Let the Good Times Roll?

The headline proclaims that the economy has turned the corner! However it comes with the caveat that the local project of growth, that being the Container Port won’t be causing a giant boom in jobs for the population as projected by many of those locally. That and a few other interesting interpretations, make for interesting reading for those locally awaiting the change in the seas that the city has sailed through the last few years

A report from Credit Union Central of British Columbia is normally considered the yardstick by which a community gauges its potential growth or whether tougher times are on the way. The report released today suggests that things are turning in a more positive direction for many of the beleaguered communities of the Northwest.

However a few things will be of interest for locals, the pulp mill situation isn’t painted in glowing terms by the report, which sees the pulp industry in general facing some challenging times ahead, which could factor into any debate into re-opening the Watson Island mill. The afore mentioned job situation regarding the container port, which may not be quite the sonic boom we’ve been tantalized with and an already stable supply of houses that may slow down any great housing boom in the short term.

None the less, it does suggest that things are decidedly making a turn for the better, with a number of projects in the incubation stage which could change the dynamic in the Northwest quite a bit.

The Daily News had the full story on its front page.

NORTHERN ECONOMY FINALLY TURNS CORNER
By James Vassallo
The Daily News
Monday, July 17, 2006
Pages One and Three

With billions of dollars in ongoing projects and billions more planned over the next three years, the Northern economy is looking up, says the Credit Union Central of British Columbia in its latest economic analysis.

Rising investment in natural gas, mining and related manufacturing, and transportation as well as housing and non-residential buildings are all leading to higher growth.

“Favourable energy and metals prices and improved domestic demand underpin the outlook,” said Helmut Pastrick, Central’s Chief Economist. “A massive $3.2 billion in major projects are currently under construction.”

These include the $500 million Prince Rupert container port expansion, an oil pipeline expansion from Valemount to Burnaby, a coal mine near Tumbler Ridge and hydro electric infrastructure near Stewart.

A further $16.5 billion in major projects are proposed for the North ($11 billion of which are on the North Coast), and almost $9 billion of which are scheduled to start construction by 2009. These include more port construction, two liquefied natural gas (LNG) offloading facilities in Prince Rupert and Kitimat, wind power projects in Rupert and Masset, twin oil condensate pipelines from Edmonton to Kitimat and a competing condensate pipeline along a different route.

“It’s not likely we’ll see all of those $16 billion worth come online, but certainly a fair portion of it will,” said Pastrick. “The container port, I think, is fairly certain. Phase One is under construction and I think there’s a very good chance we’ll see the whole project completed I think 2009 or 2010. If it doesn’t occur in that time frame there’s every indication that the Asia-North America trade volumes will continue to expand.

“As long as that occurs, the demand for port services like that container facility can only increase, I think the outlook for that looks good and we certainly need more transportation capacity.”

One thing the port may not lead to, at least initially, is the massive population boom some locals have been forecasting.

”I don’t know how dramatic that might be, but obviously for Prince Rupert the container facility is a fairly significant change,” he said.

“It will obviously have some impact but ports tend to be very capital intensive.

“It will add jobs, I’m not certain how many will be at play .. (and) there will be some spin-offs obviously but whether those jobs are met by the local labour market or as a result of immigration remains to be seen. I suspect they’ll be filled by the local market.”

That being said, some growth is forecasted between now and 2008 and it should impact both the economy and the labour market positively. This includes both more immigration and possibly less out migration of people. Employment is forecast to rise by about two per cent per year through 2008 with job growth in construction, health care, professional, technical, transportation and storage services. The shipping and mining industries are also expected to grow.

“(The outlook for facilities like Ridley Terminals) should be positive to the extent that we see increased mining activity and that will have to be exported to markets, typically Asia,” said Pastrick.

“It should be positive for port activity and the Northwest does have considerable potential for mines.

“The metals market has shown considerable improvement in prices and the outlook for the next five to 10 years still looks quite good as long as we have strong growth in emerging markets – the China’s, India’s and the like.”

Weaker employment growth is seen in education, agriculture, manufacturing and public administration as well as forestry and number of challenges facing pulp producers.

“The pulp market is very competitive and certainly more supply is coming on from other parts of the world, so it makes it tough,” said Pastrick about plans to reopen the Skeena pulp mill.

“Certainly the existing mill could potential be competitive depending on its cost structure, even in a more difficult pulp market.

“It really depends on its operating costs and primarily the price it pays for its fibre. It’s certainly conceivable .. but in general, the pulp and paper industry is not going to be facing strong market conditions going forward.”

Housing markets are also forecast to expand into 2008. Total residential unit sales are forecast to rise about 10 per cent in 2006 and 5 per cent in 2007 and in 2008 as employment and income gains materialize. Mortgage rates are seen remaining favourable for borrowers and only slightly higher.

“The fact that we haven’t seen a lot of new housing in Prince Rupert indicates that the market was adequately supplied, but there is typically a time lag between improvements in the housing market and new construction,” he said.

“I suspect that we’ll see some higher construction levels occurring very soon in Prince Rupert, whether it’s this year or next.

“I don’t think we’ll see a tight, tight market but we’ll see enough signals in the generally rising prices that builders will begin to invest and bring some more supply on.”