Manufacturing sales in Newfoundland and Labrador dropped almost 40% in February 2010 compared to February 2009, according to figures released by Statistics Canada on April 16.
Manufacturing in February was down 33% from the previous month. No other province registered double-digit drops.
By contrast, manufacturing sector sales were up 6.4% nationally. New Brunswick registered a 26% increase in manufacturing year over year while Ontario was up 10%.
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Oil production offshore Newfoundland and Labrador continued to trend lower in February 2010, despite continued high oil prices.
Total production from the Hibernia, Terra Nova and White Rose fields hit 8,213,115 barrels according to figures produced by the Canada-Newfoundland and Labrador Offshore Regulatory Board.
That’s down from 9.5 million barrels in February 2009 and 10.1 million barrels in February 2008.
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Take a look at the very limited amount coverage available on the Internet about the southern governors and Canadian premiers conference.
There are lots of platitudes about relationships. There was plenty of interest in energy jobs. But aside from vapid comments about things like the international awareness of American business leaders – they are apparently very, very good - there wasn’t much of substance coming from any mouths.
That’s hardly surprising: the southern United States is looking for people to move in a create local jobs. Take, for example, the situation in Alabama, as described by an editorial in the Anniston Star newspaper:
It's a non-debatable, obvious fact. Alabama needs jobs.
Anniston – roughly the size of Corner Brook - is looking for someone to come to the state, set up a business and create jobs for Alabamans. Neal Wade, of the state economic development agency, told Associated Press [quoted in the Anniston Star]:
"What we want to see is not just the assembly jobs, but the research and development, renewable energy projects that will impact not just our state but all of the country…. I think there are tremendous opportunities not just to reduce the cost of energy in our state, but also to increase jobs."
Three years into the exercise this particular conference of governors and premiers seems to be coming up very short. Some provinces, like Quebec, may be able to profit but it is hard to know why a province like Newfoundland and Labrador is devoting such effort as sending the premier to the meetings while other, more lucrative prospects have been either neglected or trashed.
After all, you can just hear Mississippi Governor Haley Barbour and Premier Danny Williams when they first met: “But I thought you had jobs to send to us.”
At least, Danny didn’t have to travel far to get to Biloxi.
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Jon Lien, known around the world for his work with humpback whales, died in St. John’s today, age 71.
He was a remarkable human being and anyone who had the chance to know him on any level – your humble e-scribbler did through work with a local conservation foundation – knew immediately of his energy, enthusiasm and respect for all living things.
There will be no shortage of tributes to Dr. Lien. One of the best you will find anywhere came from Geoff Meeker two years ago when Dr. Lien was inducted into the Order of Canada. Like most recipients of the Order, Dr. Lien got it for one thing but his life was filled with reasons to acknowledge him and honour him. Geoff reprinted a profile he’d written 20 years ago and it still holds up today.
Few will be able to put it any better about a man few will be able to equal, let alone better.
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A recent study from the University of Delaware’s College of Earth, Ocean and Environment shows that a network of offshore wind sites can be managed to ensure consistent power generation from the system. [Full report in pdf]
One of the major problems with single wind farm sites is the unpredictable nature of generation. Power only flows when the wind blows and there is no guarantee when it blow or if the wind will be strong enough to generate power.
Researchers at CEOE analysed five years of data from sites stretching 2500 kilometres along the east coast of the United States. By simulating an interconnection they demonstrated that the system could provide consistent, sustainable power. While other studies have shown the benefit of interconnection, the key to success in this case lay in the wide geographic dispersion of the wind farms.
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Charges laid against one Innu hunter from events in 2009 caused a minor flurry in St. John’s when the news broke charges had been laid. This will likely wind up being a big political story but a very short legal story.
Essentially, this is a political prosecution, done for show and nothing more. The government had to hunt around for someone to charge after all the controversy earlier in the year. If it was a real charge, the justice minister would be speaking to it and since he was nowhere to be seen, you can draw the logical conclusion.
The fact the wildlife crowd came up with one lone guy to charge – from 2009 – would cause even the most blind judge to wonder what was being tossed in front of him.
In the end the hunter will get off for one of several reasons. The most obvious one is the aboriginal right to pursue traditional ways. That’s the most obvious reason and the one that is pretty hard for the Crown to refute.
They can’t play the endangered herd card for one simple reason: if the Innu actually had been killing the herd at the rate claimed, the herd would have been killed off 25 years ago.
Second, there is the angle to use if the guy has a lawyer bent on embarrassing the living crap out of the Legal Genius(es) behind the prosecution.
If that’s the case, the lawyer will scream that his client is being abused because he is from another province. He will have plenty of evidence to back up this line.
The lawyer will point to the treatment of his client compared to Innu hunters from Labrador who were caught red-handed killing animals of an endangered herd who had their gear and vehicles returned to them. The lawyer can point to the need to get a deal on the Lower Churchill as a motivation for the blatantly unfair treatment accorded to the Labrador Innu. He doesn’t have to prove that, mind you. He can just allege it. Think of it like claiming your client got a shit knocking on George Street because his old man was in a labour dispute or words to that effect.
He can also have a go at the natural resources minister for alleging the Innu were potential murderous bastards. Her whole line about something flung into the blades of a government helicopter seems a tad overblown.
And if in the process the lawyer for the poor fellow facing charges can coax a characteristically intemperate outburst from the province’s Chief Lawyer, then all the better for his client.
Ginger, get the popcorn.
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Since last summer, pictures of the Wolfe Island wind farm have been one of the most popular search terms to drive traffic to Bond Papers.
Unfortunately, they haven’t been readily available since the site redesign. Well, by popular demand, here’s the best shot, taken from the Wolfe Islander III on the return run from the island to Kingston.
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There are two things to notice about a provincial government news release from the human resources and labour department announcing the awarding of $67,000 of job subsidies for seven jobs in the electoral district represented by the minister responsible for human resources and labour.
Well, there’s three if you include the fact that Susan Sullivan is announcing money for her own district and at no time makes reference to the fact it is her district.
But there are two other aspects of this release that scream out for attention:
Firstly, the news release gives absolutely no background whatsoever on what the seven people benefitting from the cash will be doing. In fact, aside from the first paragraph, the rest of the release pours out tons of boilerplate on the program used to pay for the jobs.
Secondly, one of the employers involved in the projects is the Nova Central School District. The money is for “the hiring of staff…” for the district.
In other words, the provincial government is using government money from one department to subsidize jobs in another line department. Nova Central gets its funding from Darrin King, the education minister.
Talk about jobs that depend on taxes.
Talk about make-work schemes.
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The International Energy Agency is warning that oil prices above US$80 a barrel may jeopardise economic recovery in major countries.
From the Globe and Mail:
“Ultimately, things might turn messy for producers if $80-100 (per barrel) is merely seen as the new $60-80 (per barrel), stunting economic recovery while prompting resurgent non-oil and non-OPEC supply investment,” the Paris-based IEA said in its monthly oil market report.
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Just for the fun of it all, here’s a table showing the Newfoundland and Labrador labour force (top line and the employment, by month, from March 2007 to March 2010.
The numbers are from Statistics Canada’s The Daily.
There are a few things to notice:
1. Employment in Newfoundland and Labrador peaked in May 2008 at 224,700. Then it dropped drastically and kept on falling until November 2009. That’s when it seems to have started a rebound.
2. May 2008 was two to three months before oil prices peaked and the recession started.
3. As one might have expected, all that provincial government capital spending last year kept construction workers employed but it sure as heck didn’t work any miracles in the job market.
4. Even though there’s been a pretty steady climb in employment since later 2009, there doesn’t seem to be any particular reason for the climb, at least not in the private sector. The employment level also seems to have hit a plateau for a while.
5. The only major private construction project due to ramp up in the near future is the Vale Inco project at Long Harbour. The Hibernia South and White Rose work aren’t really jab-makers. Hebron is the next big one to hit and that won’t show up until 2012 at the earliest.
6. Notice that the labour force in the province has been growing steadily since the middle of 2007. That matches the observation made by labradore about economic refugees who started returning home in advance of the recession.
7. Is the recession really over? Continued labour force grow suggests there is a problem elsewhere and that economic refugees continue to head back to Newfoundland and Labrador in the hopes things are easier at home.
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In 2007, the contracts manager at Metalcraft Marine, a Kingston Ontario boat builder noticed the growing number of reports from the united States that predicted a looming downturn in the American market.
The company shifted its marketing focus to South America, the Middle East and Asia. The work paid off: revenues in 2010 will be 50% higher than 2007 based on new customers outside North America.
Meanwhile, since 2007, the provincial government in Newfoundland and Labrador has been working alongside the other eastern Canadian provinces to increase trade with the United States. There is now a whole trade focus on the south-eastern Untied States complete with junkets and conferences.
Just this weekend – April 2010 - the Premier co-hosted the latest conference for the south-eastern project. This is the same trade venture. incidentally, that drew Paul Oram to Georgia when he was the business minister. His grasp of recent events in the province is breathtaking. Well, breathtaking that is, if you have no idea what he is talking about. If you do have half a clue, you’d wonder what planet he was from to have cocked everything up so badly.
Now to be fair, the whole idea for this venture seems to have been cooked up back before 2007 when it looked to some like the growth in the United States economy would know no end. By the time the bureaucrats and politicians managed to get themselves organized, the first signs of looming trouble were showing up. And by October 2008 when Oram was in Georgia, the entire arse had fallen out of the American economy.
By then, of course, or even by 2007, the bureaucratic juggernaut couldn’t be stopped even if someone wanted to. And now three years after the first one, a whole bunch of people get together regularly at taxpayer expense to talk about how nice it would be if the private sector companies in the respective jurisdictions did a little business with one another.
These trade affairs never seem to do much more than talk, of course and set up permanent offices employing public servants to help co-ordinate future meetings. That’s what happened with the Tobin-era Irish junket-fest, revived by the Williams crew or the Team Atlantic missions to anywhere that has warmth and sun in the wintertime. But the purpose of this discussion let’s run with the assumption used by governments, namely that these trade missions and junkets actually work.
Politicians who come into office without any idea of what to do usually wind up following the flow. This American trade idea is likely no exception.
You see, the United States has been the province’s major foreign trading partner for decades. In 1999, two thirds of all exports from Newfoundland and Labrador went to the States. By 2006, that proportion had climbed to 75%. Even in 2008 – the last year for which the provincial government provides statistics – 71% of exports from Newfoundland and Labrador went into the American market.
To put it another way, take a look at the export value compared to the province’s gross domestic product (GDP): the total value of goods and services produced in Newfoundland and Labrador. In 2008, about half the GDP went to the Untied States. The GDP in 2009 was 22 billion. The drop was pretty much all due to the collapse of the American market.
Now that level of dependence is not as bad as Metalcraft's problem in 2007, but it certainly should have made someone within the provincial government sit up and take notice. After all, the provincial government’s own statistics analysts produced the figures cited above. The level of dependence on the American economy is not a state secret.
Rather than trying to increase trade with the United States, Newfoundland and Labrador would be strategically better advised to diversify its markets. But since 2003, the provincial government has been doing exactly the opposite.
What’s more, the provincial government - in an apparently capricious move - specifically rejected getting involved with a major international trade initiative aimed at diversifying the markets for local goods and services.
Sure Paul Oram took a jet to India in 2008, but the very next year, the provincial government rejected a major national effort designed to open the European union to free trade with Canada. A few million dollars worth of seal bits trumped what had managed to become, by 2008, close to a couple of billion dollars of trade into the European Union. The prospect of more trade with the Europeans opens opportunities for new business throughout the province not to mention offering the chance to resolve some long-standing trade issues in the fishery.
However, none of that seems to have had any impact on the group of politicians and bureaucrats determining the province’s economic policy. So it is that the European opportunity was neglected, to put it mildly, while the American continues.
Now this is not the first or only time such a situation has occurred since 2003.
The provincial government took a hand in smashing to bits the only internationally competitive fishing enterprise based in the province. Fishery Products International continues as a brand. The brand, along with the international marketing arm went to a Nova Scotia-based company. Another section, a seafood marketing arm based in the United Kingdom also wound up on the block, snapped up just as quickly by someone else with far greater vision than the provincial government and the band that sliced the company to pieces.
Now it does not matter if the provincial government actively worked to destroy FPI or if it merely went along for the ride because it lacked a coherent fisheries policy of its own. The end result is the same: The parts of the company that could have helped to diversify markets for local seafood are gone to others. The unprofitable and problematic bits – the processing bits – remain in the province and continue to be highly problematic although they are now held by a smaller company with far less global clout.
The others are doing quite well for themselves. John Risley, vilified by the Premier during the FPI debacle, personally runs a successful company that last year turned a profit of $25.8 million despite the downturn in the American market and the high Canadian dollar. A key part of the success is the FPI stuff Risley bought with the same Premier’s agreement.
There is no small joke in discovering that the Biloxi conference co-hosted by Danny Williams is sponsored,in part, by AbitibiBowater. Williams’ expropriation gambit of AbitibiBowater’s and other’s assets in 2008 has turned out to be a legal disaster for the provincial government and may well prove to be as big a financial mess too.
Irrespective of that, though, there is something fitting in having Williams hosting an event designed to encourage trade while it is sponsored by a company which is the poster-child for the Williams administration’s erratic, contradictory policies.
It is one thing to sell products in another market. Another key component of trade missions is attracting new investors. What could more readily turn off investors than the spectacle of a provincial government seizing control of assets, revoking permits and unilaterally quashing legal action?
Williams did not just lay waste to AbitibiBowater’s presence in the province with his December 2008 surprise. The expropriation bill also seized assets belonging to two other companies: the Italian multi-national ENEL and St. John’s-based Fortis. There is still no sign of any settlement with any of the parties affected, including those like ENEL and Fortis which appear to have been collateral damage in whatever war lay at heart of the expropriation.
Two decades ago, the Government of Newfoundland and Labrador recognised both the problems faced in the province and the opportunities posed by changes in the global economy. The Strategic Economic Plan aimed to make fundamental changes in the economy, diversify industries and markets. The plan was a step forward.
Two decades later, the province is two steps back. The SEP and all the knowledge that lay behind it are tossed aside.
As the old adage goes: fail to plan. Plan to fail.
The results are there for all to see: increasingly, the provincial labour force is dominated by people whose jobs depend on tax dollars, rather than on jobs that generate tax dollars.
The provincial government now accounts for almost 25% of the employed labour force in the province. This is not just the result of the near collapse of the forest sector and the steady decline of the fishery: public sector employment like public sector spending generally continues to grow apace. Curiously enough, the Williams administration started out with a policy of reducing the public service.
Since 2003, the only development projects that have taken place were all either begun before the current administration took power or build modestly on existing work. Nothing new has turned up despite the creation of an entire department supposedly devoted to generating new economic development.
More of the provincial economy in 2010 depends on exports to the United States than a decade ago. About 71% of all foreign exports now head to the United States.
Oil generated one third of the provincial gross domestic product in 2009; that’s about seven billion dollars in a $22 billion economy. Total provincial government spending for 2010 is about seven billion. As industries like forestry and the fishery have withered or faltered, the provincial government has stepped in to take its place.
The provincial economy is increasingly driven by public sector spending which, itself cannot be sustained at current levels.
There are ways to correct the course the provincial government has currently set.
That is where this series will turn next.
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Not only will the provincial government continue to make billions despite dwindling oil production, that situation will continue over the next decade with the provincial government raking in around $2.0 billion annually.
That includes 2016 when – according to the production forecast used to make these awesome predictions - production will be a mere 65 million barrels.
The source of this sunniness is none other than the local Blue Team’s favourite economist Wade Locke.
Yes, folks, the same guy who complained when he was accurately quoted (but unfortunately contradicting the official spin) is predicting sunny days ahead.
And it’s there for all to read, on the front page of the Saturday Telegram complete with a pretty graph of annual oil production.
Not surprising, is it?
And there is no reason for doubt.
Locke remains confident in his forecast, a year after he gave it:
"That what I was expecting before, and that's what I'm still expecting."
Of course, he is.
Just like he was confident when he forecast gigantic things for Labrador at a time when the global economy was tanking. he expected it then and he still expected it right up until it didn’t happen.
Or like 1990 when he pissed all over the economic benefit from Hibernia.
Yes, those economic boons can be hard to predict.
We just have to make sure the credit goes in the right direction.
cast the first stone against New Brunswick Power’s proposed 3% rate hike or any of the other proposals aimed at coping with the company’s financial problems.
The ones who worked to kill the NB Power/Hydro-Quebec deal can just suck it up end enjoy it.
(h/t David Campbell.
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The Premier is co-hosting an international trade mission this weekend, as the provincial government’s information service dutifully tells us all on a sunny Friday.
The event will bring together a bunch of state governors and provincial premiers to talk about ways to promote trade among the states and provinces.
The conference is Biloxi, Mississippi and that, as we all now know, is just a short Citation hop across the Gulf of Mexico from the Premier’s condo in Sarasota, Florida. It’s so nice when things take place so close to home.
Almost immediate Update: Since his truck hasn’t been in the Premierial Parking Space, odds are the Premier’s been back in the Southern Tower since the House closed for a three week break.
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Cooke Aquaculture is closing an $8.5 million cod demonstration project it opened last year with financial help from the federal and provincial governments totalling $4.0 million.
The facility got its first cod fry in September 2009,
The existing stock will be raised to maturity in 2012, as planned but the company won’t breed new stock.
In a story in the regional weekly newspaper The Coaster, the company blamed higher–than-expected costs and competition from wild cod fishing for its decision. The company also said it couldn’t attract additional investment from its partners or from the provincial and federal governments.
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The first episode of Twin Peaks aired 20 years ago – April 8, 1990.
Here’s a quick clip in which SA Cooper meets the ever-lovely Audrey Horne:
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1. A Harris-Decima poll for Canadian Press confirms what most Canadians have known for a couple of years: neither of the federal political parties is persuading Canadians that it has the stuff to govern with a majority in Parliament.
2. Gilles Duceppe gets a few headlines by discovering there is life outside the Queensway. He didn’t really have anything to say – new or otherwise - mind you, but Duceppe got a few headlines largely for showing up.
3. As others have noted, former Quebec Premier Jacques Parizeau may have thought that the ethnic vote cost him the referendum in 1995 but he was still willing to let a few “ethnics” look after his health at Montreal’s Jewish General Hospital.
As the Gazette notes in a more serious vein, though:
So we owe Parizeau not only our good wishes for a full and speedy recovery, but also our thanks for the wisdom of his choice. It serves us almost as well as we're sure it will serve him.
4. Putting Rahim Jaffer’s name and the word “absurd” in the same headline is redundant. Access is related to power and influence. People who really have them don’t talk about them.
In 2009, the Canadian Association of Petroleum Producers forecast a steady decline in local oil production.
The decline is forecast to end around 2017 as new production from Hebron comes on stream, but the increased production only lasts for a couple of years before the decline sets in again
The peak once Hebron comes on stream is forecast to be about the same level as the forecast shows for 2012. That’s slightly above 80 million barrels.
But hang on a sec.
Production for the current year – 2010 – is forecast by government officials at 86 million barrels.
Yessirree, that’s right. And production last year was 97 million barrels, again a figure CAPP had down for 2011.
In other words, the decline is about two years ahead of forecast. We also know that Hebron is behind schedule as well. How much behind schedule isn’t clear but it could be as much as a year later than the optimistic projections when the deal was announced or when it was re-announced.
So that period in the low-production trough could well be longer than CAPP’s forecast shows and the rise back up after Hebron could be much slighter.
In other words, when finance minister Tom Marshall admits that oil production is on the down-slide, he’s acknowledging that he already knows exactly what the implications are from that CAPP graph.
Let’s put it this way: this year, if oil averages around $83 a barrel as the provincial government believes, the total value of oil production offshore will be about $7.1 billion ($83 X 86 million)
In order for the provincial treasury to bring in the same royalty as it forecasts for this year - $2.1 billion – with production at 40 million barrels (i.e. the bottom of the trough) – oil would have to average $178 dollars per barrel in that year.
No sweat, says you, oil got to $147 a couple of years ago.
Yes it did, sez your humble e-scribbler. And look what happened right afterward. Oil didn’t average that price: it hit the number and then fell off quickly.
If that isn’t enough for you, consider that oil prices averaging $178 a barrel would be more than double the average price ($83) the provincial government forecast for oil this year.
So in order for the provincial government to do exactly what they are doing in 2010 in that mythical year we will call 2014 (remember everything is two years ahead of schedule) oil would have to be almost $180 a barrel all year.
For those keeping track, and just to show you how soon this is, just bear in mind that 2014 is one year beyond the period of continuing deficits forecast in the spring provincial government budget.
And just remember, as well, that this year the budget is forecast to be short by almost a billion dollars of cash.
Not only is there not enough of a cash reserve to cover that sort of a shortfall in 2014, there wouldn’t be enough cash in any secret government pockets to handle a deficit half that big.
And that’s without thinking of what tremendous pressures there’d be for higher wages and higher costs and higher priced everything else in a world where the price of oil doubled in a mere four years.
Yes, gentle reader, that little scenario assumed spending stayed where it is predicted to be in 2010. But as we all know, if oil prices were to shoot up that way, spending would have to go up just as radically. The only problem is that spending would shoot up but – as we know – the major source of provincial government revenue would only come in at the level for 2010.
When oil was forecast to be half the price.
Increase your spending dramatically while holding your revenue about the same.
That’s the definition of “unsustainable”.
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In 1995, the provincial government spent slightly less than a billion dollars on health care.
That was 26.4% of the provincial budget that year.
In 2010, a mere 15 years later, the provincial government is spending roughly 43% of the budget (not including capital works) on health care.
That figure drops slightly – to 38% - if you add capital spending but that's only because of the disproportionate amount of spending on capital works not related to health care.
In 2008, the provincial government spent 43% of the budget on health care.
That’s on par with spending in Quebec, for example, but the rate of change has been much greater in Newfoundland and Labrador than it has been in Quebec. Health care spending in Newfoundland and Labrador has doubled since 2003; in Quebec, health care spending grew 33% between 2003 and 2007.
Wait.
It gets better.
With health care spending at about $2.7 billion, that works out to be the equivalent of 12% of the value of all goods and services produced in the province - the gross domestic product or GDP - in 2009.
According to the Organization for Economic Co-Operation and Development, the Untied States spent 16% of its 2007 gross domestic product on health care. That’s the most recent year for which the OECD supplies statistics online.
Canada as a whole spent 10% of its GDP on health care. That was slightly behind Germany and around the same amount as Austria and France. But the majority of countries in the comparison of Europe and North America spent less than 10% of GDP on health care.
Just to be sure, in 1995, Newfoundland and Labrador spent about 10% of its GDP on health spending.
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Incidentally, those 1995 figures are from the Strategic Social Plan consultation paper. It was supposed to have been released in early 1996 but circumstances prevented that from happening. Since copies are scarce – they were rounded up and shredded on orders from on high – your humble e-scribbler will scan his and start posting it very shortly.
