International business in Bermuda today is where Bermuda tourism was in the early 80s, having peaked and at the beginning of a structural shift in operating model and under attack from hungrier global competitors.
1980 was the peak of tourism numbers.
2008 was the peak of international business.
30 years later Bermudians are wondering where all the tourists went. The PLP is stubbornly refusing to swallow their pride and outdated mindset and implement the kind of fundamental reform and modernization required to make Bermuda tourism relevant again while everyone is the industry is screaming for them to get their heads out of the pink sand.
I worry that in far less than 30 years Bermudians will be asking where all the (re)insurers went, while the PLP stubbornly refuses to swallow their pride and outdated mindset and implement the kind of fundamental reform and modernization required to make International Business relevant again that everyone in the industry is screaming for them to do.
Bermuda companies are now global companies, and in many cases no longer Bermuda companies (but Swiss and Irish). The tax issues are largely settled and companies are comfortable locating virtually any job outside of Bermuda, other than a small handful of mostly underwriting jobs. The old mindset that Bermuda Immigration can dictate who you hire and for how long is gone.
XL now has only 2 of their 11 top executives located in Bermuda. This is one of the two flagship Bermuda market companies. ACE did likewise years ago.
[XL CEO Mike McGavick] explained that, as a global company with offices in 27 countries, XL's senior management team was not all based in the same country, and never had been throughout his three years leading the company.
"We've probably been at a peak, in recent history, of senior executives being in Bermuda," Mr McGavick said. "Some of those people have been staged both out of other places and Bermuda.
"Will I be doing more up there? Sure. Are there others who are making changes for their own idiosyncratic reasons? Sure. But we've always been very flexible with where people live. All the time I've been here we've had a distributed senior management team and I expect we'll continue to."
Companies now choose which positions they locate in Bermuda. If Immigration says "No" then they move that position, and the affiliated supporting jobs, to a jurisdiction more welcoming. Term limits are kryptonite to Bermuda's international competitiveness and the long term death of international business in Bermuda.
The Swiss are actively using Immigration policy (ours and theirs) to attack Bermuda by recruiting companies and soliciting highly skilled, high earning positions to their cantons through tax holidays and individually negotiated tax rates.
It isn't cost. Switzerland is as expensive if not more than Bermuda.
It isn't economic stability. Ireland is in far worse financial shape than Bermuda.
It's convenience and attitude.
The PLP, or at least a few in the PLP know this, but will not do the right thing. Political face saving is paramount and will ensure Bermuda's international business industry goes the way of our tourism industry. That is not protecting jobs for Bermudians. It's exporting jobs.
Bermuda Immigration's role has fundamentally shifted. The days of employment protectionism are over and it now needs to act as a critical marketing arm for Bermuda as a financial centre.
Immigration policy should be geared towards retaining our existing intellectual capital, and attracting new international investment and expertise.
Paula Cox's debt means that banking on a global economic recovery to simply get us back to 2007 levels is not enough. We need to grow GDP and revenues to new highs in order to service her $100M Ministry of Debt - or dramatically cut spending (= massive public sector layoffs after a hoped for election win by the PLP).
As Bermuda companies have gone global, so have the jobs. As with tourism in the 80s, other countries are refining and improving the Bermuda model and doing it better.
If Immigration blocks or rejects a company from locating a job in Bermuda, with long term stability, they will simply look elsewhere.
They won't call the press. They won't kick and scream. They'll say "these guys just don't get it and won't get it", pack a few people on a jet and send them to somewhere that is happy to have them.
Just as the PLP reversed their policy limiting yacht stays to 21 days, they need to reverse their policy limiting jobs stays to 6 years. It's the same fundamental problem - taking your customer for granted and indicating that it's all on your terms.
Financial services companies, like tourists, have many options of where to go.
The fundamental challenges with international business today are the same as tourism: international competitiveness, a quality and constantly improving product, and ease of use.
Bermuda cannot afford to have the PLP do to international business what happened to tourism. The time to act is now, not in 30 years.