The Cost of Doing Business
It’s one of the toughest things about operating in Alberta
The high cost of running a business in the province was a hot topic amongst respondents to this year’s survey. Hotter still, though, are the reasons behind the expense. What’s driving costs? And what sectors are feeling them the most?
“The cost of doing business in Alberta is related to the shortage of labour supply,” says Ken Unruh, CEO of Magna IV Engineering, an electrical engineering and oilfield services company in Edmonton, and one of the survey respondents. “But that doesn’t mean it’s impossible – our competitors are facing those same labour shortages as well, so their costs of labour are also under pressure.”
The energy sector, and especially the oil sands that form a major backbone of that sector, have seen cost increases on building mines of more than 13 per cent over the past year, according to a study by the Canadian Energy Research Institute. This is driven partly by increased costs for steel and electricity, but primarily by higher labour costs, says Dinara Millington, the senior research director with CERI and author of the report. “There is a skilled labour shortage within the oil sands sector and there are specific positions that are looking at shortages – especially the in situ projects,” she says.
As many Albertans will say, these costs have a trickle-down effect on other businesses, whether they are directly or, often, indirectly related to the energy sector.
But what about sectors far removed from Alberta’s dominant industry? At Lux Beauty, an Edmonton-based luxury beauty product retailer, the big expenses are wholesale costs, brokerage fees and landing costs, and labour, says self-described chief “vision” officer, Jennifer Grimm. But, Grimm says, her approach has been to combat this potential cost by focusing on reducing turnover. “We’ve been able to attract and keep people,” Grimm says. “I’m grateful for that and I’m conscious that we need to maintain that. Retail has terrible turnover, so it’s about concentrating on the culture and what sort of workplace training rewards and fun we provide our staff.”
The highest divergence of opinion on the 2014 survey was found through discriminating by revenues (see graph at below).
You Said It
“Alberta is an expensive place to do business and, as such, the province should be working toward broader support between provinces and the ability to move products and resources both tangible and human around.”
– Marlon Leggott, Senior Vice-President, Packers Plus