Risks of moving Marine Atlantic headquarters to St. John’s are too great, CEO says
Should Marine Atlantic decide to uproot its headquarters in St. John’s and relocate it to Port aux Basques or North Sydney, it is likely that the crown corporation would do so without the people currently in leadership positions in the capital of Newfoundland and Labrador.
Most, if not all, of the 20 employees currently working in St. John’s would quit their jobs instead of moving.
This was only one of the conclusions of a final report who reviewed the business case for consolidating operations and potentially relocating Marine Atlantic’s head office to one of the company’s port communities.
Therefore, there will be no change to the current structure, said Murray Hupman, President and CEO of Marine Atlantic.
“We consider the risk of making this type of move to be too great,” Hupman told CBC News in a telephone interview Wednesday afternoon.
While stopping before rejecting the concept, the report detailed some serious risks associated with such a decision.
One of the potential consequences? The possibility that the Crown corporation will not be able to fulfill its constitutional mandate due to the challenges of recruiting and retaining highly qualified executives, managers and other specialists.
“The reality is that in general, it is easier to recruit these types of positions in the major centers,” the report reads.
The report was initiated by the board of directors of Marine Atlantic and completed by a consulting firm called HDR Inc. in February 2020.
It was obtained by CBC News as part of an access to information request.
St. John’s staff will not be relocating
The review explored two options: maintaining the head office in St. John’s, where it has been located for over two decades, or a full or partial consolidation of the shore-based administrative offices in Port aux Basques or North Sydney.
The final report did not make a definitive recommendation.
But one of the most dazzling discoveries? When asked by the report’s authors, staff in St. John’s said they would not be moving.
“Many have a career spouse in St. John’s and / or kids they wouldn’t want to leave schools / activities,” the report read.
One of the common themes of leadership and management staff? That Marine Atlantic “will not be able to effectively recruit and retain talent in port communities”.
The report says there is a risk that recruitment problems lead to what is known as downsizing, where applicants with lower education and experience are hired to fill positions.
According to the report, “this could prevent Marine Atlantic Inc. from fulfilling its mandate” to manage and operate the constitutionally mandated ferry service between the island of Newfoundland and mainland Canada.
“The reality is that there is no precedent for a federal Crown corporation the size of Marine Atlantic Inc. headquartered in a community the size of Port aux Basques or North Sydney,” indicates the report.
Hupman echoed some of the report’s findings, saying that specialists in law, information technology and computer systems, marketing and communications “appear to be more abundant and the market appears to be much better in the region. St. John’s than in small communities ”.
Headquarters an ‘ivory tower’
However, the report also revealed a difference of opinion, with the board appearing to favor offshoring.
Interviews with anonymous board members revealed “that there is a sense of disconnection between port community staff and head office with a notion of head office like an ivory tower”.
Board members felt that “innovative recruiting” and “staff development” could overcome the challenges that could arise from the head office move.
There is a feeling of disconnection between the staff of the port communities and the head office with a notion of head office like an ivory tower.– Unnamed Board Members, Marine Atlantic Inc.
Asked about the Ivory Tower commentary, Hupman said it was likely done before board members had a full understanding of how the company works.
“It was early in the game, without the knowledge and background of people today,” he said.
“I don’t think that was meant to be a direct criticism in the sense that we have here these people who operate and live very differently from the rest of the organization.”
The question of the location of the head office has long been a thorny one, with community and political leaders in Port aux Basques long arguing that the head office should be located in the community on the southwest coast of Newfoundland – the main point. entry into the province for those arriving by sea.
The counter argument is that the head office is best located in St. John’s, where the vast majority of suppliers and specialist services such as law firms, government agencies and the media are located.
According to the report, many companies are setting up their headquarters in major centers in order to attract talent.
The report targeted the College of the North Atlantic in Stephenville. There have been seven different occupants in the president’s chair for the public college system since 2006, according to the report, with one person serving three different times.
And when the provincial government decided to move its Crown Lands division from St. John’s to Corner Brook in 2017, only seven of 32 employees moved, according to the report.
If Marine Atlantic decides to move its headquarters to St. John’s and loses the management and management team there, the report says such a scenario could “result in lost productivity and inefficiencies that may take years to overcome. for the organization “.
A big severance package has potential
The cost of severance packages could also reach $ 2.5 million, according to the report, with an additional $ 500,000 in recruitment and relocation costs to fill vacancies created by the exodus.
Most of Marine Atlantic’s employees are based in Port aux Basques or North Sydney, and according to the report, the company is already facing challenges replacing highly trained specialists for its fleet of vessels.
“Finding professionals in the rural communities in which the company operates or attracting candidates to settle in these communities also poses challenges,” the report says.
Marine Atlantic could save nearly $ 200,000 per year in travel costs by relocating its headquarters, according to the study.
Go for a lower rent option
The company’s headquarters have been located in St. John’s for more than two decades and occupy most of the two floors of the downtown Baine Johnston Center.
According to the report, Marine Atlantic is spending $ 460,000 on office space in St. John’s, with the lease due to expire Aug. 31.
If the company decides to keep its head office in St. John’s, the report recommends that Marine Atlantic seek premises at a lower cost.
Hupman has confirmed that Marine Atlantic will begin the process of exploring the real estate market for alternative office space in the St. John’s area this fall.
According to its most recent annual report, Marine Atlantic spent $ 242.5 million in 2019-2020. The federal grant for the service was $ 135.3 million.
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