitant to express an opinion.

I do know that even relying on the rosy predictions from the market study, the authors of the due diligence report figured the second berth might just about pay for itself over 30 years provided there are no unexpected environmental issues and the municipality doesn’t end up paying much more than it budgeted for the land it expropriated and there are no cost over-runs. And we went ahead and built it anyway.

So…where does that leave us?

 

Coda

A lot of the recommendations in this report — like develop “a marketing strategy with tailored value propositions for distinct target groups,” create “a rural residential development plan,” conduct “a deeper analysis of the CBRPS to assess potential options for improving efficiencies” — seem like lovingly planted seeds that will one day grow into full-fledged consulting engagements. You gotta hand it to them — they know how to ensure their own future viability.

But I caught myself wondering if a consultancy firm like Grant Thornton is really best placed to advise a municipality on its viability and ran across a 2012 article on precisely this subject by a reporter named Daniel Denvir, who noted that in advising governments:

Consultants draw on experience from a private sector that has relentlessly slashed employment, broken unions and outsourced work for decades.

In fact, Grant Thornton borrows its whole “framework” for measuring municipal viability from the private sector, using  measurements employed in RBC’s “Youthful Cities 2019 Urban Work Index.” (Halifax, by the way, didn’t fare very well in these rankings — Edmonton was the winner).

The authors of the CBRM study prefer the phrase “partnering with external organizations” to “outsourcing” but they mean “outsourcing” and they do advise the municipality to consider it.

They also refer to people as “human capital” and “intellectual capital” and sometimes simply as “labour” as in:

The comparatively lower median household income suggests a lower cost of labour for potential private sector businesses.

Because when people don’t have much money, you don’t have to pay them much money — never mind how qualified they are or how high the cost of living is.

I have always found this sort of sterile, pseudo-scientific language off-putting and never more so than when it’s applied to my people and my community.

But as I was working up a good head of steam about all this I remembered what happens to consultants’ reports in this town and I pictured it on a shelf between the Mayor’s Task Force report and Neil MacNeil’s Port of Sydney (rejected) report and I calmed right down.