Alberta 2015-2016 - Chemistry Industry Association of Canada

Competitiveness Scorecard – Chemical Sector
Alberta 2015-2016
Currently, Alberta represents 39% of Canada’s industrial chemical manufacturing. Alberta petrochemical companies mainly use
natural gas and natural gas liquids as raw material, known as feedstock, for the production of petrochemicals. A chemistry services
presence is also growing in the Alberta economy. While existing facilities operate profitability with favourable oil/gas price spreads,
growth depends upon access to significant additional natural gas liquids. CIAC recommends market diversity for energy products
and the development of a long-term advantage in petrochemicals based on enhanced and sustained access to incremental natural
gas liquids from Western Canada’s energy hub. Alberta can secure some relief from the boom and bust swings by increasing growth
along its rich resource value chains.
COMPETITIVENESS
COMPARISON
CATEGORY
TREND
COMMENTS
Existing facilities enjoy a competitive but not advantageous
tax regime with respect to U.S. jurisdictions. Matching the
federal extension of the ACCA for 10 years will help attract
investments to Alberta. Local tax-based incentive packages
on the USGC are attracting new investments there.
Corporate Taxation &
Fiscal Policy
Environment,
Health & Safety
Environmental regulatory uncertainty does not support
expansions or growth plans and there are concerns that
federal provincial regulatory approaches could lead to
duplication of regulatory requirements and add to the
uncertainty.
Manufacturing Base/
Critical Mass
Encourage upgrading along the energy value chain and
integrate it into a strategy for sustainable growth that will
lead to broader economic diversification.
U.S. shale developments have resulted in a large increase in
cost-competitive energy supply. Oil and gas prices still
lower here, but Alberta and Western Canada must diversify
its energy markets (e.g. Asia, Eastern Canada). Pipeline
constraints for energy limits feedstock growth prospects.
Electricity transmission costs continue to increase
significantly.
Energy
(Supply/Pricing)
Raw Materials/
Feedstocks
Supply for existing operations has stabilized and is
improving. Significant new growth in supply will require
new investment. Pace of growth in natural gas markets
combined with continued construction cost challenges
tempers the expected pace of growth. Increasing U.S.
feedstock supply and current lower prices also presents
competition for Alberta growth.
Logistics
Distant from major markets and dependent largely on rail.
Declining railway level of service is a significant problem.
Attraction and retention in a tight labour supply market and
competition with the energy sector for some key worker
categories, including skilled construction trades, also hurting
cost competitiveness for new projects. USGC construction
cost escalation concerns are increasing. An aging workforce
also a challenge.
Workforce Supply/
Construction Costs
COMPETITIVENESS OVER COMPETING JURISDICTIONS
Advantage
Neutral
Disadvantage
1
Based on indices used by the
World Economic Forum
TREND IN COMPETITIVENESS SINCE 2014 / 2015
Improving
Unchanged
Declining
Who we are – Where we are
Alberta 2015-2016
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First among manufacturing industries on basis of exports - $8.7 B
First according to amount of value added
First in terms of average salary - $97,100; higher still for industrial chemicals - $108,600
Second largest by value of shipments - $14.3 B, 78% due to industrial chemicals
Fifth largest by level of employment – 7,850
Alberta’s Chemical Sector–
Keystone to Manufacturing
2