Know
Your Region: The Industries
This
section looks at the industry sectors in the Southwest from
the perspective of a Competitive Advantage Analysis (CAA). A
CAA is a methodology use to examine past trends with a view
to identifying industry sectors that have under-performed or
over-performed relative to other industries and other regions.
One of the purposes of the analysis is to generate an informed
debate about where the
industries in the regional economy have been and where they
could be headed.
The
main findings in this section are summarized below in point
form.
• The CAA used employment as a measure of economic growth
which is problematic in some industry groups (e.g. agriculture
and the oil patch). The period examined was from 2001 to 2006
and the
comparison point was taken to be the province as a whole.
• The CAA confirms the fact that agriculture and the resource
sectors are the largest industry groups in the Southwest.
• Six of the thirteen industry groups are classified as
having limited prospects for a variety of reasons. External
trends, that is, a decline at the provincial level, is a problem
for four:
• agriculture;
• wholesale trade;
• accommodation and food services; and
• finance, insurance and real estate.
Declining
competitiveness, that is, the employment growth in the Southwest
is lagging growth at the provincial level is a problem for five
including some that are affected by external trends:
• agriculture;
• construction;
• manufacturing;
• wholesale trade; and
• finance, insurance, and real estate.
A
weak base is an additional problem for three sectors:
• finance, insurance, and real estate,
• manufacturing, and
• construction.
• Six of the thirteen industry groups are classified as
current or emerging strengths, depending on their size. The
current strengths are:
• the resource sector,
• other private sector services,
• education services; and
• health care and social services.
The
emerging strengths are public administration and business services.
• The remaining sector – retail trade – is
classified as a high priority retention target because it is
of medium size, growing provincially, but lagging growth in
the Southwest.
5.1
Methodology and Approach
There are four steps involved in undertaking a regional competitive
advantage analysis:
• choosing a region and a reference against which it is
compared;
• choosing the economic measure or measures used in the
analysis;
• choosing a time frame for the analysis; and
• choosing the industry sectors.
In practise, a scarcity of good quality data limits many of
these choices. These four decisions made for the Southwest are
described below.
Choosing the Comparison Region
The obvious choice for a region to compare with Action Southwest
region is the province as a whole. This has some risks,
however, because the provincial economy differs from the economy
in the
Southwest in some significant ways. In particular, the economies
of Regina, Saskatoon, and the North will be much different.
A more relevant comparison might be with the economies in regions
sharing the same climate and geography such as those in southeast
Alberta and the bordering US states but data limitations make
such a choice impractical. In the end, the province as a whole
was chosen for the
comparison region.
The
choice of the Action Southwest region for the CAA means that
the Statistics Canada census is the only data source that can
be used because the census is the only data source that can
be customized to a specific sub-provincial geographic area.
Choosing
the Economic Measure
In theory a competitive advantage analysis can be done for any
kind of economic measure. In practise, the choice of a subprovincial
region means that employment is the only available indicator.
There
are advantages and disadvantages to using employment as a measure
of economic activity. Employment has the advantage of
being easy to understand – a job is a readily identifiable
measure of
economic success for an individual if not an economy. And reliable
data from Statistics Canada’s decennial census provides
employment by industry group.
But there are difficulties with employment as a measure of economic
activity at the industry level. The first is that changes in
productivity can affect changes in employment; a firm or industry
may be more
successful by every other measure except employment. If an individual
firm or an industry group has revenue growth, higher salaries,
and profit increases with the same number of employees, a measure
of employment will not indicate “success”.
A
second difficulty is related to a phenomenon that is particularly
prevalent in Saskatchewan, namely the presence of multiple job
holders, people who simultaneously hold two or more jobs. In
2006, for example, 8% of persons employed in the province were
multiple job holders, the highest rate in Canada. The
census measures the characteristics, including the industry,
of only the “main” job – the one at which
the respondent works the most hours. We undoubtedly misrepresent
agricultural employment in the Southwest, for example, when
we measure only employment for the main job.
A
third difficulty is with part-time employment specifically and
hours of work generally. Replacing two part-time employees with
a single full-time employee working the same aggregate hours
will look, in the
statistics, like an decrease in employment. Increased hours
for either part-time or full-time employees, on the other hand,
will not register at all. A more appropriate measure might be
hours worked rather than employment but reliable data on hours
of work by industry are not available. In practise this might
make little difference because, at an aggregate industry and
provincial level at least, changes in hours of work are relatively
slow to occur.
Finally
there is the issue of commuting. The census measures employment
according to the residence of the worker rather than the location
of the employment. Employment opportunities in the region will
be overstated to the extent that residents commute to locations
outside the region and understated to the extent that people
living outside the region commute to jobs within the region.
Section 7.2 shows that there is some degree of commuting into
and out of the Action Southwest region but the quantity is relatively
small so this is probably not a significant issue for the CAA.
Choosing
the Time Frame
A competitive advantage analysis requires, for most of the indicators,
a time frame over which the comparison is made and the choices
made are important. Saskatchewan’s resource-based economy
has
experienced a number of booms and busts over the years and the
choice of starting and ending points will have an impact on
how well or how poorly a particular regional economy appears
to be performing. The census, on the other hand, provides information
only every five years.
In
the end, the most recent period available, 2001 to 2006, was
chosen because it is the most current and because the data have
been subject to the fewest definitional changes over this period.
So we are measuring the change during a period of relative prosperity
in the province. From 2001 to 2006, employment in Saskatchewan
grew by an average of 0.6% per year in the province as a whole
whereas it
declined in the Southwest.
Choosing
the Industry Sectors
The choice of industry sectors to be used in the analysis was
also largely determined by the availability of data. In both
2001 and 2006 Statistics Canada used the NAICS (North American
Industry Classification System) to classify industries.
A
number of industry groups were combined when their separation
would have meant that they were not comparable over time. This
has several unfortunate consequences.
• The forestry sector cannot be separated from agriculture
although this will not have a significant effect.
• Utilities, which are primarily in the public sector,
cannot be tracked separately over time and so are combined with
the mining/oil/gas sector.
• A large number of disparate industries are clustered
into the “other private sector services” category
including several important industry groups such as transportation,
culture and recreation, and personal services.
The resulting thirteen industry groups are shown in Table 5.1
(can be viewed by clicking the link below)
The
employment data use what is called the “experienced labour
force” which is a broader concept than the number of employed
because it includes those who have worked for at least some
period in the previous eighteen months. To be employed, a person
must have done work for pay or profit. Employed persons can
be paid workers, self-employed, or the so-called “unpaid
family workers”, namely those who work without pay in
a family farm, business or professional practice. Those who
are absent from their job or business because of a vacation,
illness, labour dispute, or other reason are still considered
as employed. Persons with two or more simultaneous jobs are
counted only once, classified in their “main”
job.
Note
that the public sector industry groups – public administration,
health care, and education – are included in the analysis
for completeness. There is no suggestion that these are economic
“drivers” for the provincial or regional economies.
For
reference, Figure 5.1 shows the distribution of these thirteen
industry groups in Saskatchewan in 2001 and 2006. Generally
speaking, the pattern over the ten years has been for declining
employment in agriculture and modest increases in most other
industry groups. Figure 5.2 contains the same information for
the Southwest Region and shows the dominance of agriculture
in the Southwest.
more
on... The
Industries pdf.
