Area manufacturing picture robust but challenged

08/29/07
BY JOHNNIE BACHUSKY
Red Deer Express

There is no doubt the Red Deer region’s manufacturing sector has prospered along with the entire province’s robust economy.

According to the latest manufacturing survey by Red Deer Regional Economic Development (RDRED), high oil prices, keen interest and development in the oil sands, and the Alberta Advantage continue to drive the local economy.

The manufacturing sector is enthusiastically and busy reaping the benefits.

The survey, which is published each year to give business leaders a broad view of trends and developments in the manufacturing sector, shows that in the past five years the Red Deer region developed dramatically with 86.59 % growth in sales.

Company payrolls jumped 48.56% during the same period. There was a 44.66% increase in the number of manufacturing jobs, and a 12.86% hike in the average annual and hourly wages.

In 2006, local manufacturing sales increased by 17% over the previous year.

The survey noted the Red Deer region increased its purchases by 9.1% due to an increased capacity to develop and supply products in Central Alberta. Only 5.35% of suppliers’ goods have been bought from the United States or international markets.

Last year, Red Deer manufacturers paid out nearly $382 million in salaries, an increase of 18.95%.

RDRED says this increase is due to the ongoing critical labour shortages, and companies increasing salaries to attract and retain workers, particularly skilled labour.

And there lies the challenge for the entire Central Alberta economy, including the manufacturing sector.

“There is no doubt we have seen significant growth in the manufacturing sector, perhaps limited only by the availability of skilled labour to support these operations,” said Cal Dallas, executive director of the Red Deer Chamber of Commerce.

“And that remains the barrier to further expansion and growth. While we may have seen some slow down in some sectors, particularly in the gas industry, I believe this has been more of a breather than a significant sort of setback for the manufacturing sector.”

According to Brian McCready, vice president of the Alberta and Saskatchewan chapter of the Canadian Manufacturers & Exporters, Alberta’s manufacturing sector will require nearly 150,000 skilled workers by 2011.

The labour situation has become so acute Central Alberta employers, including manufacturers, have been invited to the National Job Fair next month in Toronto.

“Sheet metal fabrication is an area that has been impacted by the availability of trained welders. Enterprises that are supported by transportation have been challenged,” said Dallas.

“Obviously in the construction industry, whether it is heavy infrastructure or even in the housing industry, there have been challenges around the availability in skilled trades.”

Dallas said there is a variety of tactics that need to be executed in Central Alberta to have a meaningful impact, including recruitment of labour outside of the region, whether out of province or hiring temporary foreign workers, or supporting immigration of skilled workers to the Red Deer area.

“Those tactics need a whole variety of community energy supports to be effective,” said Dallas.

“When we encourage folks to come to the community there are a variety of expectations they have, including finding housing and social supports. We work with a variety of organizations in that area.”

Although labour is the current number one issue facing the manufacturing issue, the Chamber and other organizations are also keenly aware that productivity investment and taxation are additional challenges that must be addressed.

“It is difficult to unlink these challenges and treat them on a stand alone basis,” said Dallas. “Labour is related to productivity. Capital and technology investment is related to productivity. Taxation, because it has the potential to inhibit that same technology investment, is related to productivity.

“There is a linkage between all the business challenges,” added Dallas. “It is hard to suggest one is more prominent that the other.”

But government taxation, considered a barrier to investment, is certainly high on the list, and it is an area business advocacy groups are continually lobbying at all levels of government.

“We need to be very careful about taxation policies particularly with respect to the manufacturing sector,” said Dallas. “In the economy we are looking to live with, and to develop that is twenty years forward, we need to address these productivity issues where we don’t necessarily have the advantage of the non-renewable resources.

“There will come a point when our economy will need to be more dependent on industry that is not related directly to non-renewable resources,” added Dallas. “We need to foster and nurture these enterprises. One of the ways we can do that is through competitive tax policy, both provincially and federally.”

For more information about the Red Deer region’s manufacturing sector visit these web sites:
www.reddeercorridor.com
www.centralalberta.ab.ca
www.reddeerchamber.com

jbachusky@reddeer.greatwest.ca