Watershed decision

Lawrence Solomon
National Post
December 18, 2001

two people turning a tapCUPE, the public service labour union, recently issued a dire prediction to its members. “A waste water treatment system in the coastal city of Halifax … could well be a watershed in the Canadian struggle against privatization,” it warned in exhorting its troops nationwide to join its anti-privatization campaign.

“The stakes are high … the water multinationals smell big business. They’ve stepped up their lobby in Halifax, with an eye to setting a private precedent for other coastal cleanup projects.”

The watershed decision took place last week. A precedent was set. Halifax, in the first indication of how Canadian cities may react to the deplorable state of the waterways that receive their sewage, overwhelmingly chose privatization.

CUPE waged an intense, two-year war in Halifax but, in the end, city councillors had an easy decision to make in trusting the cleanup to a multinational consortium over municipal operators. For decades, Haligonians had seen their environment deteriorate under an apathetic, government-run sewage system that treated Halifax Harbour as its toilet. Every year, the unionized public utility abjectly dumped 40 billion litres of raw sewage – untreated feces, tampons, condoms – into public waterways, staining Halifax’s reputation coast to coast. To add insult to injury, since 1973, the city has been collecting a surcharge on water bills to pay for a cleanup. Almost 30 years later, most of that money has been frittered away, leaving citizens with dirty waterways and empty pockets.

In contrast to Halifax’s abysmal environmental record, the multinationals vying for the contract – one led by the British firm, Thames Water, the other by France’s Suez-Lyonnaise des Eaux – operate mostly in the European Community and the United States, the two jurisdictions with the world’s most stringent water quality standards. Public opinion polls in Halifax showed the public wanted the best job done for the best price, ruling out the government-run locals.

As the bidding for the sewage contract demonstrated, the public is doing well by the decision to go private. Halifax had estimated that building the sewage plants alone would cost $315-million. Suez, which narrowly outbid the British multinational for the contract, has committed to build the plants for $262-million, besting the Halifax government estimate by more than $50-million. The sewage contract requires the winning bidder to clean up the harbour enough to permit swimming, boating and fishing 67% of the time. Suez wants the water to be clean enough to allow those activities 95% of the time and believes it can do so at little extra expense.

To add to the benefits to taxpayers of the deal to build and operate the plants – at $465-million over the 30-year life of the contract, the largest municipal infrastructure project in Atlantic Canada’s history – Suez will be paying taxes: an estimated $1-million a year to the province, twice that to the federal government. Had the award gone instead to a municipally run utility, the cost of the project would have been higher, the quality of the environment would have been lower, and governments would have had less revenue to pay for health, education, policing, or other needs that involve an indispensable government role.

None of privatization’s inherent advantages impress CUPE, which sees instead a lost opportunity to obtain more dues-paying members. CUPE knows privately run utilities need fewer workers to get the job done – in some cases, half as many workers – limiting the union dues spilling into its coffers. Because taxpayers, consumers and the environment all benefit, CUPE has emerged as the only loser from its two-year long campaign to derail the privatization process.

Over those two years, CUPE stopped at nothing in its attempts to discredit privatization of water and sewer services. Among its many assertions, CUPE claimed that, as a result of water privatization “dysentery has gone up by 600% in Great Britain alone.” In fact, dysentery rates, which fluctuate wildly, fell as often as they rose in the decade following privatization. In another example, CUPE claimed private companies have logged increased water pollution violations in the U.K. In fact, following privatization, sewage plants cleaned up their act and coastal beaches became swimmable for the first time in decades. The U.K.’s Environmental Agency declared “most of the environmental damage of the past 200 years will have been repaired by 2005.”

CUPE also claimed private companies failed to invest in infrastructure. In fact, the private U.K. companies are investing almost $100-billion. As a government official put it, “You just couldn’t contemplate that kind of expenditure in the absence of privatization.”

Halifax councillors and the public took note of CUPE’s evidence and opted for the competition. Past attempts to build sewage facilities repeatedly failed for lack of money. The private sector’s proposal – slim on bureaucratic waste, fat with benefits for the public – makes the long-overdue cleanup possible.

With the Halifax privatization a done deal, the battle will now turn to the other cities with Third World sewage disposal, particularly St. John’s, Saint John and Victoria, all publicly run systems that pump raw sewage directly into their waterways.

CUPE’s one good claim deserves repeating: Halifax’s decision “could well be a watershed” in bringing Canadians the superior water and sewage systems we deserve.

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Making sense of the vote: The 2000 Canadian election

Elisabeth Gidengil, André Blais, Richard Nadeau, Neil Nevitte

November 1, 2001

McGill University, Université de Montréal and University of Toronto


The authors offer an explanation of individual vote choice and an account of the overall outcome of the 2000 Canadian election, looking at the election from both the bottom up and the top down.


Click here to view .pdf document

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War profiteers at work

Lawrence Solomon
National Post
October 9, 2001

The war has begun and the profiteers are at work, parlaying the tragedy of Sept. 11 into lucre for their pocketbooks. The penny-ante profiteers, like the gas station operators that preyed on public fears and jacked up pump prices to US$5 a gallon, have already been shamed into repaying their ill-gotten gains. The big-time profiteers don’t shame so easily.

In past wars, the big winners were the arms dealers and other suppliers to the military. This time around, the big-time profiteers don’t supply the government. They sponge off the government. At the head of the sponge line are the United States’ farmers.

Prior to Sept. 11, farmers expected slim pickings from the public purse. Because Americans didn’t want to raid their Medicare or Social Security funds to provide pork to farmers, the Agriculture Committee’s ranking member in the House of Representatives, Charles Stenholm, reluctantly conceded that hopes for a big farm-subsidy package were “dead.”

A few days later, terrorists struck the World Trade Center and the Pentagon, and a savvy Mr. Stenholm decided the time was right for him to strike, too. The “need for a new agriculture policy … may have been enhanced,” he decided, setting to work to convince his fellow legislators that Sept. 11 makes agriculture funding a priority. The farm lobbies smell victory, too. “We’re just going all out trying to line up votes,” said Bob Stallman, president of the largest farm lobby, the American Farm Bureau Federation. In the wake of the tragedy, Mr. Stallman and his farm friends in Congress are seeking a 75% increase in farm subsidies.

Mr. Stallman and other lobbyists claim that their resuscitated bill – the Farm Security Act – will enhance the United States’ food self-sufficiency. They were making this claim prior to Sept. 11, too. “This is going to be an issue for all Americans,” Senator Blanche Lincoln of Arkansas had told The New York Times. “Do we want to support American agriculture and ensure our food security and independence, or do we want to lose control eventually to the global marketplace as we have with our energy policy?”

After Sept. 11, her words seemed to take on new significance. But they are a fraud. The United States has no food security concerns – it is an immense food exporter.

The subsidies, which mostly go to wheat and other low-value export crops, do affect global food security, but for the worse. By flooding world markets with subsidized grain, U.S. farmers wreck international food markets and help put farmers in poor countries, who can’t compete against the United States’ cheap exports, out of business. Instead of feeding themselves, many of these countries instead become food importers or rely on food aid. With their economies undermined, local democracy is stunted and the poor countries’ often despotic rulers – who control aid distribution – become strengthened. Higher subsidies for U.S. farmers would only increase the size of U.S. exports and undermine poor countries further.

The profiteering U.S. farmer harms global security another way, too. The money the farmers are clamouring for competes with, and compromises, funding for the United States’ legitimate security concerns. Little wonder that Senator Richard Lugar, a leading member of the Senate’s Agriculture Committee, deplores the rush to pass a farm bill as “irresponsible,” adding, “To imply somehow we need a farm bill in order to feed our troops, to defend our nation, is ridiculous.”

The Farm Security Act is not about the welfare of America’s troops. It is about the welfare of middle-class farmers, particularly a handful of big farmers who grab the lion’s share of the benefits. Last year, 10% of farmers received 61% of the US$32.2-billion in subsides. For the five-year period ending in 2000, one-third of the US$71.5-billion that the federal government paid in subsidies went to the largest 2% of farms. The top 1% received an average of US$112,000 per year while the bottom 80% received an average of $1,200 per year.

Not that the average U.S. farmer is disadvantaged. With an average household income of $64,000 in 1999, farm households came in 17% higher than the average U.S. household. The average income of the households which own large farms, which get the lion’s share of the subsidies, exceeded $135,000 a year, $41,000 of which was subsidy. Amazingly, many of the legislators in farm states who argue for and pass the bills are farmers themselves who, in the process, line their own pockets. Ms. Lincoln’s family farm, for example, received US$351,000 over the last five years.

Aircraft manufacturers such as Boeing, which in past wars profited by selling bombers and other military aircraft to the armed forces, saw no silver lining to the clouds of Sept. 11. Because it stands to lose far more business in civilian aircraft than it can ever hope to earn in military aircraft, Boeing’s stock plummeted, as did that of most other manufacturers in the aircraft industry. Boeing also announced it would need to lay off between 20,000 and 30,000 workers. The economic carnage in New York and throughout the country is immense, and although some industries, and some workers, will be receiving federal aid, that aid will not leave them whole. Many Americans are coming together at this time to relieve the suffering, and making sacrifices of their own to help victims of terrorism. Only one large group seeks to turn Sept. 11 into a windfall: flag-waving American farmers.

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Buffalo, not farmers, belong on the Prairies

Lawrence Solomon
National Post
September 11, 2001

 

One hundred years ago and more, lured by free lands and wild-eyed visions of prosperity, pioneers were duped into settling the Prairies. Many quit as soon as they realized their mistake, never to return. The rest, through their offspring, got their revenge.

For decades, Prairie farmers have been extracting payments from a gullible public that believed that the plight of the Prairie farmer was temporary. It isn’t. The Prairies cannot support a large farming population, and never could. Canadians who believe otherwise are being duped, as surely as those early Prairie pioneers were duped.

Before Saskatchewan became a province, before Canada became a country, the area we know as the Prairies went by another name: The Great American Desert. This semi-arid area extended from the Rio Grande in the south to the delta of the Mackenzie River in the north. Since recorded time, this area has received too little rainfall – about half that necessary – to consistently support agriculture.

Early pioneers turned back when they reached the Great American Desert. The summers were too hot, the winters too cold, the rainfall too unpredictable, to provide a decent living. Then governments decided to open up the West. Because railroad companies refused to build uneconomic lines across the desert, governments plied them with financing and vast landholdings to sell to settlers. The railway companies built the lines, and set about marketing their lands.

The Great American Desert was re-branded; its name would soon be forgotten. In both the United States and Canada, railways obtained large land grants and government encouragement to market them aggressively. They did so for decades, making wild claims about the climate and the agricultural potential of the Prairies well into the 20th century. Luckily for the railroads, few harsh droughts struck during their marketing efforts.

Told that the land was fertile and the water plentiful, Europeans crossed the oceans in droves and Americans flocked north. Stephen Leacock, the economist-historian from McGill University, described the times in his history, Canada: The Foundations of its Future:

“‘The new century,’ said Sir Wilfrid [Laurier], ‘is Canada’s.’ It was, till the Devil took it away. Bountiful harvests and good prices drew a flood of immigrants toward the West, utterly different from any movement seen before. The new Minister of the Interior, Mr. Clifford Sifton, inaugurated a vigorous advertising campaign for immigration. Lecturers spoke at the fall fairs of the United States and visited the British Isles. Leaflets and maps were sent all over Europe; agencies opened at the ports. Imperial Germany became alarmed. ‘The attempt to lure our fellow countrymen to this desolate sub-arctic region,’ so complained Wilhelm’s Street, Berlin, to Downing Street, London, ‘is to be denounced as criminal.’ But Main Street, Winnipeg, won out. Immigrants began to move in a flood. As many as 75,000 came to the Western Provinces in 1905, 90,000 in 1906 and in the last four years before the Great War, an average of 120,000 a year.”

Canada’s publicity machine pulled out all stops. At the 1897 Diamond Jubilee, the London Canadian Arch proclaimed Free Homes for Millions, a theme repeated in posters plastered everywhere. Through its Homestead Act, the government gave all comers 160 acres, and through railroad subsidies it gave them ready transportation. The marketing campaign drew everyone from Oxford graduates to remittance men, starry-eyed all: “He saw himself already lord of a bonanza farm, reaching beyond the horizon, bending with golden grain that fell with a sigh beneath the knife of the blinder,” Leacock wrote. “He saw himself in winter affluence on the portico of a California hotel. It was a picture that called forth while it lasted all the best impulse of individual effort. It is all gone now … The boom broke. The fortunes vanished.”

The fortunes vanished, as vanish they must. The Prairies regularly succumb to drought. Prairie farmers learned that lesson well, and have since been harvesting subsidies. The rest of us have yet to understand that we’ve been attempting the impossible in expecting sustainable agriculture on the semi-arid Prairies. Not that crops can’t be grown there with enough expense – by pouring subsidies into farming the desert, even Saudi Arabia became a major exporter of wheat. But neither Saudi Arabia nor Saskatchewan has an economic rationale in growing wheat.

Last week, to help with the drought, Saskatchewan’s agriculture minister formally requested that Ottawa top up existing subsidies with up to $200-million in new money. The farm lobbies voiced instant approval. “I think he’s on the right track,” said one. Said another: “At some point the federal government needs to say the program, the normal system, won’t handle this stress.”

Yes, at some point the federal government does need to say that the normal system won’t handle growing grain in the desert. It then needs to stop perpetuating the mistake made a century ago, when government policies mistakenly overpopulated the Prairies with farmers. The federal government should recognize that it has been defying nature and stop subsidizing Prairie farmers, it should buy out Prairie farmers prepared to leave the land, and it should return the land to buffalo, Prairie grasses and wilderness.

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Nothing’s sacred

Terry Poulton
Strategy magazine
September 10, 2001

As a strategy for zooming your brand identity up, up and away, nothing has more pizzazz than leaping a tall building Superman-style – and then crowning it with your corporate moniker.

Until recently, it was office towers, sports stadiums and performance halls that attracted most of the leaping and much of the millions being spent to snaffle naming (and ancillary) rights for properties designed to showcase companies’ business prowess and civic largesse.

Nowadays, however, so many “short buildings” and other novel venues are being “leapt” by a sometimes-surprising array of corporate pursuers that Judy Haber says “There’s a gold rush going on in non-traditional naming rights opportunities.”

A senior partner at Performance Sponsorship Group of Caledon East, Ont., Haber says she has brokered some unusual unions and knows of many other eyebrow-raisers either in existence or now being considered.

These naming rights and title sponsorship opportunities include shopping malls, Imax theatres, universities, science centres, schools, aquariums, amusement parks, convention centres and media centres for international events, not to mention city-owned properties such as parks, swimming pools and skating rinks. Venues carved out within other venues are also up for grabs, examples of which include the Sears Theatre (inside Toronto’s Air Canada Centre) and the Air Canada Clubs inside Vancouver’s GM Place, Ottawa’s Corel Centre and Montreal’s Molson Centre.

Even subway stations are being eyed, especially since Boston put its transit hubs up for grabs last year. That’s a move that is ripe for emulation in Toronto according to Lawrence Solomon, executive director of the Toronto-based Urban Renaissance Institute, who reckons that the cash-strapped city could recoup millions by selling, say, the Yonge and Dundas station to the nearby Eaton Centre, or possibly the fashion district’s streetcar route to a major clothing retailer.

A venue can even be scooped up if it’s virtual, rather than bricks and mortar, as TD Waterhouse demonstrated when it bought the naming rights for the Toronto Maple Leafs’ 2001 season.

In some cases, the corporate suitors are more unusual than the objects of their affection. Examples include the Mattel and Hasbro toy companies, both of whose names are now plastered on children’s hospitals (in, respectively, California and Rhode Island); and Edmonton’s Epcor Utilities. When its competitive hands were untied by deregulation, the company signaled its intention to branch out by transforming the Calgary Centre for Performing Arts into the Epcor Centre.

Why such an explosion of innovative partnerships at this point in time? Haber says it’s easy to understand. Government cutbacks and the resulting budgetary shortfalls are one key driving force. Another is that sports stadiums have effectively “out-priced themselves” with stratospheric fees such as the US$115 million bid placed by Internet biggie CMGI to name the New England Patriots’ new Boston stadium.

Also, Haber adds, “sports arenas are sometimes abandoned by their teams and they’re dark much of the time, while these non-traditional places often operate all year.”

Shopping malls, where the foot traffic is enormous and consistent, are becoming enticing targets for naming rights acquisitions, especially in the U.S. In Canada, Haber says 25 million people per year pass through a venue such as Mississauga, Ont.’s Square One shopping mall, for which she is currently engineering a title sponsorship she hopes to announce next year. She was recently beaten to the punch when Minnesota’s giant Mall of America sold naming rights to its five-story central rotunda to the Sam Goody music chain.

But, while many of the faces on both sides of today’s bargaining tables may be new, their aspirations really aren’t, Haber says. In fact, they generally resemble those that drove a 1991 deal when her then-client, Hummingbird Communications, purchased and eponymously renamed Toronto’s O’Keefe Centre for the Performing Arts (dubbed in a 1960s naming rights deal for a local brewery).

“The O’Keefe found an alternate way to generate money to retain and augment its programming,” Haber explains. “And Hummingbird, which was then a relatively new company, became a household name virtually overnight. So it was definitely a win/win outcome.”

With smaller venues, such as museums, science centres and Imax theatres, says Rick Janes, the distinct advantage for title sponsors is the absence of the competing clutter that permeates arenas and rinks. As president of Toronto-based MacLaren Momentum (the events division of MacLaren McCann), Janes says he recently did an evaluation for the Famous Players cinema chain “to determine the [untapped] marketing value of its seven Imax properties across Canada.”

The conclusion? “That these are bona fide opportunities because they have all the elements you should look for in terms of marketing deliverables,” says Janes. These include “high traffic flow, opportunities for signage on-screen, in the concourses and on the exteriors – and they are also [exploitable] for media exposure.” Best of all, he adds, “by taking the pre-eminent title position, you don’t have to try to break through the clutter of dozens of other sponsors.”

Wayne Doyle, manager of public and media relations for Mississauga, Ont.-based Canon Canada, concurs with Haber and Janes and adds some extra insight. “In the past, acquiring naming rights in return for making a donation was mainly a philanthropic thing. But in today’s economy, people understand that, while it’s great to put your name on a building, [doing so] has to serve your bottom line. So the question is, how do you leverage it for a return on your investment? And the answer is, you have to be able to take that naming opportunity and translate it into increased public awareness, increased public perception, or increased sales.”

On behalf of his employer, Doyle has been in the thick of a new-style naming rights acquisition lately in which the unusual element was not the venue but the suitor. Last week, the newly named Canon Theatre premiered its first production in a former vaudeville house that opened in downtown Toronto in 1920 as the Pantages Theatre.

“But can you imagine a company like Canon getting involved in theatre 20 years ago?” Doyle asks. “Today we realize that the demographics in the performing arts actually match up perfectly with what we’re all about, as a company dedicated to imaging solutions.”

How are Canon’s corporate interests being served by attaching its name to a theatre? Doyle says the benefits begin with being in the sort of multi-partner arrangement that characterizes many naming rights deals. Canon’s partners are the humongous U.S.-headquartered Clear Channel Communications, which owns the property and brokered the deal, and veteran theatre impresarios David and Ed Mirvish, who will manage the facility.

Doyle expects that Canon will receive substantial exposure, thanks to the marketing know-how of both these partners. “Our name will be featured in every advertisement and in all publicity for every production, with coverage not only in the Toronto area but in tertiary markets such as the Northeastern U.S.”

As for Canon’s own customers, Doyle says, “Having the theatre gives us opportunities to continue building relationships, which is ultimately what business is about these days.” So key customers will be feted at Canon Theatre premieres and others will be offered various cross-promotional prizes.

Although Doyle declined to disclose the price Canon paid for what amounts to the biggest billboard possible, some other companies practically brag about the cost-effectiveness of such deals, especially compared with the astronomic fees required to sponsor sports stadiums, teams or star athletes.

ROI potential is definitely a starting point whenever Toronto-headquartered Rogers Communications considers acquiring naming rights or other sponsorship positions, according to VP of communications Jan Innes. She says this applies even when a project is relatively small, such as the company’s $2 million investment in the Rogers Communications Centre at Toronto’s Ryerson University, because, “no corporation just wants to throw money out the window.”

Incidentally, speculation is rife that Rogers might acquire the naming rights currently on offer for the Toronto SkyDome. Innes says only that she “guesses it’s something we’d look at. But we’d also look at our balance sheet to decide whether it’s something we can afford and whether there’s payback for us.”

Other prime considerations in deciding whether naming rights are worth acquiring, according to Pete McAskile, CEO and creative director at Toronto-based sports and event marketing company Second Dimension International, are the contract terms. He says these generally include tenure in the facility and ancillary rights. The latter can involve selling or demonstrating the buyer’s products within the venue, the type and volume of exterior and interior signage, and even restrictions on certain types of performances – as pertains in some cases where liquor and tobacco promotions are barred when youth-oriented entertainment is presented.

Even when the wisest of heads prevail on both sides of the naming rights equation, disaster can still strike, as the managers of an outdoor stage at Toronto’s Harbourfront Centre can attest, Known as the Molson Stage for a couple of decades, it was hugely popular. But when rival brewer Labatt became Harbourfront’s overall sponsor, Molson was obliged to vacate the premises. After about two years of anonymity, the stage acquired a new title sponsor this spring – Norigen Communications. But last month, Norigen declared bankruptcy, leaving the stage in the lurch once again.

As daunting as possible business failure may be, another potential pitfall – rejection of a venue’s new name, especially if it replaces an historic favourite – can be almost as challenging. And it’s usually tricky, McAskile says. While a company automatically expects free publicity whenever its new venue is mentioned in the media, it is often disappointed. “If the company name is just tacked on the front of the former name, it’s almost sure to be dropped by the media and the public,” he explains, adding that Canon was probably right to drop the venerable “Pantages” altogether, despite the likelihood of a backlash among theatre buffs.

Then again, there’s always the possibility that a company’s shiny new name may attract unfortunate jests. That’s exactly what happened when Calgary’s famous Olympic stadium was recently acquired by an oil company and became the Pengrowth Saddledome.

“Sounds like an infection brought on by too much horseback riding,” quipped Bruce Arthur in the National Post.

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