5. Economic Foundation Capacity Assessment:
The Southwest Foundations

SWOT Analysis

Southwest Saskatchewan industries and communities are at a critical crossroads. They face a number of challenges, as well as new opportunities that will fundamentally change the nature of their businesses and the markets in which they operate over the next five to ten years. The following information was derived from the findings of numerous industry Leadership Team roundtable meetings and extensive research. It reflects the challenges and opportunities facing the Southwest and poses the question of how we can maximize the region’s strengths and opportunities and mitigate its weaknesses and threats.

The industry Leadership Teams evaluated the performance of the region’s sources of economic inputs. The analysis focused on the strengths, weaknesses, opportunities and threats of each of the regions categories of economic input foundations. The economic foundations of a region are the public and private institutions that supply critical inputs to private businesses in the region and thus contribute to its competitiveness. Industry clusters need high quality responsive economic foundations to achieve a high value-added strategy. Economic development strategists have identified six categories of economic foundations that have major impacts on the competitiveness of clusters, and the sustainable prosperity of regions. They are: adaptable human resources, accessible innovation, available finance, adequate physical infrastructure and acceptable business climate / governance, and achievable quality of life.

The intended outcome of the roundtable meetings were to develop a shared understanding of: the challenges and opportunities facing the four key industries of the Southwest (manufacturing, energy, tourism and agribusiness); a “preferred future”- opportunities for our industries; and what needs to be in place to ensure thriving competitive sectors of the Southwest.

Manufacturing Sector

Strengths

Business acumen

• Businesses know their products and services well
• Businesses and people are innovative, and passionate about their business
• Businesses have markets established, good sales and manufacturing skills
• Businesses produce quality products and services
• Businesses in the southwest are very adaptable
• New ideas are encouraged

Transportation infrastructure

• Short line rail access in the region
• Transportation systems are good

Investment capital

• Investment capital is available
• Southwest region is one of the wealthiest regions of the province

Quality of life

• Communities across the region are beginning to work together
• Affordable living
• Abundance of natural resources
• High standard of living
• Education training systems
• Space

Workforce

• Quality people - highly motivated
• Talented
• A good work ethic

Weaknesses

Availability of trained labor

• Rural depopulation is increasing and the average age of people in the region is highest in the province.
• Accessing skilled and unskilled labor is getting harder and businesses have to turn down work due to lack of skilled labor. There is a shortage in tool and die, machinists, millwrights.
• Retention of labor is also a problem. There are many individuals, skilled and unskilled, moving out of the region and into bigger cities and not a large influx of people to counteract the number of people leaving.
• Younger people who have gone through training at institutions or within a company and have become skilled in a trade often seek employment somewhere else.
• Many young people within the region feel that there is always somewhere more exciting to move to. Trained youth move to Alberta instead of remaining in Saskatchewan, and companies can’t afford to compete on the wage levels with Alberta based companies.
• Only 1700 people immigrate to Saskatchewan out of the potential 240,000 immigrants that come to Canada each year. It is difficult to retain immigrant workers in the southwest because no clusters of similar ethnic populations exist in the region or province.
• There is a barrier to entry of skilled labor from other countries even though skill shortage
  has been identified – 8 months to “Fast Track”.
• Need trained people now – not 5 years in process.
• Employee skills shift due to rapid change of technology.
• No system in place to find good trainers and mentors.

Image of manufacturing employment in schools

• Manufacturing as a profession – image low.
• Not selling future of Saskatchewan in school system.
• Shrinking pool of youth from rural Saskatchewan that can be trained.

Shipping infrastructure in province

• The bad condition of highways and road-bans within the southwest region causes problems in product distribution, market expansion, and access to supplies and service suppliers.
• Population base lacks critical mass to support infrastructure.
• Energy cost is high.

Manufacturing is not a priority in Canada and Saskatchewan

• Sector is ignored or taken for granted.
• The region does not understand the impact the manufacturing sector has on its economy.
• More incentives and better tax breaks exist in other countries.
• Lack of incentives from all levels of government.
• Government acts more on behalf of foreign business.
• Government regulations are not conducive to business growth.
• Taxation is high and not conducive to a competitive environment.
• Businesses have to compete with the federal government. In particular employment insurance is more lucrative than working for some people. This prevents labor from coming back to work full-time.

Businesses lack the enterprise mentality.

• Attitude in the region is poor.
• Businesses don’t want to work with competitors.
• There is a belief you have to do it alone.
• We have a history of being independent; we are too proud to work together.
• Not utilizing all the resources and capacity that we have in the region.
• There is complacency, belief in status quo, belief someone else will rescue.
• The fear of failure, fear of change and the unknown creates a perception things can’t be done in the southwest.
• Lack of visionaries / leadership, and too focused on the problems and not the solutions.
• Businesses that don’t operate at full capacity have to bid less for jobs (contracts) to keep employees busy and able to work full time so they don’t have to lay them off.
• Picking up labor sporadically during the busy periods creates problems with quality
  control.
• Sometimes businesses can’t take on big contracts due to lack of resources, and therefore they turn the work down and the potential economic impact is lost from the region.

Access to capital

• There is a lack of operating capital resulting in expansion restrictions for each company.
• Business support organizations do not provide much help in accessing funding.
• Venture capital funds want too much of a return and only invest in high tech.
• Communities are some of the wealthiest in Canada, but the people with the wealth are not prepared to risk in local ventures.

High overheads

• High overhead costs are a concern. Major contributors for the high overheads were identified as natural gas, high taxes, and infrastructure costs.

Cash flow

• Companies will often have to go into their line of credit because they are required to pay their bills within 30 days yet their customers/client are not paying their invoices within the 30 days creating problems and differences in cash flow.

Opportunities

Business acumen

• We have to step outside of the box and begin to think more entrepreneurial.
• Investment will be critical and will require more sophisticated risk analysis, more value added, and will have little or no room for error.
• Product development within shorter and shorter cycle times to keep ahead of global requirements.
• Speeding up the rate of new product introductions and process improvement.
• Must become better at what we are good at – specialization (quick turn around, custom manufacture of one offs, innovative designs and products, service, service, service, provide more value to the customer).
• Some of the companies indicated that they could improve their quality systems within their own company. Quite often, companies operate as they have been for many years without questioning the processes they use to manufacture products and therefore don’t identify potential changes that may improve quality.
• Service will be more prevalent, closer to customer so have the ability to inform and
  exploit active interest in customer success.
• Businesses that started locally must now compete globally.
• Automate – invest in machinery to increase throughput.
• Increase the new business from existing market sectors.
• Be ahead of technology by identifying the next generation of requirements.
• Increase the use of market intelligence and look for niche opportunities.
• Identify and evaluate the risk and return of each venture with more expertise.
• Be leading edge in the products manufactured.
• Operations will have to become “high paying value added operations”.
• Will need technology, which will require a better educated, and more skilled employee.
• Business must become lean / efficient or will be gone.

Government and public policy improvements

• Government and public policy improvements can be made by increasing communication with lobby groups. Companies should collectively and continually inform the lobby groups on issues that they need to approach the decision makers in government with.
• It is important to use the appropriate advocacy groups who have good connections already set up and can ask questions on behalf of the group. These advocacy groups can include the Swift Current Chamber of Commerce, Saskatchewan Chamber of Commerce, and the Canadian Federation of Independent Businesses (CFIB).

Support local suppliers

• When possible, buy local/regional or at least Saskatchewan to support the economy and become more informed about the capabilities and services of local companies.
• When opportunities to save money by purchasing out of the region or province occur, companies need to inform local supplies that their business lost to an outside of region / province company and for what price. Quite often local suppliers will assume that another local company won your business.
• Informing companies that their costs are high in comparison to other companies and by how much can help them perform a more accurate competitive analysis and will provide them with better information to base their decisions on.

Business networks

• We need to switch our community mindset and realize we have to control our destiny in the long term. We need to collaborate in the region as one united economy.
• Gain from the outside – partnerships and collaboration. Businesses have to begin to look at their competitors as partners and work interdependently.
• Promote joint ventures, identify and support leaders. Need to increase the formation of alliances and improve the buying power of manufacturers and system integration of supply chain.
• Encourage development of international partnerships. Develop alliances with international companies – partnerships outside of normal issues.
• Must have supplier relationships or cannot succeed. Supplier relationships – more involved in longer term relationships.
• Need a communication tool to create awareness of companies that may be seeking a business network partner.
• We need to become more aware of the capabilities of what our companies in the region have so other businesses can know what they can use.
• We need to store specialty materials to have ready access. Engage in bulk purchasing (steel, office supplies, etc.). Share employees joint labor marketing, warehouse space and manufacturing capacity / technology, etc., between companies.
• Need to capitalize on transportation opportunities (back hauls - trucks leaving the region empty). Many of the companies pay high freight and back haul prices to receive supplies. These companies often use the same transportation company, but no one knows the shipping demands of their neighbor company and therefore do not combine shipments to reduce costs.
• Improve research and development. Companies can partner and work with Universities
  and Technical Institutes to have their students and professors assist with market research, product design, and product development required by the company.

Labor resources (skilled and unskilled)

• Change the current attitude working with hands. Collaborate with: Cypress Hills Regional College, SAIST, universities and basic education. Work to change course outlines and equipment training. Need additional dollars for instruction. Develop partnerships to provide resources. Educate the educators as to current needs and technologies.
• Manufacturing will have to collectively reach youth with the support of the Saskatchewan government – develop a program to keep youth in Saskatchewan.
• Must find way to develop native youth as a resource. The solution to the inclusion of the First Nations people in manufacturing would have to come from First Nations groups themselves.
• Must identify the successes that have taken place and try to duplicate.
• Need incentives to draw young people back home and when youth come looking for employment be ready to hire and train.
• Need a training program for ethanol operators. This needs the support of the Cypress Hills Regional College.
• Establish relationships with the local Hutterite work force.
• Utilize prison inmate programs for various jobs (i.e. Prism Industries).
• Develop a regional labor pool listing.

Accessing capital

• The banks must participate and be more aware and friendly to the capital needs of manufacturing - communication was highlighted as a significant part of this issue.
• There is a lot of old money in the region, and we need to figure out a way to access it.
• Develop a community investment fund/pool that is locally controlled.
• Our region needs to differentiate itself, brand itself as a good place to invest and attract capital.

Government support

• Government will have to back manufacturing in Canada like the US government backs manufacturing in the United States.
• Saskatchewan is labor friendly rather than business friendly - this must change.
• Send letters to the editors of local newspapers, be positive, be consistent, and tell the facts about the manufacturing industry and the economy.
• Lobby groups need to approach agencies such as local municipalities, highway departments, and companies such as wireless access providers to improve the operating conditions in the area. Negotiations can be established where the improvements are justified by logistics data and cost shared by the providers, users, and municipalities.

Sector and new opportunity development

• A huge opportunity is in agriculture processing and oil and gas processing in Saskatchewan.
• Taking advantage of new markets and business opportunities offered by China and other developing economies.
• Need an independent courier system because corporate courier services do not operate frequently enough.
• Need a mobile accounting service to provide rural businesses with support not readily found in rural communities.
• The ethanol project in Shaunavon needs to happen. This project will serve as an anchor and create cluster development and better service industries.

Threats

Customers are much more demanding than ever before

• Keeping up with rapidly changing customer demands and the accelerating pace of innovation.
• Greater choice and higher consumer expectations.
• Mind set is changing – disposable society – more for less.

Business environment

• Overcoming outdated perceptions of manufacturing, and a general lack of awareness about the importance of manufacturing and the changes occurring in the sector, on the part of young people, governments, and the general public.
• Lack of political will at federal level to do something for business and the strength of Canadian dollar brings a reduction in revenues.
• Speed of business is accelerating and speed of product obsolescence is increasing.
• Managing continuous improvement, innovation, and growth in a rapidly changing business environment. A greater design and engineering component is now more common.
• Dealing with rising business costs, particularly for raw and industrial materials, energy, insurance, and mandatory overheads like payroll taxes and regulatory compliance costs.
• The global cost of supplies / inputs are increasing. Material costs continue to fluctuate up and down weekly especially for lumber and metal plates.
• Competing for contracts, investments, and product mandates from larger enterprises that are now sourcing on a global basis.
• Global competition is increasing. Competing with low-cost and increasingly sophisticated products being imported from China and other emerging industrial economies.
• Competing against unfair trade practices or restrictions imposed on Canadian businesses operating in foreign markets and competing with government owned businesses.
• Attracting and retaining skilled and experienced personnel, particularly in light of looming retirements in the sector.
• Other Canadian communities looking for similar skilled labor.

Market driven stability

• The ups and downs of particular markets create problems in the stability of the operations of the company.
• When markets are down, some companies have had to layoff employees, and when the markets improve, problems arise when the company tries to hire back the required skilled workers.
• Increased costs occur because new employees need to be trained to replace those that did not return to their job.
• Another after-effect of the layoff is the retention rate of the employees as many of them feel that their job is no longer secure with the company.

Farm commodity prices

• The farm commodity prices have a direct effect on many of the manufacturers within the region.
• Commodity prices have been on a constant decline over the past decade and even hit all time lows for some crops.
• Therefore many of the farmers are spending less on equipment, which hurts the agriculture equipment suppliers within the region.
• Another result of the condition is that the number of farmers is decreasing and many of the farm families are moving from rural areas into urban centers for employment or education, decreasing the access to potential employees.

Financing

• Obtaining adequate financing for new investments, re-engineering, and business growth.
• Banks are getting more difficult to get financing from for rural areas and private investors are leery to invest in business projects in rural areas.
• State of infrastructure and environment
• The region lacks infrastructure (good roads, schools, health care and recreation facilities).
• Infrastructure such as roads could make the flow of goods, services and inputs difficult, therefore increasing the cost of production or longer production time frames.
• Avoiding delays in the transit of goods and people across the Canada-U.S. border.

 

Energy Sector

Strengths

• The energy sector has the ability to create significant employment in the Southwest.
• Most felt the labor pool is available but concealed through skilled operational staff having tremendous mobility. Journeymen working outside trade, older workforce not actively pursued.
• The large number of people employed in the region because of gas and oil also results in numerous businesses becoming economically viable.
• Industry such as the shortline railway project and other potential economic endeavors show strength in the regions economy. The communities actively support increasing, maintaining and enhancing industry through the supplies of labor, material and infrastructure.
• The Community college program appears pointed towards training the existing labor pool to match industry needs.
• Partly paved highways throughout the rural areas can be considered both a strength and a weakness. However, improvements must continue to be made.

Weaknesses

• Trades unavailability with increased energy sector activity and large new construction projects.
• Oil patch material lead-time as Edmonton appears to be the inventory availability of choice.
• Equity bases Agri-Culture unavailable Start-up capital not readily available.

Opportunities

• Power provider rate incentives.
• Active Safety and Training plans for individuals and companies.
• Significant untapped energy such as methane.

Threats

• Short-term loss of trades personnel with construction activity.
• Geo-environmental (rural municipalities in Saskatchewan versus central governing in Alberta).
• Taxes and tax royalty structure.
• Elements, weather, extensive rain stymies activity.
• Regulations can increase capital costs significantly.
• Provincial sales tax may be an issue.

 

Tourism Sector

Strengths

The diversity and vastness of the landscape

• Wide open spaces and clear blue skies
• Abundant sunshine
• Grasslands to forest
• Flora to fauna
• Wildlife

A culture that matches the landscape

• First Nations
• Mounted police
• Working cowboys
• Cowboy poetry to live jazz
• Artists, writers, and performers

National history of the region

• Documented literature
• Published books
• Regional libraries
• Historical museums
• Interpretive centres

Visitor Access

• 6 million people live within a 500 mile radius
• Annual traffic on Trans Canada is one million vehicles
• Highway four supports both north and south travel
• Redcoat Trail offers a historical route to visitors

Affordability of vacations in the area

• A choice of national, provincial and regional parks
• Lodges, motels and inns are competitively priced
• Recreation facilities available at very reasonable rates
• Local fare and home cooked meals are more than affordable

Weaknesses

Communication is a major weakness across the region

• Area is vastly under promoted
• Marketing is sporadic, and fragmented
• Organizations have not utilized new mediums
• Communities are not talking to other communities

Internal and external perceptions are negative

• Communities are not “telling their story”
• Education and awareness appears lacking
• Funding for tourism is non-existent in areas
• Land is seen for production, not for ecological value

Tourism packages are not readily available for visitors

• Businesses are not working with other businesses
• Working partnerships are limited across the region
• Local tour operators are small and virtually unknown
• Travel agencies promote packages only to outside areas

The infrastructure is a large obstacle to advancing tourism

• Limited rest stops on main transportation routes
• Signage is sparse, with no standards and varied rates
• Roads to key destinations are poor and below standards
• Area does not have a regional airport to serve visitors

Opportunities

• Marketing partnerships with business and communities would facilitate the creation of tourism packages to serve the visitor across the region.
• Packaging partnerships (play and stay) could provide golf tours, historical tours, ecotours, biking tours and include both family packs and senior packs.
• Partnerships with other associations (eg. Sask Museums) would further expand marketing and present additional opportunities for merchandising of product.
• A coordinated sign program across the region would support overall marketing efforts and enhance community partnerships.
• The accessibility of the area, and the level of traffic on the Trans Canada and Highway 4 is a prime opportunity, and offers businesses a market in waiting.

Threats

The biggest threat seen to addressing weaknesses and seizing opportunities is ourselves

• We don’t communicate
• We don’t work together
• We don’t accept success
• We can’t see what others see

A major handicap to furthering tourism across the region is funding and support

• Pots for organizations are small (dimes competing with dollars)
• Tourism is dependent on businesses (lacking community support)
• Governments are not seen to be connected (top down approaches)

Access to required services is limited in several areas

• Internet access (high speed and internet cafes)
• Cell phones (access across region)
• Emergency services (availability)

Competition from outside markets

• Northern Saskatchewan
• Alberta badlands
• Rocky mountains

 

Agribusiness Sector

Strengths

• Large land base.
• Diversity of land.
• Large ranching sector.
• Grain and livestock production.
• Three watersheds potential for irrigation and tourism.
• Clean environment—landscape, tourism potential.
• Weather is seasonally predictable.
• Quality of lifestyle.
• Resiliency of farmers and ranchers.
• Capacity- efficiency of farmers and ranchers.
• Willingness to develop value-added processing.
• Entrepreneurs-small business in region and on farms.
• Innovative farming practices.
• Abundant energy resources gas, oil, wind.
• Access to a network of highways, grid roads.
• Railroads Great Western Rail and CPR.
• Airports.

Weaknesses

• Skilled labour shortage.
• Access to labour force.
• Aging population—average age of farmer in excess of 58 years.
• Lack of population in region.
• Independence can limit opportunity to develop.
• Difficult to get our voices heard.
• Resistance to change.
• Low commodity prices.
• Increasing input costs.
• Plant breeders right represent loss of control for farmers.
• Farmer buys retail and sells wholesale—lack of farmer control at both ends.
• Government programs that don’t work for the farmer and rancher.
• Family farms bought 3-4 times in the same family.
• Lack of time and funding to diversify Lack of value-added.
• Transportation costs.
• Infrastructure-poor quality of highways.
• Lack infrastructure to support value-added including hospitals and education.
• Geographical distance within region.
• Rural depopulation—population of Cypress Health Region area has decreased by approximately 30,000 in the last 30 years.
• Not open for business—poverty mentality, impacts investment attraction.
• Americans threaten water rights.
• Failure to educate public regarding the business, products, and the people of agribusiness.
• Narrow production based focus.

Opportunities

• Increase value-added processing in the region.
• Branding the region- tourism/healthy/green/save the planet.
• Diverse reliable climate.
• Educating the consumer.
• Marketing the region and the sector.
• Marketing regional products under the brand.
• Irrigation development on Saskatchewan River to enhance agriculture, tourism (resorts and eco-tourism), enhances development of intensive livestock operations.
• Wind farms government opens grids to sell power.
• On farm wind power selling excess to grid initiatives to ensure viability.
• Re-direct federal program dollars to create effective solutions.
• Cooperation with all levels of government to plan for development of agriculture and communities.

Threats

• Federal/provincial dollars assigned to agriculture need to be re-directed to assist regional development—ad hoc programs don’t build an industry.
• Government regulations and government culture.
• Lack of seed capital to begin new initiatives.
• Limited access to financing without government support.
• Lack of patient financing programs.
• Access to and cost of investment capital.
• Government works to develop Regina/Saskatoon.
• Governments (provincial and federal) lack interest in developing the province beyond
  Regina and Saskatoon.
• Transportation – Great Western Rail committee working to purchase short line.
• Quality of the roads limits tourism.
• Fees for over weight transport to and from value-added operations.
• Cost of on going maintenance required for roads.
• Limited access to cellular phones.
• Limited access to high speed Internet.
• Feedlots, processing plants, ILO’s.
• Wind power long-term impact on environment.
• Long term impact of fertilizer and chemicals on land, food produced and environment.
• Water capacity required for oil and gas sector.

 

Assessment of Critical Inputs

A prosperous and sustainable region is one that has honed and developed it’s economic inputs.This requires private and public institutions to listen to the needs of industry and provide the inputs they need to grow and succeed. The ASBNC strategy has been crafted to improve response to this need and ultimately strengthening the region’s foundation.

The following is an assessment of our critical economic inputs:

Adaptable Human Resources

The existing workforce in the region is very much one of quality: highly motivated, talented, resilient, with a good work ethic. However the existing workforce along with the average age of people is the highest in the province. These factors coupled with the relentless migration / depopulation of rural southwest due to the changes in the agriculture industry (BSE, commodity and fuel prices and drought) is bringing about major challenges to the industries of the Southwest. There is economic growth in some of the region’s sectors (oil and gas and manufacturing) however, the region’s total population continues to decline and more rapidly in the rural areas. However, not all rural areas are experiencing population decline. Rural
Municipalities near larger urban centers, such as the city of Swift Current and the community of Gull Lake, have seen some growth in population in the last few years.

The youth population in the region is small which is and will continue to pose a challenge for the areas labour force unless steps are taken for attraction and retention of this demographic.Improving the opportunity for more variety of post secondary education programs, improved awareness of industry occupations and pre-employment training sessions for high school students were some of the options offered by our industries leadership teams to address this issue.

So what does all this mean? The region’s age demographic and declining population means there will be fewer people to enter into the labor force, the aging population also means people are beginning to retire and shortages are likely to develop for a broad range of skilled workers.

Possible contributing factors to our shortage of skilled laborers:

• Close proximity to Alberta, competing for labour.
• High wages and steady work in the oil and gas sector is attractive to skilled laborers of other sectors.
• Availability of good paying jobs in the oil and gas industry do not always require post secondary education.
• Rapid changes in technology with no system in place to find good trainers and mentors to meet the needs on a just in time basis.
• Internal migration to larger centres offering more opportunities and better pay.
• Primary agricultural products, a dominant sector in the region, have not required the advanced training as other sectors in other regions.
• Migration of youth for higher education not offered here.
• Poor perceptions about what the Southwest has to offer.

The industry leadership teams had much to offer for possible solutions to begin addressing these issues:

• Work collaboratively to change perceptions about careers in the trades.
• Develop a Southwest Skills Pipeline Network – matching skill with industry demand.
• Create awareness of industry labour opportunities.
• Pre-employment training programs, apprenticeships, job shadowing.
• Extension of post secondary education programs and tailoring these to local needs.
• Industry working in partnership with Saskatchewan universities to improve training capabilities.
• Sharing laborers to retain skills in the area.
• Develop and support value-added agriculture ventures.
• Work with the Federation of Saskatchewan Indian Nations along with federal and provincial departments of Immigration to target First Nations people and immigrants to locate in the Southwest.
• Improve knowledge of ethnic cultures to retain immigrant worker.

Accessible Innovation

The Southwest produces quality products and services, and has done so for decades. Our business people generally are innovative, driven and passionate. However, over the past decade our industries have become less adaptable to the changes in the global market place, less innovative and productive. Investment in innovation through the introduction of new and improved products and services, the adoption of new technologies and improved business processes has fallen as cash flow has declined over the past years. Productivity is much lower in smaller firms, as are wages, benefits, job security and training levels. The resources needed to be innovative and competitive are sometimes unattainable making our industries more vulnerable to demand and price swings in the industry.

A rapidly changing “demand” society will require continuous improvement and innovation by our industries in order to be competitive in a global marketplace. Constant technological innovation and global reach can make it very difficult for smaller firms to compete. The small firm’s lack of resources confines its ability to:

• Conduct extensive research and development.
• Upgrade production capabilities, which might require investment in expensive new process technology.
• Access professional services such as engineering, management consulting, accounting, market research and worker training programs.
• Acquire intelligence on global markets.
• Establish a credible presence in overseas markets.
• Fulfill larger contracts that require large volume production capacity or multiple skills.

Businesses that lack the ability to operate at full capacity due to lack of productivity have to bid less for jobs (contracts) to keep employees busy and able to work full time so they don’t have to lay them off. Sometimes businesses can’t take on big contracts due to lack of resources, and therefore they turn the work down and the potential economic impact is lost from the region. Also picking up labor sporadically during the busy periods creates problems with quality control.

Most businesses encourage new ideas and productivity improvements, but the implementation / actions to move innovation and efficiencies forward are hindered by old methodology of doing business. Our industries sometimes lack that enterprise mentality. The enterprise mentality is what built the region to where it is today. That is when our ancestors immigrated to Saskatchewan with virtually only the clothes on their back and created wealth, prosperity and strong growing communities. Today businesses don’t want to work with others / competitors; there is a belief out there, that you have to do it alone. Over the last 50 years we have built a history of being independent; and have become too proud to work together.

By not working together in areas of challenge and opportunity, we are not utilizing all the resources and capacity that we have in the region. There is now a growing complacency, belief in status quo, belief that someone else will rescue. This has led to a paralyzing fear of failure: a fear of change and the unknown, creating a perception that business success can’t be achieved in the Southwest. This lack of visionaries and accompanying leadership results in the entire region focusing on problems and not the solutions.

The provinces innovation resources are also major untapped assets and offer the potential for significant value-added growth in the future. Five institutions are critical: the University of
Saskatchewan, the University of Regina, the Cypress Hills Regional College, the National Research Council, and the Saskatchewan Research Council. In order to be effective, these institutions must connect with the industries of the Southwest. The research and technology outputs of these institutions must be relevant to industry, and companies must be farsighted and risk tolerant regarding the potential of technology in their industry. When both those conditions hold, the flow of technology to industry increases and so does its competitiveness in turn.

It is time to step outside of the box and begin to think more entrepreneurial. Innovation will be critical and will require more sophisticated risk analysis, more value added, and will have little or no room for error. Product development will need shorter and shorter cycle times to keep ahead of global requirements; as well as speeding up the rate of new product introductions and process improvement.

Most businesses in the region were started locally but must now compete globally. To compete globally Southwest industries need to:

• Be leading edge in the products manufactured.
• Service will be more prevalent, closer to the customer so have the ability to inform and exploit active interest in customer success.
• Automate – invest in machinery to increase throughput.
• Increase the new business from existing market sectors.
• Be ahead of technology by identifying the next generation of requirements.
• Increase the use of market intelligence and look for niche opportunities.
• Identify and evaluate the risk and return of each venture with more expertise.
• Operations will have to become “high paying value added operations”.
• Use technology, which will require a better educated and more skilled employee.
• Business must become lean / efficient or will be gone.

To improve innovation capability, productivity and be more competitive globally, industries and communities need to switch their mindset and realize they have control over their destiny in the long term. We need to collaborate in the region as one united economy. That is gain from the outside through partnerships and collaboration. Businesses have to begin to look at their competitors as partners for strategic alliances and work interdependently to take advantages of opportunities that could not be achieved independently.

The region must promote joint ventures, identify and support leaders to increase the formation of strategic alliances. The areas to establish effective business networks include: bulk purchasing (steel, office supplies, etc.), share employees, joint labor agreements, marketing, warehouse space and manufacturing capacity / technology, etc., between companies. We can also capitalize on transportation opportunities (back hauls - trucks leaving the region empty). Many of the companies pay high freight and back haul prices to receive supplies. These companies often use the same transportation company, but no one knows the shipping demands of their neighbor company and therefore do not combine shipments to reduce costs.

By collaborating we can begin to achieve together what could only be attainable by larger firms.

Available Finance

Access to available capital emerged as a critical economic foundation for immediate action in the region. The impact of BSE, low commodity prices and high fuel costs has created huge challenges for the region’s farmers and ranchers and has left lending institutions uncomfortable with the continued uncertainty of the market.

The region’s manufacturing companies often have to go into their line of credit because they are required to pay their bills within 30 days yet their customers/clients are not paying their invoices within the 30 days creating problems and differences in cash flow. Ultimately, a lack of capital results in operation and expansion restrictions for companies in the region. Also, available venture capital funds that exist in Saskatchewan for provincial based companies require too much of a return on their investment; returns normally not provided through opportunities in the manufacturing sector. It appears that only larger scale ventures and opportunities in the high tech industry seem to qualify.

The energy sector states that start-up capital is not readily available in the region and the tourism sector states that a major handicap to furthering tourism in the Southwest is funding and that in some areas it is virtually non-existent. They don’t believe that governments are connected to the needs of the tourism sector and the vital role it plays in our economy.

The southwest region is one of the wealthiest regions of the province. However, accessing this available investment capital is seen as difficult as local residents are not prepared to risk their capital in local home grown ventures and mainly stick to traditional investments such as mutual funds, blue chip stocks, bonds and savings accounts. Business support organizations do not provide adequate service in accessing appropriate funding; and the available programs that do exist do not always meet the complete needs of our industries. This has led firms to either forgo their plans of expansion, or identify sources in other regions.

If we want to build our region’s capacity and retain, attract and encourage investment to create growth and prosperity for Southwest industries we need a business environment conducive to our investment needs.

So what does industry believe we need to do to achieve this?

• Set up a community investment fund/pool that is locally controlled.
• Brand ourselves as a great place to invest and do business.
• Educate financial institutions more on the capital needs of the region’s industries.
• Improve the knowledge of lenders, investors and government about the region and it’s sectors.
• Provide industry the tools and techniques necessary to become investor ready.
• Educate industry about the available funding programs and services.
• Coordinate investor forums for industry to present to potential investors.
• Setup an internet database network that will link opportunities with investment.
• Improve access to project co-ordination and project management funding to facilitate increased projects in the region thus, increasing development and growth and investment attractiveness.
• Pool resources to share in project costs.

Adequate Physical Infrastructure

The physical infrastructure of the Southwest region has many components. However, this report will only address those that industry believed required discussion. We will begin with the transportation networks.

Roads: Southwest Saskatchewan has an extensive road network throughout the entire region. Major arterial roads in the southwest are the Trans Canada Highway and #4 Highway which runs north to Saskatoon and are shown in pink. There are several minor arterial paved roads shown in blue and collector roads shown in green. Primarily the road infrastructure consists of local grid roads.

The quality of the road infrastructure remains an abiding issue, although efforts towards improving are starting. Roads are deteriorating due to increased heavy haul traffic resulting from issues such as rail line and elevator consolidation. In some areas, the bad condition of highways and road-bans causes problems in product distribution, market expansion, and access to supplies and service suppliers. Infrastructure such as roads can make the flow of goods, services and inputs difficult, therefore increasing the cost of production or longer production time frames.

The Manufacturing Leadership Team stated that we need to begin capitalizing on transportation opportunities such as back hauls (trucks leaving the region empty). Many firms pay high freight and back haul prices to receive supplies. These companies often use the same transportation company, but no one knows the shipping demands of their neighbor company and therefore do not combine shipments to reduce costs.

Rail: According to Saskatchewan Highways and Transportation, Saskatchewan currently has over 1300 km of railways under provincial jurisdiction. These railways include shortline
railways moving grain and wood products, industrial railways providing rail service to industrial plants and facilities, and amusement railways providing educational tours within some of Saskatchewan’s Heritage parks.

A huge impact to the Southwest recently, has been the purchase of Great Western Railway from Westcan Railway Ltd. in November 2004. This network is headquartered in Shaunavon and is made up of 496 km of rail line making it the largest regional railway in Saskatchewan. There are approximately 38 shipping points on the network, with almost 60 percent of their traffic in producer cars. As a single operating railway Great Western Rail originates and moves the most producer cars in all of Canada. The collaboration and networking of the producers and organizations to purchase this line offers more options for producers in the area and will assist to maintain the future viability of elevators and processing plants in the region.

Air: Air transportation of people and cargo is perhaps the least used form of transportation due to the state of the landing strips in the region including Swift Current. These landing strips and airport facilities do not have the capacity to be utilized by larger aircraft carriers for transporting large numbers of people and cargo capacity. The closest regional airport is Moose Jaw, Regina and Saskatoon and the closest international airport is Calgary and Winnipeg. The population base of the region lacks sufficient critical mass to support the necessary improvements in air and road infrastructure. In fact, the entire trading area of the southwest region serves only 55,000 people.

The transportation challenges of the Southwest are significant to the people who live and do business here. Not only has branch line abandonment and elevator consolidations dramatically changed the way our agricultural products are moved to market, but changes in demographics and economics are demanding changes in the nature of Southwest transportation services for the system to continue to evolve.

The Tourism Leadership Team stated that with the increased number of world class attractions in place in the region and with what exists with chartered air services, contracted mail service and Medi-Vac there is growing opportunity to work with existing suppliers to create a commuter service with regional air and rail lines.

Communication: Figure 5.2 shows the SaskTel cellular coverage in southwest Saskatchewan. There is limited digital service in the region, and many areas still have no coverage whatsoever.

In addition to the limited cellular coverage in the region the tourism industry has stated radio signals are also somewhat limited and that by expanding FM signals – low power transmitters we could begin to improve promotions to the visitor, communities and region.

Water: Development of water lines is extremely limited in Southwest Saskatchewan. While significant development has occurred around Diefenbaker Lake, most of these pipelines fall outside of the project boundaries. Of those that do exist, they appear to be primarily for agriculture use, since they are rural raw water systems. A small rural treated water pipeline exists around Swift Current.

Another concern is the cost of water and wastewater treatment for all communities in the region. Communities lacking adequate water supply are unable to develop intensive livestock operations not to mention the water capacity required for the oil and gas sector.

Power: As shown in Figure 5.3 Southwest Saskatchewan has less high level power lines than other areas of Saskatchewan. This has a significant impact on investment attraction to the region. Large value added and manufacturing operations need sound sources of high voltage power to operate. Selection of sites where high voltage power is accessible is a critical criterion for investment.

Another form of power supply to the region is the Gull Lake Wind Power project. This project was the first major step towards developing a viable cost-effective green power industry in Saskatchewan. This project is a glowing example of how public and private industry, supported by the commitment from government, are building new relationships and developing strong partnerships that will benefit the environment and economy.

To further add benefit to the region’s economy, the Gull Lake Wind Power project is planning the development of an interpretive wind power station. If successful this project will create further employment and economic opportunities for the area. This project will also compliment the region’s tourism sector by attracting numerous interested visitors off the Trans Canada Highway and possibly promoting Southwest’s numerous other visitor attractions.

Acceptable Business Climate / Governance

From a cost of business point of view, the southwest region is a highly competitive location as far as business costs (wages, employee living expenses and utilities). According to a recent study conducted by KPMG in 2002, Saskatchewan ranked at the top in terms of overall costs of doing business when compared to United States, Japanese and European Cities. The study finds that Saskatchewan cities are very cost competitive locations for manufacturing and research and development. Saskatchewan businesses enjoy many advantages over their counterparts in other parts of North America. Some of those advantages include: lower land and housing costs, a highly skilled workforce, a diversified economy, a reasonably priced and reliable supply of electricity, natural gas, water and telecommunications services, a comprehensive, quality education system and a heath care system that is second to none. As well, competitive labor costs and employer-provided benefits are major costs advantages to Saskatchewan and the Southwest.

But increasing overhead costs are a concern. A profit squeeze generated by intense downward pricing pressures for most final goods producers (aggravated in Canada’s case by the appreciation of the Canadian dollar which acts like a 23% price cut on export sales and rapidly rising business costs, including labor materials, energy costs, insurance, as well as the cost of mandatory overheads in the form of taxes and regulatory compliance costs including Kyoto compliance. The global cost of supplies / inputs are also increasing, and material costs continue to fluctuate up and down weekly especially for lumber and metal plates.

Industries of the Southwest are competing in an international market place that is characterized by increasing competition and technological change, the fragmentation of markets into more specialized niches, global competition within those niches, shrinking product life cycles, and growing customer demands for ever greater performance in quality, service, responsiveness and price. Firms that wish to survive must learn these new rules of the game and adapt accordingly. The continuing globalization of enterprise as companies relocate operations or source products, services, technologies, skills and knowledge from around the world, will increasingly demand that their suppliers compete with the world’s best in terms of costs, value, quality, design, engineering, and service capabilities.

The Southwest region is known as supporting entrepreneurship and business development, but as the region moves forward, the business climate must remain positive requiring competitive labor legislation and taxation. Even though entrepreneurship and business development in the region is seen as important to all levels of government, our industries believe that it is time for government to become more focused and knowledgeable about all existing key industries driving our regional economy. By implementing “industry focused” strategies we will meet the needs of Southwest industries to allow them, and ultimately the entire region, the capacity to grow and prosper.

The manufacturing sector’s perception is that federal and provincial governments act more on behalf of national and international business attraction than the development of the existing industries that make up the sector. They also believe that government regulations and taxation levels are not conducive to a competitive business environment and ultimately business growth in the manufacturing sector. Emphasis must be placed on building a climate for formation, expanding and attracting businesses in the region. An “open for business approach” by all governments, is the simplest way to explain how a positive businesses climate needs to be built.

Industry suggested the following as possible solutions to improve the business climate of the
Southwest:

• Increase communication with lobby groups about issues they need to approach the
  decision makers in government with.
• Government and industries need to improve efforts to support local industries through
  procurement.
• Promote our industries and economy to improve image and build identity.
• Identify and benchmark the competitiveness of our industries to develop accurate municipal policy intervention needed to grow our sectors.
• Make strategic planning more inclusive by business development agencies, government, and industry collaborating to achieve a central focus and streamline regional development efforts.

The members of the agriculture team addressed numerous issues. They talked about a continued dependency on volunteers for economic development as being unrealistic. Volunteers are tapped out. Their time and energy is spent running their business, there is no energy left for community economic development.

Make strategic planning more inclusive by business development agencies, government, and industry collaborating to achieve a central focus and streamline regional development efforts.
ASBNC

Further, this team was discouraged by government processes and guidelines required for project development. Explaining that it all creates too much paper work, unnecessary complications and the time commitment required to meets these needs is too high.

Lastly, government programs do not always meet the needs of the farmer or rancher. For example, participants indicated that individuals who may lack understanding of the industry and hands on implementation required, influence and design farm programs in what seems to be an ad hoc basis. There needs to be an understanding that the business of farming and ranching is more than production. It is about developing sustainable enterprises. Products and services, finance, marketing, human resources and capital assets are all important in the business. Planning and farm management skills are critical tools for the farmer and rancher. Strategic planning, goal setting and implementation can be accomplished with some success when there is a degree of certainty in the sector. To quote a participant, “In Agribusiness the only certainty is chaos”. Crop insurance programs change each year with incomplete information available when farmers are making seeding plans. Livestock programs developed in response to BSE put millions of dollars into the hands of packers, who were already reaping huge benefits from the impact of BSE while the farmer and rancher received little benefit. Loan programs developed in 2003 in response to BSE had payments due in 2004-5 when the border issue had not been resolved and insufficient packing was still a roadblock in this province.

Industry offered the following as possible solutions:

• Find meaningful ways to engage the expertise of community leaders and volunteers respecting their business and family commitments.
• Create programs that provide financial resources for paid project support.
• Timely government response times.
• Work with governments to develop streamlined processes for projects that are user
  friendly.
• Find an effective way to liaise and collaborate with federal and provincial governments about the business of sustainable agriculture in the southwest and provide input when programs are developed or evaluated.
• Continue to facilitate leadership development-training opportunities for farmers and ranchers to gain expertise that will enhance the development of sustainable enterprises.

The energy sector spoke about the developmental plans and corresponding bylaws imposed by rural municipalities in Saskatchewan to govern the activities of energy sector companies. In these cases, companies submit work activities to councils requiring approval to access RMs. prior to proceeding. Apparently in Alberta, this type of activity is governed more provincially resulting in a more standardized approach. However, energy sector companies stressed most RM Councils in Saskatchewan were very business oriented and the bylaws passed were more of a help than a hindrance.

Achievable Quality of Life

In addition to the Southwest being touted as the “warmest climate” in the province, many desirable and cultural and recreational amenities are present in the region. Exceptionally good summer-winter outdoor recreation opportunities and a number of attractions (golf courses, national and provincial parks, and other services) exist and are well maintained.

Inventory of Southwest Offerings:

• Guest Ranches - At present, there are 4 guest ranches in the region, offering a true western experience to visitors from across the world. Each of the ranches is unique, providing choices to those who are visiting the area. What they share is a genuine authenticity and attachment to the land which for some ranches, goes back more than 4 generations in the Southwest.
• Bed and Breakfasts - Bed and Breakfasts facilities are an established part of accommodations in the Southwest and provide their own brand of experiences. At present, there are 16 located in the area. Visitors can choose from locations across the region including Chaplin’s Shorebird Reserve, Cypress Hills Interprovincial Park and Grasslands National Park
• Lodging, Motels and Inns - The region provides a choice of 40 lodges, motels and inns across the area. Lodging can be obtained within all major attraction areas and along the Trans Canada Highway which runs across the region. Rates are generally less than those that are found in major urban centres, but compare favourably in quality, and in choice of accommodations.
• Landmark Hotels - A large number of 27 “turn of the century’ hotels exist in the region, each representing part of the heritage of the Southwest. Several of these hotels have been the projects of partial and complete restoration. These include the Aneroid Hotel , the Commercial Hotel in Maple Creek and the Historic Shaunavon Hotel
• Restaurants - The region provides visitors with a vast choice of over 70 restaurants. The area offers cafés, delis, fast food, family restaurants and fine dining. While the menus are as diverse as the landscape itself, what they do have in common is they are very reasonably priced and in many cases, feature authentic and local fare that represent the region very well.
• Parks and Campgrounds - The Southwest provides a choice of 26 national, provincial and regional parks across the region. It is anchored by Cypress Hills Interprovincial Park, considered one of the crown jewels of the provincial parks. The region also features Grasslands National Park, one of Canada’s newest national parks. Lake Diefenbaker itself features 3 provincial parks.
• Nature Areas and Interpretive Centres - In total there are 12 of these amenities offered. The 4 major interpretive and conservation areas include the T.rex Discovery Centre, Chaplin’s Shorebird Reserve, an area of international significance for migratory shorebirds in the western hemisphere, Grasslands National Park and Old Man on His Back, two separate conservation areas that are returning bison to the grasslands.
• Golf Courses - There are also 12 established golf courses across the region. The most recognized is the Elmwood Golf and Country Club, one of the first courses built in Western Canada. One of the newest courses is Sask Landing Golf Resort, which overlooks the shores of Lake Diefenbaker.

“There are few places that have the national significance of the southwest. We have an area that is very attractive to the outside world and this is an opportunity that needs to be explored and built on and certainly to grow.”
Lee Friesen, BNA
Tourism Leadership Team

• Historical and Heritage Sites and Museums - Of the 27 historical sites in the region included is Wood Mountain Post and Fort Walsh, a site of national significance, which was established in 1875 to maintain Canada’s sovereignty, and was behind the forming of the NWMP. The two are connected via the Red Coat Trail, which remains today as a historical route followed by travelers across the area.
• Events - 21 annual events have been identified in the region. Namely “Where Heaven Meets Earth” could define the region today and all that it represents. This event held at Grasslands National Park in 2004 was a unique collaboration involving art, culture, and landscape. In many ways, it represented the spirit of local events across the area, creative, and authentic, but above all, reflective of the community and region.

Public safety is another key factor important to quality of life. The Southwest holds the reputation for being undoubtedly one of the safest places in the province to live and work. Public health is another important component. The Southwest is soon to have a new state of the art hospital / health center serving the needs of the region. Finally, the southwest has always been known as providing for an affordable and high standard of living, with an abundance of space for development. These are definitely some of the most competitive advantages that the region has to offer.

The southwest has many advantages in terms of quality of life, including the environment, outdoor and cultural activities, health care and cost of living. These qualities of life become a key source in attracting, developing and retaining skilled labor, and investment attraction.

Branding this region has come across loud and clear by our industries as one of the steps to be taken to ensure long-term sustainable growth. Southwest Saskatchewan must improve its image as being open for investment and prove it by building an identity that it is a competitive location for businesses to invest, employ, and grow.

The development of a brand is all about creating a positive awareness by the people within the region as well as outside the region. At present our internal image is not a positive one. We have taken on the attitude that nothing ever happens in the Southwest and opportunities are limited. The view that the Southwest is in terminal decline does not create an environment that would be perceived as attractive for new investment or much less residency. The Southwest must now begin to change our perceptions about a region that is in fact full of opportunity and promise.

Our industries suggested the following as options to begin realizing our assets:

• Communities linking to each other on line across the region and promoting what each has to offer.
• Identify all of the great tourism experiences across the region and develop promotional packages that will offer something for everyone.
• Develop regional maps that will promote all communities and tourist destinations.
• Expand signage and road side pullouts, further creating awareness.
• Expand FM signals, another medium to promote the region.
• Expand regional visitor centres and rest stops.
• Expand familiarization and school tours of tourist destinations, to create awareness of what exists in our own backyard.
• Promote our image of green and wholesome and healthy lifestyle.
• Identify our industries competitive advantages and promoting them to the world.
• Industry awareness programs in high schools to promote opportunities for employment.
• Continue building business networks and partnerships to continually increase our knowledge of one another and our potential to be competitive.

Southwest
News Guide