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On the face of it, the National Capital Region should be looking forward to a breakout year.
Not only will we be at the epicentre of the country’s 150th birthday celebrations — with at least 100,000 additional overnight visitors expected this year from outside the region — the downtown core is choking with construction as the government spruces up landmark buildings from Parliament Hill to the National Arts Centre.
Yet, despite all the activity, current and projected, our economy looks set to post a modest 2.2 per cent gain, after inflation, in 2017, according to the Conference Board of Canada, an independent research group.
On the plus side, that’s better than we’ve experienced lately: For years, our economy has barely budged. Indeed, this year Ottawa-Gatineau could finally post better economic growth than Canada’s for the first time since 2011. The Conference Board predicts Canada’s output will improve by just two per cent in 2017.
But with the sesquicentennial at hand as catalyst, the capital’s economy should be doing considerably better than barely topping a national forecast of weak growth.
What’s holding us back?
Much of the answer can be found in two of our main economic engines — government and high tech, which employ 18 per cent and seven per cent, respectively, of the region’s total workforce. Both sectors are weaker than their potential suggests. This, in turn, is holding back other areas of the economy, including housing.
The Conference Board, for instance, reckons 6,900 new homes will be built in 2017, up 2.3 per cent from 2016 but still well below the average for the past decade of 8,600 units per year. Given the sector’s huge dependence on government employees, the relative weakness in residential construction shouldn’t be a surprise.
While federal public-sector unions were much relieved by last year’s return to power of the Liberals, the change in government hasn’t translated into a hiring boom.
During the 12 months ended November, the federal government and its agencies employed an average of 130,800 in the capital region. That’s up from 127,300 during the same period a year earlier. But federal government employment remains considerably below the average of 2010 to 2012, when the number of jobs locally topped 138,000.
As the Liberals move ahead with their infrastructure projects, hiring could improve as individual departments add headquarters staff. Indeed, there was evidence this was happening last month, when the federal government boosted its workforce by nearly 6,000 in the capital while paring back employment a little in the regions.
Even so, recruiting over the long haul is likely to be restrained because the Liberals — like the Conservatives before them — are trying to make government more efficient. If federal departments can’t manage the trick in-house, they’ve shown they’re quite prepared to outsource the work to the private sector.
This could have a profound impact on the local economy.
Consider the situation at Shared Services Canada, the central computer services agency created in 2011. About one-third of the department’s budget goes toward maintaining hundreds of data centres that will eventually be decommissioned to make way for a handful of large ones. The majority of the department’s 2,200 data centre employees operate in the capital region — and fewer will be needed.
The drive for efficiency is evident across government. Late last year, for instance, the Canada Revenue Agency sent relocation notices to 549 of its Ottawa area employees, roughly five per cent of the agency’s local workforce.
The move is part of the agency’s decision to reduce nine tax-processing centres nationally to seven more specialized sites. The affected workers have another few months to decide whether they want to move to one of the CRA’s other locations outside the capital region or accept another position within a 40-kilometre radius, assuming these become available.
Related
About 12,000 of the CRA’s national workforce of 40,000 are based in the Ottawa region but the agency intends to trim this number by 2,000 over the next several years. While the cuts will likely come through attrition rather than layoffs, it still means 2,000 fewer salaried workers helping to support the local economy.
Senior government officials Marie Lemay, right to left, Alfred Tsang and Ryan Pilgrim hold a technical briefing about the Phoenix pay system and its problems.
The CRA consolidation is similar in some respects to the Phoenix project that has come to such grief. Public Services — the department in charge of Phoenix — consolidated multiple pay centres and offered employees positions at the new pay centre in Miramichi, N.B. However, few wanted to move.
As a result, 700 former pay compensation employees retired, found jobs elsewhere or were laid off — all before the department ensured the new pay system actually worked. Public Services hired 550 newcomers in Miramichi.
Managers at CRA and other federal departments have been paying close attention to the Phoenix rollout. Whether or not they have drawn the appropriate lessons will become clear in the coming year as nearly two dozen large information technology projects advance through key phases. But the government’s general drive to squeeze efficiencies from the bureaucracy seems unlikely to diminish.
One plus for the local economy — if not for Canadian taxpayers — has been the government’s need to do short-term hiring in order to fix its botched technology projects. Public Services has hired more than 200 compensation advisers — many of them based in the capital — to help reduce the backlog of public service pay claims. Shared Services is relying on outside experts to help it develop a revised strategy for upgrading the government’s computer networks.
Indeed, an analysis prepared a year ago by the Canada Border Services Agency concluded it requires a minor miracle to get things back on track. “Nearly all of the transformation programs (at Shared Services) are now behind schedule,” noted the memo prepared by CBSA’s technology branch and obtained under access to information. Little has changed in the meantime.
In short, there may well be lots of remedial work available in coming years for computer and software experts — inside and outside government. Even so, extra hiring in this area seems destined merely to make up for a shrinking government workforce elsewhere.
More promising as a catalyst for creating wealth locally is high tech. While the sector remains well below the heights reached just prior to the global financial crisis in 2008 and 2009 — the year Nortel slipped into bankruptcy — it’s still relatively healthy.
High-tech employment averaged 49,000 during the last half of 2016 — or 6.7 per cent of total jobs. That makes the capital region the most technology intensive of Canada’s major cities. Only Kitchener-Waterloo comes close, at 6.5 per cent and total tech employment there is a little more than 18,000. No. 3 nationally in tech concentration is Toronto, where the number of tech jobs — 184,000 — makes up 5.7 per cent of total employment.
The tech sector has the enormous advantage of pulling wealth into the region in a way that government jobs do not. Nearly everything sold by Mitel, Nokia, QNX and Shopify — to name just four of our more prominent firms — is purchased outside the Ottawa area. The companies use these revenues to hire, invest in R&D, lease property and build shareholders’ equity that can be used to finance startups.
Employees from Shopify ring the bell at the Toronto Stock Exchange in Toronto, Ontario, Tuesday May 26, 2015.
The disadvantage of tech is that it’s volatile. The region supports thousands of startups but fewer than 20 per cent succeed. The largest firms tend to grow slowly and must adapt to frequent changes in technology cycles. Indeed, tech clusters have to work very hard just to stay even — entrepreneurs must launch new firms to make up for the ones that inevitably fail, and established companies that successfully transition to a new technology must still jettison older product lines.
That Ottawa’s tech sector has managed to grow at all in recent months is testament in part to the breakout of firms such as Shopify, which makes electronic software for online merchants around the world. The Ottawa-based firm is forecast by S&P Capital to post revenues of more than $560 million US in 2017 compared to an estimated $380 million US in 2016.
Shopify employed 1,750 at the end of September, more than one-third of them based in Ottawa. Five and a half years earlier, the firm had just 50 workers.
Other tech firms are also expected to bolster the sector locally in 2017. Kinaxis, a software pioneer specializing in applications for managing corporate supply chains, now appears on a steady upward trajectory. TD Securities expects sales in 2017 to reach nearly $143 million US compared to an estimated $116.3 million US in 2016. TD analyst Daniel Chan in December called Kinaxis “a rare software-as-a-service play with strong (revenue) growth AND (profit) margins.”
Another solid member of Ottawa’s tech cluster is Ciena, the optical networking specialist that will put the finishing touches this year on a major new campus in North Kanata. While Ciena is headquartered in Hanover, Md., 1,600 of its 5,300 global employees are in Kanata, its single largest R&D centre.
Ciena CEO, Gary Smith.
Ciena, which acquired Nortel’s optical products unit out of bankruptcy, recently posted its third straight quarterly profit — indeed, the most recent was one of the best in the company’s history. S&P Capital is predicting eight per cent revenue gains this year on top of Ciena’s $2.6 billion US in sales in 2016.
The region’s other tech giants will likely not do quite as well in 2017, though they remain solid financially. Nokia and Ericsson — which collectively employ more than 3,000 people locally — are seeing a slowdown in sales involving fourth-generation wireless communications equipment. This is because the industry is preparing for a seminal shift toward fifth-generation, of 5G, technology, which will permit the interconnection of many more consumer items, from driverless cars to home appliances.
Until sales of 5G equipment reach critical mass — probably not until 2018 at the earliest — don’t look for much hiring in this sector. The exceptions, of course, will be in research & development. QNX, the Kanata-based firm BlackBerry purchased in 2010, last month unveiled plans to hire as many as 600 additional employees at QNX over the next few years. The newcomers will develop software for the burgeoning driverless car market, among other automotive applications.
In short, the capital region’s tech sector appears on relatively firm footing but — with only a few exceptions — lacks catalysts that would lead to significant hiring. The same might also be said of the federal government, with the exception of spending on big construction projects that have little to do with technology.
While Canada 150 renovations appear crammed into 2017, the lineup of significant projects stretches out for years, providing what looks to be a solid floor for the construction sector — the region’s third largest employer after government and retailing.
On Parliament Hill, the bulk of the rehabilitation of the West Block and Confederation Building should be done but there’s plenty more to do on the East Block and Government Conference Centre. And tradespeople have yet to begin refurbishing the Centre Block.
Public Services, the department in charge of the $3-billion Parliament Hill restoration, estimates it will spend $511 million during the fiscal year ended March 31, 2017, and another $505 million the year after that.
George Drolet of Arcop/Fournier Gersovitz Moss & Associates talks about the West Block design of the new House of Commons.
Other government building projects loom, including the second phase of Ottawa’s light rail project — scheduled to begin after 2018 — and the refurbishment in stages of the Place du Portage office complex that dominates downtown Gatineau. Add to this mix some big private-sector projects, including the proposed expansion of the Chateau Laurier and the development of LeBreton Flats.
The Conference Board predicts the construction sector in Ottawa and Gatineau will employ an average of 42,000 this year and next — about 13 per cent higher than in 2016, when residential housing construction took a breather.
Perhaps the best way to view all the spending associated with Canada 150 is that it will help pull the economies of Ottawa and Gatineau out of a deep hole. With any luck, the region’s workforce will at least stabilize.
Indeed, the capital is hosting a series of national events this year, including the Junos, the Grey Cup and the Canadian figure skating championships.
Enjoy them. Just don’t mistake them for catalysts for long-term economic growth.
jbagnall@postmedia.com
Twitter.com/JamesBagnall1
查看原文...
Not only will we be at the epicentre of the country’s 150th birthday celebrations — with at least 100,000 additional overnight visitors expected this year from outside the region — the downtown core is choking with construction as the government spruces up landmark buildings from Parliament Hill to the National Arts Centre.
Yet, despite all the activity, current and projected, our economy looks set to post a modest 2.2 per cent gain, after inflation, in 2017, according to the Conference Board of Canada, an independent research group.
On the plus side, that’s better than we’ve experienced lately: For years, our economy has barely budged. Indeed, this year Ottawa-Gatineau could finally post better economic growth than Canada’s for the first time since 2011. The Conference Board predicts Canada’s output will improve by just two per cent in 2017.
But with the sesquicentennial at hand as catalyst, the capital’s economy should be doing considerably better than barely topping a national forecast of weak growth.
What’s holding us back?
Much of the answer can be found in two of our main economic engines — government and high tech, which employ 18 per cent and seven per cent, respectively, of the region’s total workforce. Both sectors are weaker than their potential suggests. This, in turn, is holding back other areas of the economy, including housing.
The Conference Board, for instance, reckons 6,900 new homes will be built in 2017, up 2.3 per cent from 2016 but still well below the average for the past decade of 8,600 units per year. Given the sector’s huge dependence on government employees, the relative weakness in residential construction shouldn’t be a surprise.
•
While federal public-sector unions were much relieved by last year’s return to power of the Liberals, the change in government hasn’t translated into a hiring boom.
During the 12 months ended November, the federal government and its agencies employed an average of 130,800 in the capital region. That’s up from 127,300 during the same period a year earlier. But federal government employment remains considerably below the average of 2010 to 2012, when the number of jobs locally topped 138,000.
As the Liberals move ahead with their infrastructure projects, hiring could improve as individual departments add headquarters staff. Indeed, there was evidence this was happening last month, when the federal government boosted its workforce by nearly 6,000 in the capital while paring back employment a little in the regions.
Even so, recruiting over the long haul is likely to be restrained because the Liberals — like the Conservatives before them — are trying to make government more efficient. If federal departments can’t manage the trick in-house, they’ve shown they’re quite prepared to outsource the work to the private sector.
This could have a profound impact on the local economy.
Consider the situation at Shared Services Canada, the central computer services agency created in 2011. About one-third of the department’s budget goes toward maintaining hundreds of data centres that will eventually be decommissioned to make way for a handful of large ones. The majority of the department’s 2,200 data centre employees operate in the capital region — and fewer will be needed.
The drive for efficiency is evident across government. Late last year, for instance, the Canada Revenue Agency sent relocation notices to 549 of its Ottawa area employees, roughly five per cent of the agency’s local workforce.
The move is part of the agency’s decision to reduce nine tax-processing centres nationally to seven more specialized sites. The affected workers have another few months to decide whether they want to move to one of the CRA’s other locations outside the capital region or accept another position within a 40-kilometre radius, assuming these become available.
Related
- As Canada turns 150, Ottawa is transforming before us
- Driverless car push could put Ottawa tech back in the fast lane
- McLeod: Oh the place you'll be, Ottawa
About 12,000 of the CRA’s national workforce of 40,000 are based in the Ottawa region but the agency intends to trim this number by 2,000 over the next several years. While the cuts will likely come through attrition rather than layoffs, it still means 2,000 fewer salaried workers helping to support the local economy.
Senior government officials Marie Lemay, right to left, Alfred Tsang and Ryan Pilgrim hold a technical briefing about the Phoenix pay system and its problems.
The CRA consolidation is similar in some respects to the Phoenix project that has come to such grief. Public Services — the department in charge of Phoenix — consolidated multiple pay centres and offered employees positions at the new pay centre in Miramichi, N.B. However, few wanted to move.
As a result, 700 former pay compensation employees retired, found jobs elsewhere or were laid off — all before the department ensured the new pay system actually worked. Public Services hired 550 newcomers in Miramichi.
Managers at CRA and other federal departments have been paying close attention to the Phoenix rollout. Whether or not they have drawn the appropriate lessons will become clear in the coming year as nearly two dozen large information technology projects advance through key phases. But the government’s general drive to squeeze efficiencies from the bureaucracy seems unlikely to diminish.
One plus for the local economy — if not for Canadian taxpayers — has been the government’s need to do short-term hiring in order to fix its botched technology projects. Public Services has hired more than 200 compensation advisers — many of them based in the capital — to help reduce the backlog of public service pay claims. Shared Services is relying on outside experts to help it develop a revised strategy for upgrading the government’s computer networks.
Indeed, an analysis prepared a year ago by the Canada Border Services Agency concluded it requires a minor miracle to get things back on track. “Nearly all of the transformation programs (at Shared Services) are now behind schedule,” noted the memo prepared by CBSA’s technology branch and obtained under access to information. Little has changed in the meantime.
In short, there may well be lots of remedial work available in coming years for computer and software experts — inside and outside government. Even so, extra hiring in this area seems destined merely to make up for a shrinking government workforce elsewhere.
•
More promising as a catalyst for creating wealth locally is high tech. While the sector remains well below the heights reached just prior to the global financial crisis in 2008 and 2009 — the year Nortel slipped into bankruptcy — it’s still relatively healthy.
High-tech employment averaged 49,000 during the last half of 2016 — or 6.7 per cent of total jobs. That makes the capital region the most technology intensive of Canada’s major cities. Only Kitchener-Waterloo comes close, at 6.5 per cent and total tech employment there is a little more than 18,000. No. 3 nationally in tech concentration is Toronto, where the number of tech jobs — 184,000 — makes up 5.7 per cent of total employment.
The tech sector has the enormous advantage of pulling wealth into the region in a way that government jobs do not. Nearly everything sold by Mitel, Nokia, QNX and Shopify — to name just four of our more prominent firms — is purchased outside the Ottawa area. The companies use these revenues to hire, invest in R&D, lease property and build shareholders’ equity that can be used to finance startups.
Employees from Shopify ring the bell at the Toronto Stock Exchange in Toronto, Ontario, Tuesday May 26, 2015.
The disadvantage of tech is that it’s volatile. The region supports thousands of startups but fewer than 20 per cent succeed. The largest firms tend to grow slowly and must adapt to frequent changes in technology cycles. Indeed, tech clusters have to work very hard just to stay even — entrepreneurs must launch new firms to make up for the ones that inevitably fail, and established companies that successfully transition to a new technology must still jettison older product lines.
That Ottawa’s tech sector has managed to grow at all in recent months is testament in part to the breakout of firms such as Shopify, which makes electronic software for online merchants around the world. The Ottawa-based firm is forecast by S&P Capital to post revenues of more than $560 million US in 2017 compared to an estimated $380 million US in 2016.
Shopify employed 1,750 at the end of September, more than one-third of them based in Ottawa. Five and a half years earlier, the firm had just 50 workers.
Other tech firms are also expected to bolster the sector locally in 2017. Kinaxis, a software pioneer specializing in applications for managing corporate supply chains, now appears on a steady upward trajectory. TD Securities expects sales in 2017 to reach nearly $143 million US compared to an estimated $116.3 million US in 2016. TD analyst Daniel Chan in December called Kinaxis “a rare software-as-a-service play with strong (revenue) growth AND (profit) margins.”
Another solid member of Ottawa’s tech cluster is Ciena, the optical networking specialist that will put the finishing touches this year on a major new campus in North Kanata. While Ciena is headquartered in Hanover, Md., 1,600 of its 5,300 global employees are in Kanata, its single largest R&D centre.
Ciena CEO, Gary Smith.
Ciena, which acquired Nortel’s optical products unit out of bankruptcy, recently posted its third straight quarterly profit — indeed, the most recent was one of the best in the company’s history. S&P Capital is predicting eight per cent revenue gains this year on top of Ciena’s $2.6 billion US in sales in 2016.
The region’s other tech giants will likely not do quite as well in 2017, though they remain solid financially. Nokia and Ericsson — which collectively employ more than 3,000 people locally — are seeing a slowdown in sales involving fourth-generation wireless communications equipment. This is because the industry is preparing for a seminal shift toward fifth-generation, of 5G, technology, which will permit the interconnection of many more consumer items, from driverless cars to home appliances.
Until sales of 5G equipment reach critical mass — probably not until 2018 at the earliest — don’t look for much hiring in this sector. The exceptions, of course, will be in research & development. QNX, the Kanata-based firm BlackBerry purchased in 2010, last month unveiled plans to hire as many as 600 additional employees at QNX over the next few years. The newcomers will develop software for the burgeoning driverless car market, among other automotive applications.
In short, the capital region’s tech sector appears on relatively firm footing but — with only a few exceptions — lacks catalysts that would lead to significant hiring. The same might also be said of the federal government, with the exception of spending on big construction projects that have little to do with technology.
While Canada 150 renovations appear crammed into 2017, the lineup of significant projects stretches out for years, providing what looks to be a solid floor for the construction sector — the region’s third largest employer after government and retailing.
On Parliament Hill, the bulk of the rehabilitation of the West Block and Confederation Building should be done but there’s plenty more to do on the East Block and Government Conference Centre. And tradespeople have yet to begin refurbishing the Centre Block.
Public Services, the department in charge of the $3-billion Parliament Hill restoration, estimates it will spend $511 million during the fiscal year ended March 31, 2017, and another $505 million the year after that.
George Drolet of Arcop/Fournier Gersovitz Moss & Associates talks about the West Block design of the new House of Commons.
Other government building projects loom, including the second phase of Ottawa’s light rail project — scheduled to begin after 2018 — and the refurbishment in stages of the Place du Portage office complex that dominates downtown Gatineau. Add to this mix some big private-sector projects, including the proposed expansion of the Chateau Laurier and the development of LeBreton Flats.
The Conference Board predicts the construction sector in Ottawa and Gatineau will employ an average of 42,000 this year and next — about 13 per cent higher than in 2016, when residential housing construction took a breather.
Perhaps the best way to view all the spending associated with Canada 150 is that it will help pull the economies of Ottawa and Gatineau out of a deep hole. With any luck, the region’s workforce will at least stabilize.
Indeed, the capital is hosting a series of national events this year, including the Junos, the Grey Cup and the Canadian figure skating championships.
Enjoy them. Just don’t mistake them for catalysts for long-term economic growth.
jbagnall@postmedia.com
Twitter.com/JamesBagnall1
查看原文...
