In 1620, the Mayflower landed at Plymouth Rock, New England.

The ship's log explains the decision to land was because of dwindling supplies, "especially our beer."

In 1786, John Molson set up his first brewery in Montreal. In 1829, Alexander Keith founded his brewery in Halifax. In 1847, John Labatt started his brewery in London, Ontario. In 1867, the Oland family opened their first brewery in Dartmouth, NS and in 1928, George B. Oland acquired the James Ready Brewery in Saint John, NB, known today as Moosehead Breweries.

In 1971, Labatt purchased Oland & Sons Ltd. in Halifax (who by then owned the Alexander Keith Brewery). In 1991, Belgian owned Interbrew purchased Labatt. In 2004, Interbrew joined with Brazilian brewer AmBev to form one of the largest brewers in the world with an estimated 14% of the global beer market.

In 2005, Molson merged with Coors Brewing Co. in Golden, Colorado to form the Molson Coors Brewing Company. Today, Moosehead is the only Canadian owned, national brewery in Canada.

In November 2004, Molson announced that it would build a $35 million brewery in Moncton. It’s a small brewery by industry standards with capacity of only 250,000 hectolitres. That compares with some of the mega breweries in Montreal that would have a million or two hectolitre capacities.

The expectation was that Molson would operate with “local brewer” status in the Maritimes and be exempt from inter-provincial tariffs on beer sold in to Nova Scotia and PEI. At the time of the announcement, the deal was criticized by Moosehead Brewery executives on the grounds that the Lord Government had promised Molson a forgivable loan of $3.5 million and “local brewer” access to the NB Liquor Commission’s distribution system.

Moosehead President, Derek Oland suggested at the time that the package would have a value of close to $6 million and represented unfair competition to his Saint John brewery. That matter was subsequently mitigated by provincial government investments in expansion of the Moosehead brewery in Saint John.

Prior to construction of Molson’s Moncton brewery, Molson brewed its Maritime-distributed products at Moosehead’s Saint John brewery and distributed its products in Nova Scotia, tariff-free. On Valentines Day 2007, the Government of Nova Scotia announced that it would not recognize Molson as a local brewer and as a result would slap a tariff on Molson products distributed in Nova Scotia.

The tariff would be disguised as a $1.32 handling fee on each case of beer Molson distributed in the Province.

Alexander Keith, Schooner and Labatt Blue are all brewed at Labatt-owned Oland Breweries.

They have not paid handling fees on products distributed in New Brunswick since 1992.

Moosehead products have enjoyed the same tariff-free access to Nova Scotia. In 2000, Ontario brewer Sleeman acquired the brewing assets of the Maritime Brewing Company in Dartmouth, NS and later acquired “local brewer” status to also exempt its beers from Maritime tariffs.

In Quebec the handling fee is $8.52 for beers imported into that province. To avoid the premium, Moosehead joined with McAusian in Montreal to build a new brewery to gain tariff-free access to the Quebec market.

Premier Rodney MacDonald defends the Nova Scotia tariffs by saying he’s looking out for the interests of Labatt and Nova Scotia’s microbreweries (read Sleeman). All of this is set against the “Atlantica” backdrop of free-trade discussion among the Atlantic Provinces and the New England States.

Premier Graham promises to fight for Molson, insisting that a 1992 “handshake” deal between the provinces assured tariff-free access to markets by local brewers. MacDonald refuses to recognize Molson as a local brewer and claims the 1992 “handshake” agreement applies only to breweries in existence at the time. Dah!

How did Sleeman get into the picture?

80% of Canada’s beer industry is owned by the two major brewers Labatt and Molson with their U.S. brands Budweiser and Coors. Neither one is controlled by Canadians yet they dominate trade practices in this Country. Canadian owned Moosehead and an assortment of microbreweries such as the Pumphouse in Moncton and offshore imports make up the balance of the Canadian industry.

Every province in Canada has some form of protective barrier for its brewing industry. In Ontario, Labatt and Molson control 95% of beer sales through their wholly owned “Beer Store” network. In Beer Stores, product cannot be picked spontaneously from the floor. Everything is ordered over the counter from a displayed list of products.

Small brewers like Moosehead have to rely on heavy advertising to build their brands and create demand for their products in the Stores. In Alberta, Moosehead has to sell through liquor stores while Labatt, Molson and Alberta brewers can sell through local grocers.

In principle, there should be no trade borders between provinces.

How can we expect national and international companies to locate in this region if we set up local barriers to trade?

The beer side of that argument is that further consolidation in the industry would eliminate the need for local breweries in places like Moncton and Saint John. Bottlers in Scoudouc would go out of business. Packaging companies like Maritime Paper and Master Packaging would be seriously damaged. Hundreds of jobs would be lost.

Moosehead Breweries is a national brewery. It markets its products across Canada and internationally in the United States, Europe and Mexico and does so with great skill and expertise. It deserves our support but not our charity.

In my view, it was wrong to subsidize the startup of Molson in New Brunswick but to the extent Molson’s subsidization has been mitigated by investment in Moosehead, that story is old news.

Here’s my bottom line; preferential pricing, to the extent that it exists should exist only in favour of Canadian owned breweries.
If Nova Scotia insists on penalizing Molson with its $1.32 head tax, New Brunswick should respond in kind against Labatt.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at bill.bellstrategic@nb.aibn.com

Earlier this week, the Provincial Government’s Task Force on Self-sufficiency released its second “Report”.

Boiled down, the twenty seven page document would steer the province towards an export strategy driven largely by Saint John’s energy sector.

The core strategy would be supplemented with a push towards innovation, investments in productivity, education and the rationalization of major industries.

The cost could be huge, hundreds of millions of dollars and a sizeable re-orientation of peoples. Perhaps the most significant message in the Report is that investment in such change would have to be quick and whole. There is no mention of where the money might come from but one could imagine.

The Times & Transcript rightly wonders in a Valentine Day editorial how it will be politically possible to implement such a program. Good question! I don’t have the answer but I do know that unless we try, we shall be forever dependent on the federal government.

There is a major tension in the Report visible in the conflict between energy development and a climate change demand for reductions in greenhouse gas emissions.

• Oil refineries emit greenhouse gases.
• Coke-burning electric power plants emit greenhouse gases.
• Coal-fired power plants emit greenhouse gas emissions.
• Zero emission coal technology and carbon sequestration technologies are on the horizon.

If we’re going to adopt energy as our road to self-sufficiency, we have to adopt clean-air technology as the parallel road to development.

There is a second tension in the Report and that is the notion of change and the fear and uncertainty that will grip those who are embraced by the realities of change.

To underline this point, consider Daimler-Chrysler announcement on Wednesday that it will cut 13,000 jobs in North America - including 2,000 positions in Canada - as it embarks on a massive restructuring to cut losses. The job cuts amount to about a sixth of Chrysler's North American workforce.

That could happen in New Brunswick’s forestry industry as it struggles to rationalize sawmill facilities to create economies of scale.

To get a glimpse of the future, contrast Daimler-Chrysler’s restructuring with General Motors announcement that it will build hybrid versions of its Chevrolet Silverado and GMC Sierra pickup trucks in its Oshawa plant to compete with Japanese automaker Toyota. Hybrid engines use both electricity and gasoline as a power source and foreshadow the change and technological innovation that will characterize the new world.

In the restructuring of an economy, logic would suggest that a province with a population of considerably less than a million would have one major airport instead of three. I found no mention of such rationalization in the Task Force Report. It does talk about a multi-modal “Atlantic Gateway” concept but does not explain how it might benefit New Brunswick. Perhaps we could add a pass-through “toll” on container traffic.

Thirty five or more years ago, the Federal Government quietly decided that Halifax should be the capital of Atlantic Canada. Our national banks bought into it. Air Canada heard the message.

The federal public service endorsed it and scores of regional head-offices located in the City, including the oil & gas industry. The result is that Halifax is a major centre (albeit relatively small by world standards) driven by a combination of health, education, military and government institutions and a world-class deep-water port.

Moncton has all of the above except the port but Moncton has something that Halifax is missing and that is critical mass. Moncton is the centre of a market of 1.5 million people, three times the size of Halifax.

The Task Force Report appears biased in favour of Saint John and that’s understandable in the context of energy as primary wealth creator but self-sufficiency will require more than energy.

The Report calls for investment in the here and now. Moncton has been sputtering for years about a downtown convention centre. The other day, City Council deferred a decision on a new downtown coliseum to 2011.

Meanwhile the Legacy Hotels Real Estate Investment Trust has announced that it will invest $6 million in the renovation and upgrade of the Delta Beausejour Hotel. The new Marriot Hotel/Residence complex is under construction. The private sector is on the move.

Where is the public sector?

A convention centre combined with a new downtown coliseum would make our tourism and hospitality industry more efficient, more productive and more profitable. It would draw new people and new business to the Greater Moncton region. If Moncton is to move this Province towards self-sufficiency, we need to make these decisions now and find the money to fund them.

A few weeks ago, I suggested, with tongue somewhat in cheek that the University of New Brunswick and the Provincial Government be moved to Moncton. I would add Aliant (formerly NBTel) to that list. I believe there is a case to be made for the development of Moncton as an international centre of excellence, a mecca of research and development, the manufacturing, distribution and transportation hub of the Maritimes and the cultural heart of New Brunswick.

Moncton with a population of 200,000 plus linked to satellite communities in the north and centre of the province could become the alternative energy in New Brunswick’s quest for self-sufficiency.

When the Task Force delivers its final report, the biggest challenge for government will be found not in what needs to happen but in how it will happen. How will major changes be funded?

How will the general public be convinced that change is both necessary and good? How will it get people to jump on the self-sufficiency bandwagon?

This is a big challenge but I take my hat off to the Task Force for taking it on.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at bill.bellstrategic@nb.aibn.com

Earlier this week, on Tuesday, the new Liberal Government of New Brunswick delivered its first Throne Speech.

As might be expected it was ambitious and chock-full of plans and references to self-sufficiency. Missing from the speech was a definition of self-sufficiency. Indeed, there seemed to be some equivocation in respect to the meaning of self-sufficiency as indicated by injection of the idiom “sustainable economy”.

Case in point: “A stronger, sustainable economy will reduce the province's dependence on equalization”.

Webster defines self-sufficiency as the ability to supply one’s own needs without external assistance, e.g. without need for federal “equalization” monies.

A stronger economy will not necessarily be self-sufficient. A sustainable economy will not necessarily be self-sufficient unless it can generate wealth adequate to sustain its population in a self-sufficient state.

To be fair, the Throne Speech makes reference to the fact that Government has established a Task-Force on Self-Sufficiency, a Task Force that will present a Report (and presumably recommendations) in April 2007. On receipt of the Report, the Government will respond.

The framework for Government response is visible in the Throne Speech:

• literacy;
• education; a need to grow the population;
• energy development;
• innovation;
• small business development;
• investment in state of the art technologies to make our resource industries more efficient;
• an export economy;
• investments in culture and tourism;
• a transportation strategy that would recognize the links between safety, more efficient market access and clean energy;
• investments in healthier more active lifestyles; and,
• investments in affordable housing.

Aside from the financial challenges inherent in such a program, there may be conflicting challenges in the notion of energy sector growth and the greening of New Brunswick. Perhaps the biggest challenge will be the rationalization of sustainable rural (northern) economies within a self-sufficient province.

As might be expected, this document shows the way but provides little by way of detail as to how we might achieve some very commendable objectives. In advance of those details, I take the liberty (below) of tossing a few self-sufficiency suggestions into the hopper.

On the matter of literacy, give it a tangible consequence, make it a condition that people who apply for and are granted permits to drive a car, truck or other vehicle be graduates of high school and subject to literacy tests.

On the matter of population growth and student retention objectives:
introduce a program for resident graduates of universities and community colleges that would forgive 100% of their student-loans on a flat line basis if they stay and work in the province for ten years following graduation;
introduce a program to attract non-resident graduates of universities and community colleges elsewhere in Canada, that would repay 100% of their student loans on a graduated basis (5% x 4 years, 10% x 4 years and 20% in years nine and ten) over a period of ten years so long as they emigrate to New Brunswick and remain as a resident and be employed in the Province.

For young mothers who have one or more children today, pay them $100 a month for each additional child and offer them full maternity benefits for a period of five years after the birth of their third child.

To attract immigrants from outside Atlantic Canada, purchase going concern industry-leading businesses in Ontario and elsewhere and move them to New Brunswick. Establish an endowed retirement investment program for new (Canadian and International) immigrants that would enable them to build significant retirement savings if they stay and work in the Province for at least twenty years.

Strike an agreement with the federal government to move 25,000 civil service or crown corporation jobs to New Brunswick over the next twenty years.

On matters of innovation: adopt and utilize existing technology to build efficiencies into our resource and manufacturing industries. Direct R&D to development of new, patented technologies that could generate sales and profits for New Brunswick.

This Province has a world-class oil and gas company and a world-class power utility that produces electricity from a variety of fuel and energy-generating sources. Combine their respective capital and intellectual resources in a major research and development project mandated to develop new technologies to produce cleaner fuels, cleaner energy and cleaner, safer transportation of energy.

Invest in the development of ocean-wave and tidal energy technology. Explore the feasibility of geothermal electricity. We don’t have Alberta and British Columbia’s “hot-springs” but we have tons of water and a geological base that might be home to deep underground hot rocks that could generate steam to drive electricity-producing generators.

Partner with Magna International and the Government of Canada to establish an R&D engineering centre in Moncton that would develop automotive engine technologies (alternative fuels/more efficient engines) to burn 50 to 60% less fuel and build those engines in this Province.

Partner with our sister Atlantic Provinces to build a multi-modal transportation system that will speed access to markets, reduce cost and lower greenhouse gas emissions.

Partner with a global health insurance provider to develop a mixed public/private sector healthcare model that would make New Brunswick a world leader in the provision of highest quality, easily accessible, affordable healthcare.

Build an economic model for the Province that will facilitate creation of a world-class business/commercial hub (call it a cluster) big enough and powerful enough to engage New Brunswick’s rural and northern economies.

A cluster is a geographic concentration of people, interconnected businesses, suppliers, universities, communities and institutions associated by common purpose.

Example, California’s Silicon Valley where a surge in computer and technology startups in the 1990s led to the relocation of venture capital funds, encouraged entrepreneurs to locate their start-ups and attracted technically skilled people in search of job opportunities to move to the Valley.

Game, set and match!

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at bill.bellstrategic@nb.aibn.com

On January 25, 2007, Irving Oil announced it is submitting plans to provincial and federal environmental regulatory authorities to build a second oil refinery in Saint John.

This filing is intended to initiate environmental impact assessments required for the project. The proposed new refinery would have a capacity of up to 300,000 barrels per day and be located near the existing Irving Canaport deepwater crude receiving terminal in Saint John.

In June 2004 ( a year before Hurricane Katrina), U.S. Energy Secretary Spencer Abraham told the National Petroleum Council in Washington that "insufficient refining capacity" is a critical energy challenge for the United States. According to Mr. Abraham, U.S. demand for gasoline will increase by some 43 percent by 2025 (notwithstanding Mr. Bush’s recent promise to reduce consumption by 20%) and demand for diesel fuel will increase by 48 percent by that same year.

"We will need 28 million barrels per day of crude oil to meet that demand, he said but our nation's refining capacity is only 21 million barrels per day,"

Environmental standards have limited the ability of the U.S. refining industry to construct new facilities or expand old ones. Refining capacity has dropped by some 50 percent in the past two decades and U.S. refineries operate at near 100 percent capacity. The last new refinery built in that country was in 1976.

The new Irving facility responds to the need for additional refining capacity in the U.S. Northeast. Together with the existing Irving refinery, this new investment would create a combined total production capacity of up to 600,000 barrels per day.

The new refinery would cost an estimated $7 billion; employ 5,000 workers during the construction phase and 1,000 permanent workers thereafter. With the exception of a few conservationists and environmentalists, there seems to be near unanimous support for this project, an enormous investment for New Brunswick - 65% more than the $4.5 billion invested in the makeover of Pearson International Airport in Toronto.

At the risk of being trampled by the refinery enthusiasts, it’s worth noting some realities that could one day cast a shadow over this project. Eighty percent of the existing refinery’s products go to the United States, 100% of the new refinery’s products would go to the United States or Europe. That would make New Brunswick hugely dependent on the United States and the U.S. market for refined oil products.

To process 600,000 barrels of oil a day, Irving would require delivery of crude by the world’s largest tankers every three or four days. Irving’s primary source of crude is Saudi Arabia and the North Sea. Saudi Arabia borders on Iraq and sits across the Persian Gulf from Iran. How reliable will that source of supply be in coming years?

Four or five million barrels of oil traveling the Bay of Fundy every week could be problematic. If a supertanker filled with two million barrels of oil hit a rock or some other immoveable object, the resulting spill could destroy the Bay and all its wildlife for the next millennium.

There is another consideration and I hesitate to raise it but Saint John as a super energy-hub reliant on customers in the United States could become a global terrorist target in the Bush and post-Bush age. At the very least we have to consider that possibility.

In 2005 the Swedish government announced its intention to become the first country in the world to break its dependence on oil and fossil fuels by 2020.

The Swedes cite four reasons for their decision:

1. the impact of high oil prices on economic growth;
2. the link between oil, peace and security;
3. the potential to use Sweden’s own renewable energy resources as oil replacements, and
4. the threats posed by climate change.

The Swedish government created a Commission to make recommendations on how Sweden’s dependency on oil could be broken. Reporting in 2006, the Commission proposed a 40 to 50% reduction in auto/truck consumption of oil-based fuels; a 25 to 40% reduction in the industrial use of oil; elimination of oil as a heating fuel in buildings and a 20% increase in energy use efficiency.

What if such a policy landed in the United States?

Yesterday in Paris, the Intergovernmental Panel on Climate Change, a group of some 2,000 of the world’s top climate scientists pronounced global warming as real “unequivocal as evident in increases in global average air and ocean temperatures, melting sea ice and rising sea levels” - the culprit -fossil fuels and CO² emissions.

Potential of the second Irving oil refinery for New Brunswick goes way beyond construction and operation. What if a condition of Irving’s license to build required that combined total emissions of CO² from the two refineries not exceed the total volume of emissions emitted by the existing refinery?

Development of the technology and equipment to meet that requirement would find instant global demand. What if the refined products produced by the new refinery were required to burn 50% more efficiently than today’s refined products?

What if a condition of license required paradigm changes in environmental protection (triple hulls in tankers, inflatable life rafts/airbags that would contain/recover/absorb oil spills) and advanced security protective technology?

Knee-jerk reactions might dismiss these conditions as uneconomic. A closer look might reveal huge opportunity in the technological development required to meet these requirements. It would be easy to justify major investment by the federal government in a technology partnership with Canada’s single privately owned refiner.

Let’s take advantage of Irving’s willingness to invest $7 billion in the Province by demanding a value-added component(s) that would lead the world in innovative, climate-saving technology development. It might be a good way to get us on the road to self-sufficiency.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at bill.bellstrategic@nb.aibn.com