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Is The McLean Mill Worth It?
In my spare time I also write a column on tourism in the local newspaper. The local community is in transition from a logging and milling town to something else. What, we don’t know yet. But tourism is likely going to play a much larger role in the economy in the future. Anyway, I will be publishing these columns here as well as in the paper. This will appear next week in the Alberni Valley Times, I expect.
“I read the local newspapers like many others around the community. I also follow the local web forums. And I have seen that there are still some very strong feelings about funding the McLean Mill, the Steam Train and the Heritage Society.
So I thought I would look at the city’s financial reports to see for myself what kind of record the McLean Mill actually has. Over the six years from 2001 to 2006, the city has sunk about $3.2 million into the project. That’s over half a million dollars a year. The good news is that last year the deficit is about a third of what it was in 2001. So the trend is in the right direction. Mill management continues reducing the deficit at the same pace, in another 6 years it will only be $90,000.
Another thing to consider is that about 8,000 volunteer hours were donated to operating the train, the retail operation and special events. This represents just over half a person-year of work. At $12/hr, that’s $96,000 given to the McLean Mill as time.
This picture isn’t particularly encouraging. Most tourism companies take at least 3 years to become profitable. It’s been 6 years and counting for the McLean Mill.
On the other hand, governments look at things a little differently. A common tool that governments use is Cost-Benefit Analysis. This technique takes in to account the over-all benefit to the community of a development. It considers issues like how many people stay over-night in this community to visit the mill? How many visit as day-trips? How many camp, stay in motels or B&Bs? How many meals, gas and souvenirs do they buy as a result of visiting the mill? How many jobs, or parts of jobs, does this spending support? And how much of it goes back to the City and Regional District in taxes?
Some of the benefits are very hard to quantify. In a general way, it is very desirable to give people another reason to stay in Port Alberni or even to visit on a day-trip basis. It helps to diversify the local economy. It adds to the mix of things for people to do while they are visiting the valley. It helps to create a buzz. It makes the community more attractive to people considering moving here. How do you quantify that economically? It’s hard. Economists use all kinds of tricks and approaches to approximate this value. But every economist will come up with a different number. The point is, though that it is a very real value, despite it being hard to quantify.
But, as far as I am aware, no cost-benefit analysis has ever been done on the McLean Mill. Everyone agrees that the business plan, which isn’t the same as a cost-benefit analysis, was flawed. I think that an analysis has the potential to end the debate over the viability of the mill. It has been operating long enough for management to have a handle on the numbers that go through the mill, where they are from, and how much they are spending here. They also know how much the mill is spending in the community for goods and services and for employment. It’s just a matter of getting someone to dig up a few more numbers and put it together.
Ultimately, the decision to go for it or to fold it up is a political one. But I think it is a decision that would benefit from some hard numbers complemented by some thoughtful reasoning for the hard-to-value benefits. If a proper cost-benefit analysis were done, it may easily provide very good justification for the money that is being spent on the mill.”
Curious to know more about the mill? Try this link: