REGIONAL CHECK-UP 2017

Transcription

1 REGIONAL CHECK-UP 2017 Northwest BC CPABC An Economic Regional Analysis Check-Up for the 2016 Region bccheckup.com 1

2 Nechako Northwest BC (Nechako & North Coast Development Regions) North Coast HIGHLIGHTS FORECAST WORK Unemployment: Job Losses: ,800 goods jobs > +1,600 service jobs 7.7% > 6.0% 12.0% > 8.7% NWBC BC NWBC BC INVEST Northwest BC (NWBC) is made up of the North Coast and Nechako development regions Recovering copper prices Youth Unemployment: Population: 95,599 residents or -1.3% + = Increasing mining activity Slowing construction activity Industries with the Most Job Losses: #3 Tariff on softwood lumber #1 #2 Manufacturing (-1,300) Construction (-700) Health Care & Social Assistance and Accommodation & Food Services (-500 each) Value of Major Projects: -3.8% to $225.4 billion NWBC accounts for 52% of BC s total value of major projects Slower economic activity Major projects data is based on Q /- are in comparison to Q data. Business Bankruptcies: Nechako: 2 reports North Coast: 1 report LIVE Educational Attainment: 62.9% of labour force has a post-secondary certificate/diploma or higher (+4.2 ppt) Greatest increase in BC for education attainment Consumer Insolvencies: Nechako: 2.3 per 1,000 adults or North Coast: 1.5 per 1,000 adults or +35.3% +15.4% bccheckup.com Source:. All numbers are from Increases/decreases are in comparison to 2015 data.

3 Executive Summary BC experienced another year of healthy economic performance in 2016 the GDP growth rate reached 3.3% and exceeded the Canadian average for the sixth consecutive year. 1 A robust housing market, a rise in retail sales, and a sizable gain in the value of exports contributed to this growth. Top export commodities were softwood lumber, coal, aluminum, and natural gas. BC s economic growth translated into the largest annual rate of job creation in more than a decade. Northwest BC, which consists of the North Coast and Nechako development regions, experienced a subdued economy in 2016 after a strong year in Construction activity continued to decline as major project development, as well as residential, commercial, and industrial building construction, slowed. continued at the Brucejack Gold Mine. The forestry sector remained a solid contributor to Northwest BC s economy as lumber production increased slightly and shipments of wood pellets and logs through the Port of Prince Rupert grew. Nevertheless, the number of people employed in Northwest BC declined slightly by 0.2% to 42,100, and both the general and youth unemployment rates increased to 7.7% and 12.0% respectively. An overall decline in full-time jobs meant more individuals struggled to make ends meet, which was evidenced by the rise in personal insolvency rates to 15.4% in the North Coast and 35.3% in the Nechako. Still, both regions managed to maintain the lowest insolvency rates in BC in LNG momentum came to a standstill due to market uncertainty and sagging fuel prices, and a growing number of major project developments were deferred. Furthermore, low prices for some metals shut down several of Northwest BC s mining operations and reduced mine development and mineral exploration. Consequently, the number of business bankruptcies in Northwest BC increased by one to three reports in 2016, and the population declined by 1.3%, primarily due to an outflow of North Coast residents. On the upside, the recently opened Red Chris Mine achieved its first full year of production, while the newly modernized Kitimat aluminum smelter ramped up to full production, which coincided with a rebound in aluminum prices. A small silver mine near the Yukon border began operations late in 2016, and construction In 2016, Northwest BC s level of educational attainment improved for the second consecutive year. This is a positive indicator and reflects the growing skill level of the labour force. The share of the labour force with a post-secondary education increased by 4.2 percentage points to 62.9% in Regardless, this is still well below the BC average of 69.4%. As of May 2017, the outlook for Northwest BC s export commodities is mixed due to continuing global uncertainty. However, analysts are optimistic about the price of copper, which rallied during the last quarter of In addition, construction at the Brucejack Gold Mine is now complete, ahead of its schedule by a few months, and is now in commisioning stage. 3 Once in operation, the mine is expected to hire approximately 500 full-time workers. 1 Estimate, TD Economics, Provincial Economic Forecast, March 27, Cecilia Jamasmie, Copper to be Best Performing Commodity of 2017 Analysts, mining.com, January 15, Nelson Bennett, Brucejack mine sprints into operation, Business in Vancouver, May 2, bccheckup.com 3

4 Until a new trade agreement is signed, the future of BC s softwood lumber exports to the US is unclear. However, Northwest BC s forest products also ship to Asia, primarily China and Japan. These economies are expected to remain robust over the medium term, despite slowing growth in China. 4 The outlook for Northwest BC s construction industry is not encouraging, as most of the region s major projects currently under construction are expected to be completed by late Only a handful of small projects are likely to begin. Planned residential and commercial projects in preparation for LNG development are on hold until investment decisions are made, which could be years away. Overall, Northwest BC may be in for a period of slower economic growth. Labour market statistics for the first quarter of 2017 indicate that employment has declined by 1,400 jobs, or 3.3%, from the 2016 annual average. And while the decline in the unemployment rate to 6.4% appears healthy on the surface, it was due to a significant reduction in Northwest BC s labour force. 5 4 OECD, Economic Outlook for Southeast Asia, China and India 2017: Addressing Energy Challenges, January 23, Statistics Canada, Labour Force Survey Estimates (LFS), by Province and Economic Regions based on 2011 Census Boundaries, 3-Month Moving Average, Unadjusted for Seasonality, CANSIM Table , April

5 Table of Contents Executive Summary...3 Introduction...6 WORK Indicators...10 Job Creation...10 Unemployment Rate...13 INVEST Indicators...14 Business & Investment Activity Bankruptcies...16 LIVE Indicators...18 Educational Attainment...18 Consumer Insolvencies

6 Nechako North Coast decade, and 2016 was no different as the region s population declined by 1.3%, with the largest outflow from the North Coast. In comparison, BC s population increased by 1.2%, due, in large part, to an influx of migrants from Alberta seeking opportunity in BC s comparatively healthy economy. 8 Northwest BC 316,265 km 2, or approximately one-third of British Columbia. Geographically, it stretches from the southern tip of the Haida Gwaii in the west to Vanderhoof and Fort St. James in the east, and from the Yukon border in the north to Fraser Lake in the south. 6 This massive area combines two of the province s most sparsely-populated development regions the North Coast and Nechako. 7 In 2016, Northwest BC was home to 95,599 residents, or 2% of BC s population. The region has experienced a steady outflow of inhabitants for most of the past BC s economy enjoyed another strong year of growth in 2016, with its GDP outstripping the Canadian average for the sixth consecutive year. 9 Economic growth was generated by strong retail sales, vigorous housing demand, and a rise in the value of exports. Increased demand from the US and a weaker Canadian dollar were key factors that boosted BC s exports by 9.9% in ,11 Softwood lumber remained BC s primary export, with two-thirds shipped to the US, while most of the remainder went to China and Japan. 12 Other key export commodities include coal, aluminum, and natural gas. 13 BC s economic growth translated into exceptionally strong labour market performance at the provincial level in 2016, with job creation expanding at its fastest rate in more than a decade Statistics Canada, Census Together these economic regions are termed Northwest BC, as their economic data is often combined due to their small populations and proximity to each other. 8 Statistics Canada, Interprovincial Migrants, by Province or Territory of Origin and Destination, Annual, CANSIM Table RBC Economics, Provincial Outlook, December Estimate, TD Economics, Provincial Economic Forecast, March 27, BC Stats, Annual BC Origin Exports, March BC Stats, Exports, Issue #16-12, released February 7, BC Stats, Annual BC Origin Exports, March Statistics Canada, Labour Force Survey Estimates, Employment by Economic Region Based on 2011 Census Boundaries and North American Industry Classification System, Annual, CANSIM Table

7 In the past decade, the North Coast has diversified its historical dependence on the forestry, mining, mineral processing, fishing, and tourism industries to include transportation, thanks to billions of dollars of infrastructure and capital investment. 15 Ongoing upgrades to the region s ports have transformed the North Coast into a northern gateway with worldclass terminals for trade with Asia and the rest of North America. Expansion plans continued in 2016 to further increase port capacity. Recently completed hydroelectric generation facilities in the region now supply the BC power grid via the new Northwest Transmission Line, and they also hold the potential to power new mines that are proposed for the region. The Nechako is home to some of the largest and most modern sawmills in the province. The mountain pine beetle epidemic has reduced harvestable timber in recent years, impacting production at some mills, but also created new opportunities to diversify into pulp and pellet plants, silviculture operations, bioenergy facilities, and value-added wood production. Like the North Coast, the Nechako s rich mineral resources and industrial and transportation infrastructure position the region to support exploration and new mining opportunities. However, low prices for some metals shut down several of Northwest BC s mine operations and put a damper on mine development and mineral exploration in Although Northwest BC benefited from close to $84 million in exploration spending, about 41% of the provincial total, this is about one-third of the amount spent in 2012 when exploration activities in the region were at their peak. 16,17 Low copper prices prompted the closure of the Huckleberry Mine in the late summer of 2016, 18 while the Endako Mine, which went on care and maintenance in 2015 in response to low molybdenum prices, remained closed throughout The closures put approximately 600 people out of work. 19 Thankfully, it was not all bad news in Northwest BC s mining sector. The recently opened Red Chris copper and gold mine 20 achieved its first full year of commercial 15 BC Stats, British Columbia Local Area Economic Dependencies: 2006, March Northwest BC also encompasses part of the North Central Mining Region, where exploration expenditures totaled $29 million in C.P. Jago, British Columbia Ministry of Energy and Mines, Exploration and Mining in the North Central and Northeast Regions, Provincial Overview of Exploration and Mining in British Columbia, G. Clarke, J. Britton, C.P. Jago, F. Katay, B. Northcote, and J. Kyba, British Columbia Ministry of Energy and Mines, Provincial Overview of Exploration and Mining in British Columbia, British Columbia Ministry of Energy and Mines, Exploration and Mining in the Northwest Region, Provincial Overview of Exploration and Mining in British Columbia, Approximately 260 workers lost their jobs at Huckleberry Mine, while 350 were affected by the Endako closure. 20 Ibid. bccheckup.com 7

8 production in 2016, while the recently modernized smelter in Kitimat ramped up to full production perfect timing to take advantage of the rebound in aluminum prices. The Mount Milligan Mine, 21 which produces copper and gold, celebrated its third year of production and successfully completed its ramp-up phase in early A late-year rally in the price of copper was a boon to the region s producers of that metal. 23 Construction at the Silvertip Mine south of the Yukon border was underway in 2016 and operations commenced during the last quarter. Development of the Brucejack high-grade gold and silver underground mine continued throughout the year, and startup is scheduled for Northwest BC s forest industry remained a solid contributor to the region s economy in Overall lumber production in the Northern Interior (which includes the Northern Interior of British Columbia, Yukon, Northwest Territories, and Nunavut) increased by 2.4% and BC s exports for all wood products increased. 25,26 Shipments of wood pellets and logs from the Port of Prince Rupert also increased. 27 In contrast to the provincial trend, construction activity was down in Northwest BC in 2016, owing to a slowing of major project investment and a decline in overall building construction. The last few years saw the completion of several large projects, with very few new ones beginning construction. The momentum for LNG projects came to a standstill in 2016 due to investor uncertainty and poor economic conditions, and a growing number of major project developments were deferred. 21 Residents and businesses in the Nechako benefit from Mount Milligan activities, although this mine is in the Cariboo Development Region. An access road is via Vanderhoof and Fort St. James. 22 C.P. Jago, British Columbia Ministry of Energy and Mines, Exploration and Mining in the North Central and Northeast Regions, Provincial Overview of Exploration and Mining in British Columbia, Infomine, Copper Prices and Copper Price Charts, website, 24 C.P. Jago, British Columbia Ministry of Energy and Mines, Exploration and Mining in the North Central and Northeast Regions, Provincial Overview of Exploration and Mining in British Columbia, Statistics Canada, Lumber Production, Shipments and Stocks, by Canada and Provinces, Monthly, CANSIM Table BC Stats, Annual BC Origin Exports, March Prince Rupert Port Authority, Monthly Traffic Summary for December 2016, January

9 Comparison between Development Regions DEMOGRAPHICS 90% of BC s residents live in Mainland/Southwest, Vancouver Island/Coast, and Thompson-Okanagan Population in BC: 4,751,612 residents or +1.2% Mainland/Southwest (+1.6%) Vancouver Island/Coast (+1.3%) Thompson-Okanagan (+0.7%) Northeast (+0.3%) Kootenay (+0.2%) Cariboo (-0.8%) Northwest BC* (-1.3%) FORECAST Uncertainty over commodity prices Potential international trade policy changes Slower housing market + + = Cautious optimism for BC s economy in 2017 WORK ~ 94% of new jobs created in Mainland/Southwest Unemployment in BC: New Jobs in BC: +73,300 Greatest job increase in at least 10 years -0.2% to 6.0% Youth Unemployment in BC: -1.2% to 8.7% Youth unemployment is highest in Kootenay, Northwest BC, and Northeast, due to job cuts Total Jobs in BC: 2.3 million Mainland/ Southwest 64.6% Other 9.5% 10.4% 15.4% Thompson- Okanagan Vancouver Island/Coast Unemployment Rate across BC: Change Northeast 5.9% 9.7% +3.8% Kootenay 7.4% 8.0% +0.6% Thompson-Okanagan 6.4% 7.8% +1.4% Northwest BC* 7.0% 7.7% +0.7% Cariboo 7.0% 7.4% +0.4% Vancouver Island/Coast 6.3% 5.8% -0.5% Mainland/Southwest 6.0% 5.5% -0.5% BC 6.2% 6.0% -0.2% *Northwest BC is made up of the Nechako and North Coast development regions. Source:. All numbers are from Increases/decreases are in comparison to 2015 data. bccheckup.com 9

10 WORK Indicators Job Creation Job creation is an important indicator of a region s economic health and labour market trends. Northwest BC s overall employment level dipped slightly by 0.2% in 2016, following a stellar year of job creation in The net loss of 100 jobs edged total employment slightly downwards to 42, Northwest BC s service sector gained strength in 2016 with the creation of 1,600 jobs. 29 The trade industry expanded by 900 workers and was the biggest contributor to the region s service sector job growth. All job creation in this industry occurred at the retail trade level and during the first eight months of By December, however, trade employment plunged to 6,500 positions, sinking well below the annual average of 7, The transportation and warehousing industry, which has contracted since 2011, grew substantially in 2016 with 800 new jobs. Opportunities in transportation were likely generated by increased shipments from the Kitimat aluminum shelter and the Red Chris Mine, an increase in break-bulk materials through the newly completed expansion at Stewart s port, and higher volumes of forestry products transported from various locations in Northwest BC. 32,33,34 The late-summer closure of the Huckleberry Mine dampened these gains, however, as evidenced by declining industry employment levels that began in the fall. 35 Employment in public administration, which includes infrastructure development and maintenance, along with government administrative services, rebounded with the addition of 600 positions in Most of the new jobs were created during the summer months. 36 An increase of 300 jobs in the educational services industry is attributed to employment growth in primary and secondary schools, and other education services. 37 In the service sector, the accommodation and food services industry and the health care and social assistance industry underwent the largest employment declines in 2016, losing 500 workers each. 28 Statistics Canada, Labour Force Survey Estimates (LFS), Employment by Economic Region Based on 2011 Census Boundaries and North American Industry Classification System (NAICS), Annual, CANSIM Table Rounding by Statistics Canada means that these numbers do not always add to total figures. 30 Statistics Canada, Labour Force Survey Estimates, custom table prepared by BC Stats, January Statistics Canada, Labour Force Survey Estimates (LFS), Employment by Economic Region based on 2011 Census Boundaries and North American Industry Classification System (NAICS), Monthly, CANSIM Table BC Stats, Exports, December 2016, Issue #16-12, February 7, British Columbia Ministry of Energy and Mines, Exploration and Mining in the Northwest Region, Provincial Overview of Exploration and Mining in British Columbia, Derrick Penner, Stewart Port Terminal Owner takes $70-million Gamble that Business will Follow, Vancouver Sun, September 18, Statistics Canada, Labour Force Survey Estimates (LFS), Employment by Economic Region based on 2011 Census Boundaries and North American Industry Classification System (NAICS), Monthly, CANSIM Table Ibid. 37 Statistics Canada, Labour Force Survey Estimates, custom table prepared by BC Stats, January

11 In the accommodation and food services industry, Northwest BC s food service establishments saw a substantial decline in employment, while the number of accommodation services jobs expanded. 38 Employment in Northwest BC s goods sector tumbled in 2016 with the loss of 1,800 jobs, offsetting job creation in the service sector. 39 The manufacturing industry, which saw substantial job creation in 2015 due to the commencement of operations at the Kitimat smelter and Red Chris Mine, was hit the hardest, reporting 1,300 fewer workers. Detailed statistics indicate that employment in wood products manufacturing, the region s largest sub-industry, declined by 400 jobs. 40 This is difficult to substantiate given that lumber production was up in the Northern Interior in 2016, and BC s wood products exports increased. 41 The closure of the Huckleberry Mine was no doubt responsible for some of 2016 s job loss in the manufacturing industry. Northwest BC s construction industry suffered job losses for the second consecutive year in Dwindling major project construction and a decline in general building activity prompted the loss of 700 jobs. 42 The forestry, fishing, mining, oil and gas industry expanded slightly, by 100 workers. While there were fewer jobs reported in the forestry and logging subindustry, it is likely that higher prices and a surge in demand for salmon exports from Asia in 2016 created jobs for Northwest BC s fisheries workers. 43 The loss of 1,400 full-time positions in the region s labour market is likely due to job losses in the goods sector. Conversely, most of the 1,300 part-time jobs created were a result of the expansion in service sector employment. 44 These shifts point to a deterioration in financial conditions for some of the labour force in Overall, BC reported the creation of 73,300 new jobs in 2016, an increase of 3.2%, due to net employment gains in the Mainland/Southwest and Vancouver Island/Coast development regions. BC s other development regions experienced a larger rate of job loss than Northwest BC. The greatest rate of employment decline was recorded in the Northeast Development Region. See our summary infographic for regional comparisons. 38 Ibid. 39 Rounding by Statistics Canada means that job creation numbers do not always add to total figures. 40 Statistics Canada, Labour Force Survey Estimates, custom table prepared by BC Stats, January Sampling error in both 2015 and 2016 may account for some of the variation in reported job creation and job loss in this industry. 42 BC Stats, British Columbia Building Permits for Development Regions and Regional Districts, by Type , February 7, BC Salmon Farmers Association, B.C. Day Success Story: Homegrown Industry on Pace to Shatter Export Records, Creating Jobs in Coastal Communities and Opportunity for First Nations, press release, July 29, Statistics Canada, Labour Force Survey Estimates (LFS), by Provinces, Territories and Economic Regions Based on 2011 Census Boundaries, Annual, CANSIM Table bccheckup.com 11

12 Table 1-1: Employment, Northwest BC, 2011 to Job Creation (000) 5-Year TOTAL EMPLOYMENT (000) Year Goods-Producing Sector (000) Agriculture x x x x x x n/a n/a Forestry, fishing, mining, oil and gas Utilities x x x x x x n/a n/a Construction Manufacturing Services-Producing Sector (000) Trade Transportation & warehousing Finance, insurance, real estate & leasing x x 1.5 x 1.5 x n/a n/a Professional, scientific & technical services x n/a Business, building & other support services 1.5 x x x x x n/a n/a Educational services Health care & social assistance Information, culture & recreation x x x x x x n/a n/a Accommodation & food services Other services x Public administration Source: Statistics Canada, Labour Force Survey Historical Review. 45 Industries with an x are estimated to have less than 1,500 employed at that particular point in time; as a result the numbers presented in the table may not add up to total sector figures, and job creation statistics cannot be calculated. 12

13 Unemployment Rate The unemployment rate measures the number of unemployed individuals as a percentage of the labour force. In 2016, Northwest BC s unemployment rate increased by 0.7 percentage points (ppt) to 7.7%. The slight contraction in overall employment combined with a small expansion in the regional labour force resulted in a higher unemployment rate. Although Northwest BC s unemployment rate increased in 2016, it improved in its provincial ranking by one place to fourth lowest. This was due to large oneyear increases of 3.8 ppt and 1.4 ppt in the Northeast and Thompson-Okanagan development regions. The Mainland/Southwest Development Region enjoyed the lowest unemployment rate at 5.5%. See our summary infographic for regional comparisons. Table 1-2: Unemployment Rate, Northwest BC, 2011 to 2016 Region Percentage Point (ppt) Change 5-Year Year Northwest BC ppt +0.7 ppt British Columbia ppt -0.2 ppt Source: Statistics Canada, Labour Force Survey, Custom Table. Northwest BC s youth faced a challenging labour market in 2016, as the number of job opportunities for workers aged 19 to 24 declined considerably. Despite a reduction in the size of the youth labour force, the number of unemployed youth increased. Accordingly, Northwest BC s youth unemployment rate jumped by 3.4 ppt to 12.0%. This is the second consecutive year in which youth unemployment has increased. Apart from the Mainland/Southwest, all of BC s development regions reported an increase in the youth unemployment rate in Northwest BC s one-year change was substantial, driving its standing down three places to sixth place amongst BC s development regions. The Kootenay Development Region recorded the highest youth unemployment rate at 18.6%. See our summary infographic for regional comparisons. Table 1-3: Youth (Aged 19 to 24 years) Unemployment Rate, Northwest BC, 2011 to 2016 Region Percentage Point (ppt) Change 5-Year Year Norhtwest BC* ppt +3.4 ppt British Columbia ppt -1.2 ppt Source: Statistics Canada, Labour Force Survey, Custom Table. *Unemployment rate calculated by author. bccheckup.com 13

14 INVEST Indicators Business and Investment Activity Capital investment in industrial, commercial, and institutional infrastructure creates jobs and boosts long-term labour productivity and economic growth. In 2016, the ongoing slump in global oil prices and investor uncertainty suppressed Canadian capital investment. In BC, overall investment in non-residential construction dipped by 1.9% to $1.41 billion due to lower spending on institutional, governmental, and industrial projects. 46 Commercial building investment, however, increased. According to the BC government s Major Projects Inventory, the value of major capital investment in the province proposed, under construction, completed, and on hold declined by 2.7% between the third quarter of 2015 (Q3 2015) and the third quarter of 2016 (Q3 2016) to $437.7 billion. 47 As of September 2016, Northwest BC s overall major project investment comprised 52% of the provincial total. 48 A small number of oil and gas, petrochemical manufacturing, and mining investments with estimated capital costs in the billions of dollars comprised the majority of this value. Most of these projects, however, are in the proposal phase awaiting permit approval, financing, or the right economic conditions to proceed. After four years of phenomenal growth due to multibillion-dollar LNG projects proposed for the region, the total value of major investment in Northwest BC declined by $9 billion, or 3.8%, to $225.4 billion. 49 As of September 2016, there were 82 projects listed. Of these, 56 projects estimated at $207.1 billion were in the proposal stage, eight worth $1.6 billion were under construction, and 18 valued at $16.7 billion were on hold. The value of projects proposed for Northwest BC declined by $10.2 billion between Q and Q3 2016, largely due to several substantial oil and gas project revaluations. Six new projects worth $1.2 billion were added to Northwest BC s major projects inventory during the same period. The largest were: Groundhog project anthracite coal mine, Smithers, $600 million; Ridley Island Propane Export Terminal, Prince Rupert, $450 million; and Red Mountain underground gold project, Stewart, $76 million. Although 12 proposed projects with a total estimated value of $50.2 billion are scheduled to proceed in 2017, approximately $48.8 billion of this value is related to LNG projects that are at various stages in the consultation and approvals process, or awaiting financing or better market conditions. Realistically, smaller projects such as the Ministry of Transportation and Infrastructure s $37-million Highway 16/Mile 28 Daumont Level Crossing project and Northwest Community College s $18-million trades training facility renewal, both planned for Terrace, may go forward in The value of major projects under construction in Northwest BC has been on a downward trajectory since peaking in 2013, due to the completion of several large projects the Rio Tinto smelter modernization, the Red 46 Statistics Canada, Investment in Non-Residential Building Construction, by Type of Building, Province and Census Metropolitan Area, Quarterly, CANSIM Table , February 16, Preliminary estimate. Fourth quarter 2015 to fourth quarter Excludes engineering construction (such as for highways, sewers, bridges, and oil and gas pipelines). 47 BC Ministry of Finance, BC Major Projects Inventory, September Ibid. 49 BC Ministry of Finance, BC Major Projects Inventory, September 2015 and September

15 Chris Mine, the Northwest Transmission Line, and the Forrest Kerr Hydroelectric Facility, along with several smaller hydro power, infrastructure, and port expansion projects. Between Q and Q3 2016, the value of Northwest BC s projects under construction declined by $382 million. Work at the $75-million Dasque-Middle hydroelectric project southwest of Terrace and the $217million McIymont Creek hydroelectric project near Stewart wrapped up during this period. Both facilities now supply power to BC Hydro for distribution through the provincial grid. Chieftain Metals, owner of the $450-million Tulsequah Chief mine development, fell into receivership in 2016, which led to a halt in the mine s construction. The $500 million Kemano tunnel project, which was completed prior to 2016, was removed from the inventory of major projects. 50 Three new projects valued at $881 million began construction in the first three quarters of 2016: The Major Projects Inventory indicates that most of Northwest BC s projects that are currently under construction are expected to be completed by late The Brucejack Gold Mine is an underground mine with an 18-year forecasted mine life. Once in operation, it will employ about 500 full-time workers and house about 330 on a rotational basis at its live-in camp. 54,55 Up to 200 jobs will be created at the Silvertip Mine, which is also an underground operation with an expected life of 21 years. 56 The value of major projects on hold in Northwest BC increased by $1.6 billion between September 2015 and September Three projects valued at $1.4 billion in total, previously in the proposal phase, were deferred by their developers and construction cameto a halt on two projects worth $471 million. Several projects were shelved completely and removed from the inventory of projects. Brucejack Gold Mine, near Stewart, Iskut, Pretivm Resources Inc. ($811 million) start Q1 2016, finish Q3 2017; 51 Silvertip Mine, Cassiar, JDS Silver Inc. ($50 million) start Q2 2016, finish Q4 2017; 52 and Tsimshian Peninsula Access Project/Tuck Inlet Road, Prince Rupert, City of Prince Rupert ($20 million) start Q3 2016, finish Q , Ministry of Jobs, Tourism and Skills Training, February 20, The estimated value of the Brucejack Gold Mine has increased by $64 million since September JDS Silver website indicates a production start date of fall The estimated value of the Tsimshian Peninsula Access Project has decreased by $161 million since September Ben Bengtson, Gold Mine Ramping Up to Hire, Terrace Standard, July 11, G. Clarke, J. Britton, C.P. Jago, F. Katay, B. Northcote, and J. Kyba British Columbia Ministry of Energy and Mines, Provincial Overview of Exploration and Mining in British Columbia, Mining.com, New Silvertip Mine in Northern BC set to Start Construction, website, bccheckup.com 15

16 Bankruptcies Business bankruptcy trends are an indicator of a region s business climate, often correlating with economic conditions. During economic downturns, poor profitability can result in growing numbers of business failures. On the other hand, there are usually fewer business bankruptcies when conditions improve. Over the past five years, Northwest BC reported very low levels of business bankruptcies, an indication of a relatively stable business environment. In 2013 and 2014, there were no reported business failures in the region, but since then annual bankruptcies have increased slightly. In 2016, the Nechako reported two business bankruptcies following four years with no reported bankruptcies. Closure of the Endako and Huckleberry mines may have squeezed profits for local mining industry suppliers. In contrast, the North Coast saw a decline in bankruptcies in 2016, from two to one. In other parts of BC, the Thompson-Okanagan, Kootenay, and Northeast development regions also reported an increase in business failures in At the provincial level, business bankruptcies declined by 3.2% in 2016, from 154 to 149 reports. This is the lowest level in the past five years, and 22.4% lower than in See our summary infographic for regional comparisons. Table 1-4: Business Bankruptcies, Northwest BC, 2011 to Year Change Nechako North Coast Year British Columbia % -3.2% Source: Office of the Superintendent of Bankruptcy Canada. 16

17 Comparison between Development Regions INVEST Business Bankruptcies in BC: 341 major projects valued at $76.6 billion are currently under construction (or -3.7%) -3.2% to 149 reports Value of all major projects in BC: -2.7% to $437.6 billion Thompson-Okanagan saw the highest increase in business bankruptcy reports Note: Major projects data isbased on Q /- are in comparison to Q data. LIVE Consumer Insolvencies in BC: Educational Attainment in BC: Personal Bankruptcies: 1.2 per 1,000 adults or -20.0% 69.4% of BC s labour force has a post-secondary degree certificate/diploma, or higher (-0.8 ppt) # 1 # 2 # 3 # 4 # 5 # 6 # 7 Mainland/Southwest (71.4%) Vancouver Island/Coast (69.7%) Kootenay (67.7%) Thompson-Okanagan (63.8%) Northwest BC* (62.9%) Cariboo (59.6%) Northeast (53.8%) Consumer Proposals: 1.6 per 1,000 adults or +6.7% The Northeast saw the largest increase in the number of consumer insolvencies *Northwest BC is made up of the Nechako and North Coast development regions. Source:. All numbers are from Increases/decreases are in comparison to 2015 data. bccheckup.com 17

18 LIVE Indicators Educational Attainment The education level of BC s labour force has trended upward for many years as post-secondary training has gradually become a job prerequisite in most industries. And at today s rate of technological acceleration, workers are required to continuously upgrade their skills throughout their careers. The BC government predicts that more than three-quarters of projected job openings will require some type of post-secondary education by This will be discussed further in our BC Check-Up focus piece later in Northwest BC has seen a substantial improvement in the educational attainment rate of its labour force during the past few years. In 2016, the percentage of the labour force aged 25 to 54 with post-secondary accreditation jumped by 4.2 ppt to reach a record level of 62.9%. Two factors contributed to this sizable gain: the share of the labour force aged 25 to 54 with a post-secondary education or higher grew, while the size of the labour force without post-secondary credentials declined. These changes reflect several shifts in Northwest BC s labour market. Industries that generally require a higher education, such as public administration and education, gained workers while a substantial number of jobs were lost in the manufacturing, accommodation and food services, and construction industries, where education requirements are generally lower. Although Northwest BC s increase in educational attainment was the largest in BC in 2016, it was not enough to improve its ranking. Northwest BC remains in fifth place, ahead of the Cariboo and Northeast development regions. At 71.4%, the Mainland/Southwest Development Region s educational attainment rate was the highest in BC, followed by Vancouver Island/Coast at 69.7%. See our summary infographic for regional comparisons. Table 1-5: Percent of Labour Force Aged 25 to 54 with a Post-Secondary Certificate/Diploma or Higher, Northwest BC, 2011 to 2016 Region Percentage Point (ppt) Change 5-Year Year Northwest BC 58.5% 54.9% 55.9% 54.1% 58.7% 62.9% +4.4 ppt +4.2 ppt British Columbia 65.9% 66.5% 67.9% 68.1% 70.2% 69.4% +3.5 ppt -0.8 ppt Source: Statistics Canada, Labour Force Survey, Custom Table. 57 Province of BC, British Columbia 2025 Labour Market Outlook, July

19 Consumer Insolvencies The consumer insolvency rate represents the number of personal insolvencies per 1,000 adults (aged 18 or older), which includes bankruptcies and proposals. A consumer proposal is an arrangement that allows an indebted individual to repay part of their debt and keep their assets if they continue to make payments on any loans secured by those assets, such as a residential mortgage. This option has become a popular alternative to bankruptcy. In 2016, the insolvency rate in Northwest BC increased, a sign that more individuals and families struggled to make ends meet. In the Nechako, the insolvency rate jumped by 35.3%, from 1.7 to 2.3 insolvencies per 1,000 adults. The North Coast fared better, with the insolvency rate rising by 15.4%, from 1.3 to 1.5 insolvencies per 1,000 adults. An increase in the number of proposals was responsible for last year s increase in the Nechako, while growth in personal bankruptcies and proposals contributed to the North Coast s rise in insolvency. In contrast, BC s consumer insolvency rate declined by 6.7% to 2.8 per 1,000 adults. Despite Northwest BC s poor performance, both development regions maintained their top-place rankings in this indicator compared to other parts of BC. The North Coast recorded the lowest insolvency rate followed by the Nechako. See our summary infographic for regional comparisons. Table 1-6: Annual Consumer Insolvency Rate per 1,000 Adults (Aged 18 Years and Older), Northwest BC, 2011 to 2016 Rate Percentage Point (ppt) Change 5-Year Year Insolvency % +35.5% Nechako Bankruptcy % 0.0% Proposal % +83.3% North Coast Insolvency % +15.4% Bankruptcy % +12.5% Proposal % +40.0% BC Insolvency % -6.7% Source: Office of the Superintendent of Bankruptcy Canada and Statistics Canada. bccheckup.com 19

20 CPABC Regional Check-Up Northwest BC As leaders in analyzing and validating information, CPAs are often called upon to provide independent, fair, and objective information to assist in decision-making. It s with this goal in mind that the Chartered Professional Accountants of British Columbia prepare the CPABC Regional Check-Up and BC Check-Up reports each year. It is our hope that the reports will make a positive public policy contribution to the province by stimulating debate and discussion about how to make BC a better place in which to live, work, and invest. The CPABC Regional Check-Up and BC Check-Up reports, as well as related information, are available online at Staff Kerri Wilcox, Vice President, External Affairs and Communicaitons, CPABC Vivian Tse, Public Affairs Specialist, CPABC Economists Chisholm Consulting, in association with Gold Island Consulting. The Regional Check-Up Northwest BC report is edited by Vivian Tse. Creative layout, infographics, and graphics used in this report are done by Linda Mitsui of Profile Design Group Inc. Opinions expressed in the CPABC Regional Check-Up Northwest BC do not necessarily reflect those of individual chartered professional accountants. CPABC Regional Check-Up # West Hastings Street Vancouver, BC V6B 4N6 Tel: Fax: Toll free in BC: BC Check-Up, Chartered Professional Accountants of British Columbia 20