Fastest-growing economy across Canada
Saskatoon: Canada’s Fastest Growing Economy.
The City of Saskatoon is favoured once again to be one of the fastest-growing economies across Canada, according to a 2013 The Conference Board of Canada report.50 The report is the Conference Board’s annual review of 28 metropolitan areas in Canada.
The expanding job market in Saskatoon is attracting both domestic and foreign applicants, which are growing the housing, retail, and other sectors of the economy. For example, this year Saskatoon’s gross domestic product is expected to grow by 3.7%, which is significantly higher than the estimated national average.51
How is Saskatoon’s economy growing? According to the The Conference Board of Canada, “Saskatoon is benefiting from strong resource development, while healthy popula- tion growth is bolstering the housing market.” About $10 billion in mining development and expansion has already been invested in the province.52 Indeed, Saskatchewan has numerous natural resources, such as potash, oil, and uranium.53
Tim LeClair, chief executive officer of the Saskatoon Regional Economic Development Authority (SREDA), is also proud of how other sectors are making important contributions to economic growth. “We have to give credit to other sectors of the economy which aren’t related to the resource sector, including manufacturing, agriculture, transportation and com- munication,” stated LeClair.54
The agriculture sector is a natural strength. Saskatchewan has six different soil zones and over 40% of Canada’s arable land. According to the Ministry of Agriculture, the indus- try produces feed and forage, cereal crops, oilseeds, pulse crops, and some speciality crops.55
Saskatchewan has other strengths in agriculture, too. Did you know that Saskatchewan produces the majority of Canada’s wild rice? Saskatchewan also produces over 70% of Canada’s flax and over 80% of Canada’s mustard. And let’s not forget that Saskatchewan supplies 5% of the world’s exported wheat.56
In the manufacturing industry, many local companies are making machinery, wood products, transportation equipment, plastics, and food and beverages. This, in turn, has led 85% of firms to be able to export their goods outside the province, impacting the transportation and distribution industry favourably.57
“One only has to look at the automotive in Saskatoon. When you see the level of activity here, it’s a very basic barometer of the economy,” says LeClair. In fact, there is a 12.2% increase in new car and truck sales in the province.58
In addition to Saskatoon having the fastest-growing economy, it also ranks as Canada’s fastest-growing city. According to Statistics Canada, Saskatoon’s population grew by 3%, or 7,200 residents, between 2009 and 2010. Its population is estimated to be 265,300. International immigration into the province is a leading factor for its growth—over 50% of its population increase is due to new families immigrating to Canada. These families are also making Saskatoon one of Canada’s youngest cities. Saskatoon’s median age is currently 35.4 years, compared to the national median of 39.7 years.59 This means the majority of its population is of working age.
Expanding job market in Saskatoon
Clearly, having a large number of working residents translates into lower unemploy- ment rates, and Saskatchewan maintains one of the lowest unemployment rates in the country. According to Statistics Canada, the August 2011 unemployment rate was 4.5%, the lowest in the country. Saskatoon’s unemployment rate was slightly higher at 5.1%, but still much lower than the country’s 7.3% average.60
One reason for the low unemployment rate is the growing number of entrepreneurs. Each year, approximately 1,000 licences are issued to new small businesses. The resource sector is an important employer, too. Mining companies continue to recruit engineers with salaries at $150,000 and up.61 Good-paying jobs help consumer spending and keep business sales up.
Home construction is also growing fast. In the first six months of 2011, new housing increased by 38%. “Housing is a critical component of the economy,” says LeClair. “We have to make sure that we have adequate housing for people to come and take positions in Saskatoon. That’s an important part of the equation.”62
Industrial and commercial construction is of course a direct result of business growth. Vacancy rates for the commercial real estate market are at record lows, including industrial, office, and retail space. Similarly, new office tower construction is on the increase from business expansion.
In the past, Canada’s resource sector has gone through “boom and bust” phases. So, can Saskatoon’s economy realistically be sustained?
SREDA recognizes that Saskatoon’s economy is experiencing significant growth mainly because of the mining industry. “In 15 years, when all of these capital expenditures are done, do we want to go back to the slow growth of the 1980s and start exporting our kids to other provinces again? I was a product of that export market. We want to sustain our economy over the long term. We have to get it right,” says LeClair.63
To encourage long-term economic growth, SREDA has developed a number of initia- tives to address existing challenges faced by business and to encourage a sustainable econ- omy. One project involves analyzing issues facing the region’s labour market. “When a company looks at setting up operations in Saskatoon or Regina, the first thing they look at is the labour force. Do we have people to fill those jobs? If you can’t answer that ques- tion in the affirmative, it becomes very difficult to build a business case.”64
SREDA is also focusing on bringing global businesses to Saskatoon. “Brazil has two of the world’s largest food processing companies. They employ over 130,000 people internationally but have no facilities at all in North America. They have no market penetration here, no presence here,” says LeClair. “We have the critical mass—the infrastructure, the raw com- modities. I met with the Brazilian ambassador and they’re willing to open the doors.”65
Similarly, encouraging entrepreneurship and growing small businesses is important, too. In fact, entrepreneurship is one of the reasons why Saskatoon has the country’s fastest-growing economies. “The vast majority of our employment comes out of the entrepreneurial, homegrown companies,” says LeClair.66 One partnership involves IDEALS Inc., an organization designed to support new businesses and reduce potential risks. While 60 to 75% of all new businesses will fail within the first year, business incu- bator organizations like IDEALS help businesses achieve an 87% success rate.67
Investment in research and development and expanding knowledge-based industries is another strategy for continued economic growth. “We have many companies coming from around the world to use our research facilities. There is $2.6 billion worth of research facilities clustered around the university. We’d like to see more companies come to do their research here, and then build their facilities close by.”68 The University of Saskatchewan has developed technologies that have resulted in companies establishing themselves nearby. SED Systems, International Road Dynamics, and Philom Bios are a few examples. Certainly, the potential for more startups or spinoffs exists.69
According to LeClair, “information communication technology (ICT) is a critical industry that supports numerous other industries including healthcare, mining, manufac- turing and biotechnology. ICT professionals have found Saskatchewan’s economy fertile for innovation that only ICT companies can supply.”70
According to economists at TD Bank, other factors are also needed to sustain eco- nomic growth. Skilled labour shortages need to be addressed. Certainly, Canada needs to educate students with the right skills to support a prosperous economy. And keeping taxes low is another challenge to remain competitive. Some economists also believe that Sas- katchewan should build upon its resources strength and become a clean energy powerhouse.
1.What economic elements are contributing to Saskatoon's growing economy? 2.What non-economic or other related factors are contributing to Saskatoon's growing economy? 3. What do you think are the most important factors for Saskatoon to sustain long-term economic growth?