Imperial Oil’s decision to relocate its head office from Toronto to Calgary is the latest sign of energy-rich Alberta’s expanding corporate and economic power base.
Canada’s largest energy company plans to move 500 of its top managers and strategists westward to be closer to future growth opportunities and achieve better “organizational effectiveness.”
But it is also part of a larger trend in Canada’s business sector – following the lead of Canadian Pacific Railway and others over the past several decades – to shift their headquarters from the industrial heartlands of Ontario and Quebec to the Alberta Prairies.
“Wherever you go, you hear a buzz – a buzz of activity,” Premier Ralph Klein said following a sold-out luncheon in Edmonton last week.
“It’s no wonder that we rank No. 1 in Canada in economic growth, job creation, lowest overall taxes, highest in disposable income, salaries, population growth, education funding, health-care funding, low business costs and workforce productivity.
“Those are some of the reasons why Alberta is a leader in Canada and why companies like Imperial Oil have decided to locate here.”
Calgary Mayor Dave Bronconnier said his office has fielded inquiries from other companies – not just from Canada but from farther afield in Europe and Southeast Asia – sussing out similar relocations.
“I think people are looking at Alberta generally across the landscape and seeing that its economy is doing well. It’s now the only province in the country that is debt free,” said Bronconnier.
“Yes, we have some infrastructure challenges, but we’re working on that.”
Crowded freeways and looming water shortages are all part of the growing pains that Calgary is forced to deal with after expanding by nearly 200,000 residents in the past decade alone.
Record-setting prices for oil and natural gas have also continued to be a boon to Alberta.
Awash in billions of dollars worth of royalty and tax payments from the energy sector, the province is able to maintain lower levels of corporate tax and income tax, and still eradicate its net debt.
“Well before oil was cresting at $50 US (per barrel), there was clear evidence of a shift of corporate headquarters to Alberta and Calgary in particular,” said Mike Percy, dean of the University of Alberta business school in Edmonton.
“And I think you’re going to see that trend continue for virtually every energy company who wants to cluster where the action is in Alberta,” he said.
Percy said the current boom is “much more sustainable” than previous high oil-price cycles in the late 1970s and early 1980s before heading into a decade-long economic downturn.
“Now I think the economy is more diversified, the province has a tremendous fiscal base, so what I think we’re going to continue to see is a shift of economic decision-making to Alberta.”
One of the landmarks of the diversification of Alberta’s economy beyond its energy and agriculture roots was the 1996 decision by Canadian Pacific Railway to consolidate five head offices spread out across North America in Calgary.
The scope of CPR’s move was nearly three times the size of the impending Imperial relocation, affecting about 1,400 employees and their families.
“Calgary was chosen because at the time it was the crossroads for about 80 per cent of our business,” said spokesman Len Cocolicchio.
“It was an easier sell for employees, considering the advantages that they’d have coming to Alberta in terms of finding affordable housing, coming into a province that has a low income-tax rate, where there are very good prospects for growth,” he said.
