There are few angles of the Halifax Shipyard story that have been overlooked, but none is more glaring than how lucky we are that K.C. Irving and his descendants were born in the Maritimes.
Billionaires are not in vogue this season, but the Irving family has proven this week that they have done all the region – New Brunswick in particular but the region in general – could ask of them. For almost a century, they’ve channeled and rechanneled their wealth into tremendous enterprises in Atlantic Canada, and that is a big reason that Irving Shipbuilding won the $25 billion contract yesterday.
The economic models forecasting job creation and spinoffs may be underestimating one facet of this 30-year contract: it was won by a company owned not just by Canadians but by a Maritime family. That means all the after-tax profits will be retained by a family that has an unimpeachable record for investing in this region. If the Halifax Shipyard were foreign owned, yesterday’s announcement would have been great news. The fact that it is owned by Maritimers makes it all the greater.
So if we figure this contract has a 10 percent after-tax profit margin (just a conservative guess), the Irvings will end up with $2.5 billion over the next few decades that can be reinvested. Will they reinvest it here? If history is anything to go by, they will.
I realize this site should focus on the startup industry, and I’ve meandered away from my central mission today. So I’ll add have two random thoughts on how this contract will affect entrepreneurship.
First and most obviously, the shipbuilding contract will spawn a generation of startups, especially in ocean industries. Not only will technicians working on the contracts start their own contracts, but the contract will create wealth, which will lead to angel investment.
Second, I’d like to differ with the notion that there will be no immediate economic benefit from Wednesday’s announcement. I think we dodged a significant economic bullet yesterday that would have affected all segments of the economy in Nova Scotia, including entrepreneurship.
If the announcement had gone any other way, the result would have been months of counterproductive whining about our inability to get anything done in Halifax. If we’d been shut out altogether, I really think the impact, mixed with the global economic problems, would have been a psychological bodyblow that would have restrained people from wanting to start businesses here. Luckily, we’re spared such grisly recrimination.