Canada’s Need for New Infrastructure

On an average, public infrastructure in Canada is about 15 years old. That’s old enough to require improvements and upgrades. If Canada wants to remain competitive and wants to attract the best talent from across the globe, if the country wants to make its cities sustainable and one of the best places to live in, its core public infrastructure needs upgrading, enhancement and modernization. Roads, public transit, and other community facilities must be improved and/or expanded to make it happen.

 

Thankfully, the federal government has put public infrastructure spending at the core of its development budget. Infrastructure spending will centre on the Building Canada plan. The scheme, which will begin in 2014-2015, will have an annual budget of $4.7 billion to be spent on various  infrastructural development projects. According to the Association of Consulting Engineering Companies-Canada (ACEC), this will be the largest and longest federal investment on infrastructure in Canadian history. A total of $53 billion will be spent for building roads, bridges, subways, commuter rail and other public infrastructure under the Building Canada plan. The federal government will work together with provinces, territories, and municipalities to implement the project successfully.

 

The Building Canada plan will see $32.2 billion going to a Community Improvement Fund. This consists of an indexed Gas Tax Fund and the incremental Goods and Services Tax Rebate so that municipalities can build various types of infrastructure. Another $14 billion is allocated for projects that hold a special significance nationally or locally.  The plan also includes improvement of the infrastructure of First Nations. The plan has allocated $7 billion for the purpose. Federal assets, like bridges, harbours, and military bases will also be improved under the plan, with the government setting aside $10 billion for it.

 

With such a large-scale investment, Canadians can hope for livelier, reinvigorated, and economically-improved cities and communities.

US re-shoring will lead to innovation in Canadian manufacturing

Countries like Mexico and China have traditionally been the preferred locations for US companies to set up their offshore manufacturing operations to reduce cost. The latest data released by Alix Partners, a consulting company, may change that . The Alix Partners report says that the United States has already reached cost parity with Mexico and would soon be reaching similar parity with China – by 2015 – which would mean that the cost of the production for the American firms would remain the same whether the product is manufactured in USA, Mexico or China. These countries that had built a niche because of their low manufacturing cost have either lost that advantage or are losing it fast. 

This shrink in the cost parity was not gradual, it happened very rapidly and between 2010 to 2012, leading US companies have brought 50,000 jobs back to USA in the manufacturing sector. More firms are considering the possibility of following suit and bringing at least part of their operations back to US. It must be noted that though re shoring has brought back the jobs, it is not the same jobs that went away with the introduction of global supply chains. There is a major shift from assembly line production work to more specialized highly valuable set of skills. The jobs that are being brought back are specialized and require a different level of skill in the fields of research, engineering, design, and development. Bringing the jobs back to USA is allowing the manufacturers to test and utilize more technologically advanced practices – something which was a tad difficult to attempt in off shore manufacturing units. 

The situation in Canada  is quite different. As Canada did not ship out most of it’s jobs when the trend of relying on global supply chain started, re-shoring is less of an issues for most Canadian firms. However, re shoring in US would affect Canadian companies in an unexpected way. While  US companies are upping the ante with introduction of better design and development and more technologically advanced processes, the Canadian counterparts are lagging behind. They still house low skill manufacturing jobs in the continent and cut costs to keep those jobs at home as they do not have the resources  to finance cutting edge innovation in their fields. 

One way that Canada can be part of the innovative and modern manufacturing methods is by collaborating with multinational corporations and becoming part of the global supply chains. Some of the Canadian firms are following this trend but they are not in the manufacturing industry.  Only time will tell how Canadian companies will compete with global players with rising manufacturing costs and lesser money to be spent on innovation and design. 

Suncor Energy Inc Confirms It Will Proceed with Fort Hills Oil Sands Mine Project

After being shelved for years, Suncor Energy Inc announced in October that they will push through with plans to develop the Fort Hills oil sands mine. The project was placed on the backburner since the financial crisis in 2008 . The project will now move forward with ownership by Suncor Energy and its partners Total E&P Canada and Teck Resources Ltd at a cost of $13.5 billion.

 

Fort Hills was originally the joint venture formed by the alliance of three companies, namely UTS Energy, Petro-Canada and Teck Resources. In 2009, Suncor bought Petro-Canada and in 2010, French oil firm Total acquired UTS Energy.

 

Suncor said they expect Fort Hills to begin producing oil after four years at the earliest. When production starts, Suncor said it intends to produce 180,000 barrels a day within a year’s time. This is the mine’s full capacity. The production is set to comprise an estimated 15% of the oil firm’s average capital budget on an annual basis.

 

Located 90 kilometers north of Fort McMurray in Alberta, Fort Hills is estimated to contain 3.3 billion barrels of bitumen which can last for the next five decades. Suncor Chief Executive Officer Steve Williams said the project is set to give substantial economic benefits not only for the company but for the province of Alberta and Canada as a whole. The quality and size of the resource found in Fort Hills will ensure that the project will provide Suncor with long-term cash flow. At the same time the company’s shareholders will receive robust returns from their investment.

 

 

NovaCopper Inc Caught in Catch 22 Over Alaska Copper Mining Project

Which comes first-  the road or the mine? Vancouver-based NovaCopper Inc and Alaskan officials are seemingly caught in a Catch 22 for the planned commercial copper mine in the Ambler Mining District. Located in the Northwestern part of Alaska. For the Canadian mining company, a road must be constructed that would link the proposed mining site to the highway system in Alaska. On the other side of the spectrum, Alaska officials think building a 220-mile road which was estimated to cost $2 million a mile will be pointless unless it leads to an existing mine.

Although both parties had already inked a memorandum of understanding to prepare for both the mine and the road, they were not committed to build either one. Should the road be constructed, however, NovaCopper could stand to earn substantially from Ambler's rich deposit of copper and other metals.

Although NovaCopper and Alaska officials have yet to decide on which to build first, some critics have already expressed opposition to the construction of the district road. John Gaedeke, a critic of the road has founded a group called the Brooks Range Council which campaigned against the road. In an interview with the Alaska Dispatch, Gaedeke cited that Alaska has netted royalties of as little as three percent from mining and no more than a seven percent tax rate of the net profits.

Other's complain that the district road would affect tourism and the movement of caribou in the area. The road also raises environmental concerns, such as the risk of the mine development letting loose acid-rock drainage. However, those who supported the road construction insisted that a road would be advantageous in terms of cutting down the energy costs in the region.