Some hope on horizon for Atlantic provinces

Economies may see better growth, job prospects due to construction, shipbuilding contracts
By Liz Bernier
|Canadian HR Reporter|Last Updated: 04/01/2016

There hasn’t been an overabundance of good news stories when it comes to the Atlantic provinces’ economic outlooks as of late, but this year may be different.

Growth prospects are still modest, but there may be some “rays of sunshine” for the maritimes, according to the Conference Board of Canada’s Provincial Outlook: Winter 2016.

Nova Scotia is leading the region with forecasted growth of 2.1 per cent this year compared to the national average of 1.7 per cent, said Marie-Christine Bernard, associate director of provincial forecast at the Conference Board of Canada in Ottawa.

“It’s mostly Nova Scotia that’s doing better relative to the other provinces in the Atlantic region. In 2015, there was not strong economic growth in Nova Scotia but that was mostly due to the decline in natural gas production... usually, natural gas production, if it increases quite rapidly, it can be a big boost to the economy but it doesn’t really generate a lot of employment,” she said. 

“So we looked at the economy… excluding the natural gas industry, it’s actually doing quite well. There is strong economic activity in the construction sector, in the manufacturing sector, and there’s some good prospects for this year and next year in those sectors again.”

There is certainly cautious optimism in the province, said Robert Batherson, chair of the board of the Halifax Chamber of Commerce. 

“Last year was a good year in Nova Scotia in terms of outperforming the national average by way of GDP growth,” he said. 

Atlantic Canada is traditionally a slow growth area economically, said Glenn Davis, vice-president of policy at the Atlantic Chamber of Commerce in Halifax.

“Based on the (Conference Board) report, you can see that the highlights are Nova Scotia and, to a lesser extent, P.E.I. The other two provinces are structurally challenged by the oil and gas industry in Newfoundland and the general economic downturn in New Brunswick.”

Factors to watch

Manufacturing is certainly one sector that has projected growth for the upcoming year, said Bernard. 

“Manufacturing is benefitting from the Irving shipbuilding contract. The work really got underway in the second part of last year, so we’re going to see the shipyard hiring more workers. So we’re going to see stronger activity coming out of the manufacturing sector,” she said. 

“As well, the U.S. economy is doing better. Consumer demand in the U.S. is much stronger than it was in the last two years and (there’s) strong job creation, so Nova Scotia has strong ties to the U.S. market. So there are a number of factors that are going to help the manufacturing sector — it’s not just the shipbuilding activity.”

In terms of construction, there are several projects under development in the province that could provide a boost, said Bernard. 

“Construction will be strong in 2016 and there are also a lot of new multi-unit housing developments that started in 2015 and they’re not completed yet, so we’re also going to see strong residential investment as well.”

The national shipbuilding and procurement strategy began to come into effect late in 2015, said Batherson. 

“So it’s not only the benefits that come from the hundreds and hundreds of shipyard workers who are working at Irving’s Halifax shipyard — it’s also the other benefits that come from that level of spend through the entire supply chain,” he said. “That’s one aspect where we expect to see a lot of growth take place.

“Secondly, there’s a lot of commercial construction throughout Halifax. If you were in downtown Halifax right now, you would see our downtown literally littered with cranes.”

Another factor people are excited about is Shell has a billion-dollar offshore exploration program underway, said Batherson. 

“They’re drilling for oil so there’s a billion dollars of investment flowing through our economy over the next number of years,” he said. 

“A lot of the forecasts that we’ve seen are factoring in that offshore oil activity that’s taking place with the Shell program.

“Also, BP has a billion-dollar offshore program that is in place, will be going through regulatory review in 2016, so we expect in the longer term that we’ll have a second offshore exploration program underway by 2017.”

Tourism is another sector many in Nova Scotia are hopeful about for the upcoming year, said Davis. 

“All the governments, at least I’m assuming in their plans, do recognize the value of tourism in a direct impact on the provincial revenue. But, also, it’s a developer of awareness of future business opportunities,” he said. 

“Nova Scotia has a strategy where they say they’re going to double tourism revenue to $4 billion by 2024. It’s aggressive but I find we’re kind of lucky in terms of our natural resources, the coastal atmosphere that you have down here… it lends itself to an appeal for tourists.

“And we’re located close to Europe, close to large markets in the U.S., so we’re in a good position — we just have to take advantage of it.”

East-west connection

With these opportunities on the horizon coupled with the downturn in Alberta’s oilpatch, will there be a trend of oil workers returning home to the Atlantic provinces after migrating or commuting out west? 

It’s a very likely scenario, said Davis — but it’s more out of necessity than because of an overwhelming amount of employment opportunities in the Maritimes. 

“It’s more along the lines they’re coming home because they have to rather than they’re pursuing a huge opportunity here at home,” he said. 

It could have a particular impact on New Brunswick, which is still not seeing any significant growth, said Bernard. 

“We haven’t seen job creation pick up in New Brunswick, (which) has close ties to Alberta’s energy sector. A lot of people who fly in and fly out of Alberta come from New Brunswick and they might have been affected by the downturn in the energy sector, so that could also affect the economy in New Brunswick.”

But, at the same time, those returning workers could provide the skilled labour necessary for large-scale projects such as the shipbuilding contracts, said Batherson — making recruitment fairly easy for employers in those sectors. 

“I know a year or two ago, Irving Shipbuilding and other major employers were concerned about being able to tap into a skilled trades-related workforce… but now with the change in the energy sector — not only in Alberta but also in St. John’s — the drop in the price of oil has affected a lot of the activity that’s taking place in Newfoundland and Labrador,” he said. 

“There is a larger talent pool that employers like Irving Shipbuilding can tap into that perhaps wasn’t there a year or two ago.

“It’s always about watching those variables that take place that can affect the overall economic climate.”

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