Canada's biggest business hub
Work never ends in booming Nisku-Leduc industrial centre
Paul Marck
The Edmonton Journal
Friday, August 10, 2007
This is the final article in a five-part series examining the economies of Edmonton's near neighbours.
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LEDUC - In hurry-up Leduc and Nisku, the business crowd knows how to do breakfast in a big way. Monthly business breakfasts for the Nisku-Leduc Economic Development Authority routinely attract 350, and the 7 a.m. start time, rolled back from 7:15, has crept back even earlier to 6:40.
That, says Pat Klak, is to accommodate an early-working bunch who want a quick bite, a sage message from the guest speaker, and to be on their way to work by 8:15 a.m. in the busy industrial basins of Nisku, Leduc and Edmonton International Airport.
The power breakfasts have been going on since the early 1990s -- and for good reason.
"Most business owners don't have time for lunch, they just want to keep working," says Klak, executive director of the Leduc Nisku Economic Development Authority.
The economic developer, a joint venture between Leduc city and county, is among the most aggressive and busiest agencies in Alberta. It boasts a volunteer force of 3,000, regular overseas business missions and a global contingent of 1,600 goodwill "ambassadors," an unpaid army who convey Leduc and Nisku's good news around the world.
With nearby Edmonton International Airport adding to its reputation as Alberta's International Region, Leduc-Nisku is a hub of busy business.
There's every recognizable American name among international energy firms and a vibrant economy built around local companies that service, sell and provide for every need in Alberta's primary industry.
In the old days the business park specialized in oilfield services, but today businesses have diversified to the point that only 30 per cent of Nisku firms are tied to the oilpatch. Yet there is no doubt this is oil country, despite canola fields on the horizon and retail malls down the road.
In a quick tour around Nisku, it's evident that nobody stops for anything. A constant thunder of heavy trucks kick up dust and pickups whip in and out of industrial yards at breakneck speed, with nary a glance towards oncoming traffic. Stop signs are just decorations at intersections.
Given the startling pace, it is no surprise that the mother of invention is seen everywhere around Nisku and Leduc.
Take Stoneham Drilling Inc., operating from temporary quarters as the company's new building is constructed on an three-hectare lot in Leduc Business Park. For now, it's a Quonset hut and trailers.
"We hope to be inside before the snowballs start flying," says Skip Stewart, Stoneham's vice-president of operations.
Calgary-based Stoneham was in rented space in Nisku, with equipment spread across different locations, before deciding last year to build its own yard.
While there was some slack in drilling earlier this year, Stoneham has been busy assembling four new rigs, for a total of 19 that will drill gas around Rocky Mountain House and as far away as Chetwynd, B.C., this winter.
In the last quarter, Stoneham built six rigs, at a cost of $11.4 million. The company isn't really in the rig-building business, but with a 14-month delay in getting parts and equipment, Stoneham found itself doing just that, Stewart said.
"What we really see now is the result of demand from customers one-and-a-half and two years ago," said Stewart, a veteran of more than 48 years in the oilfield.
For Pat Wilson, owner of Camex Equipment Sales and Rental Inc., a heavy equipment manufacturer and dealer, Alberta's booming energy sector meant a huge expansion. From a 5,000-square-foot facility that Camex started in 1992, the company grew to a new, second, 50,000-square-foot manufacturing facility in Nisku three years ago.
Camex also got into manufacturing as a way to cope with chronic supplier shortages for the custom-built oilfield service trucks it sells.
The expansion turned out to be a sound business decision. Last year Camex's 80 employees turned out a record 220 new vehicles. As Camex expanded, revenues grew from $50 million to $118 million.
At the same time, Camex's international sales have grown to about 20 per cent of total business.
"The last three years have been record years," Wilson says. Despite a slowdown in 2007, indications are that exploration and service firms will ramp up again this winter, he says. "I think with oil at $77 a barrel and going up, it will continue to stay strong."
Growing businesses translate into a growing industrial area. Alberta's economic boom has seen the Nisku Business Park mushroom from 900 hectares 2,400 hectares in the past five years, with nearly 600 companies, a workforce of 14,000 and 65 per cent of businesses working internationally.
Plus, the bustling new industrial park growing up next to Nisku across Airport Road, Leduc Business Park, is already home to 50 new businesses.
Broker Barrie Whittingham of Garstad & Whittingham Realty Inc. in Nisku said prices for serviced industrial land have tripled since 2004 to $375,000 an acre, from $125,000 to $150,000.
"It's been very busy for the last three years," Whittingham said.
Industrial land sales have eased slightly this year, but inquiries from Calgary, Houston and elsewhere seeking land still come in every day, he said.
Whittingham said there is no question that Alberta's oil boom is fuelling the land rush in the Leduc Business Park.
"There's no land at all in Nisku to speak of, probably less than 20 acres," Whittingham said.
The shift towards the new business park is seen in the value of building permits issued to the end of June, compared to the first six months of 2006.
Total value of all building permits -- commercial, industrial and residential -- issued by the City of Leduc totalled $150 million to the end of June, nearly double the $77 million worth in the first half of 2006.
Leduc Mayor Greg Krischke says the turning point in the economy came in 2004, when the value of all building permits was only $60 million.
"Since that time we've exploded."
The total value nearly doubled to $105 million in 2005 and hit a record $165 million for all of 2006. "So you can see we've really ramped up," Krischke said.
So much so that annexation plans are on the front burner again. Until recently, the city believed it had enough industrial land to last until 2040. Now the city expects to apply to annex more land from the county within five years.
Relations between the two municipalities are friendly, and they now co-operate on planning issues, rather than setting up a buffer zone and leaving each to work out its own issues.
Leduc County Reeve John Whaley jokes about the bustling hub of activity Nisku has become, as the county's centrepiece of entrepreneurial enterprise.
"Don't stand still too long or you'll get run over," Whaley says.
He credits the province for hiking its per-capita grant formula three years ago, which has helped Leduc, with its relatively small population base, to make infrastructure and service improvements to keep up with the rapid industrial expansion.
"Everybody wishes for nice, sustainable growth, and for the last few years it's been trying for everybody," Whaley says.
With growth come difficulties in keeping up with municipal services and improvement spending. Alberta's chronic skills shortage means contractors and developers face mounting costs and delays.
"With municipalities, as long as it's good, we have to do our best to address it. If it slows down, that gives us some breathing room. It's not up to us. The economic boom is driven by bigger forces than our small municipalities."
Leduc County, which has a different way of measuring development, had $16 million worth of building and demolition permits issued to the end of June 2006, compared to a peak of $29 million for the first half of this year.
All the same, it shows that growth has been a hallmark in Nisku-Leduc for years, making it the biggest industrial and business hub in the country, since a handful of people and companies joined to kick off the economic development partnership in 1992.
"That was really the beginning of putting together a comprehensive marketing team," says Pat Klak of the Economic Development Authority.
The marketing continues, but the focus has changed.
"We have the same challenges as everybody else," she says. "It's crazy. For us, growth is not a new problem."
Mike Slade, chairman of the economic development authority and a sales representative with Nisku Printers, says proof of growth is everywhere, from the hiring signs outside most businesses to firms -- like Stoneham Drilling -- setting up shop in portable office trailers and Quonset huts before their buildings are constructed.
Staff shortages are causing a rebound effect, Slade says. An apparent slowdown in oilfield drilling sent a lot of rig workers searching for work in construction. But drilling didn't ease as much as expected, and now the riggers are leaving the building industry to return to the oilpatch, creating problems for construction contractors.
Aside from labour woes, Slade sees a big difference between the oil boom of three decades ago and the current one.
"The big boom everybody talks about way back -- that was pretty hot," Slade says.
"This is a much different thing. There's been more planning involved, a lot more seasoned people and a lot of the businesses have really matured a lot. With the shrinking globe, the dynamics that come with it, you've had to adapt. I can't say I've ever seen anything like it."
LEDUC CITY
POPULATION:
2006 16,288
2011 *17,750
2026 *23,659
TOTAL TAX LEVY:
2006 $17.5 million
2011 *$19.1 million
2026 *$24.8 million
RESIDENTIAL HOUSING UNITS
2006 6,333
2011 *6,981
2026 *9,332
TOTAL EMPLOYMENT
2006 7,955
2011 *8,543
2026 *10,199
*projected
LEDUC COUNTY
POPULATION:
2006 13,546
2011 *14,437
2026 *18,061
TOTAL TAX LEVY:
2006 $25.1 million
2011 *$26.9 million
2026 *$32.5 million
RESIDENTIAL HOUSING UNITS
2006 5,085
2011 *5,482
2026 *6,879
TOTAL EMPLOYMENT
2006 16,335
2011 *17,439
2026 *19,427
*projected
Major area businesses Leduc/Nisku: PCL; Ledcor; Trinidad Drilling; Aquita Drilling; Sperry-Sun Drilling; Spar Aerospace; Edmonton International Airport
Sources: Hemson Consulting Ltd; albertafirst.com; Leduc-Nisku Economic Development Authority
© The Edmonton Journal 2007
Copyright © 2007 CanWest Interactive, a division of CanWest MediaWorks Publications, Inc.. All rights reserved.
Canada's biggest business hub: Nisku-Leduc
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