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Calgary Regional District.

CALGARY REGIONAL DISTRICT

REGIONAL BUSINESS REPORT

At one time, two words summed up Calgary's image - energy and Stampede. Energy was the engine pulling the economy, while the annual Calgary Stampede attracted tourists from around the world. They're still number one in their respective fields. But both are making room for a host of aggressive newcomers that are fast fulfilling the promise of a diversified Calgary economy.

Consider that telecommunications alone is a $1-billion-a-year industry in Calgary, with prospects of reaching the $2-billion plateau by 1995. Or that a booming electronics industry employs some 20,000 to 30,000 Calgarians from electrical engineers to computer specialists.

In tourism, the legacy of facilities from the 1988 Winter Olympics has helped make Calgary a year-round attraction. And facilities like the nearby Tyrrell Museum of Palaeontology and the Spruce Meadows equestrian complex are among the finest of their kind in the world.

At the same time, the city has burgeoning industries in film production, fashion, furniture, food processing, plastics and computers. Perhaps the true measure of how diverse Calgary's economy has become is that in a time of stagnant energy prices, housing values have jumped and retail spending has remained near the top, per capita, in Canada.

"The downturn in 1982 diversified the economy by putting a lot of people on the street who got into businesses that were not oil related," says Bruce McDonald, executive director of the Calgary Economic Development Authority. "Now, a lot of those people are required by companies like TransCanada PipeLines," which recently moved its head office to Calgary from Toronto.

TransCanada PipeLines is just one in a string of corporate headliners to relocate their headquarters to Calgary in recent years. Perhaps an even bigger coup was the recent decision by aeronautics giant Hughes Aircraft to choose Calgary for its new Canadian headquarters. From its Calgary is working on a $380-million contract to supply Canada with a computerized air traffic control system.

"When a company like Hughes, one of the top advanced technology companies in North America, if not the world, picks Calgary as its headquarters location, other companies start to look over the fence," says McDonald, who has been fielding an increasing number of corporate enquiries from far-flung business capitals. It's Calgary's proximity to western Canadian and U.S. markets that attracts them as well as its excellent transportation facilities, its highly educated workforce and a quality of life rated by a University of Guelph study as the best in Canada.

Perhaps the clinching argument is Calgary's entrepreneurial attitude. Keyword Office Technologies, a world leader in the conversion of computer documents from one system to another, recently closed much of its U.S. operation and strengthened its Calgary headquarters. The reason the company gave, in large part, was that the work ethic was better in Calgary than in California. Since the reconsolidation, "productivity has shot up," says company president Bob Blackshaw.

This market-driven attitude also shows up in an aggressive approach to tackling export markets, particularly in the United States and the Pacific Rim. Calgary business leaders were among the most ardent supporters of the free trade agreement with the United States and were among the first to take advantage of the resulting opportunities. "I believe the Alberta business community will be the biggest gainer in all of Canada from the Free Trade Agreement," says former premier Peter Lougheed, a father of free trade.

City leaders are mapping out even more ambitious plans for the future. In 1989, the city produced a unique economic blueprint called "Calgary...Into the 21st Century." This document "is the continuation of the process to wean Calgary away from over-dependence on the energy and natural resource sectors and to enable Calgary to take advantage of the worldwide knowledge explosion and emerging situations and technologies," the report says.

Diversification, the document indicates, can best be achieved by focusing on a series of challenges. These include capitalizing on free trade, becoming a "host, consultant and educator to the world," and establishing Calgary as the world's first "information port." This last, visionary idea involves using Calgary's computer expertise to gather information from around the world, process it and then use and disseminate the resulting knowledge.

What makes this report more than an economic pipe-dream is that the city officials and the 100-plus business leaders who drafted the document are also actively involved in implementing it. "A lot of those business people looking at those challenges are going to recognize opportunities and take advantage of them," says McDonald.

Energy

Make no mistake, though, energy still ranks as the most important sector of Calgary's economy. Nearly 700 exploration and development companies are based in Calgary, 83 per cent of the Canadian total, and as many service and supply companies. Calgary stands third in Canada in terms of number of head offices, with more than 40 companies headquartered there. And energy is the reason. Calgary's tide of Oil Capital of Canada has been further strengthened in recent years by the decisions of industry giants to move their head offices to what McDonald calls the "Business Capital of Alberta."

From high-rise offices in downtown Calgary, these companies led the search for oil and gas in western Canada, off the country's north and east coasts and in various energy-rich corners of the world. Indeed, Calgary's expertise is in high demand worldwide in such areas as petroleum engineering, pipeline and petrochemical construction, and operation and heavy oil development. As proof of this expertise, Calgary firms conduct one-seventh of the world's seismic activity, employing roughly 3,000 people in data processing and interpretation.

Calgary's oil patch, too, has diversified. Once driven by the pursuit of light crude oil in the western Canadian basin, the city's energy companies have shifted much of their attention to the great stores of natural gas underlying Alberta, British Columbia and the North. That combined with the advent of energy deregulation and free trade has opened the door to increased sales of natural gas to U.S. markets and a related expansion of pipeline capacity. At the same time, development of Alberta's vast reserves of oil sands and heavy oil deposits is pushing ahead to replace declining conventional reserves. Several mega-projects are expected to proceed this decade.

To add value to Alberta's natural gas reserves, Calgary companies such as Nova Corporation have invested several billion dollars in petrochemical plants, which strip from the gas stream elements such as ethane, a building block for many plastic products. The establishment of a growing number of Calgary companies that manufacture plastic bags, foam containers and other plastic products help keep further wealth in the province.

Similarly, several Calgary-based companies remove sulphur from sour natural gas deposits and export it to many countries, particularly in the Pacific Rim. The strength of Calgary's coal industry, which boasts 60 per cent of Canada's coal production head offices, demonstrates the further diversification within the energy sector.

Undoubtedly, energy has created much wealth for Calgary. But one of its greatest legacies has been the nurturing of other spin-off industries. Many companies which began life serving the petroleum industry have adapted their expertise and products to the specific needs of other markets worldwide.

For example, Willowglen Systems and Westronic developed sophisticated systems for the remote monitoring of pipelines and other energy projects. These systems, called SCADA (Supervisory Control and Data Acquisition), now stand at the leading edge of monitoring massive waterworks projects, large apartment complexes and the like. At the other end of the spectrum, entrepreneur Lionel Conn has branched out from energy to develop computerized skate-sharpening machines and high-fashion leather produced from pressed fish skins.

Advanced

Technology

Perhaps the greatest beneficiary of living under the energy umbrella has been Calgary's rapidly growing advance technology sector. For many years, the energy industry has demanded the latest and best technologies for finding oil, interpreting data and communicating information. Not surprisingly, Calgary is one of the most active centres for computer transactions in the world. Consider that some 200 software products for natural resource management and mineral and mining processing are marketed in Alberta.

"The oil industry has given Calgary a leg up in becoming one of the leaders in high technology in the world, certainly in the area of software," says McDonald. "This city is very advanced in computer technology. That's why we have such good software and the development of black boxes that talk to each other. Most cities have yet to catch up to what we're doing here."

Calgary is home to more than two-thirds of Alberta's advanced technology companies, which earn annual revenues of more than $2 billion. Telecommunications is the city's largest advanced technology sector, a $1-billion industry that employs more than 2,500 people and exports more than 90 per cent of its varied products.

Northern Telecom Canada leads the way, manufacturing digital switching equipment and business telephone systems at its two Calgary plants. Its Meridian Northstar system for small business is one of the few phone systems manufactured entirely in North America, since its 1988 launch, it has been shipped to some 40 countries. Close behind is NovAtel Communications Ltd., a world leader in the manufacturing of cellular telephone systems. NovAtel's new Calgary factory will include robots in its computer-integrated manufacturing complex.

At the same time, another group of Calgary telecommunication firms is winning international contracts with innovative technologies. Intera Technologies, for example, is a world leader in airborne remote sensing, used for everything from monitoring hail clouds and tracking the movements of icebergs to mapping the geology of entire countries. Intera is moving even further afield by becoming a partner in Canada's forthcoming earth observation satellite.

Other Calgary advanced technology firms are creating a healthy spin-off industry in aeronautics. For instance, Pelorus Navigation Systems has developed microwave landing systems for airports, while ITRES Research has created imager spectrograph instruments used in space programs. The naming of the University of Calgary (U of C) as the administrative centre of the new Canadian Network for Space Research has bolstered the efforts of such companies.

Second in high-tech size is electronics. "Calgary's electronics industry has as many companies per capita as anywhere in North America," says Bill Croft, president of the Calgary Research and Development Authority. The industry employs some 20,000 to 30,000 Calgarians, many of them working for small companies that have emerged in the past decade.

Some Calgary software companies, such as D&S Petroleum and Q.C. Data Collectors, have maintained oil industry ties by developing sophisticated programs that interpret and digitize oil well logs. Others have gained expertise in computer document conversion and computer simulations for military applications. One exciting development is DataSpan Technology, leading-edge technology for automatically converting manual maps and satellite photographs to computers. Calgary's computer hardware companies include LSI Logic Corporation of Canada, which manufactures high-performance personal computer chip sets for world markets.

A good portion of Calgary's advance technology future belongs to the scientific breakthroughs of biotechnology. Alta Genetics is a world leader in the development, production and marketing of livestock genetics. At the same time, medical research supported by the $300-million Alberta Heritage Foundation for Medical Research is bearing commercial fruits. A sleeping mask developed by University of Calgary scientist John Remmers, for example, is helping many sufferers of a disorder known as sleep apnea.

Many of Calgary's advanced technology companies are spin-offs of research begun at the U of C, and most retain working links with the university. To help more scientific research reach market, the university has established a for-profit company, University Technologies International, with a mandate of transferring technology into commercial ventures.

Nearby, the Calgary Research and Development Authority (CRDA) operates Discovery Place I, a multi-tenant research facility. The CRDA also runs the Calgary Advanced Technology Centre, a small business incubator that assists in the launch and rapid growth of advanced technology companies.

Manufacturing

The rise of Calgary's $4-billion manufacturing industry bears close ties to technological advances. Visit some of Calgary's newest factories and you'll find the latest in robots, work cells, fibre optics and computer-aided design. This largely results from heavy investment in research and development. Calgary houses the largest concentration of research facilities in western Canada. These include the 42.5-hectare University Research Park, the second largest such facility in Canada, laboratories of major petroleum companies and in-house facilities of small entrepreneurial companies.

Paving the way for further leaps forward is the provincially-funded Alberta Research Council, which operates an advanced manufacturing demonstration facility in Calgary. This facility allows companies to investigate alternative manufacturing technologies such as the concept of computer-integrated enterprise.

Perhaps surprisingly, food and beverage processing is Calgary's largest manufacturing sector, employing one-sixth of the city's manufacturing workforce. Meat processing accounts for the bulk of activity here, shipping a variety of finished products to export and local markets from state-of-the-art plants.

At the other end of the spectrum, a growing number of entrepreneurs have found niches for specialty products such as pastas, tortilla chips, desserts, gourmet jams and gift boxes of smoked pheasant. Three Calgary companies that have achieved international distinction are Bernard Callebaut Chocolaterie, producer of exquisite hand-made chocolates; Big Rock Brewery, maker of a selection of dark, unpasteurized beer; and Britl Bread, baker of Scandinavian-style crisp breads that are reaching consumers in the United States.

Food processing, by the way, is the most visible part of a significant agriculture industry in Calgary. City firms are involved in manufacturing farm machinery, marketing farm products and shipping them to all points of the globe. Calgary is home to several farm organizations as well as regular livestock shows and sales. Several leading biotechnology research companies are also based here.

Calgary's other manufacturing heavyweights include the printing, publishing and allied industries, fabricated metal products, electrical and electronic products and transportation equipment. Companies in this diverse sector make everything from oil well valves and farm machinery to business cards and telephone sets.

Over the years, Calgary companies have built an international reputation in the manufacturing of special shelters. The 102-year-old Sprung Instant Structures is the world's largest manufacturer of portable fabric structures, used for everything from sheltering earthquake victims to covering a NASA space shuttle. ATCO, whose famous portable buildings are often seen in school yards and on construction sites, now builds complete mini-cities for hostile environments.

Calgary manufacturers also keep industry and people on the move. Canadian Foremost builds all types of huge all-terrain vehicles bought by the nations of the world, most notably the Soviet Union. On water, Ski-Free Marine has just developed the world's first personal water-skiing machine.

Also making an international splash are Calgary's designers. In its computerized Calgary plant, Sun Ice manufacturers and exports large volumes of fashionable yet warm winter outerwear, while Mermaid Leather International supplies the likes of Pierre Cardin with unique leathers made from pressed fish skins. And SMED Manufacturing has combined high technology with European designs to produce universally praised furniture.

Tourism

By early in the next century, tourism is expected to become a dominant industry, challenging energy as Calgary's top employer. Already, tourism is well on its way to achieving that latter distinction, accounting for 19,000 direct and indirect jobs. In 1989, Calgary attracted a record 8.5 million visitors, who spent $550 million in first-time expenditures.

Spurred by the unprecedented success of the 1988 Winter Olympic Games, Calgary tourism is booming. More than a one-time extravaganza, the Olympics provided worldwide exposure to several billion people, creating a window of opportunity for marketing the city as an international destination.

The Calgary Stampede immediately capitalized by attracting record crowds to the annual "Greatest Outdoor Show on Earth." Likewise, the legacy of Olympic facilities has drawn long lineups to see the bobsleigh track and 90-metre ski jump tower at Canada Olympic Park, the Olympic speedskating Oval and the bowl-shaped Olympic Saddledome. The Olympics also spawned another legacy, the week-long Calgary Winter Festival.

These newest additions enhance an already dazzling array of attractions. They include the Glenbow Museum, Heritage Park, Fort Calgary, the Calgary Zoo and Prehistoric Park, the Planetarium and Space Centre, the refurbished Calgary Tower and a new military museum, recently opened by Queen Elizabeth.

Nearby, Banff lures several million visitors a year to Canada's oldest national park. Closer to the city is Kananaskis Country, a 5,200-square-kilometre playground that boasts two championship golf courses, two ski resorts, an alpine village, stocked trout ponds and miles of hiking, biking and cross-country skiing trails through the spectacular front ranges of the Rocky Mountains.

To the northeast of Calgary, 500,000 visitors a year make the pilgrimage to the Badlands of Drumheller, home of one of the world's finest dinosaur halls, the Tyrrell Museum of Palaeontology. To the south, tourists marvel at Head-Smashed-In Buffalo Jump, where for six thousand years. Plains Indians hunted buffalo by driving them off low cliffs.

And that's just a beginning. On the drawing board are a proposed ranch museum in nearby Cochrane, the $7-million-plus Calgary Chinese Cultural Centre and an ambitious expansion of the greatest draw of them all, the Calgary Exhibition and Stampede. At the same time, Calgary tourism officials are planning for the future by mapping out aggressive marketing campaigns in countries such as Japan and by upgrading training standards in the hospitality industry.

To accommodate visitors, Calgary's hotels and motels offer more than 9,000 approved units. These accommodations support the city's excellent convention facilities, led by the spacious downtown Calgary Convention Centre. During 1989, the city hosted some 75,000 convention delegates, who spent $40 million. Confirmed bookings in 1990 were expected to attract more than 100,000 convention delegates.

Education

Business is also attracted to Calgary because of its productive and highly-educated workforce. Calgary's participation rate in the labor force is 75 per cent, the highest in the country, while unemployment as of mid-July stands at just over seven per cent. At the same time, Calgarians are the best educated in Canada; 55 per cent have post-secondary education, compared with a national average of 42 per cent.

In its short history, the University of Calgary has attracted a full-time student population of 22,000 and become a national leader in fields such as management, medicine, sports, environmental design and applied research. The U of C is home to several research institutes and has a large industrial research park on its doorstep. The university's research funding totals more than $50 million a year.

The U of C's Faculty of Management is heavily involved with the business community through its New Venture Development Program, executive management programs and International Centre. The university also boasts a Cyber 205 Supercomputer, available to companies involved in extensive research and development projects.

Established in 1916, the Southern Alberta Institute of Technology (SAIT) has 5,500 full-time and 40,000 part-time students. The school offers diploma programs in such areas as electronics engineering, avionics technology, petroleum technology and hotel administration as well as 29 apprenticeship trade programs. In recent years, SAIT has taken its training expertise abroad to countries such as China, Pakistan, Indonesia and Ecuador.

Transportation

A modern transportation network that handles goods and people quickly and cost effectively keeps Calgary business on the move. A principal advantage is Calgary's location at a major intersection in southern Alberta is one of its principal advantages. The Trans-Canada Highway and the CP Rail main line pass through Calgary, which oversees the east-west flow of both national and regional goods. Highway 2 intersects Calgary, providing high-speed access to U.S. interstate highways to the south and Edmonton and the Northwest Territories to the north.

Calgary is also the headquarters of major transportation organizations, including Greyhound Lines of Canada, the Alberta Trucking Association and PWA Corporation, which owns Canadian Airlines International.

Calgary is a hub of air traffic, with more domestic and international flights than any other prairie city and a cargo volume of some 30 million kilograms a year. Nearly five million passengers a year pass through the Calgary International Airport, 12 kilometres north of downtown, which offers some 20 non-stop flights a week to Europe, direct flights to Tokyo and many links with U.S. cities.

The Calgary Transportation Authority (CTA) is currently negotiating the transfer of the Calgary International and Springbank Airports from federal to local control, with a tentative takeover date of early 1991. The CTA intends to increase marketing and thereby attract more airlines and concessions to the International Airport and more industry to airport lands.

Calgary is also a major regional trucking centre, serving southern Alberta, southeast B.C. and bordering U.S. states with several hundred trucking firms. The trucking industry is bolstered by Calgary's distinction of having the lowest cumulative kilometres between major centres in western Canada.

The western flow of goods to tidewater has been streamlined by railway improvements such as the completion of the $500-million Rogers Pass tunnel, which has increased the passage of westbound trains to 24 from 15 a day. At the same time, the new Coquihalla Highway through British Columbia's interior has shortened the Calgary-Vancouver trucking route to under 1,000 kilometres.

A further improvement is the establishment of Alberta Intermodal Services, whose Calgary yard allows containers to be quickly transferred between truck and rail. Each year, 55,000 containers pass through Calgary, 40,000 destined for the West coast. Their location can be pinpointed within minutes with computerized tracing systems.

Within the city, freeways and rail spur lines provide easy access to 2,000 warehouse buildings in industrial parks. For commuters, public transit and a well-connected network of roads make short work of getting to and from the office. Calgary has nearly 30 kilometres of Light-Rail Transit tracks, which converge from three quadrants of the city into the downtown core. The LRT is fed by a system of more than 500 buses.

Real Estate

Each day a workforce of some 80,000 Calgarians arrives in Calgary's modern downtown core. They are housed within a compact area that contains nearly 2.8 million square metres of office space. Downtown is distinguished by many signature buildings bearing the names of energy industry giants such as Nova, PetroCanada, Esso, Shell and Amoco. These Class A buildings boast the latest ideas in design and technology, creating an efficiency and elegance that has won numerous national awards.

Bankers Hall, a world-class building that rises above the refurbished Stephen Avenue Mall, is the latest of several new downtown skyscrapers. By 1991, it will be joined by the 40-storey Canada Trust Tower. Those additions will strengthen Calgary's position of having the highest amount of office space per capita of any major city in North America.

This current office construction boom has been joined by a rapid expansion in downtown retail space. Bankers Hall created four levels of classy retail space, while the new Eaton's Centre will add more than 100 retail stores. Nearby, a proposed development beside Prince's Island Park will include a festival market.

Outside downtown, the major shopping malls have undergone extensive facelifts in recent years. In total, Calgary has eight regional shopping centres with about 482,000 square metres of retail space. Several more malls are proposed, in large part the result of continued strong consumer spending. In 1987, Calgary turned in the highest department store sales per capita of Canada's major metropolitan areas.

The industrial real estate sector has also been vibrant, with a vacancy rate in 1989 below four per cent. Given low vacancies and rising lease rates, a surge in industrial real estate construction could be expected over the short term.

In 1989, more than 11,000 building permits were issued in Calgary, with a value of $977 million. That's up substantially from the 8,800 permits, worth $629 million, issued in 1988. The upward trend continued in early 1990 as permit values reached $464 million in the first four months of the year.

Much of that construction activity revolved around a revived single-family housing market, which in early 1990 reached its healthiest levels in nearly a decade. The average price of a resale house in Calgary jumped from $120,000 in November, 1989 to $137,000 four months later, when the market started to cool off.

Those prices are still reasonable compared with other major Canadian cities and given the relatively high incomes of Calgarians. Affordable housing has attracted investment from Ontario and from the growing exodus of people and capital from Hong Kong.

Finance

Another critical component of Calgary's business infrastructure is the city's financial sector. Many of Canada's banks and trust companies have set up regional offices in Calgary to help finance the intensive capital needs of energy and the other booming industries arising in the city.

Besides the major chartered banks, there are five retail banks, 30 credit unions and Alberta Treasury Branches located in the city. An additional 14 multinational banks, from the United States, Asia and the Far East, have established offices in Calgary to offer international pools of capital to business. The city is also an important regional centre for trust companies; 22 are located here.

When normal loans are unavailable or insufficient, companies can turn to the provincial Alberta Opportunity Company or the Federal Business Development Bank for financial assistance and counselling. Another option is to go public. The Alberta Stock Exchange (ASE), incorporated in 1914 as the Calgary Stock Exchange, is the fourth largest exchange in Canada, with some 900 companies listed. The ASE features junior capital pools, or "nickel deals," which allow startup companies a better chance of being listed on the ASE.

Calgary offers numerous sources of venture capital financing, ranging from the government-backed Vencap Equities Alberta to private lenders. From time to time, entrepreneurs can attend seminars or conferences to present their innovative ideas to a gathering of potential financiers.

Add all these advantages together and Calgary appears headed for prosperity built on diversity in the years ahead. Says Bruce McDonald: "Calgary is going to be one of the leading cities in North America going into the 21st century, because we're planning for it."

PHOTO : OIL IS WHERE YOU FIND IT: CALGARY EXPERTISE TAKES TO THE SEA.

PHOTO : FINANCIAL FIREWORKS: HIGH-TECH INDUSTRY FUELS THE BOOM

PHOTO : THE 1988 OLYMPICS HELPED CALGARY MAKE THE LONG JUMP INTO THE FUTURE

PHOTO : COWTOWN KICKS UP ITS HEELS AT THE ANNUAL STAMPEDE

PHOTO : ON THE GO: BE IT PEDESTRIAN, PLANE, PACKAGE OR TRAIN, CALGARY IS BUILT TO MOVE IT

PHOTO : OFFICE TOWERS, OIL RIGS: BOTH BRING IN THE GOLD.
COPYRIGHT 1990 Manitoba Business Ltd.
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Title Annotation:Regional Business Report
Author:Corbett, Bill
Publication:Manitoba Business
Date:Sep 1, 1990
Words:4397
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