Thursday, July 03, 2008

Diversification the key to rejuvenation

A study from the Chartered Accountants of British Columbia the northwest economy is beginning to see some results from a bid to diversify, leaving behind the troubles of the forestry sector for new opportunities in mining and transportation.

The BC Check Up also highlighted the increase in business start ups in the Northwest in the last year an increase of 17.8 per cent while fewer existing businesses were failing with bankruptcies in the region declining by 66 per cent.

The Daily News featured a review of the results in Monday’s paper.

Northern economy is finding strength in diversity
By Leanne Ritchie
The Daily News
Monday, June 30, 2008
Pages one and five

Diversification is helping the North Coast deal with another year of forestry sector woes, according a senior Prince Rupert accountant.

Praveen Vohora, a small business owner and CA who has lived in Prince Rupert for 30 years, said he has seen first-hand the ups and downs that the regional economy has gone through.

”While our region is feeling the impacts of a forestry sector in trouble, Prince Rupert and the North Coast have become more diversified in recent years, particularly with increased opportunities in transportation and mining,” he said.

According to the BC Check-Up Regional Edition, published by the Chartered Accountants of B. C., the Northwest region of B. C. accounted for 41 percent of the provinces’ total mineral exploration last year.

“Several new mining projects are now in the proposal or early-development phase, as are a number of power generation projects scattered throughout our region, and several massive pipelines designed to transport liquid natural gas and oil to and from the Port of Kitimat,” he said.

“We’re seeing that virtually all major project development, whether proposed or underway, is private-sector investment in mining, utilities, or transportation and warehousing. These significant capital investments are laying the groundwork for future jobs and economic diversification.

Altogether, total estimated capital costs as of December 2007 were $25 billion, up 52 per cent from 2006.

The CA report also showed strong yearly growth in business incorporations, which were up 17.8 per cent. This was the highest level of in corporations in the past decade, and indicates that people and companies have confidence in the North Coast economy, and are continuing to invest in the communities.

“And more importantly, fewer businesses are failing. The total number of bankruptcies in the region declined by two-thirds (66.7 per cent) last year to the lowest level in at least a decade,” he said.

The troubles in the forestry sector were responsible for a decline in business establishments (-8.5 per cent).

Companies with fewer than 20 employees accounted for virtually all of the reduction in the last year.

An unsettled wood products sector was undoubtedly the major contributor to these falling numbers.

“While forestry is going through another tough year, our region has done a good job at diversifying the economy through mining and transportation – with state-of-the-art facilities at the Port of Prince Rupert – and we have only just begun to reap the benefits,” he said.

“The expectation that growth would appear immediately after the opening was obviously wishful thinking. Similar to a start-up business, progress is being made. And now with the addition of the second ship, and completion of the Quick Load facility, we will start seeing the growth that we anticipated. The global economic slowdown has not deterred our port, and we should soon see volumes double and triple.”

Overall, the BC Check-Up report concludes that both Prince Rupert and the North Coast are still improving as a place to live, work and invest, he said.

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