Labour-starved companies in Alberta are looking east to Ontario for both the skills and the infrastructure to help keep their businesses thriving.

And while outsourcing work to other provinces or even countries isn't new, Alberta's red-hot economy is forcing more businesses to consider manufacturing opportunities in Ontario and Quebec.

"When an area has a labour shortage it looks to where it can get the product from at the cheapest price," says Bernie Wolf, director of the international MBA program at the Schulich School of Business at York University in Toronto.

"At the moment it's difficult to find labour anywhere in much of Alberta. It is difficult to recruit people (from another province) and the only way you probably can is by offering more and more money. But you don't want to start getting your whole wage picture so far out of line."

Paul Giannelia

Many times companies outsource to countries such as China and the United States, but Ontario and Quebec are hubs for manufacturing in Canada.

"You may not have the skilled labour available at a price you're willing to pay. You may not have the room in your plant and you may not want to build an extension onto it or whatever the case may be," adds Wolf.

Calgary-based Resin Systems is a case in point. The company is outsourcing the manufacturing of its RStandard utility poles to Global Composite Manufacturing (GCM) of Tilbury.

The outsourcing contract is for a minimum of two years and will be used by Resin to fulfil a contract worth more than $50 million to develop the poles for HD Supply, the wholesale distribution division of Home Depot.

"The automotive belt from Windsor to Michigan is well known and probably has the biggest pool of skillsets in manufacturing," says Paul Giannelia, president and CEO of Resin Systems.

Giannelia was project director for the $1-billion Confederation Bridge that links New Brunswick and Prince Edward Island.

"As our pole technology was going through its development stages, we needed to start manufacturing it under full production and that part of North America is just a logical place."

Resin Systems employs more than 60 people who develop advanced composite products for large-scale industrial markets utilizing the company's Version polyurethane resin system.

"The design of the poles is modular, so it allows you to have a lot of flexibility and to satisfy each of the unique needs for a utility pole," he says. "Composites are significantly lighter than steel, wood or concrete so there's lower transportation and installation costs."

He says it's hard to attach an actual value to the poles because the prices vary depending on size and strength.

But he says the cost of the composite poles is competitive with the traditional makes.

Resin Systems will be sending its custom-designed equipment to GCM to produce the utility poles.

Giannelia says some improvements to the equipment were needed first.

"In Alberta everybody's quite busy. The machine shops are busy and there's plenty of machine shops in southwestern Ontario. So that was another reason for moving it there," he says.

John Millson is vice-chair of GCM, which is a subsidiary of Tilbury-based Global Vehicle Systems.

He says GCM was created specifically for this outsourcing deal, with production expected to begin on June 1.

"I'm president of a company called Oil Sands Development, so I live two weeks in Alberta and two weeks in Ontario. I go back and forth looking for ways we can work with companies in both provinces," he says.

"In Tilbury, they're into automation, robotics and painting. They deal with resins and with automotive parts right now, so this is just an extension of the technology they're already familiar with and able to do."

According to Millson, this venture will create about 120 jobs to start with the potential to grow to almost 400.

"We're in the middle of the hiring process right now. We have general labourers right up to plant manager," he says. "We're creating jobs and at the moment southwestern Ontario and Windsor in particular has the highest unemployment rate in Canada.

"These are good-paying, permanent jobs."

According to Statistics Canada, the national unemployment rate in January 2007 was 6.2 per cent.

In Ontario, it was 6.4 per cent and in Alberta, 3.3 per cent.

For Windsor specifically, which is about 35 minutes west of Tilbury on Highway 401, the number jumps to 10.3 per cent.

Millson says the deal between GCM and Resin spawned from Ontario's unemployment rate and Alberta's labour shortage.

"(Alberta Economic Development's) Justin Reimer has done three tours of Ontario asking manufacturers for help. (Ontario Minister of Economic Development and Trade) Sandra Pupatello in November took a trade mission (in Alberta), saying 'Here we are, we can help,' " says Millson. "This is a fruition of that activity."

York University's Wolf says outsourcing is a networking activity taking place globally. Canada in particular is the recipient of many outsourcing contracts, especially from the United States. He says the fact that outsourcing is happening internally in this country makes the process that much simpler.

"If you can get somebody else to (make your products) better than you can, then you should," says Wolf. "But then there's the question of trust and those types of things. And you know, is the delivery going to be on time?" Giannelia says it has always been planned for Resin Systems to get into outsourcing its work and that activity will continue in the future. But he says current Resin jobs in Alberta will remain safe.

"In Alberta our product development group and everything is still intact and will be working on new products," he says.

Besides utility poles, Resin Systems also develops composite pipes for industrial conveyor systems.

Millson says Alberta's labour shortage has opened the door for Ontario companies to take in outsourcing work and that will most likely continue.

"Not only outsourcing, but joint ventures with existing Alberta companies," he says. "I personally have a number of things ongoing and I'm back and forth between both provinces."

(Dave Richie can be reached at richie@businessedge.ca)