Volume 7 | Issue 2 | Year 2004

The Profitable Place to do Business

Perched on the easternmost edge of the North American continent, Canada’s four Atlantic provinces are not only earning international reputations for oil and gas exploration, but also as a competitive location for cutting-edge business.
In its 2002 study of international business costs, KPMG names the region’s major urban areas as among the most competitively priced cities in NAFTA for manufacturing and service industries. And businesses that have located to this part of the world – total population, 2.4 million – cite numerous other compelling reasons for their move.

“We have had great success in finding and hiring a highly skilled and motivated workforce to power the growth of our Advanced Development Centre in Halifax, Nova Scotia,” says James T. Brower, Director of North American delivery solutions for Keane Inc., a Boston-based, international business and information technology outsourcing firm with operations around the world.

Indeed, many U.S.-based companies increasingly regard Atlantic Canada – with its familiar culture and language, similar educational and training infrastructure, and close geographic proximity – as an ideal location for near-shoring. Cendant, the New York-headquarted hotel, real estate, and travel industry giant, recently expanded its Fredericton, New Brunswick, call center. Says Canadian director of operations, David Burke: “Cendant recognizes New Brunswick as a highly desirable place to do business, with an employee base well matched to our brands’ high standards for customer service.”

At the heart of Atlantic Canada’s success as a near-shore host for international business is the quality and quantity of its human capital. The region is home to more than 40 colleges and universities, and boasts the highest per capita ratio of universities in Canada. “It makes good sense to grow our company on Cape Breton Island (Nova Scotia),” says Sheelagh Whittaker, President and C.E.O. of EDS Canada, a division of the U.S.-based multinational which bills itself as the largest IT outsourcing firm in the world. “This is an indication of the quality and talent of the workforce here.”

Another very attractive fundamental that has gone a long way towards drawing companies like Keane, EDS, AOL, Xerox and dozens of others to the region in recent years: a competitive, reliable, and plentiful energy supply.

In fact, the energy sector is one of Atlantic Canada’s most powerful growth engines. The region boasts an installed electricity production capacity of 14,000 megawatts generated by various facilities: hydro, nuclear, coal, gas and oil. That translates into one of the highest per capita electricity production ratios in the world. Electricity costs in the Atlantic region are the lowest of the G7 countries; they are, on average, 30 percent lower than the U.S. Electricity is also a major Atlantic Canadian export.

But beyond this, the region boasts North America’s fastest growing offshore oil and gas sector, which has influenced the growth of the region’s GDP more than any other industrial activity in recent years. Since 1998, the region’s oil and gas exports have grown by 284 percent, to just over $7.3 billion in 2002.

And the industry continues to grow. Of the $15 billion in major construction projects slated for the next few years in Atlantic Canada, 60 per cent are related to oil and gas exploration, production and distribution.

Leading projects include Sable Offshore Energy, a $3 billion project involving the development of six major natural gas fields off the coast of Nova Scotia; and Deep Panuke, located 250 kilometres southeast of Halifax, Nova Scotia, where natural gas is set to be produced by late 2005 and will run for nearly 12 years.

There’s also Terra Nova, whose floating production storage and off-loading vessel (FPSO) – the first to be tried in the frigid waters of Newfoundland and Labrador’s Grand Banks – started producing the field’s 370 to 470 million barrels of light, sweet crude at 125,000 barrels of oil per day in January 2002.

A top-quality research and development infrastructure supports the industry’s growth.

Meanwhile, the region’s three major oil refineries are export-oriented, and enjoy access to marine transportation of crude oil and petroleum products. The Irving Oil Refinery in Saint John, New Brunswick – the largest facility of its kind in Canada – recently underwent a $1-billion upgrade and now exceeds the United States Environmental Protection Agency’s new source performance standards for petroleum refineries.