Companies get fat on oilsands gravy
Most observers agree: Alberta’s economy should remain at or near the top of the provincial pack through 2013 and beyond.
That’s a pretty enviable position to be in. So what’s to worry about? Plenty, says Brad Ferguson, CEO of Edmonton Economic Development Corp.
No, he’s not referring to the interminable debt crisis in Europe, the endless haggling south of the border over the so-called fiscal cliff, or the battle to build new oil pipelines. He’s talking about issues that are festering right here at home.
To wit: too many local companies — notably mid-size, family-owned firms with annual revenues of $20 million to $200 million — have grown fat and lazy off Alberta’s oils-ands-fuelled boom, he warns.
Although their order books remain full and they’re generating steady profits, many of them look vulnerable as hungry, new players enter the market, hoping to grab a piece of the action.
“The entrepreneurial spirit has plateaued” in many local firms, says Ferguson, a former public policy and business strategy consultant who took over from Ron Gilbertson as EEDC’s new chief last August.
“They have management teams who would love to grow the business, but the owner isn’t committed to putting more capital in and taking on that next level of risk.”
Instead of chasing higher productivity, new foreign markets or acquisition opportunities outside the province, many aging business owners are ready to put their feet up, he says.
“A lot of firms here are just complacent. They’re great yield-based companies that serve one market — Fort McMurray — or they export to one market, the U.S.
“They (business owners) work hard enough from Monday to Thursday, so they can go to the cottage on Friday. That’s the Alberta dream for a lot of people,” he says.
“But they aren’t necessarily realizing their potential. They should be looking at issues like how do we become more global, how do we start moving into new markets, and how do we keep the ambition of always being a growth company? That mindset doesn’t exist with a lot of our companies. They’re complacent. And eventually complacent companies get swallowed up by new competitors.”
For a guy who heads a cityfunded economic development agency, the blunt-talking Ferguson doesn’t sound like a typical bureaucrat. But he makes no apologies for calling a spade a spade. “Life is too short,” he says simply.
Although labour recruitment and retention has been a priority for EEDC in recent years, Ferguson says the agency’s number one task now is to refocus on economic development — specifically, helping local firms continue to grow and diversify.
“I’ve been asked to focus the organization back onto traditional economic development,” he says.
“That means the develop-
“A lot of firms here are just complacent.”
BRAD FERGUSON
ment of multiple industries and creating a more sustainable, resilient economy that can outperform, whether oil is at $140 or $40.
“That’s the goal I’ve set for myself and our board has set, and that’s why I’m here.”
Although Alberta’s skilled labour shortages are only expected to worsen in coming years, EEDC expects the private sector to lead the charge from now on.
“We’ve got the opportunity to spin that (role) out as a separate entity that will be industry-led, so it allows us to free up our resources to focus on other economic growth issues,” he explains.
“Part of it is that our solution can’t be to just throw more labour at everything.
“That won’t solve the problem.
“We need to focus back on things like productivity, innovation and technology and take a more balanced approach to growth.”
Of course, EEDC has other responsibilities as well.
It operates the Shaw Conference Centre and Edmonton Research Park, and it is a joint venture partner with the University of Alberta in TEC Edmonton, an agency that supports promising early-stage tech firms.
But while Gilbertson talked about expanding the Shaw, it’s clear that Ferguson doesn’t see that in the cards, at least not in the near term.
Instead, his goal is to ensure that the Shaw and Northlands’ Edmonton Expo Centre work in a more co-operative fashion.
“The Shaw is running really well right now, but we haven’t defined the relationship with Northlands. We’re competitive and we shouldn’t be,” he says.
“Our philosophy is to make sure both convention centres in the city are operating at maximum capacity before we look at expansion.”