NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY INDUSTRY PROFILES (AND SWOT ANALYSIS)
WINTER 2012-2013 NWT Chamber of Commerce Northern Aboriginal Business Association NWT Association of Communities Industry, Tourism and Investment (ITI)
TABLE OF CONTENTS
Accommodation and Food · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 4 Agriculture · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 10 Arts and Fine Crafts· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 14 Construction· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 18 Film Industry· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 24 Commercial Fisheries · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 28 Fur Harvesting · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 34 Manufacturing · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 38 Retail Trade· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 42 Tourism · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 50 Transportation· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 56 Wholesale Trade· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 62 Non Renewable · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 70 Energy · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · 78
A Message from the Governance Committee The Governance Committee of the Economic Opportunities Strategy, in partnership with industry associations, has completed the 14 industry profi les contained in this publication. These profi les are designed to provide a consistent and objective overview of each industry, its current contribution to the economy, its potential, and the actions required to maximize that potential. Although government and industry play important roles, economic development requires the participation of us all; individuals, businesses, communities, Aboriginal organizations and government. We all have to work towards creating an investment climate which encourages growth. We are confi dent these profi les will contribute to this process.
Email the panel If you have any comments or observations, please e-mail the Economic Opportunities Strategy Advisory Panel at comments@NWT Opportunities.com. ACCOMMODATION AND FOOD This sector is comprised of This sector is comprised of establishments Within the industry, the food, beverage and establishments primarily primarily engaged in providing short-term drinking component accounts for 61 per cent engaged in providing lodging and complementary services to of employment. Employment growth in food, short-term lodging and travellers. In addition, this sector also includes beverage and drinking places has increased complementary services establishments engaged in preparing meals, by 62 per cent or 412 jobs, a surprisingly high to travellers. In addition, snacks and beverages for consumption on and increase given that overall NWT employment this sector also includes off the premises. growth has decreased over the past fi ve years. establishments engaged in The chart below highlights the trend. preparing meals, snacks and As an industry, accommodation and food beverages for consumption services adds $66 million to the NWT economy on and off the premises. and accounts for about 1,777 jobs.
Employment in Accomodation and Food Services, 1999-2011
2,000 1,834 1,777 1,800 1,736
1,600 1,508 1,443 1,433 1,436 1,460 1,406 1,392 1,394 1,400
1,200 1,155 1,086
1,000
800
600
400
200
0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: Statistics Canada
4 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES Accommodation Business Employment
As defi ned by Statistics Canada, the The chart refl ects the positive impact of accommodation business sector includes diamond mine investment between 2000 and businesses that provide short-term lodging to 2002, as well as the negative impact of the world travellers, vacationers and others. It includes economic downturn in 2008. Employment hotels, motor hotels, resorts, motels, casino growth has levelled off over the last decade. hotels, bed and breakfast accommodation, housekeeping cottages and cabins, recreational vehicle parks and campgrounds, hunting and fi shing camps, and various types of recreational and adventure camps. Industry growth is correlated to investment and tourism volumes.
Employment in Accommodation Businesses, 1999-2011
800
696 700 679 676 658 646 619 628 594 599 600 566 578
500 438 418 400
300
200
100
0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: Statistics Canada
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 5 Restaurant Tavern Sales
The Northwest Territories banned smoking in Development of a new mining property, for public places and workplaces in May 2004. As example, will result in signifi cant visitation by shown in the sales chart below this ban has had business people, consultants and specialized a minimal impact as total annual restaurant and construction workers. As investment in the NWT tavern sales have steadily increased since 2004. increases or decreases, one can expect that overall sales for the sector will mirror investment Industry sales are tied to incomes, population activity in the territory. change, tourism and business investment.
Restaurant and Tavern Sales, 2000 - 2011 (In Thousands of Dollars)
100,000
90,000 87,804 84,351 83,389 81,409 82,522 82,666 80,000 72,595 73,550 70,000 67,094 68,161 66,726
60,000
50,000 44,454
40,000
30,000
20,000
10,000
0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: Statistics Canada
6 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES Accommodation Investment and Outlook Capital Expenditures Investment is necessary to maintain a Investment in “accommodation and food business and to expand sales. Investment also services” has experienced a sharp decline over acts as a barometer of business confi dence. the last few years from a high of $15 million in New investment usually indicates growing 2006. Projected capital investment for 2012 is confi dence in the future. $3.4 million.
NWT Capital Expenditures (In Millions of Dollars) 2010 2011 2012 TotalCapitalExpenditures 1,247 1,142 1,378 Construction 1,005 869 1,063 Machinery&Equipment 241 272 316 Private 914 849 1,080 Construction 712 622 813 Machinery&Equipment 203 227 267 Public 333 293 299 Construction 294 247 250 Machinery&Equipment 39 46 49 SelectedIndustries: Agriculture,forestry,fishingandhunting 11x Miningandoilandgasextraction x 587 789 Utilities 38 52 51 Construction 18 17 18 Manufacturing 1x0 Wholesaletrade 5x7 Retailtrade 11 10 11 Transportationandwarehousing 51 x 85 Informationandculturalindustries xx17 Financeandinsurance 6x3 Realestateandrentalandleasing 25 26 26 Professional,scientificandtechnicalservices 8x13 Managementofcompaniesandenterprises xx1 Administrativeandsupport,wastemanagement x x 5 Educationalservices x6159 Healthcareandsocialassistance xxx Arts,entertainmentandrecreation xxx Accommodationandfoodservices 533 Otherservices(exceptpublicadministration) 699 Federalgovernmentpublicadministration 10 13 14 Provincialandterritorialpublicadministration 172 129 120 Localpublicadministration 34 32 46 Housing 85 79 85
Source: Statistics Canada
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 7 Industry Outlook and food businesses. As long as both the Accommodation and food services growth is tourism and mineral markets are depressed, linked with tourism, population and investment. annual growth in sales for the sector will be The industry has likely already experienced limited. However, both tourism numbers and negative impacts from continuing problems commodity prices have been experiencing with the world economy. In fact, declines in rebounds of late, and as these markets improve, industry investment paralleled problems with sales in the accommodation and food services world economic development. sector are expected to also improve.
Industry growth will likely be limited for the near term. Tourism and investment both provide signifi cant spin-off benefi ts to accommodation
Accommodation - SWOT Analysis Strengths · Technology adoption. · Rates competitive to southern cities. · Lack of support services - accounting, · High incomes. trades etc. · Tourism market and potential growth. · Aging infrastructure in most centres. · Regional resource investments can stimulate Opportunities signifi cant market demand. · Increasing interest and exposure for the · Many businesses have a well established Northwest Territories - increased tourism reputation and loyal clientele. potential. Weaknesses · Increased interest in the NWT as a destination · Limited population growth - impacts market meeting locale. size and availability of staff . · Improving economic conditions in main · Small and seasonal markets in many market areas. communities. · Increased interest in NWT oil and other · Expensive supplies. resources - increased investment. · Limited local produce or products. Threats · High operating costs and utilities. · Competition from similar destinations. · Land tenure in some communities. · Exchange rate fl uctuations. · Limited online presence. · Higher oil prices (necessary for heating). · Not diversifi ed. · Reduced interest in NWT resources. 8 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY Industry, Tourism and Investment 9 AGRICULTURE The agriculture sector is not Agriculture in the Northwest Territories is a small generates approximately $8-10 million in a major contributor to the but emerging sector of the economy. Motivated income per annum in the NWT. The industry GDP in the NWT but from by high food costs, positive contributions to can be divided into three categories: a production point of view, lifestyles, local product diversity, and increased · Small scale - community and market gardens; there is vast potential. Arable awareness of nutritional values, participation · Commercial agriculture and large scale land in the NWT remains in local food production is increasing in most, production; and, mostly undeveloped. The if not all, communities in the NWT. Ranging government has been from small community gardens to commercial · Commercial harvest of game. investing signifi cantly in greenhouses, regulated egg production and the sector and local food production can play an harvesting of “wild” edibles, the local food important role addressing production sector has grown dramatically the high costs associated over the past decade. The agricultural sector in NWT communities.
Growing Forward in Fort Liard - Industry, Tourism and Investment
1010 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES Small Scale - Community and Market Gardens A Greenhouse in the NWT Community and market gardens are best characterized as small commercial-oriented operations. These gardens often reduce reliance on imported foods in a community and/or region. Gardens operate on a seasonal basis and plot sizes range from approximately ¼ acre to 10 acres.
Garden operators or community participants generally gain the majority of the garden benefi ts by growing food for sustenance. Any surplus is either sold or contributed to the community. Community and market gardens are a rapidly growing segment of the agricultural industry in the North, and the majority of NWT communities now have one or more gardens. In some instances, where community/ market gardens have expanded to the point where surplus production occurs, commercial opportunities have evolved for farmers markets or U-picks. In some instances, surplus is sold to local retailers or businesses involved in food service. Success in community/market gardens is most often judged by output and not conventional commercial measurements.
Depending upon the cost of the land and related capital, economic return on investment varies. Where land and related capital equipment costs are high, a return on investment is necessary. Conversely, where land and related capital equipment costs are low, an actual cash return is not necessary or minimal. The former most often applies to commercial greenhouse operations and the latter to land Industry, Tourism and Investment based operations.
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 11 Commercial Agriculture Eggs in Hay River. Once there is a federally certifi ed The marketing of eggs in Canada has been grading station in Hay River, eggs produced in regulated under the Federal Agricultural Hay River will be available on grocery shelves Products Marketing Act since 1973. The NWT throughout the NWT. formally entered the regulated egg marketing Muskox industry on March 25, 1999 and currently has The commercial muskox harvest on Banks a quota of 3,028,098 dozens of eggs which is Island has been ongoing since the 1980’s and equivalent to approximately 121,000 layers. Egg provides an important source of income and production is seen as a means to: employment to residents in the community of · Diversify local economies; Sachs Harbour. The annual harvest produces · Encourage healthy living; several thousand pounds of meat for territorial · Increase income and employment consumption, as well as qiviut, a highly prized opportunities; fi bre used for knitting and weaving. · Reduce reliance on imports; · Encourage new investment; and · Establish new markets and incomes. Commercial Harvest of Game Wild Harvest Edibles NWT producers marketed just over three million The harvesting of local resources for sustenance dozen eggs in 2010 from production facilities in the NWT extends well beyond fi sh, caribou, bison and muskox. Mushrooms, berries, syrup, herbs and plants for medicinal purposes are only a few of the many examples of food products available in abundance throughout the NWT for either local consumption or for commercial trade. Other options that have potential for local consumption or trade include:
· Firewood; · Logs for construction; · Diamond back willow canes; · Birch bark; and · Spruce root.
Small Flock Producer
12 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES Industry Outlook Agriculture - SWOT Analysis Opportunities exist to produce unique NWT Strengths products like birch syrup or herbal teas and · Commissioner’s land could be used to other harvested foods. support local market gardens. Commercial egg production can also be · Demand seems to exist in urban centres for expanded and the department is working to fresh, northern produce. promote small fl ock egg production to meet · Sustainable land mass of arable land suitable local needs. for agriculture production. Market gardens have proved popular. Industry, · Past demonstrations indicate suitability and Tourism and Investment is working with attainable success for a variety of crops or Agriculture Canada to expand the program. livestock. · Large variety of wild edibles. Weaknesses · Ease and convenience of importing food products. · Land not identifi ed or set aside for agriculture. · Limited access to lands; restriction of long- term tenure. · Costly transportation costs between NWT communities. · Government subsidization reduced due to trade agreements. Opportunities · Growing niche markets for wild edibles. Threats · Reduced growing seasons. · Southern competitors closer to target markets. · Southern producers have the benefi t of economies of scale.
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 13 ARTS AND FINE CRAFTS The arts and fi ne crafts Arts and fi ne crafts make an important The survey also identifi ed people who sold arts sector, in combination with contribution to our economy as an export and crafts items in the NWT. It was reported the traditional economy industry as well as a cultural identifi er. This that 924 producers in the NWT sold items they (hunting, fi shing, etc.) sector provides incomes for residents who rely produced. Most artisans earned revenue of less are very important to the on their talents and artistic design to maintain than $1,000. subsistence of residents. This their way of life and spiritual connection to the The NWT arts and fi ne crafts sector is quite is especially true in the smaller land. Success for many artists is important to communities in the NWT. diverse, characterized by a wide range of their livelihood and well-being. traditional and modern activities. Production According to the 2008/2009 Household Survey is primarily cottage-based. Individuals often conducted by the NWT Bureau of Statistics, produce and sell products independently, there were more than 3,000 NWT residents over frequently out of their homes. Products are also the age of 15 who participated in producing sold to local retailers and cooperatives. some form of art or craft. Artists may produce more than one type of The North Slave region is by far the leader when art or craft, however most are involved with it comes to the number of people who produce sewing or needle craft products. arts and crafts in the territory. The North Slave region is followed by the Beaufort Delta, Dehcho, South Slave and Sahtu regions.
Dene Cultural Institute Hay River - Dan Westman
14 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES Type of Business Type of Business There is a strong correlation between the retail and producer categories. This highlights the strong presence of self-producing businesses. A predominant number of respondents are artists and their retail business is operated around their own art or fi ne craft products.
Arts and fi ne crafts retailers in the NWT are well established long term businesses. The majority have been in business between three and 10 years. The vast majority of retailers in the NWT (43per cent) are relatively small businesses, with Annual Sales by Threshold annual gross revenues of less than $50,000. >$500K - $1 million, 9% Another 22 per cent reported annual gross >$200K - revenues from $50,000 - $100,000, and there $500K, 4% Below $50K, were many that reported signifi cantly higher >$150K - 43% sales. In fact, 35 per cent of all retail business $200K, 9% surveyed in 2008 reported gross revenues in excess of $100,000. >$100K - $150K, 13%
$50K - Type of Art or Craft $100K, 22%
Other, 476 Books, Plays Carvings, 293 Source: GNWT 2008 Arts Retail Survey or Music, 191 DiDrawings or PainƟŶŐs, Industry Outlook Performing 384 Arts, 191 With tourism anticipated to increase by an
Jewelry, 222 average of 2.8 per cent per year over the next fi ve years, the outlook for the arts and fi ne crafts sector is positive, with continued modest Sewing or Weaving or NeedlecrĂŌ͕ growth on a year over year basis. Basket 1,879 Making, 137
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 15 Arts and Fine Crafts - Madison Kaylo SWOT Analysis Strengths · Sector benefi ts from a long history of traditional skills. · Income opportunities for under-employed sector of our workforce (aboriginal women). Weaknesses · Diminishing supply of raw materials. · Lack of a distinct brand image for products. · Access to e-markets limited in many small communities and aboriginal households. Opportunities · Tourism demand for locally made goods is strong. · E-commerce off ers broader market. Threats · Cheap knock-off reproductions of similar · High paying job opportunities goods produced outside the NWT. in other sectors. · Traditional skill loss among younger people. · Modern clothing, which has been designed for the Arctic, has replaced the traditional need for home sewn clothes.
16 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 17 CONSTRUCTION The vast majority of Many companies that started out with little Conversely, recent strong economic growth construction fi rms are small, more than a tool box and a pickup truck are here in the NWT has been attracting some with more than 90 per now relatively large businesses employing major southern Canadian construction fi rms, cent having fewer than 20 dozens of workers throughout the NWT and, such as Ledcor and SNC-Lavalin. employees. However, there is in many cases, Nunavut. A few have even Employment lots of opportunity for growth. established branch offi ces in southern Canada. The construction industry employed an average Some have even undertaken projects abroad. of 1,950 workers in 2011. This represents ADCO North, for example, used its NWT approximately 6.9 per cent of the total experience to install power stations in both territorial workforce and almost 8.8 per cent of Chile and the Grand Cayman Islands. private sector employment.
Construction Employment
2,500
2,177
2,018 1,937 1,968 1,950 2,000 1,923
1,728 1,663
1,500
1,000
500
0 2004 2005 2006 2007 2008 2009 2010 2011
Source: Statistics Canada
18 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 19 Construction Employee Earnings Creating Wealth and Construction workers in the NWT averaged Workers were paid a total of $317 million, Employment in Aboriginal weekly earnings of just under $1,400, one of approximately 14 per cent of the NWT’s total Communities – Report by the Conference Board the highest in 2011. employment income. of Canada © 2005 GDP in the Construction Sector (In Millions of Real Dollars) By Stelios Loizides and 397 400 Wanda Wuttunee 380 369 368
350 320 313 302 300
238 250 230
200 168 167 161 158 150
100
50
0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Statistics Canada Construction Contribution to the NWT Economy In 2011, the NWT construction industry High Multiplier Impacts contributed $158 million to territorial GDP The NWT construction industry has a signifi cant (chained 2002 dollars), or 5.5 per cent of total impact on the local economy. The NWT Bureau GDP. This is a considerable drop from the of Statistics input-output model estimates that sector’s peak in 2007 when total contribution every $1 million in construction investment to the NWT’s GDP equalled $380 million or creates as many as 3.5 jobs in the territorial approximately 10 per cent of total GDP. economy, and every dollar of construction investment contributes up to 46 cents to the Construction activity is directly linked to capital NWT’s GDP. investment. Based on this, it is not surprising to see that revenues declined between 2007 and 2009, as the construction of DeBeers’ Snap Lake mine was completed in 2007 and entered production in 2008. 20 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES Value of Building Permits and Industry Outlook Construction is made up of three segments: This represents a drop of 55 per cent for the residential, non-residential and other (ex. period. Although residential permits and building of mines). The total value of all industrial permits remained relatively consistent building permits in the NWT also experienced for the period, the value of commercial, a signifi cant drop in 2010, decreasing from and institutional and government permits $165 million in 2009 to $74 million in 2010. experienced signifi cant declines of 51 per cent.
Industry Outlook industry. In the long-term, the prospects for the The industry will continue to experience construction industry are bright, especially with challenges over the next couple of years due to the potential of having fi ve new mining projects limited investment made by the mineral sector being developed over the next decade. and by the public sector. This is directly linked to the current economic situation. As the economic situation improves, so will the outlook for the
Surveying for New Construction - Digital Images
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 21 Construction - SWOT Analysis Strengths Opportunities · History of working in the North · Major resource sector expenditures translate under extreme conditions. into signifi cant construction opportunities. · Industry has developed effi cient, · Socio-economic agreements provide innovative and reliable practices and new opportunities for contracting. designs specifi cally for the north. · The marketing and transferring of · The NWT Business Credit Corporation technology developed in the NWT provides contract security fi nancing. that is specifi cally designed for Arctic · The Business Incentive Policy (BIP). conditions to other circumpolar regions. · Agreements with resource companies provide Threats improved contract access for NWT companies. · The construction industry is Weaknesses vulnerable to lower-cost competition · Sales are linked to investment which varies from southern companies. with commodity prices, capital availability, market perceptions and other factors. · A shortage of skilled labour in the NWT. · Industry must compete with mining and government wages and benefi ts. · A limited market creates volatility. · Access to land for development.
22 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 23 FILM AND PRODUCTION
Film, video, and digital media While statistics on the NWT fi lm industry increase in interest from television drama series are the centre of a growing are limited, the growing economic force of and feature length fi lm productions. These types and dynamic industry in the NWT fi lm and media arts industry was of productions have very positive impacts on the NWT. Participation from documented in a 2011 sector study, A Review several sectors of the NWT economy, and create local residents in the NWT is of Film Commission Mandates (Outcrop employment and training opportunities for increasing and there are a Communications Ltd., 2011). The study found local fi lm industry members. number of projects currently that fi lm and digital media activities, including in production. Experienced The most recent production and the fi rst website design, annually contribute about $9 television and fi lm professionals ever drama series to be fi lmed in the NWT is million to the NWT economy. This includes are available to off er their CBC’s newest drama series, Arctic Air (Omni about $5 million in wages. More than 100 services and expertise to visiting Film Productions Ltd.). The storyline is set in people are estimated to be employed full time production companies. Yellowknife and makes reference to multiple in the NWT fi lm and media arts industry. communities throughout the territory. It drew The NWT has also enjoyed some notable the largest audience for the premiere of a new successes in attracting investment. drama series in the last decade for CBC, with a Documentaries and television based reality total viewership of 1.05 million. It is estimated shows make up the majority of fi lming activity that in excess of $1 million has been spent on in the NWT for out-of-territory productions; goods and services while fi lming on location in however, in recent years there has been an the NWT.
Filming Arctic Air in Yellowknife - Black Swan Films taken by Coal Photography
24 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES Both the Native Communications Society and Additionally, Discovery Channel’s Mighty Ships the Inuvialuit Communications Society (ICS) and License to Drill (Exploration Production Inc.) develop a variety of productions each year documentary series used various locations in for the national Aboriginal People’s Television the northern NWT for fi lming. Network. They currently produce four to six documentaries annually and estimate costs at $60,000 per documentary.
It is diffi cult to predict future investment, but the NWT Film Commission will continue to Arctic Air - Omni Film Productions Ltd. promote and encourage fi lming activity in the Northwest Conservative estimates place the value to Territories. the NWT of these types of productions at approximately $100,000 in direct expenditures Ice Road Truckers (Original Productions Ltd.) each year, per production. This does not include was the fi rst reality television series fi lmed in private contracts whereby a monetary sum the NWT. In 2007, 3.4 million viewers tuned may be paid to an individual or business to in to the series premiere, which made it the participate in a show under an agreement most-watched original telecast in the History made between the production company and Channel’s 12-year history. The series fi lmed the individual or business. two successful seasons in the NWT and aired in the United Kingdom, New Zealand, the United Other productions include the award-winning States, Australia and the Netherlands. Tropicana commercial Brighter Mornings for Brighter Days campaign that was fi lmed in Gemini Award winning Ice Pilots NWT (Omni Inuvik. It was estimated the fi lming of the Film Productions Ltd.) is still going strong into its Tropicana television spot in January 2010 third season. It was also credited as being one of contributed $350,000 to the local economy. the History Channels highest-ever ratings for a Canadian series.
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 25 The Film Industry - SWOT Analysis Strengths Opportunities · Unique characters, colourful history · Increased interest in the North and Arctic and unique geography. especially with regard to: · Northern personalities (old and new). - Features; · Northern and Aboriginal culture. - Series; - Commercials; · Success and legacy of Ice Pilots NWT; Ice - Reality shows (eg: Jesse James); Road Truckers, License to Drill and Arctic Air. - Lifestyle media. · Small, but highly skilled, resource of · Cold weather testing - Porche and Land Rover. professional fi lm people and performers. · North pole and sea ice interest. · Ice roads, vintage planes, etc. · Historical connections - Franklin (traveled Weaknesses the Western Arctic as well); Mad Trapper; · High costs but comparable with Canol Trail; Hudson Bay Company, etc. larger southern centres. Threats · Shipping and transportation logistics. · Competing locations. · Limited support services. · Other locations have better · Limited resources for assisting fi lm incentive programs. development - small population · Waning interest in the Arctic. and economies to scale. · Lack of production funding. · Distance and remoteness. · Uncertain market conditions for local industry. · Limited range of capacity and limited opportunities for local industry.
Ice Road Trucker Returning from a Mine Haul - Jiri Hermann
26 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 27 Arctic Air - Omni Film Productions Ltd. Ltd. Productions Air - Omni Film Arctic COMMERCIAL FISHERIES Northwest Territories (NWT) There is one well-established commercial freshwater fi sh industry was 1,038,000 pounds, freshwater fi sheries support freshwater fi shery in the NWT - the Great Slave an increase of 48 per cent in comparison to subsistence domestic use, Lake fi shery. The chart below shows the total 2009/10. The most signifi cant increase, 38 per sport fi shing and commercial harvest in the NWT (in pounds) for the time cent, was in deliveries of lake whitefi sh from fi shing for both food and period 2000/01 to 2010/11. NWT fi sheries Great Slave Lake. sport. Sport fi shing is experienced a steady decline in harvest since its very popular with many peak in 2001/02. However, this trend changed residents of the NWT and in 2010/11. In 2010/11, the total harvest of the in 2010/11, fi shing tourists comprised over 25 per cent Total Fish Harvest in the NWT by Weight (in 000’s lbs) of overall visitor spending. 3,000
2,654 2,685
2,500 2,415 2,310
1,978 2,000
1,622
1,500
1,199 1,038 1,000 783 706 702
500
0 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11
Source: Freshwater Fish Marketing Corporation
28 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES Freshwater Fishing and the NWT Economy Production from the commercial freshwater harvested from Great Slave Lake and makes up fi sh industry has been steadily declining since 81 per cent of the lake’s total harvest. Whitefi sh its peak in 2000/01 when it was valued at $1.5 volume has increased compared to 2010/11. million. In 2010/11, however, the industry Other provinces also harvest signifi cant amounts experienced an increase of 47 per cent and was of perch and pickerel, which command higher valued at $495,000. This decline in the value of prices (up to 2-3 times the price of whitefi sh). the fi sh harvest can be explained by a decline in the number of participants in the industry. The NWT supplies about 1 per cent of Canadian freshwater fi sh. Whitefi sh is commercially
Value of the NWT Fish Harvest (In Thousands of Dollars)
$1,600
$1,467 $1,414 $1,400 $1,275 $1,206 $1,200
$1,000
$852
$800 $705
$600 $567 $495 $413 $400 $380 $337
$200
$0 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 Source: Freshwater Fish Marketing Corporation
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 29 Freshwater Fishing in Canada Quality Canadian fi sh can command a premium The Northern Pike price. For example, one Manitoba company ships packaged fi llets from its Minnesota warehouse throughout North America. These fi llets are high quality and immediately processed and frozen to ensure freshness. They are wrapped in plastic and shipped in dry ice. The northern pike is one of the NWT’s most well-known and widely distributed These Manitoba fi sh are sold in 3, 6, 9 and 11 fi sh. In fact, this species has a circumpolar pound boxes. The price for an 11 pound box distribution, with populations occurring of fi llets is $135.00 US plus shipping. Whereas in nearly all parts of Canada, the northern the average price paid to fi shers in the NWT is United States, northern Europe, and Asia. Pike under $1 per pound, the direct market price is a favorite sport fi sh for many tourists. for US customers is about $14.00 per pound.
The table lists the value and quantity for various Lake Trout species of fi sh harvested throughout Canada. This 2009 data is the most recent information available from the Department of Fisheries and Oceans. The value of NWT production was $337,000 compared to $1.5 million in Alberta. Lake trout is a cold water species found Select NWT Commercial Species throughout the NWT. Because these species do not tolerate warm water, lake trout from Lake Whitefi sh southerly populations is forced to retreat to the deep cold waters of the lakes.
Lake whitefi sh is the main commercial fi sh in the NWT. It is traditionally one of Canada’s most commercially valuable fi sh species. Its diet consists of a wide variety of bottom-living invertebrates and small fi shes, with zooplankton occasionally making up the remainder of the diet.
30 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES 2009 Freshwater Fish Harvest in Canada
Species NB QC ON MB SK AB NT Canada Q(2)V(3)QVQVQVQVQVQVQV Alewife 941 207 ͲͲͲͲͲͲͲͲͲͲͲͲ 941 207 ArcticChar ͲͲͲͲͲͲͲͲͲͲͲͲͲͲ 00 Burbot Ͳ ͲͲͲ 10ͲͲͲͲͲͲͲͲ 10 Carp ͲͲ 46 16 8 4 251 132 ͲͲͲͲͲͲ 305 152 Catfish ͲͲ316 273 21 8 ͲͲͲͲͲͲͲͲ 337 281 Eel 49 279 109 762 0 0 ͲͲͲͲͲͲͲͲ 158 1041 Goldeye ͲͲͲͲͲͲͲͲͲͲͲͲͲͲ 00 Inconnu ͲͲͲͲͲͲͲͲͲͲͲͲͲͲ 00 LakeTrout Ͳ ͲͲͲ 208 216 35 25 216 140 ͲͲ 32 17 491 398 Perch ͲͲ 37 190 992 8142 140 317 ͲͲ 00ͲͲ 1170 8649 Pike Ͳ ͲͲͲ 21 18 1393 1166 495 383 30 23 16 11 1955 1601 RockBass Ͳ ͲͲͲ 10 19 ͲͲͲͲͲͲͲͲ 10 19 Salmon Ͳ ͲͲͲ 00ͲͲͲͲͲͲͲͲ 00 Sauger Ͳ ͲͲͲ 0 0 651 2117 ͲͲͲͲͲͲ 651 2117 Shad 14 12 ͲͲ 40ͲͲͲͲͲͲͲͲ 18 12 Smelt ͲͲ 47 57 3538 1827 ͲͲͲͲͲͲͲͲ3585 1884 Sturgeon 0 0 ͲͲ 223ͲͲͲͲͲͲͲͲ 223 LakeSturgeon ͲͲ 70 253 ͲͲͲͲͲͲͲͲͲͲ 70 253 Atl.Sturgeon ͲͲ 38 229 ͲͲͲͲͲͲͲͲͲͲ 38 229 Sucker(Mullet ͲͲ 5 2 11 3 1477 559 518 175 ͲͲͲͲ 2011 740 Sunfish Ͳ ͲͲͲ 14 193 ͲͲͲͲͲͲͲͲ 14 193 Trout ͲͲͲͲͲͲͲͲͲͲͲͲͲͲ 00 Tomcod ͲͲͲͲͲͲͲͲͲͲͲͲͲͲ 00 Tullibee(1) Ͳ ͲͲͲ 223 213 66 42 19 8 2 3 ͲͲ 311 266 WhiteBass Ͳ ͲͲͲ 1360 2322 ͲͲͲͲͲͲͲͲ1360 2322 Whitefish Ͳ ͲͲͲ 2038 5479 2231 3425 1296 1578 1015 1473 243 256 6822 12211 WhitefishRoe ͲͲͲͲͲͲͲͲͲͲͲͲͲͲ 00 YellowPickere Ͳ ͲͲͲ 2280 8783 4906 14638 458 1502 1 5 14 40 7660 24967 OtherFish 0 0 129 248 3297 64 30 53 140013133470 382 Total 1004 498 797 2030 14028 27315 11182 22474 3002 3790 1049 1504 318 337 31380 57948
(1)IncludesLakeHerring,ChubandCisco. (2)Qisquantityoffishharvestedintonnes. (3)Visthevalueoffishharvestedinthousandsofdollars.
Source: Fisheries and Oceans Canada
Industry Outlook The external market for NWT fi sh is dependent surging interest in NWT fi sh in local, regional largely upon market conditions in the US and and territorial markets. Capturing, serving and the strength of the US dollar. Markets are still sustaining these NWT markets will be critical willing to take all fi sh harvested in the NWT but to the future of the fi shery. Export markets will a weak US dollar is having a negative impact on continue to play a role, albeit possibly to a sales. Augmenting market values will be a lesser extent.
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 31 Fisheries - SWOT Analysis Strengths Opportunities · Mature fi shery with established markets. · While restricted, there may be opportunities · Known stocks. for additional value added processing. · Experienced fi shers. (eg: smoked fi sh, caviar, etc.) · Established management structure · Farmed fi sh are suff ering a quality crisis; and commercial quotas. niche market for wild product is evolving. · Great tasting freshwater fi sh. Threats · Established and growing local markets. · Diminishing interest in fi shing as a career. Weaknesses · Viability of fi shing as a business; costs versus fi sh prices. · Competition from fi sh farms. · High operating costs (fuel, wages, etc.) · Susceptible to over fi shing without careful monitoring of stock and harvests. · Wage off erings can not compete eff ectively against other economic sectors. · Freight costs to southern markets are high. · Processing costs.
32 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 33 FUR HARVESTING Wild fur from the NWT is The Government of the Northwest Territories Sales of seal pelts continued to decline this year, considered among the best (GNWT) has invested signifi cant eff ort in with average prices in the $10-12 range. The in the world and generally marketing furs, and in providing a basic level of Genuine Mackenzie Valley Fur (GMVF) Program commands premium prices price stability. is now paying harvesters above market, buying at fur auctions. Fur sales have seals at $55 per pelt. This is made possible Both China and Russia are emerging as experienced a resurgence through a GMVF program that buys, tans and major markets for NWT fur. Muskrats are in in recent years, increasing sells fi nished hides into the traditional craft by $680,279 in 2011/12 surprisingly high demand and on average the market. The program breaks even. to reach $1.5 million. price per pelt has doubled since 2009. NWT marten (sable) pelts continue to command high prices and a signifi cant premium over other provinces and territories.
Fur Sales since 2001/02 (In Dollars)
$1,600,000 1,511,199
1,400,605 $1,400,000 1,308,895 1,297,939
1,193,656 $1,200,000 1,124,015
$1,000,000 968,205
818,740 830,920 $800,000 757,417
$600,000
$400,000
$200,000
$0 2002Ͳ03 2003Ͳ04 2004Ͳ05 2005Ͳ06 2006Ͳ07 2007Ͳ08 2008Ͳ09 2009Ͳ10 2010Ͳ11 2011Ͳ12
Source: Industry, Tourism and Investment
34 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES Benefi ts - Genuine Mackenzie Valley Furs (GMVF) Program
Through the GMVF Program, the GNWT works Prime Fur Bonus in partnership with NWT harvesters and the fur Where a trapper’s fur sells for an amount equal industry to support and promote the NWT’s to or greater than the advance, the trapper is traditional fur economy. entitled to receive a Prime Fur Bonus payment.
The GMVF Program provides the following Grubstake benefi ts to trappers: Trappers who have shipped a minimum of 20 to a maximum of 400 pelts to auction through Guaranteed Advance the GMVF Program during the previous trapping Trappers who ship their fur through the season are eligible to receive a Grubstake GMVF Program are eligible to receive a Payment of fi ve dollars per pelt for up to 400 guaranteed advance payment. Fur needs to pelts. be in good condition in order to be eligible for consideration. Advances are reconciled when Commissions and Handling Fees the fur is sold. If the fur sells for less than the All commissions and handling fees for all fur advance the program bears the cost. In the sold at auction, up to a maximum of eight event the fur sells for more than the advance, percent of gross value, are paid by the GMVF the trapper receives the additional proceeds. Program.
Fur Auction - Buyer Checking NWT Martin - Industry, Tourism and Investment
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 35 Percentage Breakdown by Species’ Marten and bears have the Value of Total Harvest highest fur value accounting 1% for 65 per cent and 12 per cent 2% 2% 12% of the total NWT fur harvest 4% value respectively.
3% Bears 4% Beaver
6% Fox
Lynx
Marten
Muskrat 65% Wolf
Wolverine
Other
Source: Industry, Tourism and Investment
A Way of Life
Trapping provides a cash income and enables Aboriginal people to continue a lifestyle that has been a tradition in the North for thousands of years.
Management of resources is done in partnership with the trapper, local wildlife management boards and government. All harvesting is monitored and analyzed to ensure healthy fur bearer population is sustained.
Trapping occurs in the coldest months when the fur is prime to ensure only top quality pelts are marketed. Prime means that the fur has reached its maximum length, density, and texture. Ice Fishing - Industry, Tourism and Investment
36 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES As an internationally traded commodity, on Humane Trapping Standards. The NWT pelt values fl uctuate due to supply (harvest) has implemented these standards and and demand based on what fashion enforced the use of certifi ed humane traps. dictates. In the past fi ve years, demand Wildlife resources are not only an important from emerging economies such as China part of our northern ecosystems, they are and Russia have driven fur prices higher. also an essential part of the cultural and All fur bearing species are harvested in economic well-being of northern residents. compliance with the International Agreement
Fur Harvesting - SWOT Analysis Strengths · Lack of support at the national level · Furs - quality product. (fi nancial and policy commitment). · Knowledgable trappers. · Aging population. · Genuine Mackenzie Furs branding. · Restricted to aboriginal participants. · Communities provide strong Opportunities support base for fur production. · Gateway nations like Turkey where · Fur marketing and buying service. signifi cant demand exists. · Take a Kid Trapping - building · China becoming the largest importer of the next generation. raw fur and exporter of fi nished goods. · Established trails, cabins, equipment · Growing interest in Aboriginal culture and trapping infrastructure. and traditional clothes etc. · Strong commitment by GNWT Threats and Aboriginal Governments. · Anti fur movement. Weaknesses · Knowledge of the fur industry, its · Maintaining an interest in trapping. participants and the North. in younger ages; (similar to farming - attraction of city lights).
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 37 MANUFACTURING Manufacturing showed Manufacturing can reduce the NWT’s reliance the Northern environment. For example, the signifi cant growth between on imports and improve the balance of trade Fort McPherson Tent and Canvas shop makes 1999 and 2005, when overall with the rest of Canada. This keeps jobs and custom tents, designed for exploration and sales reached a peak of $91 opportunities within the territory. A viable harvester needs. million. At that time, there manufacturing sector also works to diversify were 28 NWT businesses the economy, and provide products suited to engaged in manufacturing. Since 2007, sales have Annual Manufacturing Sales Since 2001 (In Thousands of Dollars) declined to $9.3 million from $45.8 million, and the 100,000 number of manufacturers 90,709 has declined from 28 to 16. 90,000 80,759 80,000 78,343
70,000 64,243
60,000 56,552
50,000 45,811
39,209 39,602 40,000
30,000
20,000 16,114
9,162 9,316 10,000
0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: Statistics Canada Manufacturing Investment
Investment is necessary to maintain indicates growing confi dence in the future. a business and to expand sales. This Investment largely parallels sales declines is particularly true of manufacturing, between 2006 and 2009. Between 2006 and which tends to be capital intensive. 2010, capital investment by manufacturing Investment also acts as a barometer of business sector has declined by 64.7 per cent. confi dence. Increasing investment usually
38 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES Capital Investment by the Manufacturing Sector (In Millions of Dollars)
1.8 1.7
1.6
1.4
1.2
1
0.8 0.8 0.7 0.6 0.6 0.5 0.4 0.4
0.2
0 2006 2007 2008 2009 2010 2011 2012
Source: NWT Bureau of Statistics
Manufacturing - Revenues and Operating Costs
The chart on the following page provides Energy, water and other utility costs are not, on summary operating and sales data for NWT average, a major industry cost. The industry’s manufacturers since 2004. Over the past major cost is materials and supplies, especially six years, this data also shows a signifi cant over the 2004/07 period. This seems to indicate decline in sales, from $87 million to just over a linkage to the cost of rough diamonds. As $17 million in 2009 - a decline of 80 per cent. the number of diamond plants has declined, This decline was matched by a decline in material costs have declined, on average, from manufacturing plants, from 27 to 16, and a $60 million per year to under $5 million. drop in average manufacturing establishment sales from $3 million to $1 million.
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 39 Manufacturing Costs and Trends - NWT
2004 2005 2006 2007 2008 2009 2010
Establishments (#) 27 28 21 16 14 15 11
Revenue ($'000) Total 86,588 92,455 61,298 59,203 40,237 19,810 17,211 Revenue from goods manufactured 80,760 85,391 57,568 55,954 31,350 15,112 12,326
Expenses ($'000) Total 75,760 92,944 63,363 58,819 35,736 19,795 17,868 Total salaries and wages, direct and indirect labour 9,873 10,378 10,261 10,875 8,339 6,598 4,873 Production workers wages, direct labour 7,759 8,215 8,437 9,142 6,845 4,333 2,830 Non-manufacturing employees salaries, indirect labour 2,114 2,163 1,824 1,733 1,494 2,265 2,043 Total cost of energy, water utility and vehicle fuel 326 364 364 756 666 361 298 Cost of energy and water utility 303 320 344 685 614 315 253 Cost of vehicle fuel 23 44 20 71 52 46 45 Cost of materials and supplies 50,903 66,833 41,364 38,300 .. 6,414 4,732
Employees (#) Total number of employees, direct and indirect labour 225 241 201 207 172 136 85 Number of production workers, direct labour 176 183 173 175 146 101 60 Number of non-manufacturing employees, indirect labour 49 58 28 32 26 35 25
Inventories ($'000) Total opening inventories 19,715 21,111 5,070 6,386 5,302 5,486 2,148 Opening inventories, goods or work in process 102 5,141 2,994 3,147 109 3,211 63 Opening inventories, finished goods manufactured 14,376 14,268 522 389 519 520 395
Total closing inventories 22,018 22,676 5,447 9,684 5,442 3,046 2,488 Closing inventories, goods or work in process 1,335 10,009 2,167 2,468 3,226 1,044 53 Closing inventories, finished goods manufactured 14,257 10,846 565 420 341 368 415
Manufacturing value added ($'000) 30,631 19,640 15,056 16,250 .. 6,018 7,306
Source: Industry Canada‘s Small and Medium-Sized Enterprise Benchmarking Tool
Annual Manufacturing Employment
As of 2010, the average manufacturing business in the NWT is small, with employment averaging around seven positions. Average wages have remained fairly consistent over this period, at around $47,000 per worker, per year.
40 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES Industry Outlook cent of rough diamonds in the NWT represents Manufacturing has signifi cant potential for $100 million in input value. Recent work to growth, especially if Avalon Resources moves revise the NWT Manufactured Products Policy forward with its planned hydromet facility in the should create new opportunities to diversify and southern NWT. The GNWT’s eff ort to revitalize expand the manufacturing sector. the diamond processing industry could also have a signifi cant impact. Processing just 5 per
Manufacturing - SWOT Analysis
Strengths · High energy costs. · Government of the NWT supports · Additional freight and transportation manufacturers in the form of equity costs to enter southern markets. assistance and job creation initiatives. · Low product volume requirements · Small scale manufacturing initiatives and limited northern markets. meet unique northern target markets. · Cyclical demand and short re-supply · Manufacturing Policy. windows (eg: less than one month · Made in the NWT. is open for diamond re-supply.) · Manufacturing has been proven successful Opportunities in small communities (ie: Fort McPherson) · Raw materials and resources. and potential exists to expand elsewhere. · Unique or niche northern needs. Weaknesses · Lack of competitors. · The NWT is not well integrated in the · Potential for small scale supply of both raw and processed materials manufacturing - Arts and Crafts. for further value added products. Threats · High costs of labour. · Southern competition which may · High employee turnover and loss benefi ts from improved economies of associated training costs. to scale and lower input costs.
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 41 RETAIL TRADE Retail is the sale of goods and Retail trade encompasses a broad range Christmas and summer periods. Longer term services from individuals or of businesses, including local corner stores, sales are heavily impacted by population and businesses to the end-user. A national chains, video rentals, automotive income changes. retailer purchases goods or dealers and service stations, and more. Most Retail sales depend upon consumer products in large quantities retail businesses are small and locally owned, expenditures, which in turn depend upon from manufacturers directly but “retail” also includes some of the NWT’s incomes, and consumer confi dence. If residents or through a wholesaler, and largest companies, such as Walmart and then sells smaller quantities are not confi dent about future employment, Northern Stores. to the consumer for a profi t. they will increase savings and therefore spend Combined with wholesale, trade businesses are less on retail purchases. a major employer, accounting for about 10 per Annual sales (below) have been little impacted, cent of total employment or about 2,500 jobs. showing fairly strong and consistent growth Retail sales are seasonal, and peak over since 2001.
Annual Retail Sales (In Millions of Dollars)
800
727 706 709 693 700 678
599 600 575 530 532 505 500
427 400
300
200
100
0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: NWT Bureau of Statistics - Quarterly Statistics Publication, June 2012
42 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES Retail Trade Performance Within Canada
Overall growth in the NWT exceeded Alberta growth like Saskatchewan, the Yukon and and British Columbia. However, the NWT lagged Nunavut. The NWT also lagged behind the behind regions with high rates of economic Canadian average.
Per Capita Retail Sales - 2011 (In Dollars)
20,000 18,706 18,000 16,941 16,448 16,000 15,265 15,347 14,699 13,808 14,000 13,235 13,141 12,827 12,841 13,111 12,091 12,000 10,673 10,000
8,000
6,000
4,000
2,000
0 CA NF PEI NS NB PQ ON MB SK AB BC YT NT NU
Source: Statistics Canada
As both incomes and prices tend to be higher higher, which likely refl ects their higher tourism in the NWT, per capita sales are signifi cantly volumes - over 300,000 road travellers every above the national average. The Yukon is slightly summer.
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 43 Retail Sales Contribution to GDP (In Millions of Chained 2002 Dollars)
140
120 120 116 116 117 114
103 100 98 98 94 91 86
80
60
40
20
0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: NWT Bureau of Statistics
Retail Trade’s Contribution to the Economy
Since 1999, retail trade has consistently income remained fairly consistent over this averaged between 3-4 per cent of the NWT’s period, despite temporary mine closures. Gross Domestic Product (GDP). In response to static population growth, retail The industry was not signifi cantly impacted by sales have levelled off over the past three years. the 2008/09 economic downturn, as worker
44 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES Source: Aidan Cartwright
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 45 Retail Employment and Outlook
On average about 2,400 people in the NWT work in retail businesses. Employment is seasonal, with extra people being hired over the Christmas period and summer months.
Retail Employment, Monthly
3,000
2,500
2,000
1,500
1,000
500
0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: NWT Bureau of Statistics
46 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES Capital Expenditures (In Millions of Dollars)
20 18.7
18
16
14
12 11.7 10.7 9.8 10 8.8
8
6
4
2
0 2007 2008 2009 2010 2011
Source: Statistics Canada
Industry Outlook Investment represents future capacity, as well as business confi dence. If businesses see potential growth, they will invest in new equipment or buildings. Capital expenditures from 2009- 2011 have declined by 47.6 per cent. Growth is expected to remain modest until new mineral developments stimulate population growth.
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 47 Retail - SWOT Analysis Strengths Opportunities · Rates competitive to southern cities. · Increasing interest and exposure · High incomes. for the Northwest Territories - · Tourism market and potential growth. increased tourism potential. · Regional resource investments can · Increased interest in NWT as stimulate signifi cant market demand. a meeting market. · Many establishments have a well · Improving economic conditions established reputation and loyal clientele. in main market areas. Weaknesses · Increased interest in NWT oil and other resources - increased investment. · Limited population growth - impacts market size and availability of staff . Threats · Small and seasonal markets · Competition from similar destinations. in many communities. · Exchange rate fl uctuations. · Expensive supplies. · Higher oil prices (necessary for heating). · Limited local produce or products. · Reduced interest in NWT resources. · High operating costs and utilities. · Land tenure in some communities. · Limited online presence. · Not diversifi ed. · Technology adoption. · Lack of support services - accounting, trades etc. · Aging infrastructure in most centres.
48 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 49 TOURISM Tourism is the largest Tourism is the largest renewable resource based Travellers come to the NWT for a variety of renewable resource based industry in the Northwest Territories. Within reasons, but typically fall into one of seven industry in the Northwest the economy it is considered an export, as it segments (Aurora Viewing, Outdoor Adventure, Territories. Within the brings new dollars into the NWT and generates Fishing, Hunting, General Touring, Visiting economy it is considered employment for many northerners. The travel Friends and Relatives, and Business Travel). As an export, as it brings new and tourism industry is competitive and is not of May 2011, Air Canada, Canadian North, First dollars into the NWT and immune to global situations like the recent Air and WestJet provide regular fl ights from generates employment economic downturn or the rise in terrorism. Yellowknife to Edmonton. Since 2007/2008, for many northerners. there has been a steady decline in visitations to The travel and tourism Through the delivery of ITI’s (Industry, Tourism the NWT. Overall, visitations to the NWT have industry is competitive and and Investment) tourism support programs, decreased by 19 per cent since 2007/2008. is not immune to global great strides forward had been made in situations like the recent developing NWT’s human resource capacity, economic downturn or research capability, public and private tourism the rise in terrorism. infrastructure, new tourism products and brand development of the NWT as a travel destination. Visitation to the NWT
90,000
79,572 80,000 75,895 73,419
70,000 67,803 68,004 64,251 65,340 65,196 64,418 62,111 60,000 53,917
50,000
40,000
30,000
20,000
10,000
0 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12
Source: Industry, Tourism & Investment
50 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES Tourism Contribution to the NWT Economy
Overall tourism represents over 2 per cent of the relatively steady between 2009 and 2010. total economy, and their share of total economic The most common cost cutting initiatives for activity has changed little over the past decade. business travel were reduction of overall travel Tourism also provides an excellent market for budget, reducing air travel, and sending fewer local arts and crafts, an industry utilizing many employees to meetings and conventions. traditional skills and supporting sustainable Canadian business travellers account for the vast development. majority of the NWT’s business travel market. The economic downturn in late 2008 negatively Most Canadian business travellers reside in impacted business and leisure travel in 2009 and Alberta, and notable portions of the market live 2010. The highest decline was in business travel in Ontario and British Columbia. in last two years while leisure travel remained
Visitor Spending (In Millions of Dollars)
160
BusinessSpending
140 LeisureSpending
120
100 78.8 77.4 54.7 74.6 50.2 42.3 46.1 40.7 80 58.1 48.5
49.5
60
40 63.1 67.6 66.1 63.8 64.4 61.6 60.5 55.9 48.8 49.5 20 44.6
0 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12
Source: Industry, Tourism & Investment
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 51 Main Tourism Segments in the NWT
Visitors to the NWT typically fall into one of the elimination of caribou hunting tags and seven categories: the United States ban on importing polar bear hides. Majority of hunters come from the Aurora Viewing - each fall and winter, United States and southern Canada. Hunting approximately 7,000 visitors come to see the outfi tters are still off ering big game packages Aurora Borealis. Majority of travellers are from to hunt Dall’s sheep, mountain goats, moose, Japan, followed by visitors from southern bears and wolves. Hunting contributed $4.2 Canada, the United States, South Korea, million to the NWT economy in 2010/2011. China, the United Kingdom and Australia. The tour operators off er one-night to three- General Touring - over 70 per cent of night packages to aurora viewing visitors. general tourists drive to the territory typically The aurora visitors spent approximately $9.4 in the summer months. During their stay they million in 2010/2011. enjoy sightseeing, photography, shopping and wildlife viewing. The majority of general Outdoor Adventure- the NWT attracts about touring visitors come from southern Canada, 2,000 adventurers year-round. Visitors come the United States, Germany and Switzerland from southern Canada, the United States and and stay three to four nights. Overall they Germany to partake in guided and unguided spent $10.5 million in 2010/2011. outdoor adventures. NWT tour operators off er guided trips by boat, canoe, raft, snowmobile Visiting Friends and Relatives - while and dogsled. Over $6 million was spent by modes of transportation are split fairly evenly tourists on guided and unguided trips in between road and air, the introduction of 2010/2011. West Jet in summer 2009 has lowered airfares making fl ying to the NWT more aff ordable. Fishing - each summer around 5,000 visitors Almost 50 per cent of these visitors are from come to the NWT solely to fi sh. Anglers can Canada, and the majority travel here in the take a multi-day guided fi shing trip or bring summer months. up their own boat to sail and land some amazing fi sh. Anglers purchasing guided Business - Canadian business travellers fi shing trips are typically from the United account for the vast majority of the NWT’s States, Ontario and British Columbia. The business travel market. The largest number majority of independent anglers come from of business travellers work in mining and Alberta and British Columbia. Anglers spent government, and most are occupied in almost $12 million in 2010/2011. professional or management positions. More and more of business travellers are Hunting - when compared to 2009 the participating in guided tourism activities number of hunters coming to the NWT during their business trip. Business travellers declined by more than 300 in 2010 due to spent more than $49 million in 2010/2011.
52 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES Tourism is an export industry that attracts new sensitive to events and factors that play out dollars and spreads wealth among a diverse on a global scale. We have seen in the past range of businesses. It supports and encourages decade how global events such as SARS, H1N1, the retention of culture and language, and terrorist actions and the recent global economic it can provide a strong argument for the downturn can have very drastic impacts on preservation of pristine wilderness areas. The travel. tourism industry cuts across a broad swath Although the NWT has a well-established of sectors; coordination and cooperation tourism sector, there is still the potential among the many businesses involved is crucial to expand various segments of the sector, for tourism development. The fundamental including Aboriginal cultural tourism, requirements for tourism development: access, experiential tourism and outdoor adventure. accommodation, food services, and attractions, must be satisfi ed to realize tourism potential. All Although the NWT has a well-established sectors of the industry must be fully engaged as tourism sector, there is still the potential active partners to move forward. to expand various segments of the sector, including Aboriginal cultural tourism, The tourism industry is forecast to grow by an experiential tourism and outdoor adventure. annual average rate of 2.8 per cent over the next fi ve years. However the industry is particularly
Wood Buff alo Park - Dan Westman
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 53 Tourism - SWOT Analysis
Strengths · Comparatively short summer season. · A remote and exotic geographic location · Relatively low paying jobs relative to “on top of the world;” Arctic Circle; Arctic the non-renewable resource sectors. Ocean and the Northwest Passage. · Insuffi cient support or tourism · Aurora Borealis, dark winters, and 24 hospitality training. continuous summer daylight. · Limited product off erings. · A strong and vibrant Aboriginal culture. · Lack of distinct brand image as a destination. · Abundant wilderness with unique Opportunities and rare fl ora and fauna, ancient · Soft and hard adventure travel. rocks, karst topography, hot springs, · Recreation Vehicle market. sinkholes, fossils and canyons. · Aboriginal cultural tourism. · Abundant fresh water; scenic lakes · European and Australian tourist markets. and beautiful waterfalls. · “Close to home” markets. · A colourful history encompassing ancient aboriginal and historic sites. · Rapidly expanding Chinese travel. · Growing secondary diamond industry. Threats · Relatively modern guest facilities, as well as · More populouse regions have access to adequate communications and transportation signfi cantly greater marketing resources. systems, at least in the major centres. · Competition from other jurisdictions Weaknesses for the Japanese Aurora market. · It is expensive for tourists to travel and tour. · Aging North American population will shrink the adventure tourism market. · Limited knowledge of the NWT and its off erings. · Continued recession in the US and threat of collapse in the Eurozone. · Long distance from major centres/ market and poor roads.
54 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 55 TRANSPORTATION As defi ned by Industry The industry is a major employer, accounting The industry has met this challenge through a Canada, the transportation for up to 10 per cent of all employment in the combination of investment and innovation. and warehousing industry NWT. involves all transportation Many businesses within the industry are of goods and people, by all The transportation and warehousing industry structured as networks, with operations, sales modes of transportation has played, and continues to play, a crucial role and workers distributed over an extensive (road, rail, water, air and in the development of the NWT. Supplying geographic area. remote communities, moving workers and pipeline). The industry also The industry’s Gross Domestic Product (GDP), includes warehousing and materials to job sites and getting products to increased 80 per cent between December 1999 storage as well as Canada market all require transportation. and December 2005. Since 2005, industry has Post and courier businesses. shown little growth.
Transportation GDP Since 1999 (Millions of Chained 2002 Dollars)
300
250 244 235 230 233 221 220 211 203 200
171
151 154 150 133 135
100
50
0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: NWT Bureau of Statistics
56 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES NWT Transportion Industry Investment
Investment transportation and warehousing sector has Businesses invest in order to expand or maintain reduced investment in the NWT by $87 million. sales. Investment is a measure of potential, as That is a decrease of 58 per cent in the last fi ve well as businesses’ perceptions of the future. If years. businesses see growth potential, they will invest In 2011, planned investment in the transport in new equipment or physical expansion. and warehouse businesses was $64 million. Investment in transportation has been Investment in the industry has been declining decreasing since 2007, a period which coincides as a percentage of the NWT total, down to 5 per with reduced sales. Since 2007, the cent from 8 per cent in 2007.
Transportation & Warehousing - Capital and Repair Expenditures (In Millions of Dollars)
140
120
100
80
60
40
20
0 2008 2009 2010 2011 2012 2011 Data is suppressed for confi dentiality purposes
Source: NWT Bureau of Statistics
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 57 Contributions of Transportation’s Sub-sectors
The chart breaks down industry activity into The second largest group is trucking, accounting fi ve groups. Statistics Canada combines air, rail, for 21 per cent of the NWT industry. marine and “scenic” businesses into one group, Pipelines currently represent 6 per cent, but which represents 60 per cent of the industry. their share has been declining. Warehousing and other businesses account for the remaining 10 per cent.
Transportation Industry GDP Distribution by Segment (2010)
Postal/Couriers 3% Warehousing& Other 10% TruckTransport 21%
Pipeline 6%
Air,Rail,Marine, Scenic 60%
Source: ITI Estimate
Dan Westman
58 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES Transport Employment and Outlook Industry Outlook Future growth will be impacted by resource expected to remain near current levels over the development, population and investment next few years. trends. As such, industry employment is Monthly Transport and Warehouse Industry Employment
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: NWT Bureau of Statistics
The industry is one of the NWT’s largest however, industry employment has declined by employers, directly accounting for over 10 per more than 400 jobs. cent of employment. The industry showed Industry employment tends to be seasonal, considerable growth over 2000-2003, which peaking during June, July and August. coincided with the development of Diavik Employment is lowest over winter months, with Diamond Mines. Employment continued to the exception of February, a peak month for increase at a steady pace until 2008. Since 2008, mine and community re-supply.
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 59 Transportation and Communication - SWOT Analysis Strengths Opportunities · Industry experience in cold weather and ice · Increased demand for services from non- road construction is an exportable service. renewable resource development. · Hay River is one of the largest · North American tourism demand inland marine ports in Canada. linked to improved roads. · Mackenzie River barge service can supply bulk · Expanded European markets through goods to Alaska and into the central Arctic. direct fl ights from Europe (requiring Weaknesses expansion of the Yellowknife airport). · Poor data on air passenger and freight fl ows. · E-commerce off ers an opportunity for small · Rail system needs upgrading. Northern businesses to sell product to a much larger market beyond the NWT. · Expensive to build and maintain roads - relative poor quality of some roads. · Large levels of resource investment and a wealthy resource base. · Less than 25 per cent of the NWT landmass is within 100km of an all weather road. · High incomes and demand for goods and services - most of which · Half of our communities comprising have to be transported North. about 16 per cent of the population either have limited seasonal access by Threats winter road or no road access at all. · Rising energy and fuel prices. · The movement of freight/cargo in the · Some provinces and states looking NWT is largely unidirectional; northbound at using natural gas for transport full, southband empty. This negatively fuel - no supply in the NWT. impacts the cost of doing business. · Increased demand on infrastructure from · Internet connectivity is poor in many non-renewable resource development. communities, and broadband access is · Climate change and global warming. not widely available across the NWT. · Only 8 communities in the NWT have aff ordable, public Internet access.
60 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 61 WHOLESALE TRADE Wholesale businesses provide Wholesale businesses provide goods to other Since 2004 sales have increased by $167 million, goods to other businesses businesses and government. Demand and or 38 per cent; one of Canada’s fastest growth and government. Demand sales are dependent on various factors. For rates. Wholesale trade in the NWT is four times and sales are dependent example, an industrial supply company’s sales that of the Yukon, refl ecting the NWT’s larger on various factors. For might be tied to mineral exploration, sales of a economy and industrial base. example, an industrial supply hotel supply company could be impacted by Industry sales were impacted by the 2009 company’s sales might be a changing tourism industry, and a company tied to mineral exploration, downturn, declining 12 per cent in 2009, a supplying restaurants might be impacted by sales of a hotel supply drop of $78 million. 2010, showed a strong declining consumer spending. company could be impacted recovery, with sales approaching previous 2007 by a changing tourism highs. However, in 2011 annual wholsale sales industry, and a company dropped by $17 million from the previous year. supplying restaurants might be impacted by declining consumer spending. Annual Wholesale Sales (In Thousands of Dollars)
700,000 647,705 629,726 624,241 606,788 600,000 552,099 526,226 515,831 500,000 439,913
400,000
300,000
200,000
100,000
0 2004 2005 2006 2007 2008 2009 2010 2011
Source: NWT Bureau of Statistics
62 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES NWT Wholesale Trade Performance Within Canada
There is a close relationship between economic to the other jurisdictions nationally, the NWT growth and wholesale business. The fastest performed in the lower third of the country for growing economies also had the fastest the period. growth in wholesale trade. When compared
Growth of Wholesale Sales 2006-2011
200% 187% 180%
160%
140%
120%
100%
80% 72%
60% 54%
40% 27% 25% 19% 21% 20% 22% 20% 15% 17% 17% 10% 6% 0% CA NFLD PEI NS NB PQ ON MB SK AB BC YT NT NU
Source: NWT Bureau of Statistics
Per capita, the NWT has the fi fth highest wholesale trade within the NWT highlights the wholesale trade in Canada. Per capita sales importance of industry and especially mining, are $13,692 compared to $11,359 in BC and within the economy. $4,088 in the Yukon. The relative importance of
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 63 Per Capita Wholesale Sales 2011 (In Dollars)
25,000
20,873 20,285 20,000 18,521
16,366
15,000 13,503 13,692 12,079 11,359
10,000 8,291 7,681 7,847
5,000 3,916 4,088
1,963
0 CA NFLD PEI NS NB PQ ON MB SK AB BC YT NT NU
Source: Statistics Canada
Wholesale Contribution to the NWT Economy
In 2005, the wholesale industry contributed $73 While the industry represents a small share of million (chained) to the NWT GDP. In 2011, the GDP there is signifi cant room for further growth, contribution to GDP was $68 million. This is up likely linked to resource investment. $4 million, from the 2009 downturn.
64 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES Wholesale Contribution to GDP (Millions of 2002 Chained Dollars)
90 83
80 76 76 73 70 68 66 64
60
50
40
30
20
10
0 2005 2006 2007 2008 2009 2010 2011
Source: NWT Bureau of Statistics
Aidan Cartwright
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 65 Wholesale Employment, Annually
800
700 681 654 641 596 600 586 585 551 506 500 487 489 465
400
300
200
100
0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: Statistics Canada
Industry Outlook Investment represents future capacity as well trend. Future investments will likely depend as business expectations. In the NWT, wholesale on the development of new mining company investment declined signifi cantly properties or progress with the Mackenzie after 2008. However, since 2009 there has Gas Project. Industry growth is expected been a steady increasing to remain linked to mineral production.
66 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES Wholesale Trade Industry Investment (In Millions of Dollars)
14
11.9 12
10
8 7.3
6
4.4 4.5 4
2
0 2008 2009 2010 2011 2012 2011 Data is suppressed for confi dentiality purposes
Source: Statistics Canada
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 67 Wholesale Trade - SWOT Analysis Strengths Opportunities · Access to substantial mineral and · Opportunities will largely develop government sector, plus growing retail. from outside demand for NWT · Tourism market and potential growth. tourism or NWT resources. · Impact benefi t agreements and · Increased interest in NWT as Economic Benefi t Agreements. a meeting market. · Regional resource investments can Threats stimulate signifi cant market demand. · Competition from southern suppliers, · Many establishments have a positive who have lower operating costs. reputation and loyal clientele. · Reduced interest in NWT resources Weaknesses resulting in reduced industrial · Limited population growth - impacts development and investment. market size or client companies and availability of staff . · Small and seasonal markets in many communities - eg: tourism. · Expensive supplies . · Limited local produce or products. · High operating costs and utilities. · Land tenure in some communities. · Limited online presence. · Not diversifi ed. · Lack of support services - accounting, trades etc. · Aging infrastructure.
68 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 69 NON-RENEWABLE RESOURCES The NWT has an extremely Oil and Gas rich resource base and non- renewable resources continue Oil is produced in Norman Wells, one of Canada’s actively undergoing exploration — the Imperial to be the focus of economic richest oil fi elds. Natural gas is largely extracted Oil Resource Venture Limited’s Ajurak project activity. The fi gure on the from various fi elds in the southern NWT as well and the British Petroleum Exploration Company next page highlights existing as at the Ikhil project near Inuvik, and at Norman Limited’s Pokak project. The companies are and likely resource projects in Wells. Volumes of oil and natural gas production undertaking seismic surveys, gravity surveys and the NWT, Nunavut and along are continuing to decline. However, record oil fi eld data collection programs. the Yukon/NWT border. prices have off set the decline in oil production. During the 2010/11 call for bids process, 11 New opportunities are being explored. Currently parcels were granted against the exploration there are three projects proposed for exploration expenditure bids of $534 million in the Sahtu in the off shore of the NWT. Two projects are region of the NWT. The winning bidders intend to explore the “tight oil” potential of the region by undertaking seismic and drilling activities.
The proposed Mackenzie Gas Project (MGP) will begin in the Mackenzie Delta and end in northwestern Alberta. It will initially transport 0.8 to 1.2 billion cubic feet per day (bcf/day) of natural gas, enough to heat half of NWT homes for a whole year. The gathering system will be expandable to 1.9 bcf/day. A natural gas liquids pipeline will be built in the same right-of-way between Inuvik and Norman Wells.
Natural gas liquids will be separated in Inuvik and shipped down this line to join the existing Enbridge pipeline. The project proponents now estimate that the MGP will cost a total of $16.2 billion: $7.8 billion for the pipeline, $4.9 billion for the development of the anchor fi elds, and $3.5 billion for the gas-gathering system.
70 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 71 150û 145û 140û 135û 130û 125û 120û 115û 110û 105û 100û 95û 90û 85û 80û
Map - NWT Mineral Deposits
Mineral Legend
Base Metal 75û7 Diamonds 75û Gold Ni - Cu - PGM Uranium Natural Gas Wells Shale Oil Oil Wells Highway Seasonal Winter Road Oil/Gas Pipeline
Niglintgak, Taglu Operating Property Exploration Property 70û Hydromet
Ikhil/Gas , Parsons Inuvik
8 Hope Bay Belt
High Lake Colville Gas 5
Nunavut 65û 65û Jericho Hackett River Norman Wells Oil Izok Lake Back River Norman Wells Lupin MIne Ekati/Diamonds Diavik/Diamonds Courageous Lake Gold
Mactung/Tungsten Snap Lake/Diamonds Gahcho Kue/Diamonds Yukon Territory NICO Project Northwest Territories Selwyn Project Yellowknife Gold
Behchokö 4 Yellowknife Cantung/Tungsten Fort Simpson Avalon Rare Metals 3 Prairie Creek/Zinc Lead Silver 60û 1 60û Hay River 1 7 Liard Gas Pine Point/Zinc Lead 1 Saskatchewan 37 Cameron Hills/Gas British 5 Pointed Mountain/Gas Gas Fort Smith Liard Columbia 97 Cordova Horn Basin Embayment River Alberta
130û 125û Basin 120û 115û 110û 105û BC Shale Gas Basins NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES 72 Source: ITI Map – North America Sedimentary Basins
Source: ITI - IEA Map
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 73 Value of Oil and Gas Shipments from the NWT (In Thousands of Dollars)
800,000 CrudeOil
700,000 NaturalGas 621,728
600,000 460,521 501,036 337,619 360,979 491,981 395,926 500,000 387,358 350,583 454,532
378,808 396,244 400,000
300,000 230,925
200,000
100,000 207,278 154,058 121,897 96,253 120,668 120,010 62,124 51,464 50,068 0 11,690 26,243 22,601 19,697 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: NWT Bureau of Statistics
Corbis
74 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES Mackenzie Gas Project (Summary) The Resource Project Components · The three anchor fi elds that will initially · A 1,220-km, 30-inch natural gas pipeline supply the pipeline were discovered in from Inuvik to northwestern Alberta. the early 1970s. These three gas fi elds · A 480-km, 10-inch natural gas liquids collectively contain an estimated 5.8 pipeline from Inuvik to Norman Wells. trillion cubic feet (TCF) of recoverable · Three natural gas fi eld production facilities. natural gas and will have a production · A gathering pipeline system. life-span of 25 to 30 years. · A gas processing facility near Inuvik. Natural Gas Liquids Projects Proponent · Natural gas liquids (NGLs) are present · Imperial Oil Resource Ventures Limited in unprocessed natural gas, and may contain ethane, propane, butane, · ConocoPhillips (Canada) North Limited isobutane, and gasoline, which are · ExxonMobil sometimes referred to as condensate. · Shell Canada Limited · These NGLs are removed and sold · Aboriginal Pipeline Group separately, leaving almost pure methane to be sold as natural gas.
Mining
The NWT mining industry is dominated by Diamond Mines diamond mining, with three operating mines, Since 2009, diamond exports jumped from $1.4 and one under development (Gahcho Kué). billion to over $2 billion in 2011; an increase Together, the three operating mines account of nearly $600 million or 40 per cent. In 2011, for more than one-quarter of total GDP. Other oil shipments were worth $396 million, while possible mines before 2020 include Prairie natural gas production declined to $20 million. Creek, Nico, Yellowknife Gold and Nechalacho. Diamond production dropped in reaction to the Taken together, these fi ve projects could add fall in demand that accompanied the 2008–09 over 1,700 new jobs to the economy by 2017, recession, but demand and prices have since off setting declines from the planned closure of recovered and are at pre-recession levels. Ekati scheduled for 2019. The Gahcho Kué project is in the permitting
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 75 phase and is the subject of an environmental contains proven and probable mineral reserves review which is expected to be completed in of 21.8 million tonnes containing 760,000 six months. Subject to successful permitting, ounces of gold, 61 million pounds of cobalt, and construction of the fi rst mine at Gahcho Kué is 77 million pounds of bismuth. expected to commence in 2013 and production NICO is currently under review by the Mackenzie is expected to commence in 2015. Gahcho Kué Valley Environmental Impact Review Board. will produce an average of 4.5 million carats per Initial production at Avalon Rare Metals year for the fi rst eleven years of the mine life. Nechalacho project has been delayed until late Other Mineral Properties 2016. Interest has also been shown in the Kennady On June 27, 2012, Canadian Zinc reported North diamond project near Gahcho Kué. positive results from the preliminary feasibility A number of promising gold projects are under study for the Prairie Creek zinc-lead-silver mine. development. Fortune Minerals NICO project
Value of Mineral Shipments from the NWT (In Thousands of Dollars)
3,000,000 Diamonds 2,056,656 2,096,718 2,069,630 Other 2,029,468 2,500,000 1,762,053 1,764,893
1,587,740 1,567,019
2,000,000 1,447,940
1,500,000 791,821 717,780 624,949
1,000,000 606,254
500,000 553,604 634,314 540,405 533,577 738,610 492,463 605,646 594,020 608,849 609,454 490,361 289,729 463,680 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: NWT Bureau of Statistics
76 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES Non-Renewable Resources - SWOT Analysis (MOG) Strengths Opportunities · Rich resource base · High prices for diamonds and oil; gold · History of development and strong business still are historic highs as well support services (trucking, air, etc) · Low interest costs reduce capital · Minerals database costs and improve ROI · Geoscience Centre (expertise) · Growing Chinese, Korean and Asia demand · Oil pipeline and right of way · Low natural gas prices has created · Commodity mix, diamonds, oil, renewed interest in LNG technology, gold, rare earth elements, etc. which could reduce NWT costs. Weaknesses Threats · Infrastructure · Volatile markets · Shortage of skilled labour · Competition from other regions · Distance from markets · Product substitution - eg: reduced demand for rare earth batteries · High operating costs · Complicated regulatory process · Ambiguity regarding “duty to consult”
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 77 ENERGY The abundant energy The abundant energy resources of the NWT are energy development in the NWT. Such resources of the NWT are largely untapped and provide the territory with as Governments, the private sector and largely untapped and provide a strategic resource to support future economic households continue to explore alternative the territory with a strategic development. energy options such as wood pellet technology. resource to support future This heating method is an alternative to diesel On the renewable energy side, with over economic development. and can reduce heating costs. The combined 11,000 megawatts of hydroelectric potential, annual consumption of pellets in the NWT is our northern rivers could be a source of in the range of 12,000 tonnes per year. While clean, sustainable energy. In addition, there biomass use is expected to grow rapidly, other is also potential for the development of technologies are beginning to be explored, other renewable energy sources, including such as geothermal power, wind power and wind, biomass, solar and geothermal energy. solar power. Displacing imported diesel is a key long-term objective in the NWT. The GNWT worked with the Northwest Territories Power Corporation to launch the The high economic and environmental price 60 kilowatt solar photo-voltaic installation at of fossil fuels points to the need to invest Fort Simpson and its eff ects on energy use are in hydroelectric capacity and renewable currently being monitored.
Solar Array at Fort Simpson - ITI
78 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES In the NWT there are three main sources used NTPC is a GNWT Crown Corporation. It services to generate electricity: natural gas, diesel fuel 27 communities through the operation of 20 and hydro. Hydroelectric generation is used in isolated diesel plants, a natural-gas-fi red plant, eight communities in the Great Slave Lake area, and 6 hydro plants. while natural gas-fi red power plants provide NUL consists of two companies. Northland electricity to the communities of Inuvik and Utilities (Yellowknife) Ltd. distributes Norman Wells. The remaining 23 communities hydroelectric power in Yellowknife and have electricity provided by diesel-fi red power Northland Utilities (NWT) Ltd. distributes plants. hydroelectric power in Hay River. Northland There are three suppliers of electricity in the Utilities (NWT) Ltd. also generates and Northwest Territories: NWT Power Corporation distributes diesel-electric power in four isolated (NTPC), Northland Utilities NWT (NUL), and communities. Imperial Oil Ltd (IOL). In addition, the mining IOL sells natural gas-fi red electricity to NTPC for industry generates its own electricity at remote distribution in Norman Wells. sites using diesel as a fuel source. Community and NWT electricity generation by source is shown in the fi gures below.
2011 Community Electricity Generation (Total Consumption 328,939 MWh)
Natural Gas, 7%
Diesel, 15%
Hydro, 78%
Source: NWT Bureau of Statistics
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 79 2011 NWT Electricity Generation Including Industrial Consumers (Total Consumption 647,282 MWh)
Natural Gas, 11%
Hydro, 40%
Diesel, 50%
Source: NWT Bureau of Statistics
GDP Contribution by Utility Companies (Millions of 2002 Chained Dollars)
70
62 59 59 61 60 59 55
49 54 50 50 43 42 43 40 40
30
20
10
0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: NWT Bureau of Statistics
80 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES In 2011, utility companies contributed just The chart below highlights utility electrical over $60 million to the total GDP of the NWT. generation for the years 2008 through 2011. As shown in the chart on the previous page, As shown, electricity generation is cylical with growth has been positive over the past fi ve generation peaking during the winter months years. and dropping in the spring and summer months.
Utility Electrical Generation in the NWT (MWh Utility Generation)
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0 2008 2009 2010 2011
Source: NWT Bureau of Statistics
INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 81 Overall utility generation, as shown in the this process, seven electricity rate zones were fi gure on the bottom of the previous page, in established, as shown in the fi gure below. The the NWT has been relatively fl at, aside from revised electricity rates came into eff ect on seasonal variations. With utility customers, December 1, 2010. As a result, the price of winter consumption is signifi cantly higher than electricity in some smaller communities was summer. reduced.
In 2010, the GNWT completed a two year process to review electricity regulations, rates and subsidy programs in the NWT. Through
Electricity Service Provider by Community and Electricity Source
SERVICE COMMUNITY SOURCE PROVIDER Dettah, Fort Resolution, Fort Smith, Behchokö (Generation NTPC and Distribution) Hydro (8 communities) Hay River, Hay River Dene Reserve, Enterprise, Yellowknife NUL (Distribution) Aklavik, Colville Lake, Deline, Fort Good Hope, Fort Liard, Fort McPherson, Fort Simpson, Jean Marie River, Lútselk’é, NTPC Nahanni Butte, Paulatuk, Gameti, Sachs Harbour, Tsiigehtchic, Tuktoyaktuk, Tulita, Ulukhaktok, Whati, Wrigley Diesel (23 (Generation and Distribution) communities) Kakisa, Fort Providence, Trout Lake, Wekweètì NUL (Generation and Distribution) Natural Gas (2 NTPC Inuvik, Norman Wells communities)
Source: Energy Planning Division, ITI
82 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 83 Diavik Wind Farm
By the winter of 2012, the Diavik Diamond Mine new ground for similar installations in remote is planning to have the fi rst large-scale wind communities. farm in Canada’s Northwest Territories. The mine Once operational the wind farm is expected to is one of the world’s major diamond producers. generate 9 per cent of the mine site’s electricity. It is located off the hydro grid, in a remote This will translate into a saving of four million location, close to the treeline and the border litres in diesel fuel per year (projected). This with Nunavut. reduction in diesel will reduce carbon emissions The wind farm will employ four 2.3 megawatt by 12,000 tonnes per year. wind turbines (total installed capacity 9.2 MW). Estimated project economics are very robust, These turbines have an innovative, gearbox free, including a positive Net Present Value Payback direct drive, low temperature design. This will period of less than eight years. be the fi rst large scale wind-diesel installation at a remote ‘off the grid’ mine site. It will also break Source: www.diavik.ca
Wind Farm - Environment Canada
Energy - SWOT Analysis (Energy Planning)
Strengths · High labour costs · Vast Potential - largely known locations · Limited transportation network · Mining and oil/gas growth - potential · Limited scientifi c research population growth and increased demand. · Limited technology · Quantity of biomass · Limited access to timber · Number of abandoned gas wells Opportunities and low natural gas prices · Potential export sale (southern · Number of know, and signifi cant, Canada and US) natural gas deposits Threats Weaknesses · Low natural gas prices could · Limited Grid reduce export markets · High diesel operating costs · Exports also impacted by · High operating costs economic conditions · Relatively small, scattered market
84 NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY | INDUSTRY PROFILES INDUSTRY PROFILES | NORTHWEST TERRITORIES OPPORTUNITIES STRATEGY 85