The blockbuster deal between Hydro-Quebec and NB Power overshadowed rivals for the nod as the region’s top business story, but with billion-dollar offshore deals on the table in Newfoundland, paper mills closing and both the recession and the swine flu lurking about, there were plenty of contenders for the other four spots. Here are our top five Atlantic Canadian newsmakers for 2009.
No. 1: Hydro-Quebec comes calling
If you tasked a team of journalists with creating the ‘perfect’ business story, they’d be hard-pressed to come up with something better than Hydro-Quebec’s proposed takeover of NB Power. It involves big money, secret meetings, clashing ideals, strong and vocal opponents. It has even annoyed the Americans. The only thing that’s missing (so far) is the sex.
One suspects New Brunswick Premier Shawn Graham had little idea he would be unleashing a firestorm of protest when he sat with Quebec Premier Jean Charest in late October to announce he was selling most of NB Power’s assets for close to $5-billion. Wasn’t the deal crafted to make him a hero for dumping an ill-performing Crown Corporation, eliminating 40 per cent of the provincial debt and ensuring New Brunswickers had among the lowest power rates in North America for at least five years? Heck, he and his advisers probably thought there would at least be some positive spinoff from the green parts of the deal that sidelined filthy thermal generating plants, thus assuring savings into the future when a carbon tax is imposed.
It didn’t unfold that way. Instead, the deal raised the ire of political adversaries, provincial counterparts and many average New Brunswickers who saw the Province abandoning self-sufficiency. For weeks, the front pages of newspapers across the region were filled with stories dissecting the deal and editorials dissecting Graham. The phone lines of radio talk shows lit up like Christmas trees whenever the matter was discussed.
It was a story that kept on giving. When Frank McKenna threw his considerable political weight behind the deal, Danny Williams rushed off south of the border to warn the already nervous Americans that a Hydro-Quebec monopoly on transmission lines running south was a prelude to Armageddon. Was his fervour fuelled by the fact the deal might scuttle his plans to sell future power from the Lower Churchill Falls development through that same corridor?
Even as 600 angry New Brunswickers gathered around the legislature, hammering Graham for negotiating the deal in secret, for reneging on his 2006 election promise to keep the utility in public hands, and for exempting Hydro-Quebec from future tax payments, word slipped out from Charlottetown and Halifax that Mr. Charest was still in a courting mood for other provinces’ power utilities and powerful people were listening to his wooing.
In Fredericton, Graham remained stalwart and his refrain remained the same. It was too good of a deal to pass up. The Province’s debt was crushing its ability to compete, and with the lower power prices, especially for the corporate sector – a 35 per cent drop for large businesses and 15 to 20 per cent for medium-sized business – industries would be lining up to set up shop in New Brunswick.
At least, that’s the message he will be spending $1-million to take to the public in an ad campaign. Depending on his success, the deal will likely be back on this Top Five list next year.
Good luck with making debt reduction sexy, Shawn.
No. 2: Danny’s Royalty Coup
If Danny Williams’ aggressive involvement in the NB Power/Hydro-Quebec deal has made him a little more unwelcome than normal in Fredericton, his unique style of political hardball continues to earn him fans at home.
Why not play hardball? It works. After two years in a dramatic tug of war with three of the world’s largest oil companies, Williams announced in June he had signed a tentative offshore oil deal that would be worth more than $10-billion in royalties to the Province – twice as much as the Rock has collected from all three previous offshore projects put together.
For a paltry $30-million, Newfoundland and Labrador bought a 10 per cent equity share in the Hibernia South oilfield, the southern corner of the project that started the Province’s climb from “have not” to “have” status. With projected reserves of 223-million barrels of recoverable oil and an unprecedented 50 per cent royalty rate, the Feds, who walked away with just $3.5 billion, were left shaking their heads.
The scope of the coup became even clearer later in the summer when Nova Scotia was forced to announce its offshore royalty numbers were tanking because of near-comatose natural gas prices. Premier Darrell Dexter announced his Province’s expected revenue for the year would be just $151-million, a 70 per cent drop from projections made just a year ago.
No. 3: Navigating the storm
The climb out of the economic doldrums has proved harder and longer than many had predicted. With currency fluctuations making it difficult for manufacturers to find stable footing and banks and traditional investors still sitting to the side of the trail, it became government’s role to pull the economy forward.
Pouring millions into highways, university buildings, sewage treatment plants, and even military ships, governments created jobs and spending that cushioned the impact of anemic tourism, depressed housing prices, and retail sales that were more tortoise than hare.
If the effort was criticized in the short term because projects in Tory ridings seemed to attract more funding, there were signs the crushing debt-load in the wake of the stimulus spending would be fodder for future attacks. Indeed, Shawn Graham’s bid to cut debt by selling assets might be a foreshadowing of things to come.
With all its downsides (everything from seafood to lumber and tires was more expensive to export), the strong Canadian dollar helped fill buses for cross-border shopping expeditions and had misguided Atlantic Canadians swelling with pride as it approached parity with its traditionally stronger American cousin.
On the up side, with fewer Americans around because their money didn’t go as far as it once did, it was easier to get a table in the best pubs where you could drink yourself silly waiting for the real recovery to take hold.
No. 4: Forestry woes
In 2009, AbitibiBowater became a four-letter word.
The struggling paper giant closed its pulp and paper mill in central Newfoundland in February, throwing 450 workers and 250 foresters out of work. It put another 300 on edge in Nova Scotia by ordering repeated shutdowns of its Brooklyn plant before eventually chopping the plant’s capacity in half.
The blow in Newfoundland was not swift and painless. Workers whose fathers and grandfathers had laboured in papermaking were forced to watch the agonizing end, as the Province expropriated the company’s timber and hydro-electric generating assets, only to see the company counter with threats to launch a trade action under the North American Free Trade Agreement to recoup $300-million it felt it was owed.
Even though the company had shut another mill in Stephenville in 2005, there was no joy when it finally filed for creditor protection in April. There was just morbid speculation about how hard a restructured firm would press for cost-cutting and wage concessions at its remaining plants.
The dark tone was the same around sawmills and lumber yards across the region that stood idle, waiting for the resurrection of the American housing market. Several mills closed when the recovery failed to come by year’s end. Others limped along, supported by governments anxious to keep jobs in rural areas.
In November, when those same governments refused to get drawn into fractious talks between AbitibiBowater and its union, negotiations broke down and issues involving pensions and restructuring procedures remained unresolved.
No. 5: H1N1 Jive
If Y2K, also known as the millennium bug, was the overhyped non-starter story of a decade ago, this year’s over-reported underachiever also sported initials: H1N1.
From the time the first television images showed Mexican businessmen wearing surgical masks, Atlantic Canadian tourism operators, restaurateurs, and business owners of all sizes have fretted about the possibility that one day half their staff would call in sick with the swine flu.
The federal government fanned the flames with its relentless calls for vaccination, and Chambers of Commerce did little to calm the waters by urging all businesses to have a disaster plan in place. Sales of hand sanitizer went through the roof and door knobs and keyboards sparkled from countless repeated cleanings.
Even as experts were reporting that the consequences were no different than the normal flu season, a series of tragic deaths, school closures, and poorly organized clinics left mothers frazzled and angry (and that was before television cameras gave the story the emotional legs to keep driving forward). The dreaded “second wave” fizzled as did fears the costs would outstrip the $2-billion price tag associated with SARS in 2003.
A few department store Santas may have used the hype to jump the vaccination queue, but the impact on most businesses was minimal.
Not all the energy that business threw into prevention was wasted. Kevin Kelloway, a workplace specialist at Saint Mary’s University in Halifax, says many businesses were forced to look at their absentee policy and update ancient protocols that required notes from doctors or encouraged people to come in even while they were sick.