Roundtable Three Summary: July 8th
As we arc through the first few weeks of summer, we’ve been continuing our conversation with Edmontonians about our city’s future economy. More and more people have been participating in our dialogue about how we can build a prosperous and resilient economy. During the second week of July, we welcomed a few dozen leaders from the private and non-profit sectors, who spoke very frankly about what they think is required.
TALKING ABOUT THE FUTURE
To kick things off, the participants took note of several national and international trends that will have implications for our city. Among these was climate change and the fact that cities around the world will increasingly be taking steps to reduce emissions and adapt to changing weather patterns. People speculated that this is likely to spur a global trend towards the fusion of technology with the natural environment. Increasingly we may see greater demand for autonomous solutions that help increase energy efficiency, improve water conservation, improve the optimization of arable land and enhance waste management.
Participants also cited technological change as a driving force in changing the types of jobs available and the way people work. For example, as the use of drone-based and semi-autonomous solutions expands, greater numbers of people will work remotely. Telecommuting will take on a whole new meaning. This may open up opportunities for Edmontonians to work for companies from all over the world, but it will also raise serious questions about the kinds of industries that are likely to be based in our city. Will we be a city full of people working for industries based elsewhere? Or will we have our own industries here, employing others from around the world? And, if so, what could those industries be?
Although it did not lead to any easy answers, this discussion shone a spotlight on a difficult truth – that our city’s economy is far more likely to be impacted by global forces beyond our control, than being able to set those trends. This means we will need an agility and a resilience that’s second-to-none.
This served as an excellent lead-in to a discussion about the key ingredients – or drivers – that Edmonton needs in place to build a prosperous and resilient economy for the future.
Participants had a lot of advice on this front, identifying the following major drivers:
- A forward-thinking education system. The education system produces the skilled talent that our economy needs, including graduate students and researchers who come up with new ideas that can lead to innovative products and services. The system needs to evolve and keep pace with the realities of the twenty-first century, working to produce graduates with the skills needed for the changing economy. Some participants suggested this might mean reconceptualizing the purpose of a university – from a hub of thinking and debating to a builder and purveyor of certified knowledge. It was also suggested that Edmonton would benefit from being home to a world-class school of international business.
- Effective communications that engage and shape results. The ability to engage audiences and convey messages is vital for economic growth. For example, people across Edmonton will need to be engaged about this new economic strategy (once it’s developed), so they can understand how they might play their part in bringing the strategy to life. Another important aspect of this driver is the ability to effectively engage outside audiences – including potential investors and skilled talent – to build and shape Edmonton’s international reputation.
- Efficient flows of product development and sale. People emphasized the importance of being a city with an export-based economy. This helps bring in new wealth from outside Edmonton (and Alberta), rather than recycling a dwindling amount of wealth. To be a strong exporter, Edmonton needs highly efficient logistics and supply chains. For example, roads and highways should be free flowing, with ample capacity and minimal disruption. Strong connections between air, rail, and road must exist to facilitate the swift export of goods and services. Supply chains must also be robust so that producers in Edmonton can cost-effectively fashion the products and services they will sell to the rest of the world.
- A strong financial sector. Once again, the issue of access to capital was raised. People said that while steps should be taken to encourage local investors to participate more in industries outside of oil and gas, this alone is not sufficient for the economy. Rather, Edmonton requires to attract significantly more foreign direct investment from a diversity of sources, across all industries. Participants emphasized the importance of having a stable investment climate with a smart regulatory regime and governments that convey an openness to business and industry. They also made the point that Edmonton would do well to strengthen the size of its financial sector. The city is already home to banks such as Canadian Western Bank and ATB. Being home to more financial institutions and (perhaps more importantly) having more funds under management here in the city would help build a bigger pool of available capital and investors who are knowledgeable about the regional economy and local opportunities.
- Creative subsectors that help drive the economy. Recognizing that innovation drives an economy forward, people suggested that Edmonton needs strong horsepower in terms of creativity. Creativity serves as vital feedstock for new ideas, applications and solutions. This puts the arts and culture subsectors in a new light with an additional value proposition. A strong and vibrant arts and culture community may be an essential ingredient for helping support a creative and dynamic economy in Edmonton.
- Strong social supports and a healthy community. Since skilled talent and investment are increasingly mobile, Edmonton needs to ensure it can stand out as a place that provides a high quality of life. Investors and leaders take care in considering where they and their employees and families will want to live. They are more likely to select Edmonton if our city has a strong social fabric, sustainable health services, a healthy ecosystem and plenty of green space. Having effective supports for immigrant and refugee settlement would also be wise, given that immigration is likely to continue being a key source of population growth for Canada as a whole.
- A competitive manufacturing sector. Participants noted that our city already has some advantages in terms of manufacturing, including a high-quality electricity grid, very cost-competitive and reliable electricity, and stable geography (i.e., prone to neither earthquake nor hurricanes). This makes Edmonton an excellent choice for further manufacturing. Taking steps to enhance this advantage – through efforts such as supports for automation or additional start-up supports, for example – could give our city a very powerful building block for future economic growth.
Participants were equally frank when it came to identifying barriers that currently stand in the way of Edmonton realizing a prosperous and resilient economy. People stressed that the private, non-profit and public sectors will need to work together constructively to navigate and address the following challenges.
- Edmonton has some structural cost disadvantages. It would be naïve not to recognize that our city has some fundamental cost constraints that set it apart from other cities around the globe. For example, our location means that we experience all four seasons and are geographically removed from many markets. These factors add operational and transportation costs to almost everything we produce and sell, and construction costs are generally higher in Edmonton than many other places. Due to choices we have made as a society, such as universal health care, our tax regime is structurally higher than those in most U.S. jurisdictions, which do not have the same level of public expenses. Labour costs are also higher in Edmonton (and the rest of Canada), compared to many other places around the world, as a consequence of not only our labour laws but also our relatively small population. The fact that many of these costs are “baked in” and rather unchangeable means that Edmonton must work extra hard on many other fronts to compensate, if our city wishes to be a destination for direct investment, new industries and jobs.
- The regulatory approach of governments needs to change. Participants pointed to regulatory frameworks as an area where improvements can and must be made. In too many areas the existing regulatory approaches are seen as sluggish, complex, administratively onerous and stuck in the past. For example, people said that regulatory requirements for infrastructure are often over-engineered, adding unnecessary cost and time delays. It was also said that it takes too long to get projects or applications approved, compared to other cities and other jurisdictions. Furthermore, rather than focusing on desired outcomes, regulatory frameworks are often too prescriptive about how things must be done. This sends signals that Edmonton does not trust citizens or organizations and fails to accommodate advances in science and technology. Participants warned that if Edmonton wants a prosperous and resilient economy that features innovation, then governments will need to enable it by cutting red tape and “getting out of the way”. At the same time, it was noted that the political cycle of four years presents a difficulty, as it can drive governments to make short-term choices that are politically expedient rather than choices that will have benefits for all citizens over the longer term.
- There is misalignment in human resources. One observation was that the types of skilled workers needed by industries and organizations are not being generated by our local post-secondary institutions. This misalignment is leading to two big challenges. One is that graduates of local institutions (whose educations have been subsidized by local taxpayers) are unable to find jobs in Edmonton that match their training and, consequently, leave the city or province altogether. The other is that local industries are unable to source the skilled talent they need from the pools of graduates generated by local institutions. Participants said this chronic misalignment is not a new problem, but that it needs to be addressed very quickly.
- The local business mindset may be too limited. Some private sector participants said that they and their fellow business people may also be serving as a barrier right now in terms of their mindsets and outlooks. It was suggested there may be a higher level of risk aversion than desirable. This may be due to investors “having it too good” during the commodity booms, or the fact that failure is punished terribly in the Canadian economic system, or perhaps even stemming from a lack of knowledge or lack of confidence. Whatever the cause, there is a perception that many local businesses are scared to partner and grow, especially if it might mean taking on an investor in return for a share of their company. Instead, there appears to be a trend that Edmonton business owners grow their company to a certain size, coast at that size, and then eventually sell off the company (usually to interests from outside of Edmonton) and decamp to Vancouver, Kelowna or the southwest U.S. to retire. Too often the sold-off company is harvested for resources and shuttered, or integrated into the new owner’s larger firm and downsized. As a result, the opportunity to create a significant, large home-grown Edmonton-based firm is lost, and the hard work of Edmontonians is effectively “sold off for parts” to make other cities richer. Participants said this dynamic needs to change, and a new growth-oriented mindset needs to be diffused and taken up across Edmonton’s business and investor communities.
- Access to capital remains a key challenge. As noted earlier, access to capital is seen by participants as an essential driver for having a prosperous and resilient economy. At the present time, capital can be challenging to raise. Participants noted there is currently insufficient foreign direct investment. Some said that capital can be raised with some work, but often at terms that are not particularly attractive. It was also observed that capital in Canada continues to be largely controlled by interests in central Canada that do not always understand or appreciate the opportunities in Edmonton. People stressed that improving access to capital from diverse sources will be necessary in order for Edmonton to move its economy forward.
- Logistics and access to markets could be enhanced. While it is recognized that progress has been made over time, there are still opportunities to enhance how freely and easily products and services can flow to other markets. This includes areas such as: improving international air connections, improving transportation corridors, and strengthening airport access. Participants also said that the cost of internet and data services remains too high relative to other places. In the twenty-first century, this factor is as challenging for supply chains as having poor highways or rail service.
- Edmonton still lacks many things that some members of younger generations are seeking. It was suggested that Edmonton continues to be a less-than-ideal place for the next generation of workers, researchers and innovators, because it does not offer all of the features that many young people want. For example, rather than a strong transit network like one would find in London or New York City, Edmonton continues to have a predominantly “car culture”. Although ride sharing and bike sharing options have been growing the city, these remain concentrated in certain areas rather than being available at large. Some people suggested that more will need to be done to make Edmonton a destination of choice for millennials and younger generations, who are likely to drive the expansion of the tech-innovation sector.
THE CONVERSATION CONTINUES
From the points above, you can see that participants in our conversation are increasingly diving into detail about what it will take to make Edmonton’s future economy a prosperous and resilient one. We are hearing a lot of frank talk about the state of our current economy and, at the same time, having spirited debates with each other about what’s possible and what’s realistic in terms of how Edmonton’s economy can evolve and what it can become.
As we continue our conversation through the summer, we encourage you to participate. Tell us your thoughts about what others have been saying. Do parts of it ring especially true with you? Do you think some comments are completely out of left field? We want to know. The more opinions we have in the mix, the better. This input will ultimately all be used to inform the creation of a new economy strategy for all of Edmonton, impacting all Edmontonians. Now’s a great chance to have your voice heard.