Shipbuilding
Deal; $2b Offshore Plan; SubSea Cable: Promises or Prosperity?
Prime Minister Stephen Harper
addresses workers at the Halifax Shipyard in Halifax last January.
Nova
Scotians are excited about what the 25 billion dollar shipbuilding contract means
for our economy; but there is so much more going on than just shipbuilding. The
Chronicle Herald of Halifax, NS put this article outlining the various projects
sited for Nova Scotia on the front page of their Business section just last
Friday November 16th 2012…. the province of Nova Scotia is
definitely the place to be! With the recent Shipbuilding announcement and the
many future projects that have been announced for those of us in the Atlantic Provinces
we can anticipate a stable and growing economy.
IT’S BEEN
50 years since a heavy water plant in Glace Bay was trumpeted as the saviour of
Cape Breton’s beleaguered economy.
It’s been
45 years since Clairtone Sound Corp., which employed 1,000 people in
Stellarton, making televisions, was touted as a new era of prosperity.
It’s been
40 years since the giant IT’S OIL headline on the front page of this newspaper
heralded the discovery of Sable oil and gas as an economic anchor for the province.
While the
Nova Scotia economy has had its share of long-lasting successes, it’s also been
plagued by disappointments.
The heavy
water plant had technological problems and shut down in the 1980s. Clairtone’s
ill-timed entry into the colour television market failed and the Pictou County
plant shuttered soon after. And although the Sable Offshore Energy Project has
been a positive force in the province’s economy, it hasn’t necessarily lived up
to the hype.
Fast-forward
to 2012 and a number of megaprojects are on the horizon.
Irving
Shipbuilding Inc.’s multibillion-dollar, 30-year program to build the navy’s
next fleet of combat vessels. A pair of oil industry giants, Shell Canada Ltd.
and BP plc, plan to spend more than $2 billion combined exploring Nova Scotia’s
offshore. The Maritime Link, a $1.2-billion subsea cable, is expected to bring
hydroelectricity from the Lower Churchill River in Labrador to Cape Breton and
mainland markets.
But
whether these projects are economic game changers or puffed-up promises depends
on who you talk to. While some observers cite an impending economic overhaul,
others warn of giddy hype.
Premier
Darrell Dexter has called these opportunities game changers.
“They
will alter the future of this province … and the Atlantic region,” he said in a
speech last June, adding that “Nova Scotia is on the verge of an unprecedented
era of investment and opportunity.”
His words
echoed those of former premier Gerald Regan who was quoted as saying the
discovery of oil and gas off the province’s coast “might well be the future
prosperity of Nova Scotia.”
“It was
touted as transformative and clearly, while natural gas has had a significant
impact, the transformative effect was not what the Regan government expected it
would be in 1971,” Saint Mary’s University history professor John Reid said in
an interview.
Along with the three massive
developments planned for Nova Scotia, a number of smaller ventures are also
garnering attention.
Calgary-based Projex Technologies
Ltd. plans to hire 440 engineers — at an average salary of $90,000 — for its
Halifax office over the next five years. Technology giant IBM Canada Ltd. has
promised to hire 500 people to staff a new global delivery centre based in
Halifax. And Pieridae Energy Canada has pitched a new liquefied natural gas
plant for Nova Scotia’s Guysborough County that comes with a $5-billion price
tag.
Although
the multiple projects slated for the province are promising, Charles Cirtwill
recommends a dose of caution to accompany the hubris.
“We’re
counting our chickens before they hatch,” said the president of the Atlantic
Institute for Market Studies, an independent economic and social policy
think-tank based in Halifax.
A real
game-changing project, Cirtwill said, would see Nova Scotia altered from a
government-led economy to a private sector-led economy. Another game changer
would be if Shell or BP found oil off the coast of Nova Scotia at a scale worth
bringing ashore, he said.
And while
the shipbuilding program will make a significant contribution to the economy,
Cirtwill said it’s not a game changer. “There’s no question it’s a huge step
forward for Halifax but it’s offset by a number of losses in rural Nova
Scotia.”
Elizabeth
Beale, president and CEO of the Atlantic Provinces Economic Council, said the
real opportunity for Nova Scotia lies not only with the massive projects slated
for the region but the potential spinoffs.
“It’s not
the jobs in the yard that are important but the technology and opportunities
that will flow to the region,” she said, referring to the $25-billion
shipbuilding program. “The significance will be the opportunities local
companies have to work as subcontractors. That is how we learn and improve and
become more productive. We need big investments to push us along.”
A measure
of a project’s success as a game changer, Beale said, is whether it improves
productivity in the province. “Productivity levels in the province and region
have generally been much lower than the national average, and that simply is a
reflection of the fact that we haven’t had an industry base here that had high
levels of output or wages.”
Yet Beale
also warned of the risks of pumping up major projects. Besides making a
population cynical if the results don’t pan out, the success of many
large-scale projects hinges on factors beyond our control, such as a volatile
global economy or commodity prices, she said.
Robert
Hogue, senior economist at Royal Bank of Canada, said the timing of the big
projects will be critical.
“If those
projects go forward as currently planned the dollar amounts are quite
impressive. The real key will be the timing of them. If there is enough overlap
of a certain project we might see a year or two of robust growth.”
But once
the projects reach a certain cruising speed, Hogue said economic growth will
likely even out. “Activity will operate at a higher level but the actual growth
rate will stabilize.”
Dalhousie
University economics professor Lars Osberg said the number of projects scheduled
to come online in Nova Scotia is promising. But he said investments in
education and training to ensure a highly skilled workforce is essential.
“You can
have a game-changing event in any particular game in the season but that
doesn’t mean you make the playoffs. What determines if you make the playoffs is
whether you’ve got the skills on the bench.”
November 16, 2012 - 8:15pm BRETT BUNDALE
Business Reporter
(bbundale@herald.ca)
http://thechronicleherald.ca/business/177559-high-hopes-for-economy
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