Knowledge takes flight

Tony Wanless | Image: Jupiter | Published: June 12, 2008

A recent investment deal that barely registered on the local landscape indicated that maybe the B.C. economy isn't all about rocks, rivers and trees.

Not that I have anything against the resource economy; it's where much of our money comes from right now. But from a risk management point of view, it's dangerous for an economy—just as it is for an investor—to rely on one sector too much.

Sure this bet-the-farm policy can have big payoffs in the short-term if your timing is right, like the hot economy we're experiencing right now. But when things turn, as they inevitably do, you'll be hurt badly. So you try to hedge against this by developing other parts of the economy.

Right now, I'm afraid B.C.'s enamoured of the short-term money supplied by natural gas, mining, and other resource sectors.

So it was nice to see that the Vancouver International Airport Authority recently sold a 50-percent interest in its global airport management subsidiary, YVR Airport Services (YVRAS). Citi Infrastructure Investors, an alternative investment unit of the banking giant Citigroup, took the position because it sees YVRAS as its springboard to an expanding global business.

Few people have heard of YVRAS, but in the past 12 years it has been building a nice little business by selling its expertise in airport development and management around the world, particular to those who need to create and run smaller airports. So far, YVRAS runs 19 airports—including YVR, where it gained the knowledge—in seven countries, including Chile, Dominican Republic, Canada, Jamaica, Turks and Caicos, Cyprus and the Bahamas.

When the Vancouver airport was privatized, a company was created to run it. What it learned is now applicable to other countries and cities where governments are now hiring experts to manage these important facilities instead of doing it themselves.

This is a form of consulting. And this kind of consulting via expertise is gaining traction all over the world as knowledge becomes more valuable than raw resources. The more advanced gain knowledge through some pursuit and then sell that knowledge to others who need it. Right now the knowledge market is booming globally, as developing nations ramp up their infrastructures so they can take a larger part in the global economy.

It's also a pointer for everyone else in this province facing some uncertain times. Sure, we might not be able to compete against developing countries in the basics—manufacturing

and resource extraction (unless we're the only ones who have it)—but we certainly can in terms of expertise. For example, we're the world's best at mining development, and while we might not actually be doing it here, we can certainly show others how it's done.

I don't know who on the airport authority board dreamed up this idea of creating a subsidiary to manage other airports, but I applaud him or her. It's not too often you see an institution's board take this kind of bold initiative—many boards are instead peopled with political appointees who spend more time covering their butts and cashing their cheques.

So let's give credit where it's due.