Mayor Fontana, LEDC and London’s Jobs Crisis

Last week Joe Fontana, former Liberal cabinet minister and current mayor of London, delivered his State of the City Address at the London Convention Centre.  The London Chamber of Commerce sponsored the breakfast event.  This was his last annual update prior to the municipal elections scheduled for later this year.

Notwithstanding Fontana’s legal issues, the Mayor has faced difficulty with two of his election promises: a 0% property tax increase and 10,000 new jobs during his first term.  While the proposed 2014 tax rate increase could be in excess of 3%, it is the Mayor’s jobs promise that has come under scrutiny of late.

Recently the mayor acknowledged that only 5,000 jobs have been created in the city during his tenure citing London Economic Development Corporation data.  The problem with the mayor’s employment claim according to Mike Moffatt, an Assistant Professor in the Business, Economics and Public Policy group at Ivey is that it completely ignores 2013’s job losses.  Moffatt states, “There were 247,200 Londoners employed in January 2013.  That number had fallen by nearly 4,000 by the end of the year, with 243,300 employed in December.”  This means London has generated less than 1,000 new jobs since Fontana became Mayor.

And the outlook for 2014 looks bleak with the scheduled closure of Kellogg’s that will impact over 1,400 employees.  It is conceivable that Fontana could end his first term with fewer jobs than when he became mayor.

Perhaps municipal politicians should stay away from making employment promises since there are so many factors that influence employment beyond the control of municipalities.  Fontana stated in his annual speech last week that his job campaign promise was a “target.”

No doubt London has been hit with plant closures over the past few years.  In a recent London Free Press article, Councillor Joe Swan stated, “We spend all our time trying to do attraction and I’m not sure we’re doing enough to serve local businesses.  It’s all about getting the big hit, the big company . . . our focus needs to be more on local retention.”

The LEDC website claims that “through the business retention portfolio, it assisted local businesses with expansions and retention issues.”  The corporation states that they assisted 25 businesses to obtain $5 million in funding.  At first glance the LEDC performance in this portfolio seems quite underwhelming.

Besides the jobs and companies that have left London, residents should be concerned about the companies who continue to retain a footprint in London but quietly have transferred quality jobs to other jurisdictions such as India and China to improve their bottom lines.

There have been calls to review the LEDC’s governance structure so that city council can be more involved in the attraction and retention of jobs.  It may also make sense that companies who have outsourced London jobs be disqualified from participating in the LEDC’s governance structure.  This is currently not the case.

The LEDC declined a request to comment on London companies that engage in outsourcing as well as those companies that outsource who also sit on the corporation’s Board of Directors.

Mayor Fontana responded via email, “upon confirming with the London Economic Development Corporation, where appropriate, we encourage companies to develop local supply chains.  We introduce companies to suppliers in the regional to promote more local sourcing.”

With a municipal election later this year, voters may decide to add Fontana to the number of unemployed in the city.  Either way, the next mayor will need to clean up the accountability and governance at the LEDC.

 

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