Peril X – The Talent Exodus

Large-scale emigration marked the traumatic end of the economic boom-bust cycle for oil-related projects in the West. In our current circumstances, the severe and protracted collapse has forced mutations in our economic genomes, such that all future models will be different.

In the autumn of 2004, a small panel of representatives from major players of the Canadian capital projects industry were taking questions from the live gallery at the Calgary Telus Convention Center. This event coincided with the first phase of CNRL’s Horizon program as it was transitioning from detailed engineering to construction phase; one of the program’s vice-presidents drew from an old quotation about ‘nature abhorring a vacuum’ when he addressed a concern voiced by a member of the audience about how the magnitude of the Horizon project would command a greater resource base than the Canadian prairies could possibly muster in such short demand.

The vice-president let the question hang silently in the room. He grinned, then calmly into the microphone said: “where there is a vacuum, industry will fill it; the resources will come.”

And, as forecasted by the prescient man, they did indeed come. The net in-migration of sturdy backs and needed skills to Alberta, from elsewhere across Canada and abroad, streamed into the high-angle of the s-curve, and a new chapter in our nation’s development thus began. At the time, there was no comprehensive indicator by which to accurately measure the influx of people, resources and service industry investment.

Government data indicates that in Alberta in 2006 alone, 96,000 jobs were created, but this information excludes the many independent contractors and undocumented employment that resulted, which may have measured as much as an additional 30,000 full-time equivalent positions. To support the great in-migration for major project execution, the region’s infrastructures and corollary services industries grew in reasonable proportion. Then suddenly, Red seas and Whyte miles were alight with the economies of $100 WTI, and many parts of Canada renewed their distaste for the affluent west, and the public media learned to dig in the alleys to find the injured, the weak and the socially violated.

Just as the major international producers surveyed and took important stakes in our nation’s natural resources, so too did the service and supply enterprises from international domains. Our indigenous engineering firms were acquired at significant multiple, thereby creating pockets of entrepreneurial wealth and planting new flags in the prairies. The French energy giant, Total, went so far as to make public declarations on billboards that it would require thousands of people and would be an ever standing icon in the community.

Since then, radical dynamics of capital investment in the markets of mining, minerals processing, oil, gas, power and infrastructure, have vacillated between the euphoric and catastrophic, coupled by the vexing for many people in the Canadian West.

Three years on, many have packed up, bid farewell to school mates and colleagues, transferred assets out of town, and driven off in trepidation, leaving offices and houses cold and hollow. Similarly, big yellow iron has been stricken from balance sheets, sent to the auctions or transferred to distant contracts at locations in need. This is the lost fleet that had appeared from everywhere and is now nowhere to be found. The resource exodus is painfully obvious to everyone, save for those who arrived for work related to infrastructure and trickle-down economics. The delayed consequences of these sectors continue to be felt and can be measured by dismal reports of restaurant closures, decreased housing values and auto sales.

Borne of desperation or good intent, there has been an abundance of new consulting firms, independent contractors and organizational initiatives formed to support the genesis of new or alternative businesses. Sadly, the statistics will ultimately reflect the hard reality that the great majority of these start-ups will fade out, or dissolve, when gainful employment is secured once again.

The immediate danger is that the West simply does not have any bench strength of resources, and that those who are presently working in the industry are either under duress of the still looming hatchet or are pressed to limits of tolerance from excessive work loads. Funds are coming available to hire support and there is some optimism for independent contractors as we enter the phase of the contingency workforce. This particular phase is necessary until companies find more confidence in macro-economic trajectories.

Among the greatest of perils related to the mass exodus is simply that of eroded confidence and dashed hopes.

People and companies may not wish to re-invest in professions, lives and dominions that can be torn asunder on any given gloomy Sunday. The only thing that could be worse, is that the exodus is not yet over; selective powerful industries are frail and lack the sex appeal they once flaunted. This is not to say that we should expect yet another major quake or fissure, but that there are many people who will readily abandon the life of projects as opportunities arise. And who would blame them? As it was in the 1980’s, loyalties remain delicate on thin ice.

Next in this series is Peril #4: The Perils of Thin Ice

R W Harms EPC Lens, 2018

#epclens #rwharms #talentexodus #perilsandpromise