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Mega ProjecKeeping the island ts of Newfoundland afloat 72 | Atlantic Business Magazine | September/October 2012 SPECIAL REPORT Newfoundland and Labrador On November 3rd, 2008, Newfoundland and Labrador became a “have” province for the first time since it joined Canada. Then-premier Danny Williams released the news during a press conference, saying that figures released by the federal finance department showed, for the first time, the province would not be receiving equalization payments from Ottawa. Long considered the “poor cousin of Confederation,” Newfoundland and Labrador was finally self-sustaining, operating on its own resources and on its own monies – mainly due to oil revenues, corporate income taxes, commodity prices and retail sales. The news was huge. The province had finally fulfilled a prophecy made by former Progressive Conservative premier Brian Peckford. “I am more convinced than I have been any time in the past that Newfoundlanders and Labradorians speak (with) one voice Keeping the island By Pam Pardy Ghent when we all say one day the sun will shine and have-not will Projec ts be no more,” Peckford said during his victory speech in 1982. of Newfoundland afloat The economy of Canada’s most eastern province shows no signs of reversing that forward momentum. When the Atlantic Provinces Economic Council (APEC) – a non-partisan think tank – recently released its Major Project Inventory 2012, it showed that Newfoundland and Labrador, with 48 per cent of the total major project inventory, is well ahead of the rest of the Atlantic region in terms of major, or “mega” project development. APEC identified 111 projects worth a total of $40.1 billion that are either ongoing or scheduled to take place in the province – an 11 per cent increase over 2011. Mega projects defined community. It is giving rise to the creation of new The term was first applied to very large capital businesses, attracting business and investment, and projects, like the Syncrude oil-sands project in helping businesses avail of supplier development northern Alberta, back in the 1970s. “Mega” opportunities and expand their operations,” he says. essentially means millions, though by today’s The product is there. So is the technology. In standards it’s more likely to refer to billions addition to having access to extensive natural With more than $5.6 billion in housing developments than millions as a single offshore oil production resources, the province has world-class research and $12.3 billion in oil platform may easily carry a price tag in the billions and academic facilities, Hutchings continued. “We and gas related activities, of dollars. That the island of Newfoundland itself are strategically positioned to capitalize on Canada’s easternmost province is awash in mega has many mega projects in the works is a big deal trade corridors to the Arctic, we have a solid project spending. In fact, as a mega project can only thrive in an atmosphere communications network that is being used by according to the Atlantic Provinces Economic of certainty. Ten-year, 20-year or even 50-year Tele Greenland to link into North America’s Council, over $40 billion is commitments involving billions of dollars and communications industry and we are home to an slated for major projects decades of employment can only be undertaken innovative business community whose products are in Newfoundland and Labrador in 2013. if a province’s finances are sound, if demand is finding their way into international markets.” there, if the technology exists and if the political Hutchings says that the collective force of environment is supportive. the ongoing activity has made Newfoundland Keith Hutchings, Minister of Innovation, and Labrador an attractive location for business Business and Rural Development for the province development and a place where young people and says his government is more than supportive more experienced professionals can enjoy vibrant, of the commercial and industrial activity that progressive careers. “It has also significantly is taking place. “This activity (major project increased the provincial government’s ability investment) is creating exciting and rewarding to invest in healthcare, education and key spin-off opportunities for the province’s business infrastructure throughout the province,” he says. Online extras: atlanticbusinessmagazine.com | 73 Approximately $3.6 billion will be spent benefitting from the boom of economic Around the province this year in Long Harbour on construction activity. By leveraging its strategically- Residential development is one of the of Vale’s nickel processing facility. located port and marine infrastructure, province’s growth sectors. Housing starts Maintenance on the Terra Nova offshore Lewisporte has experienced population in the St. John’s region increased during project’s FPSO (Floating, Production, gains, a new hotel has opened, and the the month of July, according to data Storage and Offloading vessel) at the Marine Institute has established its first released by Canada Mortgage and Housing Marystown shipyard is worth $560 million. regional fisheries and marine centre in the Corporation (CMHC). July’s housing starts Increased work on facilities associated with community. For a province famous for its totalled 276 units throughout the St. John’s the $8.3 billion Hebron offshore oil project, out-migration – often of its youngest, best area compared to 258 units in July of last expected to employ over 3,000 workers and brightest – this is great news. year. Year-to-date starts were up 13 per cent during its construction phase, was also “I think that the greatest opportunities to 1,207 units. mentioned in the APEC report. are yet to come and the future is bright for That’s significant considering total But that’s far from a complete list today’s youth. Youth today are progressive, housing starts were down two per cent to of projects and benefits. In Bay Bulls, growth-oriented, and want to leave their 16,876 units compared to 17,230 a year ago Pennecon established a marine terminal mark on their community, province and in other urban centers across Canada. In which serves Hibernia, Terra Nova and industry,” Hutchings says. the Atlantic region, 890 new units were White Rose. Over the next three years started compared to 1,409 during July 2011. the terminal is anticipated to create an Future developments That the province of Newfoundland and additional 23 new jobs. In Clarenville, major The provincial government isn’t afraid Labrador saw the only significant increase retail operations, like building material to put its money to work. “The provincial is, well, significant. supplier Kent, are opening and expanding. government ... (has) established close to Just as significant is the fact that “Automotive dealerships are expanding $200 million in programs and services approximately three-quarters of all new and there is a wave of other commercial that support entrepreneurs from start- single-detached homes sold for more than developments and companies expanding up through product development, and $300,000, though the fastest growing their product lines, all (stemming) from the ultimately national and international segment of the market were homes selling large industrial projects,” said Hutchings. sales. We have also taken an active role for $400,000 or more. Even smaller, more remote communities in developing policies that further create The distribution of wealth is stretching like Lewisporte, far removed from any an environment where communities and well beyond the capital city. significant industry project, are also businesses can maximize the significant strengths that exist in Newfoundland and Labrador,” says Hutchings. In the last session of the House of Assembly, the government passed a resolution to encourage all provinces to explore opportunities for an East-West electricity transmission corridor. “East- West electricity would help to unlock Newfoundland and Labrador’s vast supply of clean renewable power sources such as the Lower Churchill Project beginning with the proposed Muskrat Falls development. Its development would result in greater capital investment and support conditions where businesses can excel.” Hutchings stressed that activity of this nature brings direct, indirect and induced benefits. Direct benefits would encompass engineering and construction activities, while indirect benefits include material, services and equipment purchased by the project and workers involved with fabrication of equipment. Those involved with the services sector would benefit as well, he said. That the province is doing well comes as no surprise to those who have been waiting and watching. Newfoundland and Labrador has recorded cumulative surpluses of approximately $5.5 billion in six of the last seven years, with a corresponding reduction in net debt of $4.1 billion up to March 31, 2012. The projected surplus for 2011-12 was $776.4 million, 74 | Atlantic Business Magazine | September/October 2012 Projects by Industry ($ millions) positive. “Newfoundland and Labrador is in the midst of a period of very strong Industry 2012 2013 investment that will continue for several Oil and gas $3,787 $12,272 more years,” says Brannon. Manufacturing/ other primary $1,340 $3,063 Scope of work Mining $710 $6,396 One example of an ongoing mega Electricity $454 $9,415 project is the Terra Nova FPSO, operated Other public infrastructure $358 $267 by Suncor Energy (with just under 38 per cent share) in partnership with Housing $315