Subsidies for Siemens helped seal cybersecurity deal

The head of Siemens Canada says the global engineering company chose New Brunswick for its new cybersecurity centre thanks in part to subsidies worth $60,000 per job.

Faisal Kazi says the $3.6 million of provincial government money, including $2 million in payroll rebates, helped clinch the office for Fredericton. It will employ "up to" 60 people, according to the company and the province.

"For a company like Siemens, it's always about the business case," Kazi said in an interview.

"The business case includes the environment that we're in, the talent that's available, and the investment we will make. So any funding, any support from the government that will facilitate that, adds to the decision."

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Premier Brian Gallant travelled to Toronto Wednesday to join Siemens CEO Joe Kaeser for the announcement. Kazi said the event wasn't in New Brunswick because Kaeser's schedule didn't allow him to travel here.

The new centre will research and develop new technologies to protect major infrastructure such as power stations, electricity grids and mass transit systems from cyber attacks. Those systems will be marketed worldwide.

The centre isn't the first Siemens foray into the province. The company set up shop in Fredericton in 2012 with a $35-million contract to develop "smart grid" technology for NB Power.

It's intended to modernize the electricity grid to give users more control over power consumption so the utility can reduce demand.

$537K from former Tory government

Since then, the company has developed an increasingly symbiotic relationship with the New Brunswick government.

In 2013, then-Progressive Conservative premier David Alward agreed to $537,000 in payroll rebates from Invest New Brunswick when the company established a "centre of competence" with 25 research and development jobs in the capital.

And in 2016, with the Liberals in office, the company launched a "smart grid innovation network" with NB Power and the University of New Brunswick.

The project was funded in part by $2.8 million from the provincial and federal governments. They anted up another $245,000 the following year.

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Two Siemens Canada CEOs — Kazi and his predecessor Robert Hardt — have become fixtures at the annual State of the Province speech, each of them introducing Gallant in different years.

That relationship helped land the new centre, Kazi said.

"New Brunswick has been a natural choice for us. We have had a really good experience from the talent base, and from the quality of the products which have been produced on the smart grid side in New Brunswick," Kazi said.

"That was our most important criteria. Of course the financial support from the government makes things easier."

2 phases

The cybersecurity centre is separate from the smart-grid project. The Gallant Liberals have made cybersecurity a pillar of their economic growth plan.

The centre will ramp up in two phases. The first, with up to 30 employees, will involve $1 million in payroll rebates, a $1 million grant for capital spending on the building, and $600,000 to cover "eligible relocation expenses" for Siemens employees transferred to Fredericton.

Those transferred employees will be eligible for the payroll rebates, meaning Siemens will reduce the cost of their salaries by moving them here.

"Siemens does not receive any money up front and has to meet certain conditions before any amount is disbursed," Opportunities New Brunswick spokesperson Eric Lewis said in an email statement. No one from the Crown corporation was made available for an interview.

$20K in moving expenses per employee

Kazi said the company may not need all of the moving expense money. He says the Fredericton centre will hire mostly "local talent," with the transfer of maybe two or three Siemens employees "that already have a higher level of maturity and experience in cybersecurity."

At a maximum of $20,000 in moving costs per employee, "there may be a chance that we will not use the full amount of money," he said.

Hiring for the second phase of the centre, starting in 2020, will trigger the second $1 million in payroll rebates.

The province says the hiring for phase one alone will add $17.1 million to the province's economy over seven years.

Kazi said he didn't believe Siemens was being used as a prop by Gallant as the premier gears up for a re-election campaign that starts in less than three months.

"His passion for New Brunswick has been always there and this was the same three years ago as it is now," Kazi said. "I don't think he's using it. Maybe, but I didn't get that feeling."