January 8, 2019
As with weather reports, economic information must be balanced to provide a realistic forecast
By Alex Fallon, SREDA President & CEO
I read with interest the article Businesses forced to ‘either adapt or get out’: Companies try to weather storm of rough economic times in Sask. (StarPhoenix, Jan. 7, 2019). The headline has since been somewhat softened online to Sask. businesses making changes as ‘turbulent times’ expected to continue.
Regardless of headline, the article contained some economic success stories buried under an overly dark economic cloud.
Lloydminster-based S.O.R.E Oilfield Services Inc., should be applauded for growing the company to 135 staff, up from a dozen in mid-2015. I’d presume they are happy they didn’t ‘get out’ of the Saskatchewan economy when the storm clouds were dark(er). JNE Welding Limited Partnership also plans to hire 20 new employees as it expands locally. Both of these are good Saskatchewan success stories that might warrant a different, brighter headline.
Granted, there is trade uncertainty – but can you remember a time when there hasn’t been trade uncertainty? Isn’t uncertainty the foundation of trade opportunities – buyers and sellers taking advantage of the ups and downs of international markets?
What is more, just a few weeks ago RBC reported that exports are “surging” and “the Canadian economy is on firm ground despite trade uncertainty”, they followed that on December 12 by saying there is “more room to grow for all provincial economies in 2019” (see RBC Economic Outlook December 12, 2018).
Surely that isn’t already “last year’s” news? Only a few months ago, Saskatchewan manufacturing shipments rose to a historic $1.6 billion, and the Bank of Canada’s latest Business Outlook Survey pointed to increased confidence in investment intentions.
In the SP story, similar dark clouds were said to be gathering over provincial growth forecasts. Yes, perhaps RBC ‘slashed’ (or ‘decreased, or ‘adjusted’) their growth forecast from 2.8 to 1.6 per cent, but many would argue the original 2.8 per cent was overly optimistic. RBC’s updated forecast compares to BMO’s 1.4 per cent and TD Bank’s 1.8 per cent. An average growth forecast of 1.6 per cent may be a consensus for modest growth, but it’s growth nevertheless. And it’s certainly an improvement on the once expected 1.3% growth in 2018. You see the problem with forecasts, they are just that.
Given the modest growth forecast and the significant wealth of resources in Saskatchewan (and I don’t mean just commodities – how do you measure grit and entrepreneurial spirit?), I am glad these companies aren’t ‘getting out.’ Even though the boom is gone — we know booms aren’t meant to last, right? — we’re still going strong in Saskatchewan. At least, we’re anticipating moderate growth, and considering commodity prices are lower than at peak times, that’s a decent forecast.
Indeed, our resource economy is perhaps more diversified than ever. POW City (potash, oil, wheat) is also now a STIC City – thrumming with science, technology, innovation and collaboration.
Of course, we don’t need rose-tinted economic glasses, either (I can’t find those anywhere.) And there are certainly challenges (and opportunities) confronting our key sectors and commodity prices. But like weather fronts, these economic conditions don’t last forever. Supply and demand conditions are never static. The economy is always changing, and so must businesses.
As my economics professor used to say, statistics and quotes can paint any economic picture you want, and if your business thinks it’s bright or gloomy, either way you’re probably right. Rather, confidence and business acumen are the best economic success indicators a company can leverage when trying to determine its future.
These aren’t necessarily turbulent economic times, they’re just economic times. Cloudy? Perhaps. Stormy? I don’t think so.
I know the (economic) sun will always rise in Saskatchewan, and those that come, and those that stay, will continue to shine.
Alex Fallon is the President & CEO of the Saskatoon Regional Economic Development Authority (SREDA). He holds a Bachelor of Business & Economics (Hons) and a Bachelor of Laws (Hons), and has worked in the private and public sector in Europe (London), Asia (Tokyo) and Canada (BC & SK) for organizations including Rolls-Royce Plc, The Department of Trade & Industry (UK), Cameco Corporation, The Government of Canada, and The Government of Saskatchewan.