BUSINESS BEAT BY FAUS JOHNSON
Last month, I reported on a new business opening in the county and it gives me no pleasure to report on one closing in this month’s article.
I have chosen to do interviews with business people in order to get firsthand accounts of what went right and, in this case, what went wrong!
I sat down with Abbas Jafarnia recently to discuss the pending closure of Maritime Steel in New Glasgow. I know there has been much written in the local papers about this business saga, but thought it was important to hear his interpretation of events and if there is anything we can learn from it. This is his story!
Born, raised and educated in Iran, Abbas is a metallurgical engineer who moved to this area in 2004. A naturalized Canadian citizen, he went to work for R.B. Cameron at Maritime Steel as quality control manager.
Using the Kaizen technique of “continuous improvement,” widely used in Japanese manufacturing, productivity improved and the facility went from employing 40 to over 100 people.
In 2007, he left for Iran to look after his ailing father and returned in 2008, to Toronto to continue working in his profession.
Seeing the potential for Maritime Steel, Jafarnia made several attempts to buy the business. In 2011, after the business closed, and with the financial backing of Iranian investors and friends, he was successful in finally purchasing the facility for $1.25 million.
Due to past environmental and air quality issues, there was distrust from the local business community about having such a facility in the downtown core.
This, coupled with the U.S. and Canadian sanctions against Iran which made it illegal to send or receive money through the Iranian banking system, effectively shut him off from working capital to operate the foundry and Canadian banks would not consider lending him money based on these sanctions.
He then began talking to the federal, provincial and municipal governments about financial assistance. He was told by ACOA that he had a weak management team and the provincial government said he had an inadequate business plan.
Due to the long recession in the United States and lack of maintenance spending on the U.S. rail system, many of the foundries south of the border had permanently closed, giving Maritime Steel a great opportunity to fill this void, which happened to be their speciality as well. So the orders were coming in, but there were no operational funds to produce the goods.
In 2012, Jafarnia met with then Economic Development Minister Percy Paris to discuss his situation and again was told that his business plan was inadequate. The offer was made to help with a business plan but not until 10 months later did the funding for the plan come through. It took six weeks to complete the business plan, which was then submitted to the provincial government for consideration. He was then advised that because of the political problems between the U.S. and Iran he could not sell to U.S. customers or have a U.S. bank account; this despite now being a Canadian citizen!
So what went wrong with this endeavour and what can the community learn from this situation?
Jafarnia believes the Town of New Glasgow was against the plant operating from the very beginning. Despite receiving a provincial environmental permit to operate and only receiving one complaint call in his two years of operations, the property and business were stigmatized and the town did not want it operational. He believes they were successful in convincing the provincial government that they should not support the venture.
However, not everyone was against the continuation of the operation and Jafarnia was pleased that many of the local, provincial and federal politicians and community organizations did try to help him by exercising their support, including his own unionized employees.
When asked if he thought Pictou County was a welcoming and inclusive community his answer is an unqualified No!
Within a week of purchasing his first home in the area, his front yard was littered with garbage, followed by people urinating on his doorstep and finally his house being peppered with eggs that resulted in a call to the police. The perpetrators where quickly discovered and brought back to the house to clean up the mess. Was it the work of misguided juveniles? Yes, but where do kids learn their bigotry?
Jafarnia did not express anger or outrage at these incidents and his comment was, “there are bad people everywhere, not just Pictou County!”
So with our outward migration of young people and skilled workers, how does one attract and retain people, particularly immigrants whose forefathers where not fortunate enough to get passage on the Hector or other vessels that first brought immigrants to this part of the country? Jafarnia believes that the Multicultural Association is doing good work to help immigrants from other countries adapt. Centres, both large and small, that have worked to attract newcomers are the communities that are thriving and growing.
So, we have lost 40-50 good paying jobs, an entrepreneur willing to take a risk, possibly all of the manufacturing equipment from the plant and a $1.5 million contract that will now go to Ontario. While governments continue to pour millions into big businesses with dying and polluting industries, small businesses continue to fail under the burden of high taxes, electrical rates and a burdensome bureaucracy.
Are there any real winners here?
Faus Johnson is a graduate of Dalhousie University and the University of Western Ontario, Ivey School of Business