Daily Business Buzz
Virtually vacant building a testament to runaway expansion
© ADAM MACINNIS – THE NEWS
The former Clairtone factory has remained virtually vacant and derelict over the past 40 years. While some parts of the 250,000 sq. ft. building are in a state of disrepair, Stellarton Mayor Joe Gennoe says there are no plans to demolish the building and he hopes to find a suitable buyer.
[STELLARTON, NS] – It was the ’60s in Canada and a booming Toronto stereo-furniture manufacturer was looking to expand.
With financial support from the Nova Scotia government, Clairtone’s Peter Munk set his sights on Stellarton.
The rest, as they say, is history. The virtually vacant building on Acadia Avenue sits as a testament to runaway expansion supported by government funds.
Clairtone’s rise and fall from grace has been chronicled in a book by Maritime author Dan Soucoup called Failures and Fiascos: Atlantic Canada’s Biggest Boondoggles.
“I did a book a while back on Maritime first-achievements and thought it would be interesting to do the other story, our failures in the region,” said Soucoup. “Clairtone was such a big flop, a $25 million loss to the taxpayers 40 years ago, that I had to do it.”
His book is a sad compendium of failed business ventures and wasted public funds from the 1820s to present day. Other projects covered include the Shubenacadie Canal, a bizarre and giant log raft and Halifax’s sewage treatment plant.
“Clairtone is right up there with the Bricklin in New Brunswick and the heavy water treatment plant in Glace Bay,” said Soucoup.
Armed with government funding and support from Industrial Estates Ltd., a Crown corporation headed by Pictou County’s Frank Sobey, Clairtone set up a 250,000 sq. ft. shop in Stellarton.
According to Soucoup, $8 million in public funds would be spent to create 600 to 1,000 jobs. But it didn’t take long to realize there was something wrong.
“Cost controls were non-existent and manufacturing managerial talent was hard to come by in Nova Scotia,” Soucoup wrote. “Clairtone was unable to put their products into customers’ hands at a profit.”
A series of poor business moves included Munk’s decision to invest in Canadian Motor Industries and the government’s requirement that Clairtone begin making colour televisions.
After losing $6.6 million on gross sales of $17.5 million in 1967, and a government takeover of the company less than a year later, production was halted in 1970. The province and taxpayers were out $26 million.
“I think Clairtone did have a negative effect on the idea that government could manage a private-for profit venture,” said Soucoup. “It turns out they can't unless it is a monopoly.”
While he notes that the Westray mine was certainly a big mess, very sad and tragic, he can’t think of any other similar flops in Pictou County.
“The general theme of the book is that governments can't operate businesses effectively and should not try. But they do and get in trouble.”
The trouble remains to this day. Forty years later, the Clairtone factory has yet to find a buyer. Despite a failed attempt to sell the building to Art Munro, who was prepared to purchase the building for $500,000 and transform it into a viable business, Stellarton Mayor Joe Gennoe remains optimistic.
“There is a lot of value there and there’s always people interested,” he said. We’re marketing it and about half a dozen people are looking at it.”
Gennoe noted there are no plans to tear down the building, which has been used as storage for Sears and Scott Paper.
At the end of the day, Soucoup said Clairtone is a good example of why governments shouldn’t pick winners in business.
“They can fund start-ups but perhaps in an arm’s length way, and keep out of operations.”