A lion of Nova Scotian economic development

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I've been visiting a neighbour this summer: Robert Manuge, a name at the centre of a defining epoch in Nova Scotian economic history. At 89 and ailing, he's anxious to make a point about economic development then and now. Manuge was general manager of Industrial Estates Ltd., the economic development agency set up by premier Robert Stanfield in 1957. He invited me to his home at rural Lake Annis, Yarmouth County, to sift through a dozen thick scrapbooks assembled by IEL staff at the time.

The scrapbooks tell a remarkable story. New industries are pouring into Nova Scotia at a prodigious clip. "Nova Scotia Moves into the Mainstream," reads a headline in the Financial Times of London in 1965. IEL's "record makes impressive reading," says Time magazine in 1962. Others speak of Nova Scotia shaking off the economic gloom of closed coal mines, of shedding its image as a place of quaint fishermen, of becoming "the California of the east." There's a year-by-year count of IEL-sponsored industries arriving -- 20 by 1961, 28 by 1963, 40 by 1965, 60 by 1968.

The Financial Post commented that IEL should succeed "if only by sheer audacity." The audacity part was Manuge, along with industrialist Frank Sobey who served as president of the arm's-length agency.

Always on the hunt for potential clients, a chance encounter with a person remotely linked to Michelin Tire on a plane trip led Manuge on a hunt -- described by the Financial Post as an "international cloak and dagger thriller" -- that finally got the secretive company here for its first North American landfall, against the wishes of French president Charles de Gaulle who wanted it in Quebec. A similar encounter landed India's first major international investment, the Anil hardboard plant (now Georgia-Pacific) at East River, Lunenburg County. And there was the first European car assembly plant, Volvo. One report has Manuge "literally chasing after Reynolds International chairman, J. Louis Reynolds," to land Canada's first aluminium can factory. His secretary kept count. He logged a million miles from 1961 to 1971 hustling business for Nova Scotia.

IEL's success was what largely propelled Robert Stanfield to national prominence, and to the leadership of the Progressive Conservative Party of Canada in 1967. But when Stanfield left, says Manuge, things went rapidly downhill. Subsequent politicians couldn't keep their hands off the goodies -- starting with G.I. Smith, but particularly Gerald Regan after him. The decisions that sank IEL were political, he says -- IEL by then was being overruled.

There was the Clairtone Sound Ltd. collapse, costing the province $30 million, and the Glace Bay heavy water plant, costing some $120 million. The Clairtone debacle came over the premature production of colour TV sets. Neither IEL nor the entrepreneur, Peter Munk, who went on to become a Canadian billionaire in other fields, wanted to do this, says Manuge. Clairtone's expertise was in "hi-fi" and other electronics of the time. But financing was made politically contingent on producing colour TVs. Ditto with the fateful decision, against the advice of engineers, to use salt water in the heavy water plant, which corroded the pipes.

One of Regan's first moves in office was to fly to Europe and Japan trying to drum up business -- taking over Manuge's role and politicizing it (and failing to drum up business). Manuge says he was shunted aside and spent three miserable years until resigning, even having to sue for his pension benefits. The only thanks he got for his "contributions to this province" were from Lloyd E. Shaw, father of Alexa McDonough and long-time NDP supporter, in a letter he still cherishes. Meanwhile, last fall, at Michelin's 40th anniversary in Nova Scotia, Premier Darrell Dexter, with former premier John Hamm present, called Manuge the person who has created the most jobs ever in Nova Scotia.

The collapses put IEL into the popular mind as a failure. Yet, points out Manuge, much of the present manufacturing sector of Nova Scotia is made up of industries sponsored by IEL, including our largest home-grown success story, the IMP Group.

Manuge feels the IEL formula would have kept working if not interfered with. It consisted of building plants for new manufacturing firms to order, then leasing them back at cost or mortgaging them as the company occupied the premises, and sometimes making loans for production lines -- all meant to be repaid, as the Michelin financing has been. And keeping Nova Scotia's name constantly before potential clients. Stanfield had borrowed the concept from a British agency called North East Trading Estates.

On one of my visits, I found Manuge vexed over an article in this newspaper announcing a $400,000 payroll rebate to Surrette Battery. "Successful companies shouldn't get grants," he fumed. "Repayable loans at commercial rates, manpower training, yes. But not grants. At IEL, we never gave grants." He believes IEL's successor, Nova Scotia Business Inc., has "too much money and too many people." He believes the operation should be leaner and more focused, as his was. Meanwhile, he can't find any useful function in the 13 regional industrial development agencies in the province set up by the John Savage government at an annual cost of some $10 million.

Stuff for the NDP government to think about, then, from a lion of economic development.

Ralph Surette is a veteran freelance journalist living in Yarmouth County.

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