Hicks on Biz: Edmonton's economy cuts a diverse path By GRAHAM HICKS, first published Edmonton Sun, February 9, 2018
My eyes have been opened as never before.
Having visited four manufacturing businesses in Edmonton that operate independently of the carbon-based energy (i.e. oil, gas, coal) sector, I can now envision a pragmatic, optimistic economic future for Edmonton in a world using less carbon fuels.
All four leaders interviewed – Richard Meunier of RAM Elevators & Lifts, Denis Taschuk of Radient Technologies, Joe Makowecki of Heritage Frozen Foods (Cheemo Perogies), Chris Labossiere of Yardstick Testing – say Edmonton is a pretty good place to do business.
But there’s a crying need for an overall, coordinated economic diversification strategy on the part of all governments operating in Alberta.
File all those business failure excuses – distance from markets, alleged over-taxation, skill shortages, lack of capital, over-regulation, socialists in power – in that round file marked G.
Doing business out of Edmonton, these leaders say, is no better, no worse than anywhere else in North America.
Lower wages in the USA are balanced out by American health-care costs. Distance from markets is off-set by cheaper trucking rates – trucks that otherwise would be leaving Edmonton empty.
Taxation – municipal, business, corporate and personal – is about the same or less than elsewhere in Canada, especially without a provincial sales tax.
The cost of energy is cheaper in Alberta than most other provinces. (So far.)
The low Canadian dollar creates a built-in 25% advantage for any company selling into the USA.
The worst thing that could happen, all four CEOS agree, is another oil boom, when the oil patch pushes up demand for skilled labour. “At that point, we simply can’t compete for wages,” says RAM’s Meunier.
All the CEOS say some government initiatives – overseas trade missions, research tax credits, assistance in opening new markets, facilities like the province’s Leduc Food Processing Development Centre – are most helpful.
But big challenges remain.
Both Yardstick’s Labossiere and Heritage Foods’ Makowecki have been industry-wide leaders, chairing and leading business organizations.
Their observations are constructive but damning.
Canadian governments are infatuated with climate change. Economic growth has become an after-thought.
Governments in Alberta – municipal, regional, provincial and federal – lack vision, lack over-all strategy, lack any kind of over-all game plan with specific goals to encourage manufacturing diversity, to lessen reliance on the boom/bust carbon-fuel economy, to cope with the expected global decline in the burning of carbon fuels.
To start with, Alberta/Edmonton economic developers have no baseline. They do not know what is oil-related manufacturing and what isn’t.
Statistics Canada, the supplier of such statistics, does not differentiate energy-related manufacturing (oil refineries, upgraders, manufacturers supplying the oil patch) from other manufacturing.
But if we are to set future diversification goals, do we not need to know the current reality?
Makowecki has chaired many Alberta agriculture/food-processing industry organizations “Governments continue to work in silos.” he says bluntly. “There’s been no overall assessment of economic development, no baseline, no setting of goals.”
Smart governments around the world have strong industrial strategies, setting goals for economic growth, measuring such growth, making such goal achievement a top priority of governance.
“An overall strategy is immensely important,” says Makowecki. “If an overall strategy is agreed upon and is a top priority, then every government decision, at every level, in every department, starts with ‘how will this decision affect the overall strategy?’ ”
The good news is Edmonton has hundreds of non-energy-related manufacturing companies, started by entrepreneurs who are successfully competing in a competitive world.
The okay news is that government does a few things, here and there, to help.
The bad news is the unwillingness, or simply indifference of governments at all levels to make economic development strategy a top priority, for Edmonton, for Alberta and for Canada.
In Alberta at least, creating, implementing and priorizing an overall diversification strategy ought to be as important, if not more so, than climate leadership: At least on a par with getting pipelines built.
And that just doesn’t seem to be happening.