Weathering the storm:

🕔Sep 23, 2009

When it comes to harsh climates, be they economic or otherwise, Northerners aren’t strangers to weathering the storm.

For years, Skeena Cellulose Inc operated a pulp and paper mill in Prince Rupert, along with logging and sawmill operations in communities across northern BC, making it the largest employer in the region. In the 1990s, Skeena Cellulose faltered, was bailed out and faltered again so many times that Larry Jones, senior business analyst with Terrace Community Futures, describes his then one-horse town as having a horse that “died and drew flies here for awhile before everybody moved on with things.”

In 2006 the mill shut its doors for good, and today all that remains is a bulldozed site and the memory of a particularly dark time in northern BC’s economy. But what sprung from the compost of a decaying pulp industry, cultivated by the perseverance and ingenuity of the northern spirit, was a newly diversified economy and hope for small business.

During current economic conditions, that diversity and resilience might be what helps the North through yet another stormy economic time.

To be fair, the demise of Skeena Cellulose can’t be credited for the establishment of all 28,300 small businesses (those with fewer than 50 employees) accounted for in BC Stats’ 2007 numbers from the Cariboo north. It did, however, employ roughly 800 people (or five percent of the city’s population) at its Prince Rupert mill, and left about 10,000 people jobless across the region. Community Futures 16/37—which serves one of Canada’s largest areas, stretching from Kitimat to the Yukon border and east to Moricetown—helped to take up the slack by assisting aspiring entrepreneurs in their business ventures.

EI and beyond
Today, Jones says, the job-creation mill has taken on a life of its own. “When SCI shut its doors, the work force basically went on Employment Insurance. When that started to run out, people realized SCI wasn’t able to re-hire them and they started looking at other options.”

Systems put in place to deal with unemployment became effective at helping to start new businesses, which continued once the economy stabilized again. With an “unusual” working relationship with the Business Development Bank, capital became easier to access: “Because of the good relationship we have with the other creditors here in Terrace, it’s easier for smaller businesses to get started,” Jones says.

Today, the primary industries are service and retail, which are conducive to small business growth and draw from a wide area stretching from Kitimat to Hazelton and North into the Nass. As a result, local employment numbers have remained steady and small business numbers have grown in recent years, Jones says.
“The global crisis hasn’t affected us at all—it’s just dropping the rest of the world down to what we’ve experienced for years. We were just ahead of the curve.”

In a 2004 report, UNBC interim president Charles Jago notes that northern BC has an exceptionally high incidence of small and medium-sized enterprises (SMEs), with three northern BC communities ranked among Canada’s top 10 (out of 111) non-metropolitan cities for SMEs: Terrace, Fort St. John and Williams Lake.

Three additional communities—Quesnel, Prince George and Dawson Creek—ranked within the top 40.

Statistics Canada estimated in 2004 that 15 percent of the nation’s SMEs operate in British Columbia, slightly more than BC’s 13 percent share of the population. Seven percent of the province’s small businesses operate in the North, roughly the same as the population breakdown. But what that statistic doesn’t take into account is the lack of urban centres across the North, making the percentage unusually high.

Small business gets bigger
According to the most recent British Columbia Small Business Profile, 2007 marked the sixth consecutive year for small business growth in BC and boasted the largest increase in SMEs (three percent) since 2003. In particular, the Northeast led the province in SME growth with a seven-percent increase, or 400 businesses per year, between 2002 and 2007. The trend is largely attributed to service and support industries associated with oil and gas development.

“We saw a lot of spouses out working in the oil patch and wanting something for the other spouse to do, so they’d start a business for them,” Fort St. John Chamber of Commerce president Russ Beerling says about the economic surge a few years back. Although not all businesses have survived the downturn, the northeastern economy remains stable, he says.

“I think we hear a lot about the economy. My personal belief is that the economic reality is a self-prophecy for a lot of people,” Beerling says. “The strong-willed will survive.”

While he admits that the recent downturn has resulted in some job losses, Beerling says the bust following a significant boom has allowed businesses a moment to breathe, take stock and retrain staff. “In a roundabout way, it’s been kind of a plus to have this slowdown.”

The oil patch also provides plenty of business opportunities such as flagging companies, first aid and security, and this is where Beerling notes another interesting dynamic in the development of small businesses in the North: “Where there is a need, people try to fill the need here first, before they search outside the area,” he says, adding that the controversial issue of cross-border shopping in PST-free Alberta has created ardent support for local business.
In short, the North produces businesses with heart and small-town spirit.

“There’s really a true entrepreneurial spirit up here,” Beerling says, noting unprecedented support and enthusiasm for small business in Fort St. John. “It’s a very forgiving market and it has been for years.”

The lifestyle factor
Resilience and community spirit aside, Janine North of the Northern Development Initiative Trust suggests that lifestyle is a leading factor contributing to economic diversity in northern BC. The area’s low cost of living has sparked growing interest in amenity migration to communities like Smithers, with half the proportion of income spent on a home in northern BC compared to one in Vancouver.

“Certainly the lower cost of housing and lifestyle here are very much supportive,” she says.

Amenity migrants most often come for the recreation and solitude, bringing skills with them that are converted into jobs and home businesses. As well, large natural resource-based and manufacturing corporations, like the oil and gas industry to the east, are supported by smaller businesses.

Also, relatively new institutions such as Northern Health, the University of Northern British Columbia and the Northwest Community College network have brought a medley of new job opportunities and careers to the region.

“It’s allowed for diversifications in some communities. And certainly if you look at Prince George or Smithers, they are much more diversified than they were before economic downturns in the early 1980s, early 1990s, 2000 and 2001,” North says.

They can’t claim a similar share of the wealth production, but SMEs make up the vast majority of northern BC businesses, and their numbers appear to be growing. As large corporations continue to consolidate, small enterprises might be the way of the future for employing Northerners.

And as British Columbia’s forestry industry flounders and the world struggles with uncertain economic times, Northerners can take heart that we’ve weathered the storm before and emerged stronger on the other side.