Canada Report: Ahead of the Curve in Returning to Pre-Recession Conditions
Sound decision-making by Canadian banks and businesses has resulted in the nation's weathering the global economic downturn better than most and putting it in a position to grow more rapidly.
Steve Stackhouse-Kaelble (Fall 2011)
(page 2 of 5)
It should come as no surprise that the economy of Canada's Atlantic provinces has always been strongly linked to the area's natural resources. Aquaculture would seem to be a natural, with so many miles of shoreline, and so are mining and offshore oil and gas exploration. And, of course, tourism - the lovely landscape attracts visitors from Canada, the United States, and beyond.
But amid the peaceful and bucolic settings of Nova Scotia, Prince Edward Island, New Brunswick, and Newfoundland and Labrador, a bumper crop of cutting-edge business continues to sprout, providing an economic resiliency many Western nations would envy. This can be attributed to many factors, but first and foremost is the region's pro-jobs attitude and desire to strongly welcome investment and reach the world with its products.
Tangible evidence of this attitude comes in the form of the Canada/Atlantic Provinces Agreement on International Business Development (IBDA). Renewed this summer for another five-year term, the IBDA is a federal/provincial agreement designed to help Atlantic Canadian businesses enter and succeed in international markets. It includes a $10 million investment to boost export-related activities.
According to Newfoundland and Labrador's Minister of Innovation, Trade and Rural Development Susan Sullivan, "Over the years, [IBDA] has improved the export readiness and led to new opportunities for businesses from a wide range of industry sectors." Since the launch of the agreement in the 1990s, IBDA funding has helped launch the exporting activities of some 200 Atlantic Canadian companies and provided assistance to more than 300 exporting companies hoping to define and enter new markets. Another 450 companies have used the aid to increase their sales and presence in existing markets.
The region's global connections have lured investment from elsewhere, as well. For example, Korea-based Daewoo Shipbuilding & Marine Engineering earlier this year opened its DSME Trenton Ltd. facility, which is focused on producing wind turbines and blades. In launching the Nova Scotia operation in June, CEO Nam-Ki Lee proclaimed, "We are well on our way to creating a renewable energy cluster in Nova Scotia." The facility, a former railcar plant, already has dozens of orders to fill.
That renewable energy cluster also includes homegrown Solartron Energy Systems Inc., which marked 2011 by increasing its production of solar collectors that power boiler heating systems, tanks, radiant heating, and air-conditioning systems. "Clean energy is a large and growing international market and one in which Nova Scotia companies excel," says legislative assembly member Brian Skabar, speaking on behalf of the minister of Economic and Rural Development. Energy-efficiency also drives the business of LED Roadway Lighting, which landed healthy investment from outside Nova Scotia to help build its expertise in high-tech, low life-cycle-cost street lighting fixtures.
Nova Scotia is growing other kinds of technology companies as well. Techlink Entertainment International Ltd., for example, is using a $1.5 million secured loan from Nova Scotia Business Inc. to build its Gameplan product that integrates into video lottery terminals to provide new gaming options. And Unique Solutions Design Ltd. has landed significant investments as it builds game-changing retail technology that uses body scan kiosks to help shoppers determine the best-fitting clothes. The company plans to use the funding to open more than 300 kiosks across North America.
Meanwhile, Prince Edward Island was the site chosen for a consolidation of various Tube-Fab Ltd. operations from multiple places in Canada and the United States. The company serves, among others, the aerospace sector with tube-bending, shaping, and fabrication of tubular and machine components. The project means about 100 new jobs and more high-tech credentials for a province historically known for mussels, potatoes, lupines, and "Anne of Green Gables."
PEI's great year also has seen additions to the island's life-sciences cluster, including a $2.8 million investment by Novartis Animal Health Canada Inc. at its Victoria R&D facilities. And contract management software leader Upside Software Inc. has expanded into PEI to tap into the province's growing IT sector.
The New Brunswick provincial government has shared a $3.3 million financial package to aid Innovatia Inc., which provides a range of documentation, training, and other support services. The package will help the Saint John company implement a major contract with a global ICT company. The province also continues to support its mainstay aquaculture industry, including recent financial support for the New Brunswick Aquarium and Marine Centre, which includes aquaculture research facilities. Earlier this year, New Brunswick launched Invest NB to boost its focus on attracting new businesses, and in July the province dropped its corporate income tax to 10 percent, which it says is the lowest rate in Canada and the United States.
Newfoundland and Labrador also is aiming to ease the way for new businesses. It recently launched BizPaL, an online business permit and license information service designed to slash paperwork and save entrepreneurs time and money. And as in New Brunswick, aquaculture research and development is an important focus; the government recently delivered a million dollars to the Canadian Centre for Fisheries Innovation, one installment in a larger contribution toward helping the fishing and aquaculture industries become more productive and profitable. Other R&D recently supported by the government includes an investigation of natural gas hydrates on Newfoundland and Labrador's continental margin.
All in all, economists at Royal Bank of Canada expect modest growth in the Atlantic Provinces. Newfoundland and Labrador has been seeing strong growth in construction, exports, and employment in 2011, with hefty oil revenues fueling the economy. RBC projects that demand for PEI's agricultural and seafood products should be healthy, while the manufacturing and financial sectors of Nova Scotia are continuing their growth trends. New Brunswick, which has enjoyed growth in its export-oriented manufacturing and natural resource sectors, should see gains in the domestic economy as well, according to RBC projections.