Marine Atlantic’s St. John’s office is costly in more ways than one
Cost of commuting
Marine Atlantic may primarily serve Port aux Basques and North Sydney, but the bulk of the company’s senior management now resides in St. John’s.
The Crown corporation spent a little more than $124,000 in the last fiscal year (2012-13) on travel expenses for the 11 management and executive employees who work out of St. John’s.
That was the cost of travel to and from either North Sydney or Port aux Basques.
The Gulf News obtained the numbers through a freedom of information request.
More than half of the total cost was spent on flights. The next biggest expenses were hotels and meals.
The numbers raise questions for Random-Burin-St. George’s MP Judy Foote. She noted the federal government expects Marine Atlantic to recoup 60 per cent of its costs,
and often that gets passed on to tax-
“Maybe if the offices were located in an area where the rent was cheaper, where there wasn’t so much travel involved, that could be a factor in keeping the costs down,” said Foote.
She said it is difficult to comment on the cost directly without anything to compare it to, but she said for her the real issue is that management is so far from the operation.
“If you’re providing a service between two locations, those being Port aux Basques and North Sydney, that’s where the centre of operations should be. I don’t understand — when talking about a Crown corporation — why it’s important to have the management of that service in
St. John’s, so far removed from either of the two locations.”
The cost Marine Atlantic spent on travel for its managers is only a tiny fraction of its total operating budget (for example, in 2010-11 the corporation’s operating expenses were $222 million).
The Gulf News asked to speak with someone from the company about the numbers.
Marine Atlantic spokesman Darrell Mercer responded by email. He noted that much of the money spent on travel costs is spent in the local communities. He also noted it covers the cost of regularly scheduled executive and management meetings in Port aux Basques and North Sydney.
Mercer added that the decision to relocate Marine Atlantic’s head office from Moncton, N.B., to St. John’s was made in 1998. He said the corporation has no plans to revisit that decision.
Burgeo-La Poile MHA Andrew Parsons said he has always believed the Crown corporation’s headquarters should be in Port aux Basques. He has heard arguments for having it in North Sydney, but he said without Newfoundland there would be no operation in North Sydney.
“I’ve heard various reasons as to why management needs to be in
St. John’s,” said Parsons. “However, none of the reasons do enough to satisfy me that the same duties and tasks couldn’t be handled from Port aux Basques. It didn’t make sense to have it in Moncton, and it doesn’t make sense to have it in St. John’s.”
Eddy Ng is an associate professor at the Rowe School of Business at Dalhousie University. He said it doesn’t make sense from a business standpoint for Marine Atlantic to have its upper management so far from the main operation.
“You would want management to be as close to your operations and customers as possible,” he said. “This is also a part of your risk management. It is much more challenging to react to and co-ordinate emergency efforts when management is not on the ground. Senior management needs to be seen at the site when there is an emergency.”
Ng said having management in different locations can lead to inefficient communication, confusion and poor decision-making.
While there is talk in every business of “telecommuting” via telephone and Skype, he sees that as a bad idea.
“Yahoo recently ended telecommuting because employees lose the face-to-face communication and contact vital to an organization’s corporate culture,” said Ng. “You also become more creative and better at problem-solving when you interact with one another as a team.”
Ng said industries that have to lobby the provincial government might need to be located in the capital, but he doesn’t see that argument working for Marine Atlantic.
In fact, he said government offices and Crown corporations are often set up in more rural areas to stimulate economic growth.
He gave the example of federal tax offices that have been set up in smaller cities such as Sydney, Thunder Bay and Red Deer.
Ng said the worst thing a business can do is break up senior management between two or more locations. He said it would be better to have all senior management in one place, even St. John’s, than to split it up.
The Gulf News