Nine highlights from the 2017 State of the North report

The value of building permits in Northern B.C. has declined since 2014 across all categories, a trend that has continued through the first quarter of 2017, according to the 2017 State of the North report | Alaska Highway News

The economy of Northern B.C. has stabilized after a commodity price slide in 2014, says a new report on the region.

The Northern Development Initiative Trust released its 2017 State of the North report on Jan. 9. The 78-page report, completed with the help of MNP consultants, is full of data to give readers and political leaders a snapshot on the health of the agriculture, forestry, energy, and tourism industries, as well as the North’s five development regions.

“As the North’s economic development organization, it is important that we understand the data behind the decisions that are affecting the communities we serve,” Trust board chair Evan Saugstad said.

“The State of the North report provides us with the economic context we need to better inform our own decisions, as well as those of our communities, businesses and non-profits, so that together we can build a stronger north.”

Overall, the report says the economy in Northern B.C. has stabilized.

“The data is clear that the decline in commodity prices in 2014 had a significant impact on the regional economy, NDIT CEO Joel McKay said.

“The good news is that the data also shows that economic conditions in the region have stabilized more recently, and major project activity across the region has created opportunities for new investment.”

Here are somes highlights:

Rural B.C. accounts for 78% of the province’s yearly exports

The report notes it’s near impossible to quantify just how much Northern B.C. contributes to the provincial economy, citing a local of regional NDP figures and that the report isn’t mean to argue one region of the province is more important than the other.

However, it does reveal rural B.C. accounts for 78% of the province’s annual exports, based on 10-year aver. That’s between $24 billion to $30 billion a year, and does include mid and North Vancouver Island, Thompson-Nicola, the Okanagan, and the Kootenays.

In 2016, forest and energy products accounted for $21.5 billion of B.C.’s exports, or 56%.

“This data doesn’t account for service exports and their contribution to our total trade balance,” the report states.

“Still, it’s clear that without rural B.C., and Northern B.C. as the largest part of it, B.C. would suffer from an incredible trade deficit.”

Exchange rates a double-edge sword

Exports and tourism grew between 2013 and 2016 thanks to the declining value of the Canadian dollar. Since 2016, the loonie has been trading between 74 to 78 cents to the greenback, while appreciating relative to the Chinese yuan and British pound.

The depreciation of the dollar has been good news for forestry exports and tourism in Northern B.C., and that’s expected to continue. But not so much for the mining and oil and gas sectors.

“For those sectors, the decline in the value of the Canadian dollar was in part linked to declines in commodity prices, reflecting declines in global demand and oversupply,” the report states.

“Analysts do not expect significant changes through 2018 in the range that the Canadian dollar is trading.”

Infrastructure investments concentrated in the Northeast

There was $11.7 billion in infrastructure investments slated for the North as of the fourth quarter of 2016.

More than 91% of that, or $10.7 billion, was slated for energy projects in the Northeast, primarily the Site C dam, along with the Sunrise, Tower, and Townsend gas plants.

Other infrastructure investments across the North include $787 million worth of transportation projects (primarily the Cariboo Connector on Highway 97 along with port expansions), $74 million in education projects (primarily the new Ma Murray school in Fort St. John, and trades training centres in Dawson Creek and Terrace), and $21 million in recreation.

Farm facts

There are 3,633 farms across Northern B.C. — 1,899 producing livestock and 1,734 producing crops, however, agriculture accounts for less than 1% of overall employment.

“The majority of agriculture businesses in Northern B.C. do not have employees,” the report states, adding farm numbers have been declining in the North since 2011.

“This suggests that they are mostly small-scale family-run operations, or that they rely on temporary or contract workers.”

The majority of farms — 1,359 are in the Northeast, which is responsible for more than 80% of B.C.’s total grain and oilseed production.

Livestock production is concentrated in the Cariboo-Chilcotin/Lillooet region, where there are a total of 919 farms, 606 of them raising livestock.

When it comes to fish farming, or aquaculture, production is minor. Most aquaculture takes place along the North Coast, where farms for shellfish, Atlantic salmon, sablefish, and Chinook salmon are located.

In 2015, 93,850 tonnes of finfish were produced, with another 8,535 tonnes of shellfish produced.

Forestry facts

Cargo volumes of logs and wood pellets through the Port of Prince Rupert have been on the rise since 2014, while container shipments of lumber and pulp and paper decline.

The port saw 511,742 metric tonnes of wood pellets in 2014 grow to 896,257 metric tonnes in 2016. Log volumes increased from 351,861 tonnes to 454,461 tonnes. Containerized shipments dropped from 834,750 tonnes to 700,914 tonnes in the same time period.

Harvest volumes, production, employment, and capital expenditures in the industry have all been on the rise since 2011, the report states, with forestry accounting for nearly half of employment in the goods producing sector in Northern BC.

But the outlook from here remains uncertain, with the future of a softwood lumber deal with the United States in limbo, and the province reducing annual allowable cuts in the Prince George and Quesnel areas.

“These (cuts), and likely others, are a result of the end of the ‘salvage era’ to deal with mountain pine beetle impacted timber and will result in further reductions in timber supply and possibly mill rationalization,” the report states.

When it comes to softwood lumber, exports from B.C. to the U.S. dropped 15% in the first six months of 2017.

“After increasing at an average annual rate of 2.3 percent between 2012 and 2016, softwood lumber production fell by approximately 3 percent in the first quarter of 2017. Further production declines are expected through 2017,” the report states.

Energy outlook

In 2016, the mining, oil, and gas industries employed around 7,500 people, with 4,800 of them in the Northeast. The region was also home to the highest number of related businesses, with a little more than 400.

A commodity price decline between 2013 and 2015 saw the suspension of the Endako and Huckleberry mines in the northwest and two coal mines near Tumbler Ridge. A rise in metallurgical coal prices saw mine reopenings in Tumbler Ridge, while the Brucejack Gold Mine near Iskut started up in July 2017, while the Silvetip Silver Mine near Watson Lake began the first stages of production.

The Northeast saw five oil and gas projects under development in the fourth quarter of 2016, with investment totalling $1.9 billion.

When it comes to independent power production, there are 35 producers across Northern B.C., including eight biomass plants, four wind farms, and 23 hydroelectric stations. Altogether, they generate 9,213 gigawatt hours of energy per year, the equivalent of about 1.8 Site C dams.

“Most of the IPPs in Northern B.C. have been in operation for more than five years,” the report states.

“According to Clean Energy B.C. there is unlikely to be significant investments in IPPs in the near future. The Site C Dam, currently under construction in the Northeast, is expected to reduce B.C. Hydro’s need to purchase electricity from IPPs when it comes into operation in 2024.”

As of June 2017, other energy projects under construction included the Moose Lake Wind Project near Tumbler Ridge, and a biomass facility in Fort St. James.

Small business rules

There are around 13,732 businesses across Northern B.C., with 87% of them having fewer than 20 employees. Approximately 75%  have fewer than 10 employees.

The number of business incorporations dropped below the three-year average in 2016 to 1,131, with the great declines in the Peace River and Northern Rockies regions.

“There has been declines in the number of businesses in primary industries such as agriculture, forestry, fishing and hunting and supporting sectors,” the report states.

“The number of businesses in construction and in mining, and oil and gas has increased. The increase in mining, and oil and gas has all been in the Northeast, while in other regions, the number of businesses in mining and oil and gas has declined.”

Money and migration

A living wage ranges from $17.45 per hour in the Cariboo-Chilcotin to $18.29 in the Northeast.

“Median wages in most occupations exceed the living wage in most areas; however, median wages in occupations in retail trade, accommodation and food services and home support are below the living wage,” the report states.

There were 446 personal bankruptcies and seven business bankruptcies in the North in 2016, a substantial decline since 2011 and below the region’s five-year average, accruing to the report.

“The number of business bankruptcies has remained stable. This suggests that economic conditions have stabilized,” the report states.

The total population in the north grew to 338,283 in 2014 and had dropped to 332,386 in 2016. The region is still relatively younger than B.C., with more than 50% of the population between the ages of 15 and 54.

“International immigration is not a significant factor in population growth in northern B.C. and most migration, both to and from the region, is people moving within the province,” the report states.

Tourism and taxes

Counting tourists ain’t easy, with limited data available on the number of visitors to Northern B.C.

Still, by measuring airport traffic, ferry passenger volumes, and visitor centre visits, the report estimates that tourism in the region has experienced modest growth between 2014 and 2016 and will likely continue to grow.

“This is consistent with overall trends in tourism in B.C. and declines in the value of the Canadian dollar over that period,” the report states.

“The outlook for tourism continues to be positive due to the weakness in the Canadian dollar and the continued strength in the U.S. economy. These factors encourage Canadians to vacation in Canada and U.S. visitors to come to Canada.”

When it comes to paying the tax bills, communities see most of the burden paid by commercial and industrial property owners, according to the report. Though it varies community to community, the two property classes are responsible for 57% of the municipal tax base, with residential accounting for 38%.

The highest commercial and industrial tax share is found in Kitimat at 87%. In Fort Nelson, it’s at 79%, with residents responsible for only 8% of the share of taxes, according to the report.

In Fort St. John and Dawson Creek, the share of taxes ranges between 52% and 55% from commercial and industrial properties.

Meanwhile, Hudson’s Hope relies heavily on utilities for its tax revenues—64%.