There's no taming the western tiger.
Economic expansion in the Calgary-Edmonton corridor is projected to continue over the next few years after easily surpassing expectations first published in a TD Economics topic paper published in early 2003.
"This (the corridor) is most possibly the best place to live," says Robert MacLellan, executive vice-president and chief investment officer for the TD Bank Financial Group.
MacLellan was in Edmonton recently to provide the city's chamber of commerce with the update on the original corridor paper. "The outlook ... is very positive," he added.
This means that those living in the area bounded by the Greater Edmonton Region in the north and Greater Calgary in the south, including areas directly in between such as Red Deer and Wetaskiwin, are part of a Canadian urban centre able to amass a U.S.-level of wealth while maintaining a Canadian-style quality of life.
In a recent update to the first paper, TD Economics notes that nominal GDP (gross domestic product) per capita - a measure of the standard of living - in the Calgary-Edmonton corridor in 2003 came in at $44,000 US, "a whopping $4,000 US increase compared to the 2000 figure we featured in our earlier report and a gigantic $14,000 US or 47 per cent above the Canadian average."
GDP per capita is $7,000 higher in the corridor than the U.S. average, the report adds.
TD Economics also says real GDP growth in the corridor will come in at 4.2 per cent this year and four per cent in 2006, compared to four per cent and 3.8 per cent, respectively, for Alberta and 2.9 per cent and three per cent, respectively, for Canada.
Edmonton's service sector and labour market will also rebound strongly next year and the rest of the corridor will benefit from the reopening of the U.S. border to Canadian cattle shipments, the report adds.
Growth in Calgary's commercial services industries is predicted to be stronger than in the recent past.
Further, no meltdown in world oil prices is foreseen with crude oil prices likely to remain above $50 US per barrel for the next five years while natural gas is predicted to hold at levels above $8 US per MMBtu (million British thermal units) through 2010.
But even with all the rosy news, not everyone is sharing in the Alberta Advantage.
"Its good times, there's no denying it," says Todd Hirsch, chief economist for the Calgary-based Canada West Foundation. "You have to look pretty hard to find dark spots on the economy right now. The biggest issues right now in Alberta are not economic, they're social problems."
It's not because of lack of opportunity, adds Hirsch. "There are 'help wanted' signs anywhere you want to go. Where not all the boats are being raised by the tide are with people who are not able to work."
While the new TD report notes that the corridor's GDP per capita, on a worldwide basis, was second only to Luxembourg's in 2003, the gap between rich and poor is widening, especially in Calgary.
According to the new paper, 42 per cent of Calgary's residents are now in the low income category - with an annual income of less than $20,000 - and that number has risen five percentage points in the last two years.
The city of Calgary also continues to have higher shares of earners at both ends of the income spectrum than other Canadian urban centres.
Hirsch says the focus must turn to helping the homeless and others who are down and out to integrate back into society.
However, he adds that the TD report also validates the good news - the strength of the region to those who are able to benefit from the economy.
"Because it's TD Economics, it gets a national audience. Bay Street pays attention to what TD Economics says," Hirsch says. "They're important because they underscore - it's an outsider's view looking in - what we already know here: We're at full employment and you can't get any better. It emphasizes the growth that's going on here."
Myron Borys, vice-president of Economic Development for Edmonton Economic Development Corp., who was in attendance for MacLellan's speech at the Edmonton chamber function, says the message is important.
"For those people who don't know anything about the Edmonton-Calgary region, or the province, this (paper) is a real eye-opener. It puts us ahead of some of the wealthiest countries in the world," says Borys. "What's happened since the TD study was done, the original one, there's been an ongoing increased awareness worldwide of the importance of this region, mostly because of our proximity to the oilsands."
As for some cautionary notes in the paper, including the need to further diversify the economy - there is a stronger reliance on oil and gas than there was before, it says - labour shortages, infrastructure gaps and educational concerns, Borys says progress is already being made.
"The challenge we have is how do you ride the wave of the current economic success," he notes. "The driver of the Alberta economy for the next 20 years is going to be oil. That's a reality. But how do you diversify around that? It's a balancing act."
Borys notes a number of factors, including work being done in Edmonton to promote industry clusters, support for the city's growing biotech sector, emerging expertise in nanotechnology, funds from Ottawa and Alberta to help solve infrastructure problems, and growth at the Northern Alberta Institute of Technology (NAIT) to allow more people to get into the trades.
But, he says, it is not enough, and more has to be done to diversify the economy - perhaps by taking resources and transforming them into value-added products rather than shipping out the natural resource itself.
"We've got some tremendous potential in this region and we've got to balance it with the right investments to achieve that potential," says Borys.
The TD analysis is especially welcome in Red Deer. "We were pleased to see there was an update to the original story," says Cal Dallas, the executive director of the Red Deer Chamber of Commerce.
"Site selectors and investors are not only looking for current data but the affirmation that the region continues to be healthy and is outpacing the growth that was originally projected ... (it's) all good news for the centre of the corridor."
The oilfield sector has been soaking up much of the available workforce in Red Deer, which has a population of about 80,000 that tops more than 100,000 during daytime hours through commuters who live in areas such as Sylvan Lake, Blackfalds, Lacombe and Innisfail. Local hog processor Olymel has added 500 employees in the last 18 months with plans for more growth, and the Convergys call centre now employs more than 1,000 people, Dallas says.
"What the study did do was bring a level of awareness to the investors and the general public of what's going on in the region," says Dallas.
Bruce Graham, president and CEO of Calgary Economic Development, says the TD studies are another tool in the city's economic toolbox.
"The grouping of the corridor itself and the municipalities within it gave us a critical mass beyond what we would have individually," says Graham.
The studies also tell other parts of Canada and the U.S. what they need to know, and that the area is not just "cowboys and oil rigs," he adds.
While Graham agrees with his counterparts in Edmonton that more needs to be done on economic diversification, he says it's not as if Calgary has put its eggs into one basket.
"There definitely has been growth outside the oil and gas sector ... and it is happening despite high energy prices," Graham says, noting the work being done to bolster transportation and logistics, the business and financial services sector, and creative industries.
As for that increasing gap between rich and poor in Calgary, Graham says that has not gone unnoticed.
"It's a stat that has been brought to our attention through other reports," he says. Efforts to address the issue are underway, in part, through Calgary Works, a workforce development initiative where labour attraction, retention and better usage of community resources such as under-employed labourers, is being examined.
(Laura Severs can be reached at laura@businessedge.ca)
