How Green the Grass

It’s like stepping back into the land of used-to-be, when high-school students worked for minimum wage, cross-town commutes were completed before the car was fully heated and buying your first home didn’t mean eating Kraft Dinner twice a week and driving a 10-year-old Corolla. It’s Saskatchewan, and while it does not pretend to be Utopia – the economic upturn has had little or no effect on the wind chill in winter, which lasts from late August to early July, and there are but two Red Lobster restaurants in the entire province – many Albertans have found it’s worth a second look when expansions or even relocations are in the works.

The roads in Saskatchewan are not paved with… well, actually most of them aren’t paved at all. But last year, the population finally got back over one million for the first time since 2001, and of the newcomers, almost 3,400 were Albertans. Some of those represented businesses relocating to Saskatchewan, and still more Alberta companies are looking at the wheat province as a place to expand.

“I wouldn’t call Alberta-based businesses moving to Saskatchewan an out-and-out trend just yet, but I think that’s only for two reasons,” says Steve McLellan, CEO of the Saskatchewan Chamber of Commerce. “First of all, many Albertans are too damn busy to look at relocating or even expanding, and secondly, I don’t think many larger businesses are all that anxious to come here and start looking for 100 employees when there are labour shortages across the country. Our housing prices are also starting to creep up, so that isn’t drawing people like it once did either. But even so, there is definitely interest from Alberta investors – more than there has been in the past.”

While long-time business owners in Saskatchewan aren’t likely to tell you how fabulously easy it is to attract key talent these days, those coming from Alberta are telling a different story – an almost unbelievable tale of free-flowing resumes, workers that work and wages that won’t break the budget. It is a cautionary tale too, when unexpected costs entered the picture. But don’t worry. These four businesses, all Alberta transplants that decided to share their Saskatchewan experiences, are not about to move back.

Modus Structures Inc.
Once upon a time there was a Crossfield company that constructed prefabricated structures, and that company needed room to grow. So, the leaders of this little business looked to the west, but the bridges were too many. (Road restrictions are really bothersome when relocating big buildings.) So, instead leaders looked to the east. No, not that far east, just a little bit east. And they saw their future in Swift Current, Sask.

“It wasn’t exactly like we set out to open a plant in Swift Current, Saskatchewan; it just so happened that they had the right location for us, so we snapped it up,” says Janeen Norman, the public relations manager for Modus, a company that realized a 700% increase in profits between 2004 and 2006 and now employs 200, split between the two provinces. “We were able to buy a place and retrofit it for a very affordable price. We thought our biggest problem was going to be staffing, but it hasn’t been at all. We received 300 resumes right off the bat, and we pulled most of our employees from the local region. We staffed up pretty quickly – we were at 20 in December and now we’re at 100. It was amazingly easy to find that many people.”

Originally, she says, the company planned to lure people east from Alberta, but that didn’t work out so well. “Property itself is less expensive here but property taxes are higher,” says Norman. “I think that’s definitely something businesspeople have to look at if they’re trying to attract workers from out of province with low home prices. A lot of people don’t anticipate the high property taxes.” In Swift Current the residential mill rate is 21.61 compared to 10.61 in Crossfield. A smaller population base puts pressure on the property-tax system in Saskatchewan, and it causes some problems with the supply chain as well, says Norman. “The economy is small here,” she says. “And the supply chain does need to be more complete. We’re bringing in products like steel, because the prices just aren’t competitive. The problem is that either they can’t supply it or they can’t supply it at a price we’re willing to pay.”

Corporate taxes overall in Saskatchewan are also higher. The general corporate tax rate in Alberta is 10%, while the Saskatchewan rate for 2008 is 12%. (It’s a vast improvement, though, considering it was at 17% in 2005.) The small-business threshold also increased to $500,000 up from $300,000 in 2005. By comparison, Alberta will increase its threshold to $500,000 in 2009; it is now at $460,000.
The Saskatchewan government has been working hard to bring in more manufacturing, though. The Saskatchewan Investment Tax Credit (ITC) for Manufacturing and Processing and the Manufacturing and Processing Profits Tax Reduction, which reduces the provincial general corporate income tax rate to as low as 10% on Canadian manufacturing and processing profits, were definitely incentives for Modus.

Cindy Sanche’s Original Basket Boutique
It was with hope in her heart that Cindy Sanche agreed to put all her family’s eggs –
or rather, in her case, fine chocolates, treats and trinkets – into one basket by selling the family home in Fort McMurray as she was whisked away to Waldheim, Sask., about 50 kilometres north of Saskatoon. The Sanches, who own an Original Basket Boutique gift-basket franchise, bought a home in Fort McMurray for $250,000 and sold it for $575,000 two years later. They then bought a house on an acreage near Waldheim last year for a mere $165,000. After paying cash for their home, they are using the balance to finance their lifestyle while Sanche’s husband, Lionel, returns to university.

Sanche’s franchise took off almost immediately after she launched it last September. Still, something was amiss. The orders were flowing strong and steady but the cash total wasn’t quite what one might expect, considering the volume. “People here are cautious with their dollars,” says Sanche. “Very cautious. I think that’s definitely fair to say and it did take me by surprise. I guess it’s understandable since wages are definitely lower [although minimum wage is 25 cents per hour higher than it is in Alberta]. But at the Original Basket Boutique franchise in Fort McMurray, selling baskets for $100 to $150 dollars was typical. Our average order here is probably $50 to $75. People also take more time to make a purchasing decision.”

A Saskatchewanian and his cents are not easily parted – and maybe with good reason. In 2006, the average disposable income in the province dropped behind that of Manitoba to return to last place among the western provinces for the ninth year out of 10. In 2006, disposable income in Saskatchewan was $23,300, not only trailing Alberta’s $32,100 but also the national average of $25,600, according to the RBC Financial Group. In 2006, Saskatchewanians, along with Manitobans, also had the lowest ratio of personal debt to personal disposable income, which also illustrates their unwillingness to part with their pennies for non-essentials.

On the upside, Sanche says, “It’s kind of an untouched market here, and you don’t have to worry so much about duplication and market noise.” She adds that not all the locals are loving the newcomers. “A lot of people are really loyal to the companies they’re already with,” she says. “People who come here need to be prepared for that.” Sometimes the response quite simply is, “Better product? Better price? Sorry, I’d better not.” It is seemingly nonsensical for a province filled to the brim with common-sense folk, but it is also rather endearing. Just think of what you could do with that kind of loyalty!

Relay Distributing
Now we have a tale of one city, two provinces. Lloydminster is Canada’s only true border city, a single municipality spanning both sides of the line, and although it is an interesting tidbit to tout to tourists, for local business people, it can be a divisive issue. For years, businesses have been abandoning the “Saskatchewan side” to head west of 50th Avenue to get themselves an Alberta address. Although the entire city has been declared PST-free for years, the Alberta advantage kept drawing businesspeople and homeowners over to the more prosperous side of the border. For example, in 2006 the average resale value of a house on the Alberta side was more than $227,500 while on the Saskatchewan side, it was not quite $159,000, according to the Multiple Listing Service.

Relay Distributing is an almost 20-year-old company that supplies janitorial products and offers several other services as well. Owner Glenn Curwin says less competition for real estate on the Saskatchewan side of the border convinced him to cross to the east side of the city a couple of years ago, but there were some rather unpleasant surprises that accompanied the real-estate savings. “We owned 20 vehicles, but even though we were moving less than a mile, they all had to be inspected for safety,” says Curwin. “It wouldn’t have been a big deal because commercial vehicles have to be inspected annually, but the problem was that they all had to be done at the same time. I also had to pay sales tax on the vehicles. It was like a penalty for moving.”

People who have been a full-time resident outside of Saskatchewan for at least six months can bring their personal effects into the province without paying tax, but the exemption is not applicable to business assets. “Be careful if you’re considering moving to save money, because there’s lots to consider,” says Curwin. “The property taxes took me by surprise too. Maybe I would have done more research if I was moving from Edmonton to Saskatoon, but I didn’t. So my advice would be to check out what the requirements are going to be for your commercial vehicles and look at all the taxes.”

Nowhere are regulatory and legal differences between the provinces as evident as they are in Lloydminster. It’s all different once you cross 50th Avenue, from the ability of the skid-steer operator to burn purple gas to who or what controls the flow of liquor. There’s simply no way around checking out each rule and regulation that pertains to a particular business.

And so concludes the story of four Alberta-based entrepreneurs and enterprises that set their sights on Saskatchewan. McLellan, however, offers this counsel: “I don’t want to sound like a Tourism Saskatchewan ad, but people thinking of doing business here should come and check things out for themselves,” he says. “I think they’ll be very impressed. Maybe they’ll even stay.” And live happily ever after. Or at least until they can sell their house in Nipawin for a ridiculous profit and move to Newfoundland.

Prairie Home Developments Inc.
And now, a short story about one man’s long road to retirement. Harry Ramsbottom, a fine fellow and former Albertan, used to work for a residential construction company. At age 60, he decided to retire. To Yorkton, Sask. For the sake of brevity we will just say that his reasons were not entirely, but were primarily, economic in nature. So Ramsbottom retired. For a few days. Opportunity came a-calling. With a battering ram. Ramsbottom re-entered the workaday world and launched a construction company. He won contracts, made money and expanded. He placed employment ads in the Calgary Herald and Calgary Sun. “Let’s just say we ended up with several 11-by-eight-inch sheets of paper full of people who wanted to work here,” says Ramsbottom. “Several. Full.” Ramsbottom has lots of work, lots of workers and a tidy little income. His advice? Come quick, buy lots and for Pete’s sake, don’t retire.

Current Issue