Edmonton (Alta. ) - 1997 Prosperity through manufacturing in the Alberta capital region (1997-04 09)

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Prosperity Through The Mayors Task For

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,

Pres eri Through Manufacturing in the Alberta Capital Region

Prepared by:

The Mayor's Task Force on Manufacturing April 9, 1997

1775.3a .E37 nE368 1997

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Table Of Contents

1.0

Executive Summary

2.0 Acknowledgments

1 2

2.1 Steering Committee Members

2

2.2 Significant Contributions

4

3.0 Introduction

6

3.1 Purpose of this Report

6

3.2 What is Manufacturing

6

3.3 Why is Manufacturing Important

7

4.0

Task Force Methodology

8

5.0

Task Force Findings

10

6.0

Task Force Conclusions

12

7.0

Recommendations — Act Regionally

13

8.0

Recommendations — Industry Leads

20

9.0

Recommendations — Place Priority on Resource Based Manufacturing

24

10.0 The Municipalities of the Alberta Capital Region

31

1.0 Executive Summary

The Alberta Capital Region comprises nineteen individual municipalities, has a population approaching 900,000 and is the largest urban centre between Toronto and Vancouver. Although The Alberta Capital Region is currently a strong manufacturing centre, (perhaps the largest manufacturing centre between Toronto and Vancouver), its long term potential as a dominant manufacturing centre is even more impressive.

The 17 recommendations contained

in The Alberta Capital Region to

3. Place Priority on Resource-

in this report are in response to a

market and promote the region as a

Based Manufacturing: Growth and

question that Mayor Bill Smith put

whole. (Seven recommendations

new jobs are most likely to occur in

to the Task Force in February 1996:

have been made by the Task Force to address this issue — as set out in Part 7 of this report.)

those resource based industries in

"What can be done to grow manufacturing industries and create manufacturing jobs in the Capital Region?"

Conclusions reached by the Task Force in response to this questions are as follows:

2. Encourage Industry to Take a Leading Role in Creating the Environment for Growth: Manufacturing industries of the region, and companies that comprise those industries, must be more

1. Act Regionally: A region is the

effectively networked, organized and

most logical economic unit upon

coordinated to lead industry growth,

which to focus efforts for economic

capitalize on growth opportunities

prosperity. Efforts to stimulate the growth of manufacturing industries should be undertaken within a regional context. It is the conclusion of this Task Force that greater effort should be made by all municipalities

and address common regional issues that are critical to their livelihood.

(Five recommendations have been made by the Task Force to address this need — as set out in Part 8 of this report.)

which The Alberta Capital Region has a distinct advantage due to its proximity to low cost, readily available resources — agri-food production, secondary wood manufacturing, and manufacturing for primary industries. (Five

recommendations are made by the Task Force to address this issue — as set out in Part 9 of this report.)

2.0 Acknowledgments

I am extremely grateful for the enormous volunteer effort that has gone into this project. Hundreds of community minded business people, educators, manufacturers, economic development specialists, and elected officials from across the region gave freely of their time, energy, ideas and expertise to formulate the recommendations contained in this report.

The thing these people had in common was their unwavering enthusiasm for the region and their steadfast belief that The Alberta Capital Region was a place of manufacturing opportunity.

I extend my sincere thanks to the following people for the community service they have provided through their involvement in this project.

Mayor Bill Smith

2.1 Members of the Task Force Steering Committee Bob Saari

Vice President, Alliance of Manufacturers & Exporters Canada (Co-Chair of the Task Force)

In Alphabetic Order

Jim Andrais

Special Projects Manager, Office of the Mayor

Terry Cavanagh

Councillor, City of Edmonton

Robert Coon

Business & Public Affairs Coordinator, Parkland County

Harry Davis

Chief Information Officer, Grant MacEwan Community College

Mave Dhariwal

Program Head, Mechanical Engineering Technology Program Northern Alberta Institute of Technology

Bruce Duncan

General Manager, Planning and Development Department City of Edmonton

Betty Englehart

Research Analyst, Planning, Analysis & Coordination Branch Industry Canada

Ray Gilroy

Dean, School of Mechanical & Manufacturing Technology Northern Alberta Institute of Technology 2

Vern Hartwell

Mayor, Strathcona County

Jim Henderson

Vice President Operations, Grant MacEwan Community College

Ken Hodgins

Mayor, City of Fort Saskatchewan

Perry Kinkaide

Partner-in-Charge, KPMG Consulting

Ron MacDonald

President, Technology Brokers Inc.

Duane MacP hail

Manager, Economic Development and Tourism Strathcona County

Craig Martin

Publisher, Edmonton Sun (Representing the Edmonton Chamber of Commerce)

Darryl Martin

Director, Industry Development Branch, Alberta Economic Development and Tourism

Russ McKeever

President, McKeever Management Services Ltd.

Marvin Mishio

Leduc Nisku Economic Development Authority

Michael Mooney

WM Developments

Jim Murray

Director, Industrial Liaison Office, University of Alberta

Lorne Oswald

President, Dacro Industries Ltd.

Reginald Pridham

President, Alberta College

Ross Sharp

Manager, Economic Development and Tourism, City of St. Albert

Stanley Souch

President, Northern Alberta Institute of Technology

Marilyn Stecyk

President, Kaleidoscope Consulting

Don Vernon

Manufacturing & Processing Technologies Branch Industry Canada

Wayne Wyman

Vice President, Developed Industries, Economic Development Edmonton

2.2 Significant Contributions Cal Bricker Stan Ball Chris Baker Vi Becker Steven Black Dave Budney Bruce Campbell Terry Church John Clarke Arnold de Leeuw Wendy Doughty Aubrey Ellis Jerome Ell Glenn Fields Alan Fleury Daryl Friesen George Fricke Jerry Flagg Doug Gerrard Keith Gylander Pat Harding Marcy Hett Rick Hersack Frank Hovey Trevor Hamans Don Hamilton John Herrington Larry Hunter Mike Hollinshead Danny Islam Paul Johnson Gary Keen Kevin Kelly Keith Kalbfleisch Brent Komamicki Rick LeLacheur Wendy Lamb Don Larke Jim Lepp Chris Lumb Dan Madoche

Labatt Breweries of Canada Thermo Design Engineering Ltd. RPC Manufacturing Inc. Economic Development Edmonton Aquatex Corporation University of Alberta The Dominion Company Alberta Agriculture, Food and Rural Development Syncrude Canada Ltd. Alberta Food Processors Association Grant McEwan Community College Celanese Canada Inc. Northern Alberta Institute of Technology Industry Canada Sunland Foods Flexxaire Manufacturing Inc. Silver Springs Group Engine Rebuilders Ltd. Alberta Economic Development and Tourism TR Labs Harding Instruments Ltd. Edmonton Garment Industry Economic Development Edmonton InvenIxonics Limited TELUS Laidlaw Waste Systems Altyp Welding & Fabricating Ltd. Larry Hunter Business Solutions Inc. Facing the Future Student (Manufacturing Directory) Inland Cement Metal Fabricators and Welding Ltd. Quality Fast Foods Northern Alberta Processing Co. Capital Packers Ltd. Economic Development Edmonton Western Economic Diversification Urban Development Institute AltaSteel Alberta Microelectronics Centre Peacock Engineering

4

Bill MacMillan John Martin Cindy Message Barry Meh Chris Micetich Bob Moore Eric McGhan Paul Montandon Jim Morrison Dr. Wolfgang Muhs Doug Noble Lou Normand Robert Normand Coim O'Carroll Brian Parteno Frances Picherack Ken Pilip Ron Popek Shane Pospisil Al Rawlins Gil Sandhu Bruce Saville Harvey Sheydwasser Tom Schmidt Dean Rodney Schneck Lori Schmidt Don Schultz Chris Sheard Rod Simpson Jack Slobodan Earle Snider Henry Spencer Roy Sterling Gordon Stewart Sandy Sutton Scott Tanaka Jim Valiance Wil VandenBom Chris Vilcsak William Waite Mel Wong Julius Yankowsky

Equus Consulting Group Economic Development Edmonton Hewlett Packard! IDACOM Alberta Agriculture, Food and Rural Development Symphar Laboratories Dreco Energy Services Strathcona County Lloyd Sadd & Anthony Insurance Ltd. Daishowa Raylo Chemicals Noble and Associates Ltd Processing Industry Division, Alberta Agriculture Bank of Montreal Epsilon Chemicals Manufacturing Gainers F. Picherack & Associates Ceapro Developments Inc. Alberta Agriculture, Food and Rural Development Alberta Economic Development and Tourism Student (Manufacturing Directory) Bettis Canada Ltd Saville Systems Canada Ltd. Logican Technologies Inc. Labatt Alberta Brewery University of Alberta Alberta Economic Development and Tourism Canadian Imperial Bank of Commerce Northwestern Utilities Limited KPMG Consulting Weldco Beales Manufacturing University of Alberta Spencer-Lemaire Industries Alberta Honey Producers Town of Beaumont Industrial Polymer Centre Economic Development Edmonton Weyerhauser Canada Ltd. Dow Chemical Canada Inc. EPCOR Former President and CEO of Siemens Electric Limited Alberta Economic Development and Tourism M.L.A., Edmonton Beverly Belmont Constituency

3.0 Introduction

3.1 Purpose of this Report In February 1996 Mayor Bill Smith met with a group of business people, educators, manufacturers, and economic development specialists to explore ways of growing manufacturing industries. The specific question he put to the group was:

"What can be done to grow manufacturing industries and create manufacturing jobs in the Capital Region?"

The immediate response to this question was: "There are no easy,

obvious, off-the-shelf answers." While the group advised Mayor Smith that it would be necessary to study, analyze and discuss the issue more fully before offering such advice, they quickly concluded that it was a worthwhile project — one they would be prepared to lead. On this basis, the project commenced in late February 1996 under the title: The Mayor's Task Force on Manufacturing.

with its findings and conclusions.

• clothing

However, the most important aspect

• wood products • furniture and fixtures

of the report is the answers it provides to the question raised by Mayor Smith in February 1996.

Answers are in the form of seventeen

• paper and allied products • printing, publishing and allied industries

recommendations for growing

• primary metal industries

manufacturing industries and

• fabricated metal products

creating manufacturing jobs in The Alberta Capital Region (see Parts 7,

• machinery

8, and 9 of this report).

3.2 What is Manufacturing Canada's Standard Industrial

• transportation equipment • electrical and electronic products • non-metallic mineral products • refined petroleum and coal products

Classification System distinguishes

• chemical and allied products

manufacturing from other types of industrial activities on the basis of

• other manufactured products

products and services. It identifies 22 different sectors of manufacturing and specifies a long list of product types and commodities within each sector. Manufacturing Industries defined by the system include: • food products • beverages • tobacco products • rubber products • plastic products • leather products

The following report briefly details

• primary textiles

the work of the Task Force along

• textile products

Additionally, Statistics Canada, NAFTA, Revenue Canada, various Provincial Governments, and the Alliance of Manufacturers & Exporters Canada have each adopted a different definition of

manufacturing to fit their own perceptions and circumstances. But common to all definitions is the recognition that manufacturing is a "value-adding process involving the transformation of goods and their physical properties".

3.3 Why is Manufacturing Important In 1995 Alberta's Gross Domestic

of the GDP. Alberta's manufacturing shipments have increased 50% in the past six years.

earnings in other sectors.

As impressive as these statistics are, they still tend to understate the

Product totaled $77.8 billion.

In 1996, manufacturing industries

importance of the manufacturing

Approximately $29 billion of this

directly employed 126,000 Albertans

industry. In particular, they do not

total was generated by industries

— accounting for almost 10% of

reflect the stimulating effect that

that produce goods, with the

Alberta's labour force and over 30%

manufacturing industries have on a

remainder coming from service

of new jobs in the two years.

wide range of service industries. In

producing industries. Of this $29

Manufacturing jobs provided

their absence, the activity levels of

billion, manufacturing contributed

Albertans average weekly earnings

service industries would seriously

approximately $8 billion, over 10%

that were substantially higher than

decline.

4.0 Task Force Methodology

The Task Force facilitated a number of learning exercises in order to understand what might be done to grow manufacturing industries and create manufacturing jobs in The Alberta Capital Region.

The exercises that yielded the greatest insight, and upon which many Task Force recommendations are based, include the following:

1. Workshops to Understand the Needs of Existing Manufacturers:

2. Studies to Understand how Manufacturing Costs in this Region Compare to Other Regions:

On May 8, 1996, the Task Force and

2. a report prepared by KPMG for Alberta Economic Development and Tourism entitled Alberta Offers Manufacturers a Competitive Advantage (March 1994),

the Northern Alberta Institute of

The Task Force retained KPMG to

Technology (NAIT) hosted a full-day

expand a 1995 study that compared

work shop to explore the concerns of

business costs in Canada and the

and Tourism publication entitled

local manufacturers. Areas of

United States. In all, eight Canadian

Facts on Alberta (March 1996),

concern raised by local

and seven US cities were included in

4. a report prepared by the Canadian

manufacturers included: • business environment,

the study. The study examined the

Manufacturers Association entitled

impact of location on key location-

Manufacturing Our Future (1995),

• taxes and utility costs,

sensitive capital and operating costs

• human resource development

for seven industries.

(education and training), • excessive government regulations, • marketing and promotion of the region, • access to suppliers and markets, • transportation issues, and • communications with the City.

3. an Alberta Economic Development

5. a report prepared by KPMG for Alberta Economic Development and Tourism entitled Alberta

As well, the Task Force studied a

Opportunities For Frozen Food

number of other recent reports that

Processors (February 1993), and

provided similar comparisons: 1. a report prepared by Coopers &

6. a report prepared by Toma & Bouma Management Consultants

Lybrand Consulting for Alberta

entitled Changing Course! The

Economic Development and Tourism entitled Manufacturing

Value-Added Agri-Food & Fibre Strategy.

In Alberta (September 1996),

8

3. Surveys to Understand the Perceptions of Investors: Many Task Force participants brought a common perception to this

4. Workshops to Understand Which Manufacturing Industries in the Region Represent the Greatest Opportunity for Growth:

On September 15, 1996, Mayor

project: "That The Alberta Capital Region's advantage as a manufacturing centre was a well kept secret. If we could do only one thing to stimulate growth and create jobs in The Alberta Capital Region's manufacturing industries, the greatest impact would be realized by getting the real story out about its advantages." Given the significant implications of this assumption, a Task Force sub-group conducted a limited survey of investors to address three burning questions: 1. What positive and negative perceptions do investors have about the region as a place to locate and/or expand their manufacturing operations?

2. How significant are these perceptions in influencing investment decisions?

3. How well informed are potential investors about the region's opportunities and advantages as a manufacturing centre?

5. Face-to-Face Meetings with all Municipalities in the Region to Discuss Ways of Growing Manufacturing Industries:

On June 15, 1996 the Task Force

Smith addressed one-hundred

facilitated a full day work shop to

representatives from industry and

explore the trends and the

surrounding municipalities. He

opportunities associated with

explained the purpose of the Task

existing and emerging industries.

Force and presented its ideas. Also

Fifteen senior representatives from

discussed were ways in which the

industry attended this session. The

municipalities of the region might

results of this workshop served as

work together in advancing the

input for a second, larger workshop

growth of manufacturing industries.

that was held on June 27, 1996. The

This discussion continued

seventy sector representatives who

throughout September and October,

attended that workshop were asked

during which time Task Force

to validate the opportunities defined

representatives met face-to-face with

by the first workshop, set targets for

groups from individual

these opportunities, and sketch out

municipalities.

action plans for their achievement.

5.0 Task Force Findings

Based on the work performed, the

contribute most to this advantage

the world. In other words, we

Task Force made the following key

in manufacturing were:

found that Capital Region

findings:

Manufacturers' Needs

1. raw materials and other inputs, 2. transportation fuels, natural gas and electricity costs,

• We found that manufacturers who had expanded to the region from elsewhere were generally very positive about the region as a place to do business. Smaller, home-grown companies that lacked this frame of reference, were more negative in their assessment.

• We found that small and medium sized manufacturers in this region were not well networked with one another. This lack of coordination hampered their ability to address

3. cost-effective transportation which includes low back-haul rates, 4. skilled, productive labour, 5. specialized research capability, and 6. reasonably competitive tax rates.

Investor Perceptions • We found that most potential investors from outside of the region were not familiar with the

residents had a significant role in influencing manufacturing investments in this region.

Growth Industries • We found that most respondents were of the opinion that the Capital Region should focus its immediate efforts on the growth of three main industries: 1. agri-food processing, 2. secondary wood manufacturing, and 3. manufacturing for Alberta's

Capital Region — its strengths,

forestry companies, oil sand

advantages or opportunities.

companies, and large

• We found that in most cases, the

petrochemical companies.

Inter-Municipal Coordination in Growing Manufacturing Industries

common regional issues. In its

decision to expand or initiate

absence, many regional problems

manufacturing operations in the

affecting manufacturers were not

Capital Region was strongly

being addressed. As well, potential

influenced by residents of this

opportunities through partnership,

region. Even though the actual

were supportive of enhanced

sharing and synergy were lost.

investment decisions were made

regional efforts to promote

by directors living outside of this

manufacturing in Alberta's

region, it was often the staff of a

Capital Region.

Manufacturing Costs • We found that manufacturing

• We found that municipalities

satellite operation in the • We found that municipalities believed there was merit to

industries in Alberta were

Edmonton area who identified the

achieving a very competitive

opportunity for expansion,

position through a favourable

developed the business case, and

marketing and promoting

commercial environment and low

submitted the recommendation to

business costs. The factors that

senior officials in another part of

Alberta's Capital Region as a single entity.

10

• We found there was a sense of

and used inefficiently. There was

trust between the mayors and

a strong sense that governments

reeves of the region ... with

and economic development

Edmonton being seen as a

agencies needed to do a better

partner, not a threat.

job to coordinate efforts in the

• We found that some elected

officials and administrators were

area of economic development.

• We found that the Task Force

frustrated by what they perceived

was not the first group to suggest

as too many uncoordinated

a need for greater coordination in

efforts, groups, organizations,

the area of regional economic

teams, forums, task forces — all

development. A major study,

trying to promote economic

commissioned by the Metro

growth in this region. There was

Edmonton Economic

a feeling that the limited time,

Development Team (MEEDT) in

resources and efforts of the region were being fragmented

1992, and conducted by Price Waterhouse (Management

Consultants) stated as its major assumption that: "there are clear

advantages and benefits for the 835,000 people living and working in metropolitan Edmonton, for the metropolitan region to be marketed and promoted as one strong economic unit." The Price Waterhouse report went on to recommend many initiatives to enhance the economic development process in the metropolitan region — recommendations that are consistent with those contained in this report.

6.0 Task Force Conclusions

The Task Force formulated three conclusions about what could be done to grow manufacturing industries and create manufacturing jobs in the Capital Region. Detailed recommendations relating to these conclusions (and their rationale) are contained in Parts 7, 8, and 9 of this report.

Conclusion #1

Conclusion #2

Conclusion #3

Act Regionally:

Encourage Industry to Take a

Place Priority on Resource-Based

The region is the most logical

Leading Role in Creating the

Manufacturing:

economic unit upon which to focus

Environment for Growth:

Growth and new jobs are most likely

efforts for economic prosperity.

Manufacturing industries of the

to occur in those resource based

Efforts to stimulate the growth of

region, and companies that comprise

industries in which The Alberta

manufacturing industries should be

those industries, must be more

Capital Region has a distinct

undertaken within a regional

effectively networked, organized and

advantage due to its proximity to

context. It is the conclusion of this

coordinated to lead industry growth,

low cost, readily available resources

Task Force that greater effort should

capitalize on growth opportunities,

— agri-food production, secondary

be made by all municipalities in The

and address common regional issues

wood manufacturing, and

Alberta Capital Region to market

that are critical to their livelihood.

manufacturing for energy industries.

and promote the region as a whole.

(See Part 8 for related

(See Part 9 for related

(See Part 7 for related

recommendations.)

recommendations.)

recommendations.)

12

7.0 Recommendations — Act Regionally

7.1 Recommendation

Recommendation 1:

That the mayors, reeves and councillors of The Alberta Capital Region agree to work in partnership to market and promote this region as a whole.

First, the perceived value of

Despite these advantages, a regional

individual municipalities is enhanced in the minds of investors if

mindset (to market and promote The Alberta Capital Region as a

viewed as part of a large, integrated,

whole) will not happen by itself.

diverse region, as opposed to being a

Strong leadership and clear

stand-alone entity.

direction from senior elected officials

Second, investors perceive greater

are necessary to make it happen.

certainty in regions where member

As a first step, the Task Force

believes that a resolution to this

The Alberta Capital Region comprises

municipalities share a common economic purpose and direction.

nineteen individual municipalities,

Ones that are divided,

passed by each municipal council of

has a population approaching

uncoordinated and internally

the region. It would then be

900,000 and is the largest urban

competitive are viewed suspiciously

communicated to the economic

centre between Toronto and

and less favourably by investors.

development practitioners who work

Rationale ...

Vancouver.

Third, individual municipalities are

It is the firm opinion of the Mayor's

apt to receive a greater return for

Task Force on Manufacturing that

their economic development

the advantages of marketing and

investment when they work together

promoting these nineteen

to market and promote the region as

municipalities as one integrated

a whole. Pooling resources toward

economic unit are significant.

common projects serves to minimize duplication of effort. Larger pools of

A key reason for marketing the

funding and resources also facilitate

region as a whole is because:

larger, more ambitious, and more

The draw of the region is greater than

sustainable marketing projects. The

the draw of any single municipality or

result is a greater marketing impact.

the sum of all municipalities.

affect should be endorsed and

on their behalf.

7.2 Recommendation

Recommendation 2: That the metropolitan area

metropolitan area be referred to as

search engines were designed to

"The Alberta Capital Region" when

scan the first twenty-five words of a

marketing and promoting the region.

document. The inclusion of the word Edmonton in one of the first twenty-

surrounding and including

Reference to Alberta has strong

Edmonton be marketed and

market appeal and recognition.

promoted under the name:

Similarly, reference to the Capital of

The Alberta Capital Region.

Alberta, conveys the region's

While it was felt that titles like:

prominence within Alberta. Overall,

"Metropolitan Edmonton" or "The

the Task Force believes that the title

Edmonton Capital Region" would

provide a clearer reference to the

recognize the nineteen

demonstrates a strong regional identity, and benefits from Alberta's

municipalities of this metropolitan

very favorable national and

to Edmonton was thought to detract

area for what they are — a strong,

international reputation.

from the regional focus. As well,

Rationale ...

It is important for the world to

integrated and unified economic entity. A first and necessary step in communicating this reality is the

Several Task Force members raised a concern that this name might create

adoption of a name.

difficulty for persons wanting to find information about Metro-Edmonton

The Task Force recommends that the

on the Internet. However, the Task

nineteen municipalities of this

Force was advised that most Internet

five words would alleviate this problem.

location of the region, the reference

many of the Task Force members felt that the word "Metropolitan" conveyed a negative connotation — a dated term often associated with large, sprawling American and Eastern Canadian cities.

14

7.3 Recommendation

Recommendation 3: That the Mayor's Task Force facilitate a regional marketing project — with a project team comprising those economic development agencies, companies, industry associations and education institutions that wish to participate.

Task Force participants

Task Force participants also stressed

recommended, as a first step toward

the need for private industry to be

this goal, that the region's economic

included in the planning and

development agencies should find

execution of this and future regional

more effective ways to coordinate

marketing projects. While private

their marketing programs. However,

industry might bring a range of

participants felt it would be

resources to a marketing project, its

premature at this time to prescribe

greatest contribution would be in

the full details of such a program.

adding credibility to the marketing

Instead, it was concluded that initial Rationale ...

marketing efforts should be focused

A concern raised frequently by Task

on a single pilot project. By working

Force participants was:

together on such a project, it was thought that economic development

"The advantages and opportunities of the Capital Region are a well kept

agencies would be in a better

secret. More investment would flow to

term regional marketing process

the region if it were marketed more

could be designed to achieve

effectively."

maximum impact.

position to understand how a long

message. According to an investor survey conducted by the Task Force, investors are far more receptive to testimonials from local industry than to the promotional efforts of bureaucrats and governments.

7.4 Recommendation

Recommendation 4: That the first project to market the region be coordinated by Economic

manager must be assigned to guide

The goal of the project that was

the planning, implementation and

selected is to market The Alberta

post implementation phases of the

Capital Region and to identify

project.

industries in a target region outside

Development Edmonton (EDE), with

Although this function could be

a goal to fully involve all interested

assigned to a number of the project

parties — both as active participants

stakeholders, the Task Force

and as financial supporters.

believed that EDE was best able to

Rationale ...

lead this particular project. Not only

of Alberta — ones that are looking for expansion opportunities and would likely improve their competitive advantage by operating in this region.

In order to•maximize the probability

is EDE the largest and best funded of the region's economic

As project coordinator, EDE's main responsibility will be to engage all

of project success, there must be

development agencies, it is also a

public and private stakeholders who

adherence to project management

strong proponent of the proposed

are interested in participating and

principles. Most critical, a project

marketing project.

contributing to the project.

18

7.5 Recommendation

Recommendation 5: That upon completion of the project, the Mayor's Task Force on

will facilitate this workshop as its

regional approach they have adopted to market and promote

final activity. As part of the workshop, participants would:

The Alberta Capital Region.

1. evaluate the strengths and

Manufacturing facilitate a workshop involving the marketing project participants and other stakeholders to: (a) assess what was learned from the project, (b) explore an ongoing regional approach for marketing and promoting The Alberta Capital Region, and (c) bring together a

regional marketing group to carry out this approach.

Rationale ...

The success of the first marketing project is significant in its own right.

However, greater importance lies in

weaknesses of the process that was used to carry out the first project, and 2. discuss possible organizations, processes, and/or approaches for

what participants from across the

carrying out regional marketing

region will learn from working

activities on an ongoing basis.

together on this project. The marketing project is simply a first step in understanding how the

Recommendation 6:

various regional stakeholders should

That representatives from Metro

organize themselves to carry out

Edmonton Economic Development

these types of activities in the future.

Team report to the mayors and

The Task Force Steering Committee

reeves of The Alberta Capital Region

by September 15, 1997 outlining the

7.6 Recommendation

Recommendation 7: That the regional marketing group consider inclusion of the following elements in the regional marketing approach: (see bullets).

Rationale ...

• Ensure Accountability of the

Capital Region Manufacturers'

Marketing Group:

Association, Alberta Food

The eventual marketing approach

Processing Association, Forestry

should be designed to ensure

Industry Supply Association,

accountability. Two key elements

Oil/Gas sector representation, etc.

of this accountability framework would include: 1. a statement of program expectations as set out by the

The regional marketing group and

municipalities of the region, and

regional marketing approach that

2. mechanisms to track and report

• Market The Alberta Capital Region as a Single Entity: (As per Recommendation 1) • Grow Existing

will emerge — in accordance with

performance against these

Recommendation 5 — could take a

Manufacturing Firms: The eventual marketing approach

expectations.

should recognize that the greatest

variety of forms. Decisions on this matter will not be forthcoming until

• Partner With Major

mid 1997. However, the Task Force

Stakeholders:

has put forward the following

The eventual marketing group

suggestions regarding this eventual

should seek active participation

form, to be considered at an

from a wide range of potential

appropriate future date.

partners: e.g., the various municipal economic development

• Ensure Sufficient Resources:

agencies from within the region,

potential for economic growth will come from the growth of existing industries. Therefore, marketing/ promoting projects should be designed to attract investment that will complement existing firms and build critical mass.

• Market the Capital Region

In developing the eventual

Leduc/Nisku Economic

regional marketing approach, careful attention should be given

More Effectively to Investors:

Development Authority, Alberta

The eventual marketing approach

Economic Development &

to the level of

should recognize that most

Tourism — Industry

marketing/promoting effort that is

potential investors from outside of

Development Branch, University

required, the approximate cost of

the region are not well informed

of Alberta, NAIT, Grant

this effort, and possible sources

about the advantages of The

MacEwan College, Edmonton

of funding. In other words, success of a long term regional

Alberta Capital Region. Priority

Regional Airports Authority,

should be placed on taking a

Edmonton Real Estate Board —

marketing approach will require a

strong message to potential

Industrial/Commercial Division,

firm commitment of resources

investors about the strengths and

TELUS, Northwestern Utilities,

from identified sources.

opportunities of the region.

Trans Alta, EPCOR, Alberta 18

business and social ties with

The eventual marketing approach

their places of origin. The

should recognize that the Capital

eventual marketing approach should be designed to use these

Region's fate as a manufacturing centre is being strongly

ties to build inroads to other

influenced by persons from this

systems to identify manufacturing

regions and to market and

region. Therefore, in order for the •

companies that would benefit by

promote the Capital Region.

region's manufacturing industry

• Develop Effective Marketing and Promotion Processes: The eventual marketing approach should ensure: 1. the establishment of effective

locating in the region, 2. the establishment of effective systems for approaching prospective investors and demonstrating the advantages of the Capital Region as a whole, 3. the establishment of processes for compiling competitive proposals to attract companies to the Capital Region, and 4. the establishment of a full service — one that assists prospective investors in all phases of their evaluation and establishment. A benchmarking exercise, examining the outreach practices of other successful jurisdictions would be a starting point for this exercise.

• Draw on Multi-Cultural

• Inform Residents About the Region's Advantages and Opportunities: A study conducted by the Task Force determined that decisions to establish or expand large

to identify regional opportunities and either capitalize on these opportunities or convince others to do the same.

• Elevate the Profile

manufacturing companies were

of Business Leaders:

typically made outside of Edmonton — usually by

The eventual marketing approach should strive to put a human face

company officials who lived in

on business in the region as well

southern Ontario, and to a lesser

as elevate the status of business

extent in eastern United States.

leaders who live and work here.

However, in most of these

The high visibility of credible,

situations, the decision to expand

successful, community minded

or locate in Edmonton was

business leaders is a first step in

strongly influenced by persons

helping the region to see itself as

living in the Capital Region!

a leading business/manufacturing

Often it was the staff of a satellite

region. T

operation in the Capital Region

be p

who identified the opportunity for

Capability of the Region: The people who live in The

expansion, developed the business case, and submitted the

Alberta Capital Region originate

recommendation to senior

from all parts of the world. Many

officials in the East.

continue to maintain strong

to grow, residents must continue

8.0 Recommendations — Industry Leads

8.1 Recommendation Recommendation 8: That the formation of a regional association of manufacturers be pursued that will work collectively to address issues and opportunities effecting their growth and livelihood.

Rationale ...

The Task Force concluded that the

regional manufacturers. This

region's manufacturers are not as

meeting, followed by several months

well coordinated as they need to be

of organizational work by the

in this regard. At first glance, this

manufacturers, led to the formation

conclusion might be puzzling given

of The Alberta Capital Region

the many industry associations that

Manufacturers' Association

exist. However, the shortcoming of

(registered under the Societies Act of

these associations (from a regional

Alberta in December 1996).

perspective) is their emphasis on provincial and national mandates —

The Task Force concluded that the

mandates with broad and general

region's manufacturers must provide

focuses that prevented them from

the thrust of leadership that is

keying in on unique issues of

needed to grow manufacturing

regional significance. In fact, any

industries in The Alberta Capital Region. While government and

effort by provincial or national associations to render advantages to

economic development agencies must continue to play significant

this region would be viewed

supporting roles, nothing of real

regions.

negatively by members in other

consequence is likely to occur until

Quite simply, the purpose of The Alberta Capital Region Manufacturers' Association is: to foster and promote the welfare, growth and development of the manufacturing industry in the Alberta Capital Region. Establishment of the Association was founded on a belief that manufacturers in the Capital Region would profit from an association that focused strictly on

manufacturers are coordinated and

Implementation of the

their specific regional needs and

networked in a manner that

Recommendation ...

priorities.

In August 1996, Mayor Smith invited

The Association has set a target of

a group of manufacturers (who had

attracting 300 member companies by

participated in the work of the Task

the end of 1997, with 60 members

Force) to meet with him to explore

currently in place.

empowers them to address common problems and converge on common opportunities within the Capital Region.

the formation of an association of

20

8.2 Recommendation

edge five years ago are obsolete

institutions in addressing their

today.

human resource needs and

Recommendation 9: That The Alberta Capital Region

This challenge is further complicated

Manufacturers' Association establish

by the shortage of skilled labour in

a standing committee to advise both

Canada. Approximately 5% of

Although pleased with the services

public and private education

manufacturing firms regularly report

and the quality of graduates from

providers of their education, training

difficulty in finding skilled labour.

these institutions, Task Force

and workforce needs.

Manufacturers also report less than

participants stressed that even

Recommendation 10:

satisfactory skill levels among first time employees. According to studies

greater partnering was possible between industry and education in

conducted by the Alliance of

developing effective education and

Manufacturers & Exporters Canada,

training programs. In particular,

That The Alberta Capital Region Manufacturers' Association provide personal development services to its

preserving their competitive advantages.

a full 55% of manufacturers find that

many felt that local industry should

the performance of recent high

take a greater lead in communicating

school graduates hired by their firms is poor or only fair in meeting

its education/training needs to learning institutions — rather than

Rationale ...

elementary job requirements.

placing the burden largely on

People have always been, and will

Throughout this project, Task Force

continue to be, the most valuable

participants stressed that well

asset of a successful business. But in

designed education and training

Recommendation 9 is intended to do

today's technologically complex

programs, available locally, were a

just that. Through its Standing

workplace where skills and

Committee on Education, The

knowledge quickly become obsolete

key ingredient for growing manufacturing industries. As well,

— businesses and workers are under

Task Force participants considered

Manufacturers' Association would

immense pressure to maintain and

the region's learning/training

actively monitor the education and

enhance their skill sets. Not only do

institutions to be one of its foremost

training needs of regional

workers require more skills than ever

strengths — University of Alberta,

manufacturers and then work closely

before, the pressure for new skills and knowledge is unending.

N.A.I.T, Grant MacEwan Community College, Alberta College,

with education/learning institutions

Constant innovation and

Athabasca University, Concordia

complementary programs.

technological change mean skills

University College of Alberta, etc. All

and knowledge that were cutting

recognized the importance of these

members in the form of learning sessions, workshops and conferences.

learning institutions to be the leader in seeking out this information.

Alberta Capital Region

to ensure timely development of

21

8.3 Recommendation

Recommendation 11: That The Alberta Capital Region Manufacturers' Association lead efforts to link The Alberta Capital Region's manufacturing industries to

innovation centres — as a means of strengthening the competitive advantage of regional manufacturing firms.

Rationale ...

While it is the responsibility of

of the region. In particular, it was felt

individual companies to manage

that the region's manufacturers

internal company programs to

should take steps to:

facilitate innovation, this is

a. understand the types of research

sometimes easier said than done.

Small and medium sized companies

b. understand how the resulting

often lack in-depth technical,

innovations could be applied to

management and financial

their operations, and

resources. Clearly this is a serious obstacle for growing manufacturing industries in a region like ours where the majority of manufacturing companies are small and medium-

The term innovation applies to both:

that are being conducted,

sized.

a. new/innovative customer

c. influence the types of research that are conducted.

Recommendation 11 is intended as a first step in forging stronger communication and working relations between manufacturers and

The Task Force is of the opinion that

innovation centres. The thinking

this obstacle can be overcome in

behind the recommendation is that

processes that provide a cost/strategic advantage to the

part by forging stronger working

manufacturers should be the drivers

relationships between the region's

of innovation, with

manufacturer.

manufacturers and its innovation

research/innovation institutions

products, and b. new/innovative manufacturing

centres. According to Task Force

responding to that direction and

In today's hyper-competitive global

participants, the region's

those needs.

economy, continuous innovation is a

manufacturers have not benefited to

given. In its absence, industries and

the full extent from the impressive

individual companies can neither

range of academic, government, and

compete nor survive.

publicly financed research programs

22

8.4 Recommendation

Recommendation 12: That The Alberta Capital Region Manufacturers' Association, in conjunction with the region's economic development agencies: a. assess constraints faced by local firms in obtaining financing, and b. help develop strategies to ensure financing is both available and adequate.

According to many published studies

intended to lay a foundation for

and testimony from Task Force

examining this matter in the depth it

participants, it is not easy for small and medium-sized manufacturing

requires.

businesses to finance their required innovations. Difficulties often stem from traditional approaches in which hard collateral is required to secure loans, i.e., asset-based financing.

Although this approach is prevalent, it has become less relevant to modern industrial needs given the

The thinking behind the recommendation is that manufacturers should lead initiatives upon which their future lies. As in the case of previously recommended initiatives, this undertaking would not be feasible for most small and medium size manufacturing firms.

However, the Capital Region

Rationale ...

increased emphasis on soft assets.

Equally important to a business's

Difficulties also relate to the cost,

in conjunction with the region's

need for innovation is its ability to

economic development agencies, is

finance that innovation. Innovations

quality and availability of financial services themselves. Manufacturing

well positioned to assess constraints

in the form of new manufacturing

companies in Alberta have fewer

faced by local firms in obtaining

processes, new product development

financing sources and less financing

financing, and develop strategies to

programs, new operating systems,

variety than their counterparts in

ensure adequate financing is

and efforts to expand markets — all

Toronto, Montreal and Vancouver.

available.

cost money. All the innovative

thinking in the world will not grow a manufacturing company unless there is a cost effective way to finance innovation.

These issues are complex. Whatever solutions might surface in the future are not readily apparent today.

However, Recommendation 12 is

Manufacturers' Association, working

9.0

Recommendations — Place Priority on Resource Based Manufacturing

9.1 Recommendation

Recommendation 13:

That the primary economic

total manufacturing shipments. The

where there is a growing concern

value-added component of this $6

about food safety, health and the

billion figure, was approximately

environment.

$1.4 billion.

development focus of the region be placed on those resource-based

Task Force participants concluded

The Province of Alberta shares these assumptions and advised that a $20

manufacturing companies/industries

that growth in this industry would

billion value-added agri-food

that currently have the greatest

continue to be strong.

industry was possible by the year

immediate growth potential: a. agri-foods processing, b. secondary wood manufacturing, and c. various types of manufacturing for Alberta's primary industries.

Additionally, emphasis should be placed on science-based

The Task Force's conclusion was based on assumptions that: 1. demand for agri-food products will increase as the world's population increases from 5 billion to 7 billion by the year 2010, 2. the agri-food industry is already

companies/industries (like

experiencing a strong trend away

microelectronics and bio-technology)

from the trade of bulk goods

that gain their advantage from the

toward higher value-added

above noted resource-based

consumer ready products,

industries, and can draw on the

3. the demand for agri-food

strengths of our strong education

products in Asian Pacific Rim

and research infrastructure.

countries will increase over the

Rationale ...

In 1995 the food and beverage

next decade as personal income increases, 4. Canadian agri-food exports to

2005. This prediction is contingent upon Alberta's agri-food companies being able to outperform the competitors, availability of capital, successful recognition of market opportunities, and availability of management skills.

Why Secondary Wood Manufacturing?

Alberta's wood products industry is divided into two sectors — primary manufacturing and secondary manufacturing. The primary wood products industry is focused on producing and marketing conventional North American lumber. The majority of this lumber is kiln dried dimension lumber, the

industry (agri-food) employed

United States will continue to

17,000 Albertans and was the

increase in line with the average

province's largest manufacturing

annual rate of 15% that has occurred since 1988, and

Secondary wood manufacturers

5. Canadian produce will have an

cover a wide range of business

advantage in world markets

interests including engineered

sector. Agri-food shipments totaled $6 billion in that year and accounted for approximately 25% of Alberta's

type used in framing and residential construction in North America.

24

trusses and floor systems, furniture,

due to the relatively low cost of

windows, doors, building

Canadian labour (compared to

components, millwork, laminated beams, arches, trusses, I-beams etc.

In 1995, Alberta's wood industries employed over 7,600 Albertans and accounted for almost $1.6 billion in

Japan), and c. primary and secondary wood companies in north west United States will seek to relocate, possibly to Alberta, as their supply of timber declines.

manufacturing shipments — nearly half of which was value added.

Between 1988 and 1995, industry growth averaged more than 15% a year.

Why Manufacture for Alberta's Primary Industries?

Task Force participants concluded that northern Alberta resource

Example — Manufacturing for Oil Sands Producers Alberta's oil sands have been an engine for growth in Alberta over the past three decades. Massive construction activities when the plants were built resulted in a surge of economic activity in the Capital Region, Alberta, and Canada. The ongoing operation of the plants and their development have provided a continuing opportunity for economic activity and manufacturing

Task Force participants concluded

industries (primarily oil sands and

that growth in this industry would

forestry) provide an opportunity for

continue to be strong. This opinion

The Alberta Capital Region to

was based on assumptions that:

develop a manufacturing capability

Over the past twenty years, the oil

a. United States will continue to

based on a captive and continuing

sands industry has grown to the

place restrictions on the amount

demand for manufactured goods.

point, where in 1994, upgraded light

of softwood lumber that can be

This manufacturing base, built on

oil (sometimes called synthetic crude)

imported from Canada to that

the needs of the resource industries,

from the oil sands represented 14% of

country, and this constraint will

would provide a secure springboard

Canada's total petroleum supply. This

require Alberta's primary

for developing a supply capability

upgraded oil is now being produced

producers to find new ways of

for other parts of Canada and for

at a cost that is competitive with new

adding value in order to maintain

export.

conventional cru

a presence in that market (e.g., exporting trusses instead of lumber), b. the significant market opportunities for secondary wood products that exist in Asian countries will continue to grow

While the following example pertains to oil sands, the conclusions are equally applicable to the other resource industries.

development in The Alberta Capital Region.

Sands T under ind th

The existing surface and the situ oil

identifying additional products that

much of this activity is little more

sands operations already support

can be manufactured in this region

than a flow through. In the case of

and are supported by a sophisticated

and taking steps to assist local firms

many products, a large percentage of

infrastructure composed of natural

seize the opportunity and/or attract

the value added manufacturing work

gas and crude oil/bitumen pipelines,

new companies that could meet this

occurs outside of Canada. For

power generation utilities, refineries,

need.

example, 69% of value of industrial

chemical plants, and transportation networks. As well, 3500 small and medium-size businesses provide raw materials and finished goods and supplies, construction, engineering, finance, administration and management services to oil sands producers.

The Opportunity

machinery purchased by oil sand Task Force participants stressed that the Capital Region was perfectly situated to provide a greater share of manufactured goods used by northern Alberta's oil sands plants.

This potential advantage was seen as being unique to the Capital Region. Moreover, it was thought to be an enduring advantage that would not change or disappear with

The oil sands industry — a voracious consumer of manufactured products of all types

shifts in economic or political climate.

companies was found to be added outside of Canada. Corresponding percentages for other manufactured goods were: 40% foreign value added for heat exchangers and power boilers, 42% for fabricated metal pipes, 49% for control instruments, and 36% for electrical machinery. Overall, 47% of the value of manufactured goods purchased by Alberta's oil sands companies was found to come from

— is committed to investing $25

While analysis shows that oil sand

foreign countries. As well, it was

billion in existing operations over

companies purchase the great

concluded that much of the

the next 25 years. The Alberta Capital Region has an opportunity to

majority of manufactured materials

Canadian value, i.e. 53 %, came

from Canadian sources, further

from southern Ontario.

capitalize on this expenditure by

scrutiny of this data reveals that

28

9.2 Recommendation

Recommendation 14: That The Alberta Capital Region Manufacturers' Association work closely with the economic development agencies of the region to: a. determine what is needed to create critical mass within the secondary wood industry, the

innovations and inventions occur,

should be based on reasonable

wealth is created, and civilization is

expectations about the conditions

advanced. If not for this critical mass of people, capital, competition

that are needed to create critical

and knowledge it is uncertain whether human civilization could

Participants also recommended that manufacturers — not government or

have advanced much beyond the

economic development agencies —

simple agrarian economy. On a

should take a lead role in:

smaller scale, the principle of critical

1. identifying the set of conditions

mass within target industries.

that constitute critical mass, and

mass holds true for regional manufacturing industries.

2. determining to which of these

agri-food industry, and within those industries that manufacture

As a general rule of thumb, the

for Alberta's primary resource

elements that interact to create

industries, and

critical mass include:

b. develop plans to achieve this critical mass.

Rationale ...

The need for critical mass within an industry is an important concept that was stressed repeatedly by Task Force participants. The term critical mass implies a set of conditions, which if present in an industry, will ensure its sustainability and serve as a catalyst for vigorous industry growth and innovation.

• a threshold number of competing businesses,

conditions efforts should be focused in order to achieve critical mass.

This approach would not diminish the importance of economic

• a threshold level of technical

development agencies. Not only

support, • a threshold level of education

would agencies work closely with

and training support, • a threshold level of research and development support, • a threshold level of management skills and business knowledge (industry related), and • a threshold level of investment capital.

On the broadest scale, cities (or large urban centres) are examples of

Task Force participants stressed that

critical mass. It is here that

industries in the Capital Region

efforts to grow manufacturing

industries in assessing the ingredients of critical mass, they would also work as agents for industry in developing and executing strategies to create the desired conditions, e.g. attracting complement region, nece the

9.3 Recommendation

Rationale ...

Recommendation 15:

Companies that comprise an

That The Alberta Capital Region

industry must be networked and

Manufacturers' Association

coordinated in order to address

encourage the formation of a

common issues, problems and

secondary wood manufacturers subgroup, an agri-food processors

opportunities. The action that is recommended provides the

subgroup, and a subgroup of

foundation for long term synergistic

manufacturers that is interested in

relationships within the region's key

manufacturing for Alberta's primary

growth industries.

industries.

28

9.4 Recommendation

Recommendation 16: That The Alberta Capital Region Manufacturers' Association promote relations between primary forest

possessing expertise in a range of

As indicated in Recommendation 16

wood manufacturing niches. In

the Task Force believes that the

contrast, primary wood producers

Alberta Capital Manufacturers'

are larger, more financially powerful

Association should lead this inter-

firms that add relatively little value

sector dialogue. Initially, exploration

to the lumber they produce.

of this idea might take the form of a

companies and secondary wood

full day workshop where

manufacturers of this region to

The thinking behind

promote and introduce the

Recommendation 16 was that each

possibility of cooperative ventures.

of these types of manufacturers, if brought together in strategic

Rationale ...

partnerships, would provide a

Task Force participants stressed the

unique and valuable contribution to

importance of primary and

the relationship. Secondary

secondary wood producers exploring

producers would contribute product

partnership opportunities related to

and marketing expertise while

wood manufacturing. Typically,

primary manufacturers would

secondary wood manufacturers are

provide financial depth and ensure

small, resource-limited companies

access to a reliable wood supply.

representatives from each sector would discuss areas of possible partnership. As well, Task Force participants felt that the economic development agencies of the region should also be part of this dialogue — suggesting real examples of partnership opportunities that could be pursued.

9.5 Recommendation

Recommendation 17: That The Alberta Capital Region Manufacturers' Association promote relations between: 1. large primary producers and 2. manufacturers from the region

added to the product outside of

manufacturers of The Alberta Capital

Canada. The Task Force assumed

Region must establish channels to

that this general relationship held

dialogue with the Alberta's large

true for purchase made by all of

primary producers about the

Alberta's primary manufacturing

manufacturing opportunities that

companies.

exist and ways to capitalize on these

Task Force participants felt there

opportunities.

who could supply more of the

was a clear opportunity for

While it is not practical for each

primary producer's manufactured

manufacturers in the region to be

potential manufacturer to dialogue

needs.

manufacturing a greater percentage of the manufactured products used

one-on-one with the large primary

by Alberta's primary producers. This

local manufacturers, under the

As discussed previously,

opportunity came from being located

auspices of The Alberta Capital

approximately 47% of the value of

at the doorstep of these industries.

Region Manufacturers' Association

Rationale ...

manufactured goods purchased by Alberta's oil sands companies was

However, this potential opportunity

producers, it is possible for groups of

to conduct such a dialogue.

will not happen by itself. Instead,

30

10.0 The Municipalities of the Alberta Capital Region (In Order of Population)

The City of Edmonton

The Town of Morinville

Strathcona County

The Town of Beaumont

The City of St. Albert

The Town of Devon

The Municipal District of Sturgeon

The Town of Gibbons

The City of Leduc

The Town of Redwater

Parkland County

The Town of Bon Accord

The City of Spruce Grove

The Town of Calmar

The City of Fort Saskatchewan

The Village of Legal

The County of Leduc

The Village of New Sarepta

The Town of Stony Plain