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May 19, 1998
(Industry, Trade and Technology)


The following statement was issued today by Judy Foote, Minister of Industry, Trade and Technology. It was also read in the House of Assembly:

In light of the closure of BPS Imaging Partnerships, I take this opportunity to apprise the House of pertinent information regarding the matter.

This government has been working diligently, through our partnership with NewTel Enterprises known as Network Newfoundland and Labrador, to attract call centre business to our province. This type of activity, which is increasingly being utilized by the banking, insurance and other business sectors, is growing at a rate of 20 per cent each year.

The demand for this type of activity has created an extremely competitive environment. Therefore, governments that compete recognize that up-front financial incentives are a necessary part of the equation in a company's decision on where to locate.

In the case of BPS, Network Newfoundland and Labrador was in negotiation with the owners for six months before they successfully landed the call centre, having competed against other jurisdictions offering incentive packages. The decision to provide a forgiveable loan of $800,000 to cover start-up and equipment costs was made in light of the stiff competition we were facing. To put the type of capital costs associated with this type of business in perspective, one piece of equipment alone called a predictive dialler can cost $800,000.

The $800,000 was tied to a commitment of 840,000 person hours of work over a four-year period. For a period of time, there were 210 people employed at the call centre, the majority of whom were previously unemployed. This was an investment in our people.

BPS Imaging Partnerships consisted of two partners, both with impeccable credentials. One has been in the call centre business for 10 years and was operating call centre businesses in Ontario and New Brunswick. The other has been in the film processing business for 30 years and has a strong relationship with The Bay.

There was nothing in the background checks, financial information, or business plan, that was required as part of the due diligence that was carried out, that indicated in any way that this venture would not be successful. In fact, everything pointed to a very successful business venture.

But businesses fail. If governments didn't try to attract business because of the risk of failure, we would never have achieved the success that we have.

For example, the privatization of the Marystown Shipyard, where today there are 1,100 employees; the St. John's Dockyard, with 200 employees and Newfoundland Farm Products, with 300 employees. Widebody RV in Bishops Falls, with 30 employees; and Lotek Marine Technologies with 22 employees are just two examples of successful businesses that we have attracted. And there are numerous others.

We first became aware of difficulties with BPS Imaging in January, when we were advised that there was a significant loss of revenue triggered by the ice storms in Ontario and Quebec. It is common knowledge that the Canadian economy suffered overall during the ice storms. The Conference Board of Canada said that the storms will cost $1.6 billion in lost output. While this was one of the factors in the demise of the call centre, there were also differences of opinion between the partners which resulted in a dissolution of the partnership, with one of the partners remaining as the sole owner of the company. Anyone familiar with business knows that this happens.

I regret that this business has closed.

More importantly, I regret how the centre closed, putting 124 employees out of work. I have assured the employees that I will do everything possible to make sure they get the money that is owed to them. I will continue to work with NewTel through our partnership in Network Newfoundland and Labrador to attract other call centres here that can provide employment for our people, especially those who worked at the BPS Call Centre.

1998 05 19 3:55 p.m.


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