GDP forecast: ‘A big difference from history’
Here’s the Atlantic news we’re tracking this week, from a surprisingly rosy economic forecast to a big letdown on the LNG front.
Best of a bad lot
The latest projections for economic growth in Canada are decidedly downbeat, but Atlantic Canada is expected to do better than most parts of the country. The Conference Board of Canada is forecasting Canada’s economy will expand by just 1.0 percent in 2024, thanks to high interest rates having put a damper on both consumer spending and business investment. All four Atlantic provinces are expected outperform that national average, however, with Newfoundland and Labrador leading the way with the country’s strongest GDP growth, at 1.8 percent.
“It’s a big difference from history,” said Conference Board economist Richard Forbes, noting the years of out-migration and stagnation in Canada’s easternmost province. Much of its relative strength is due to renewed operations at the Terra Nova Offshore oil platform. The project’s floating production, storage and offloading vessel was out of service between 2019 and 2023, undergoing repairs that saw countless delays. The massive vessel, standing 18 stories high and more than 290 metres long, went back to work late last year and serves as a kind of floating economic development engine for the province. One industry report estimated the Terra Nova oilfield will provide 3,400 direct and indirect jobs and more than $620 million in tax and royalty revenue for the province by the end of its lifespan.
The Conference Board estimates Newfoundland and Labrador’s GDP growth next year will match the anticipated national average of 2.1 percent, though it could do even better given the reopening of the commercial cod fishery.
Nova Scotia, P.E.I. and New Brunswick are all expected to beat the national average for growth this year as well, but only just. Strong population growth, healthy exports and increased infrastructure spending will help Nova Scotia’s economy grow by 1.4 percent this year, though it’s expected to marginally trail the national average next year, at 1.8 percent. P.E.I. is expected to grow just 1.2 percent this year as population growth and investment has weakened, and New Brunswick will see a 1.1 percent GDP increase due to the same factors. Both are expected to rebound modestly next year, to 2.2 percent and 1.9 percent respectively.
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Chipping away
A more modest, but still much-needed economic rebound is underway in rural New Brunswick. Nearly six months after a fire destroyed its factory in tiny Waterville, the Covered Bridge Potato Chips company is once again stocking shelves and has about half its 200 staff back at work. The company had to get creative to stay in business, enlisting the help of local businesses to build new equipment quickly and converting a warehouse into a seasoning operation.
For now, the company is shipping Russet potatoes to six different chip producers in Canada and the United States, all of whom have been instructed how to fry them just so to create Covered Bridge’s “signature crunch.” The chips are then shipped back to be seasoned at the repurposed warehouse in nearby Woodstock.
CEO Ryan Albright is hoping to install a fryer at the warehouse to bring at least some of that work back in-house; the company is still assessing where and when to rebuild the factory. “As an entrepreneur ... there’s only two things you can do: one, you can just give up, or two, you deal with it and just keep pressing on,” Albright told the CBC.
Let the bleeding begin
The sale has gone through and the layoffs have begun. Early this month, the Nova Scotia Supreme Court approved Postmedia’s purchase of the Saltwire Network, publisher of the St. John’s Telegram, the Halifax Chronicle Herald and Cape Breton Post, among other newspapers. Last week, those who worried the sale would mean more downsizing in the troubled news operation saw their fears realized.
The Telegram, which dates back to 1879, announced it will eliminate its daily print edition and become a weekly newspaper starting this Friday, with daily content and breaking news available on its website. The move will mean a 30 percent cut in staff, or four of the newsroom’s 13 employees, including all the photojournalists. “It was a pretty grim scene,” Keith Gosse, president of Unifor Local 441 at The Telegram said of the announcement. “There was some anger, a lot of tears and just a bit of hopelessness for the news business.” Gosse is one of the photographers losing his job after 38 years at the paper.
Sources have told allNovaScotia that 20 to 30 Saltwire employees would be getting layoff notices imminently and another 20 to 30 have been given job offers, leaving some 250 to 270 employees receiving “transition notices” of 30, 60 or 90 days. Essentially the new owners will decide who stays and who goes in that timeframe. “Change is difficult,” Postmedia CEO Andrew MacLeod said in early August, offering words of cold comfort, “but we at Postmedia believe with deep conviction that there is a positive, sustainable and vibrant future for news media in Atlantic Canada and across Canada.”
Selling salts
Atlas Salt Inc. has signed a joint venture and distribution deal with a U.S. partner that could help it move ahead with its Great Atlantic salt mine in Western Newfoundland. The $480-million project would produce 2.5 million tonnes of road de-icing salt per year, and be the first such mine in the province, as well as the first new one in Canada in decades.
When construction is in full swing, the project could employ as many as 300 people, with an estimated 170 permanent jobs when the mine becomes operational. One study forecasts it will boost the province’s GDP by $4.8 billion over its 34-year lifespan.
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The company still needs to secure financing, however, and hopes to do so by early next year; it’s aiming for commercial production beginning as soon as 2029. The deal announced last week with Kansas-based Scotwood Industries LLC should help. Scotwood is the biggest distributor of packaged de-icing salt for the retail market in the U.S., and the agreement would see it take roughly half the mine’s production for sale in Canada, with the rest to be used for bulk road salt.
The road not taken
Those who see Liquified Natural Gas development as a lost opportunity for Atlantic Canada may be further dismayed by the revelation last week that just two months before Prime Minister Justin Trudeau said there has “never been a strong business case” to build LNG facilities in the region, Canada’s Foreign Affairs Department was touting its potential.
Proponents see LNG as a kind of “bridge fuel” that could replace other, dirtier fossil fuels during the global transition to clean energy; opponents see it as just another fossil fuel whose development would delay that transition. Canada has two projects underway, both in B.C., but efforts to develop LNG facilities in Atlantic Canada have come to naught.
Two proposals have fallen through in the last two years, with Calgary-based Pieridae Energy selling the land and the rights to its shelved Goldboro LNG project in Nova Scotia just last month.
The lack of pipeline capacity to bring natural gas east from B.C. and Alberta is typically seen as the biggest obstacle, but analysts say it could be overcome if the political will existed. Russia’s invasion of the Ukraine in 2022, which caused gas prices to spike, renewed hopes that projects might proceed in the region with exports helping to assure Europe’s energy security. A briefing note for International Trade Minister Mary Ng, obtained by The Logic, noted that “Europe can benefit from Canadian LNG, and Canada would benefit from an energy partnership with Europe.” It pointed to “several projects on the East Coast of Canada that present options for potential future exports to the EU.”
Two and a half months later, the Prime Minister was signing a green hydrogen deal alongside German chancellor Olaf Scholz and dismissing the potential for LNG, even as Scholz noted his country “will require LNG for a transition period.”
Germany has since signed a 15-year supply deal with Qatar, with shipments to start in 2026. The industry has exploded in the U.S., where six LNG facilities are operating on the East Coast and another 15 have been approved by regulators, all but one on the Atlantic seaboard. Greek Prime Minister Kyriakos Mitsotakis visited Canada in March and said his country needs LNG “for the foreseeable future as a significant source of energy.” He suggested Canada would be a welcome supplier.
Experts say it’s not too late to get on board but acknowledge it would require massive investment and a decided change in the political mood. Pipeline capacity is “not a physical constraint, it’s a political constraint,” Phil Hodge, CEO of Calgary natural gas producer Pine Cliff and former adviser to the Alberta government told The Logic. In the last few years, both the federal and Quebec governments rejected a $14-billion proposal in Quebec that would have required a new pipeline to connect to TC Energy’s Canadian Mainline, the main artery for west-east transmission of natural gas.
More, and faster please
Atlantic Canada’s homebuilders are still working double time to address (and take advantage of) a housing crunch brought on by immigration and population growth. Housing starts were up again in July everywhere but New Brunswick, according to Canada Mortgage and Housing Corporation statistics covering municipalities of more than 10,000 people. They were up by 39 percent in Newfoundland and Labrador and 25 percent in Nova Scotia, year-over-year, and by a whopping 174 percent in P.E.I., though of course off a smaller base. (For Canada as a whole, housing starts were up 10 percent in July.)
The searing pace continues a very strong year for those three provinces, all of which have seen housing starts increase by more than 50 percent year to date. Even in New Brunswick, where a plunge in multi-unit apartment construction saw housing starts drop eight percent in July, they’re still up 39 percent year-to-date. Halifax, the region’s largest city, has seen starts jump 78 percent year-to-date.
But that doesn’t mean they can’t go faster, at least according to the Nova Scotia government. The province announced last week it is amending Halifax Regional Municipality's charter in hopes of speeding development. Manufactured housing, including modified shipping containers, will now be permitted in all residential areas, new developments in the municipality’s “urban service area” will not have to meet parking requirements and temporary housing will be allowed to let workers live on-site during construction. The province also wants to see a secondary planning strategy for suburban areas in place by end of January.
The move follows legislation passed last year that gives the province the right to approve housing projects in the region, which annoyed Mayor Mike Savage and other councillors. The municipality says it is studying the new rules to figure out how to meet them, but that any new suburban plan won’t be ready by the deadline. The city has already made efforts to increase housing density, and promised to allow buildings of more than 40 storeys in much of Halifax and Dartmouth.
One intriguing development proposal filed recently would see a 34-storey tower built on the footprint of just two existing single-family homes in the Clayton Park neighbourhood. AllNovaScotia reports the proposed building would contain just 31 residential units, or a few hundred less than one might expect of a building that tall.
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