Posted on

One in 4 Alberta CEOs say they don’t know if their business can survive this crisis

CALGARY — One in four chief executives in Alberta are concerned their businesses might not survive the economic collapse triggered by COVID-19, according to a new survey.

Alberta is the country’s largest oil and gas producing province and is widely expected to record the sharpest economic contraction and drop in employment this year, following the dual-threat of the coronavirus pandemic-induced business closures and the concurrent collapse in oil prices.

The Business Council of Alberta published a survey of its members Monday that showed 26 per cent of respondents didn’t know if their “organization will survive this crisis until a vaccine is widely available or we otherwise reach herd immunity.”

“It’s a lot and it’s surprising,” said Mike Holden, the Business Council’s chief economist, noting that survey doesn’t mean those companies will file for bankruptcy — just that they consider it to be a real risk. “This is businesses who think there is some risk.”

He noted that 64 per cent of respondents had delayed spending, 61 per cent had laid off employees and 54 per cent had implemented pay cuts to survive the crisis.

So far, only a handful of companies have announced widespread layoffs during the current recession, but Holden said there might be more announcements if temporary layoffs become permanent.

It’s a lot and it’s surprising

Mike Holden

The survey of leaders at 61 companies conducted by Viewpoint Research between May 13 to May 30 also showed that 61 per cent of businesses expect a slow economic recovery.

“Generally speaking, they’re not expecting it to be quick,” Holden said, adding the uncertainty about the depth and duration of the recession has led to a drop in business confidence.

If Business Council of Alberta’s fears are realized and a quarter of businesses don’t survive the current pandemic, it would mark a dramatic uptick in insolvencies and the business exit rate, which is tracked by the federal government.

In 2017, the last year for which data is available, roughly 15 per cent of Alberta businesses exited the private sector, said Charles St-Arnaud, chief economist with Alberta Central, which provides banking services to credit unions in the province.

Signs outside a business in Calgary, on April 30, 2020.

Signs outside a business in Calgary, on April 30, 2020.

Brendan Miller/Postmedia files

By comparison, the data shows the rate of business exits across Canada is about 11 per cent.

“Alberta has kind of a higher entrance and exit rate than other provinces. There is more business creation than average and also more business failures,” St-Arnaud said.

Still, St-Arnaud said he’s expecting to see an increase in insolvencies and business failures as a result of the COVID-19-induced recession. The business closures and insolvencies will likely accelerate in September or October, once federal support programs wrap up, he said.

“The insolvency data for October will have a better look at how bad it gets,” St-Arnaud said.

Large and small companies in the province are struggling to stay afloat. Even as businesses re-open, Alberta’s largest industry is struggling with the dramatic collapse in oil prices and the resultant fall in oilfield activity.

Calfrac Well Services Ltd., one of the largest fracking companies in the Canadian oilpatch, announced Monday that it would defer payment and make use of a 30-day grace period to make an interest payment that was due June 15.

Shares in the Calgary-based company fell close to 9 per cent to 26 cents per share following the news, which warned that a failure to make the interest payment would trigger a default in Calfrac’s credit facilities. The company has drawn $170 million against a $375-million line of credit.

If the company does default, Calfrac would become the first large energy services firm to become insolvent in the current crisis.

The Business Council’s survey noted that the three largest barriers to an economic recovery in the province were low oil prices, a lack of consumer confidence and the global economic downturn causing a lack of demand for exports.

Financial Post

• Email: [email protected] | Twitter:

Source link

Posted on

‘Not looking for a Trudeau handout’: Alberta spurns notion of bailout in lieu of Frontier mine approval

OTTAWA — Alberta Environment Minister Jason Nixon flatly rejected any suggestion that Ottawa could placate the province with an aid package if it turns down the $20-billion Frontier oilsands mine.

“Albertans are not looking for a Justin Trudeau handout,” Nixon said in a press conference Friday. “We’re not interested in that. We want Justin Trudeau and the federal government to get out of Albertans’ way, to let hard-working Albertans do what they do best, which is create prosperity for this province and create prosperity for this country.”

Reuters, citing anonymous sources, reported Thursday that if the Frontier mine plan was rejected by cabinet, federal officials were preparing various streams of funding for Alberta, including cash to help clean up thousands of abandoned wells spread across the province.

Nixon said the province has not been approached by Ottawa for a potential deal. “The Frontier mine is not a political gift,” he said.

Alberta Premier Jason Kenney told an audience at the Canada Institute in Washington, “It’s hard to overstate the response of Albertans, not just our government, but Albertans broadly, if this project were to be rejected.”

Teck has already spent $1 billion during the past decade to clear a series of regulatory hurdles, invest in technology designed to lighten the mine’s carbon footprint and forge agreements with First Nations groups, Kenney said. A rejection from Ottawa now would signal to investors that despite such efforts, projects can ultimately be scuttled by an “arbitrary political decision” made without any transparency, he said.

“I think that would be a devastating message to send in terms of investor confidence at a time when we are struggling to attract foreign direct investment to the Canadian economy,” he said, speaking alongside Saskatchewan Premier Scott Moe. “So the response would be very challenging.”

Demand for crude oil will continue during the coming decades even as energy transitions away from fossil fuels, Kenney added, and it’s better that the last barrel of oil come from “a stable reliable democracy with the highest environmental and human rights labour standards on earth. Teck represents a pathway to that.”

Teck Resources’ proposed $20.6-billion Frontier project could produce 260,000 barrels per day of bitumen in northern Alberta, making it one of the largest in the oilsands.

Teck Resources’ proposed $20.6-billion Frontier project could produce 260,000 barrels per day of bitumen in northern Alberta, making it one of the largest in the oilsands.

Norm Betts/Bloomberg files

The Liberal cabinet’s decision on Frontier, proposed by Vancouver-based Teck Resources, will be released by end of month.

Environmental groups and others have called on the prime minister to reject the proposal, saying it conflicts with the Liberal pledge to reach net-zero emissions by 2050. The project would emit around four million tonnes of greenhouse gas emissions per year, over a 40-year period.

Federal Finance Minister Bill Morneau downplayed the Reuters report, saying efforts by federal officials were unrelated to the approval or rejection of the oilsands mine.

Nixon on Friday joined other Conservative voices who have called on the Liberals to support the project “on its merits,” claiming that a rejection would undermine Canada’s regulatory process and further sour intergovernmental relations.

“For the prime minster and the government to come in at the last minute and change the rules will create significant instability within our province,” he said.

“We have been clear with the federal government that we do have a unity crisis brewing within this country.”

The Frontier mine is not a political gift

Frustrations have been mounting in the province amid a more than decade-long failure to build major pipeline infrastructure, causing Canadian oil prices to sell at a steep discount to American rivals. The Trudeau government was completely wiped out in Alberta and Saskatchewan during the 2019 election, largely as a result of growing distrust toward Ottawa.

The election results speak to the “divisions we have in our nation,” Moe said. “I think, in fairness, that manifested itself on election night.”

Industry groups have complained that regulatory reviews in Canada have stretched on years longer than what is appropriate, due at times to legal challenges and political wrangling.

Trudeau is reportedly facing pressure from within his own caucus to reject the project, though a number of cabinet ministers support its approval and later development.

Toronto Liberal MP Adam Vaughan, who serves as parliamentary secretary for housing, told reporters on Friday he had “significant concerns” with some of the environmental impacts associated with Frontier, particularly for those in northern First Nations communities.

“And we talk a lot about Alberta, but I think it’s time we talk more about the Northwest Territories, in particular the health of the Delta, the Mackenzie Delta,” he said.

Alberta MP Shannon Stubbs, the Conservative natural resources critic, said the Teck Frontier decision will be a defining moment for the Liberal government.

“If the Liberals reject the Teck Frontier mine, Albertans will perceive that as a rejection of Alberta from Canada,” she said in Ottawa. “That is where the vast majority of my constituents are at.”

Don Lindsay, the CEO of Teck, recently said it was “anyone’s guess” whether Frontier would be built due to years of regulatory delays and political pressure. Some analysts have suggested the project would not be viable in today’s oil markets, after global oil prices slumped in mid-2014.

— With files from The Canadian Press

Source link

Posted on

How Wexit looks to Alberta’s First Nations: ‘A lot of Indigenous folk feel just as alienated’

CALGARY — A wry smile briefly crosses Lee Crowchild’s careworn face when the word “alienation” is mentioned.

He hears this particular word from so many lips these days in Alberta. It’s the place where he was born, so he understands well enough those long-standing strains and issues that exist between the province and Ottawa. However, today that age-old mistrust is blossoming anew, leading to murmurings of mutiny and separation.

Still, when it comes to alienation, Crowchild believes Indigenous people have a veritable stranglehold on what that really entails. After all, he is descended from a long line of native leaders on the western Prairies, reaching back to Alberta’s formative years as a province.

Crowchild was, until very recently, chief of the Tsuuut’ina, a First Nation of more than 2,000 residents who live in the eastern shadow of the mighty Rocky Mountains and cheek by jowl to the ultra-modern city of Calgary. (He was still chief when he was interviewed for this story, having been elected in 2016, but lost his bid for re-election on Nov. 20th) Crowchild’s dad once held that same chief mantle, as did his grandfather, after whom one of the adjoining city’s major thoroughfares, Crowchild Trail, is respectfully named.

His perspective on the recent uprising of separatist fervour in the province — Wexit being its nametag on social media — remains guarded, being grounded in both history and culture.

“Today you hear talk about alienation. But this is how we have been living through the generations. So now you are crying to be heard? So yes, it is a bit amusing,” he says.

Today you hear talk about alienation. But this is how we have been living through the generations. So now you are crying to be heard?

But such amusement quickly vanishes when he contemplates what might happen if Alberta did indeed try to separate from Canada, as an increasing number of people in the province are discussing.

This comes not from some heartfelt love his people feel for Ottawa: far from it. But Crowchild looks to history. The treaties in place with the Crown might not be perfect, but they have legal status. So, to disavow those, on the vague hope of something better? That is not an easy sell on the Tsuuut’ina reserve.

“This movement called Wexit, the Alberta one to leave Canada, is fine, but they’d have to leave the land behind and its resources as well. We didn’t sign those treaties to give them away. That is under the NRTA,” he says.

Crowchild refers to the 1930 Natural Resources Transfer Agreement, one in which Alberta has a constitutional obligation to transfer back to Canada any unoccupied Crown lands necessary to allow Canada to fulfill its treaty obligations with First Nations.

“No one ever talks to the First Nations about this. Some people now feel discriminated against by the federal government and they suppose they are talking on our behalf,” says Crowchild.

“They are not. We’re still invisible. Our frustration goes back a long way, to the time of colonization, that’s where our frustration started,” he adds.

But further north, in the very heart of the Alberta oilsands, there’s more sympathy for provincial frustrations among Indigenous people, many of whom work in the energy and mining industries.

Ron Quintal is president of the Fort McKay Metis, a group that, in May, became the first such one in Canada to declare self-governance. This was after they successfully bought from the province last year the 199 hectares of land they live on just north of Fort McMurray — another first for a Metis organization.

“In Fort McKay we sit basically on an island surrounded by (oilsands) mines,” Quintal says. “From our perspective we have been very much involved in the development of natural resources in northern Alberta and we see Alberta energy as a huge benefit to the rest of Canada. ”

“So, coming out of the federal election, a lot of Indigenous folk feel just as alienated as your everyday Albertan,” he says.

President of the Fort McKay Metis Ron Quintal announces they bought all of its land from the provincial government, in Edmonton Alta, on Wednesday March 28, 2018.


Jason Franson

However, aspects of the burgeoning Wexit movement raise uneasy issues for Quintal and many others in the region.

“With the Wexit movement — and it is a very strong movement right now — if you read the comments from some of the people involved it is really disheartening to Indigenous people.” He says he hears undercurrents of racism and stereotyping about First Nations people, some of whom (but definitely not all of whom) have been vocal in their opposition Alberta’s oilsands and pipeline projects.

“That is why there is cautionary talk when Indigenous folk see and hear that sort of thing,” Quintal says. “That is not to say we could not be supportive of moving away from Canada. But the issue is that there are treaties that would stall all type of move away from federalism. You cannot ignore that; you have to take Indigenous folk into consideration.”

“Ultimately folk here, for the most part, just want to get by, just like everyone else in society. So what we see is an opportunity to have a really serious conversation, not just with alienation involving Ottawa, but as well with the government here in Alberta.”

“Perhaps, if there is a separation movement, then there is also an opportunity to evolve with it and take Indigenous groups into the 21st century,” added Quintal.

Like many others in Alberta he remains frustrated by some of the common misconceptions about the oilsands region.

“People think we are polluting the rivers and polluting the land, but the fact is the riverbeds and the landscape has always had the oilsands in them.”

“We used to use the tar to waterproof canoes. It has always been there and is still there. If you walk into the MacKay River you get tar on your feet: not because it is coming from an oilsands development, but because it is here naturally. Many Canadians don’t grasp that,” he added.

JP Gladu, president of the Canadian Council for Aboriginal Business, says that the connection many First Nations people have to Alberta’s resource industry has made them feel just as frustrated as other Albertans are with the obstructionism and lack of support from Ottawa.

“Indigenous businesses are more aligned in Alberta than anywhere else in how they are feeling about the federal government and their mistreatment,” says Gladu.

As president of the Aboriginal business council, he has worked closely with oil and gas companies across Alberta to get more Indigenous firms and individuals involved in the energy business. He says that some of those based in the oilsands have been among the most forward thinking in Canada in terms of working with First Nations.

“Mark Little, the CEO of Suncor, has been a champion of champions,” Gladu says. “He has come out a number of times challenging other corporations to do better in their relationship with Indigenous peoples.”

However, Gladu reiterated that the treaties binding Canada and its relations with Indigenous people couldn’t be ignored.

“You can’t simply separate and think that Indigenous people will just come with you. Our relationship is with the federal government and not the provincial Crown. Our treaties actually bind the entire country, to a degree,” he says.

Our treaties actually bind the entire country, to a degree

However, Gladu believes there may be an ironic aspect to the current alienation and distrust between the federal government and Alberta. He sees a possibility to allow Indigenous groups to step forward as a solution, to become an honest broker between the two levels of government.

That is why he is so supportive of the recent move by Alberta Premier Jason Kenney to offer loan guarantees totaling $1 billion to First Nations businesses involved in major energy projects.  Gladu sees in the funding one of the ways forward.

“Most Canadians don’t realize that the majority of Indigenous communities actually want to see resource development, because we are tied of living on the fringes and not benefiting from such development.”

“So there is a fantastic credibility and positivity that comes to the table when you bring in Indigenous leaders to co-develop resources. I think that could be the way that pipelines get built, for example.”

“This offers our country an opportunity to allow us to be real equal participants. It could come full circle so we absolutely have a crucial role in binding our country based on our treaties and, as honest brokers, to develop projects together.”

“Economic reconciliation is the stuff we talk about all the time. It is such an opportunity. I think we have a crucial role to play in it,” added Gladu.

In a country striving for reconciliation with its First Nation peoples it would be ironic indeed if those same Indigenous people were a catalyst to help reconcile the federal government and the West.

Source link