Chester Business Park Feasibility Study

Transcription

1 Chester Business Park Feasibility Study Final Report REPORT Prepared for Municipality of the District of Chester Prepared by CBCL Limited Project No Submission date: March 9th, 2015 JOZSA MANAGEMENT & ECONOMICS

2 Mary Bishop 03/09/2015 Issue or Revision Reviewed By: Date Issued By: This document was prepared for the party indicated herein. The material and information in the document reflects CBCL Limited s opinion and best judgment based on the information available at the time of preparation. Any use of this document or reliance on its content by third parties is the responsibility of the third party. CBCL Limited accepts no responsibility for any damages suffered as a result of third party use of this document. ISO 9001 Registered Company Report No

3 9 March 2015 Ms. Marianne Gates Economic Development Officer Municipality of the District of Chester 151 King Street Chester, NS B0J 1J0 Dear Ms. Gates: RE: Feasibility Study of a Business/Industrial Park in the District of Chester This report includes the economic analysis that was carried out to identify how the Municipality of the District of Chester (MoDC) can increase employment in the district generally, and the demand for and feasibility of establishing a new business park to facilitate economic growth and development. The report includes the results of the assessment of suitability of lands within the MoDC for business park development and the identification of general areas that meet location criteria for suitable sites. More detailed analysis of specific sites including conceptual layouts is provided in a separate report. The report also includes recommendations for positioning and selling opportunities for a range of business locations including a new business park - in the MoDC and suggests a possible option for governance and management. We look forward to meeting with you to review and discuss the findings. Yours very truly, CBCL Limited Mary Bishop, MURP, FCIP Senior Project Manager Direct: (709) , extension maryb@cbcl.ca Project No: FINAL REP WORKING MARCH 9.DOCX/MB ED: 3/9/2015 5:51:00 PM/PD: 3/9/2015 5:51:00 PM

4 Contents CHAPTER 1 Executive Summary Introduction Environmental Scan and Feasibility Assessment Land Use Considerations Positioning and Selling... 2 CHAPTER 2 Introduction Purpose Study process Organization of the Report... 5 CHAPTER 3 Environmental Scan Key Socio-Economic Factors Demographics MoDC Demographics Social and Community Potential External Developments Affecting Economic Development in the District Rising Relative Labour Costs Relative Declines in the Cost of Transporting Goods Relative Increases in the Cost of Personal Transportation The Economics of Agglomeration The Economics of Demography Immigration and Returning Population Aboriginal Demography CHAPTER 4 Feasibility Analysis and Assessment Trend Projections Demographics Employment Analysis of Sector Trends Growth Targets Industry Concentration and Relative Competitiveness Measures of the Forces of Economic Growth Some Targets for Business Attraction A Sample of Fast Growing Lines of Business A Caution Regarding Targeting Sectors Low Priority Sectors Demand Projections CBCL Limited Chester Industrial Park Feasibility Study i

5 4.3 Benefit/Cost Analysis CHAPTER 5 Land Use Considerations Physical Situation Review Population and Land Use Transportation Municipal Water and Sewer Infrastructure Emergency Services Existing Opportunities for Industrial/Commercial Development Kaizer Meadow Environmental Management Centre Highway 3- Village of Chester Implementation of Streetscape Plan Broader Land Use Planning Framework Permitted Industrial Land Uses Identifying Suitable Areas for Industry Land Suitability Analysis Locations Closer to the HRM Summary of Development Options CHAPTER 6 Positioning Plan The Positioning Strategy General Positioning for Marketing, Leads and Sales Implications for the District and the Communities Within Factors Affecting Business Location Decisions Common Factors Affecting Location Decisions Policy Factors Affecting Location Decisions Agglomeration Economies Local Positioning Factors CHAPTER 7 Marketing Strategy and Selling Plan Recommended Marketing Strategies and Actions Communication and Promotion Foster a Competitive Business Environment Focus on Target Markets Accommodating Outlier Situations The Sales Plan Planning for Accountability and Evaluation Evaluation of Performance and Objectives Achievement Organizational and Governance Planning Inter-Municipal Revenue and Cost Sharing, Theoretical and Empirical Background. 63 CBCL Limited Chester Industrial Park Feasibility Study ii

6 7.5.2 Regional Governance without Regional Government Inter-Municipal Agreements Practical Aspects Creating Effective Inter-Municipal Sharing Agreements Implementing Cost and Revenue Sharing Agreements Flexibility of Cost and Revenue Sharing Models In Nova Scotia General Guidelines for a Revenue and Cost Sharing Agreement Governance, Management and Administrative Matters Governance is a High Priority Dealing with Conflicts Duration of a Cooperation Agreement Termination of The Agreement Appendix A Suitability Analysis Component Maps CBCL Limited Chester Industrial Park Feasibility Study iii

7 CHAPTER 1 EXECUTIVE SUMMARY 1.1 Introduction Municipal governments today are taking on increasingly active roles in economic development. Following on the Municipality of the District of Chester s (MoDC s) 2013 Economic Strategy, this study was undertaken to determine the feasibility of establishing an industrial/business park in the MoDC as a means of increasing the District s commercial tax base and employment. The study would also determine how the Kaizer Meadow Eco Park could be positioned to attract new business to the District. Business park developments are expensive, risky and complex undertakings and require considerable expenditures on marketing and selling. They are complex undertakings because effective marketing and selling must take into consideration many factors such as global, national, provincial and local economic forces, trends in industrial/business sectors, demographic change, environmental management requirements as well as local conditions with respect to land, water, sewer, energy, communication and road infrastructure, and social conditions. Even where opportunities are identified, municipalities need to have the capacity and resources to translate positioning and marketing of business park lands into actual sales. This requires a high level of organizational agility - dedicated and well-trained staff with adequate decision-making authority, administrative management systems that can react quickly to changing trends and new opportunities, and governance structures and processes that encourages and facilitates business investment. The main findings presented in the report are: 1.2 Environmental Scan and Feasibility Assessment General population decline in Nova Scotia will have an impact on the population in the MoDC. While the MoDC has a relatively stable population, there is an overwhelming proportion of the population between the ages of 45 and 69. Young adults (between the ages of 20-29) can be attracted to rural areas that offer reasonably priced housing, safe environments for raising children, access to urban areas. CBCL Limited Chester Industrial Park Feasibility Study 1

8 Early retirees (between the ages of 55 to 69) are attracted to rural areas. They can be an important segment for new business startups. A high proportion of residents of the MoDC work outside the District, Mainly in HRM. External factors beyond the control of the MoDC such as new technologies, rising labour costs, the cost of moving people and goods will have an effect on economic development in the MoDC. The economics of agglomeration favour larger urban centres. Rural areas that successfully attract economic development have to work hard to create environments that have unique selling points, are creative, dynamic and open to new investment. Some areas of the MoDC and Lunenburg Census Division economies such as information and cultural industries, professional, scientific and technical services, education, utilities, real estate rental and leasing services and administrative and support and waste management and remediation services are performing well relative to the provincial and national economies. Demand for land that could support a new business park is small. Estimated growth projections indicate a demand for space in a business/industrial park of between 9 and 11 hectares of land over the next 20 years. o Pricing land at about $95,480 per ha (similar to other industrial parks outside HRM) would leave the park in a negative cash position throughout its life. o The park could hold about$3,572,290 (2015$) in taxable assessment by 2037 at which point it would be 94% occupied. Expansions and new locations of service and goods producing businesses that do not locate in a business park could generate demand for an additional 5.6to 8.7 hectares elsewhere in the MoDC over the next 20 years. 1.3 Land Use Considerations Lack of available municipal water and sewer servicing will be a limiting factor in the range of business types that can be accommodated in a business park. The Kaizer Meadow site is worth marketing as a site for businesses that are difficult to find locations for. Highway 3 through Chester Village has potential to accommodate additional business investment through the implementation of the Planning Vision and Streetscape Design for Highway 3 and Chester Village report. The MPS and LUB should be revised to identify areas where commercial and industrial businesses can locate as-of-right. Land suitability for a new business park indicates that generally, locations close to Exits 7 and 8 off Highway 103 are most suitable. 1.4 Positioning and Selling Market positioning for a new business park should be aimed at attracting companies in sectors that are performing well in the District and the Lunenburg Census Division, are less influenced by agglomeration economies, are in fast growing sectors and are not negatively impacted by extra transportation costs needed to access business support services in the HRM. CBCL Limited Chester Industrial Park Feasibility Study 2

9 Local positioning factors that can be used to sell the MoDC to investors include: availability of land for heavy Industry at Kaizer Meadows; Open for Business a new park where industry can locate as-of-right ; the location in an attractive community; and, ensuring that a new business park remains flexible to accommodate the needs of emerging elements of the economy. The marketing strategy includes strategies and actions that involve o Communications and Promotions; o Fostering a Competitive Business Environment o Focusing on Target Markets o Accommodating Outlier Situations A sales plan is recommended that includes establishing a sales team, a business network and a sales management system. Examination of internal roles and responsibilities is required to ensure that sales staff have sufficient decision-making authority to make sales happen when opportunities arise. Implementation requires regular evaluation to determine whether objectives are being achieved and therefore a framework for evaluation and plan re-targeting is provided. Options for an inter-municipal organizational and governance structure, particularly as it relates to a new business park, are presented. CBCL Limited Chester Industrial Park Feasibility Study 3

10 CHAPTER 2 INTRODUCTION 2.1 Purpose This project builds on the 2013 Municipal District of Chester s (MoDC) Economic Strategy, which, among the strategies for economic development identified the potential for a new industrial/commercial park and leveraging the Kaizer Meadow facility to attract new business investment to the District. In consultation with representatives of the MoDC it was made clear that the purpose of the park, within the overall 2013 Economic Strategy, was to help increase the commercial tax base and number of jobs in the Municipality. With this information, the study was broadened to determine if an industrial/commercial park was in and of itself - an effective tool to use to achieve this. 2.2 Study process The work began with review of existing social, economic and environmental conditions at play within and external to the MoDC relevant to considerations for economic development, now and in the future. The results of this analysis identified potential industries that could be pursued by the MoDC, from within and outside the District, the kinds of locations that should be promoted to these industries and, how much land area should be available to accommodate what the MoDC could be realistically expected to attract. Discussions were held with business organizations and individuals to identify opportunities and constraints to business investment in the MoDC. Lands within the MoDC, including Kaizer Meadow Eco Park were evaluated against a set of criteria to identify areas that would be suitable for accommodating industrial use in the form of a business park. New sites were identified and analyzed for consideration. The current planning framework of the District was also reviewed to consider where changes could be made to support the development of a business park as well as increased business development, particularly in the Village of Chester. CBCL Limited Chester Industrial Park Feasibility Study 4

11 Strategies for positioning, marketing and selling the MoDC, including a variety of locations and options that would include a new business park, were developed. Approaches to governance of an MoDC lead business park are also suggested. 2.3 Organization of the Report The following chapters describe the analysis and findings that enabled the consultants to identify: the role a park could play in the overall economic strategy of the MoDC; land use planning alternatives that would help the MoDC capture more of the types of investment that would not likely chose a park location; and conditions with respect to the socio-economic structure of the District that were not supportive of business investment attraction and how to address them. The study concludes with recommendations that if undertaken would improve the ability of the MoDC to attract more business investment. CBCL Limited Chester Industrial Park Feasibility Study 5

12 CHAPTER 3 ENVIRONMENTAL SCAN 3.1 Key Socio-Economic Factors Demographics That the population of Cape Breton Island and the rural areas of the Mainland (with the exception of portions of Hants and Kings Counties) is in decline is well known. What is less well known is that the population growth of the Halifax Regional Municipality (HRM) is to a large extent fueled by inmigration from the rest of Nova Scotia. However, as Figure 3.1, shows the prospects for continued growth of the HRM based on intra-provincial in-migration are not bright. Figure 3.1 Nova Scotia Population , , , , , , , ,000 Nova Scotia Population ,000 NS Population - Actual 900,000 NS Population - Projected 895, Sources: Statistics Canada, Census of Population; Population Projections, NS Dept of Finance; JOZSA MANAGEMENT& ECONOMICS Trend projections published by the NS Department of Finance show the Provincial population beginning to decline by about The implications for the rest of Nova Scotia are clear; populations in the remainder of the Province will be under increasing pressures of decline. CBCL Limited Chester Industrial Park Feasibility Study 6

13 Figure 3.2, shows more clearly the implications of Provincial population decline for Lunenburg Census Division (CD). Figure 3.2 Population Growth Index Population Growth Index Nova Scotia Nova Scotia Projected MoDC Rest of Lunenburg CD Sources: Statistics Canada, Census of Population; Population Projections, NS Dept of Finance; JOZSA MANAGEMENT& ECONOMICS MODC DEMOGRAPHICS The Municipality of the District of Chester (MoDC) had population growth greater than the rate in NS up to about 2006 and then experienced a rapid decrease to the point that its 2001 population was about the same as it was in Conversely, the rest of the Lunenburg Census Division (CD) had a falling population up to 2006 and then showed some growth but did not regain its 1991 population level. These trends in the CD occurred during a period of general population growth in NS. However, given the projected trend from 2025 onward for NS it is easy to see the greater threat of population decline for areas such as the Lunenburg CD. Figure 3.3 Population Shift within Lunenburg CD 80% 70% 60% 50% 40% 30% Population Shift Within Lunenburg Census Division MoDC % of Lunenburg CD Pop. Rest of Lunenburg CD % of Cty. Pop. Figure 3.3, shows that the MoDC has maintained its share of the CD s population and its growth from 1991 to 2006 apparently did not come at the expense of the rest of Lunenburg CD. 20% Sources: Statistics Canada, Census of Population; Population Projections, NS Dept of Finance; JO ZSA MANAGEMENT& ECONOMICS CBCL Limited Chester Industrial Park Feasibility Study 7

14 Age Structure. The Municipality of the District of Chester is home to 10,599 people according to the 2011 Census. Since 2006 the population has declined by 1.3% from 10,741 residents to the current population of 10,599. When looking at the age characteristics of the District of Chester there is an over whelming portion of the population lying between the ages of 45 and 69. About 44% of the population is between the ages of 45 and 69. The median age years is well above the median of 43.6 for the rest of Nova Scotia. About 22% of the MoDC population is aged 65 years+ compared to about 17% in the rest of Nova Scotia. Family and Household Characteristics. The total number of families that reside in the District of Chester is 3,425 of which 46% have children living at home (compared to 55% in the rest of Nova Scotia). Family sizes in the District are smaller than in the rest of Nova Scotia, with about 63% having two persons compared to 56% in the rest of Nova Scotia. In addition the average number of children living at home is substantially lower than in the rest of Nova Scotia, with the average family in the MoDC having about 0.71 children living at home vs 0.92 for the rest of Nova Scotia. This situation is in line with the higher median age if the MoDC s population is compared to the rest of Nova Scotia. Language. Of the respondents identifying a mother tongue: 97% (vs 92% in the rest of Nova Scotia) of residents identified English as their mother tongue; 1% (vs 3% in the rest of Nova Scotia) said their mother tongue is French; and 2% (vs 4% in the rest of Nova Scotia) identified another language as their mother tongue. About 94% of residents said they had knowledge of English only (vs 89% in the rest of Nova Scotia) and about 6% said they had knowledge of English and French (vs about 10% in the rest of Nova Scotia). Immigration / Mobility. Within the District of Chester the majority of residents, 93%, are nonimmigrants compared to 94% in the rest of Nova Scotia. About 785 of the District s residents were born in Nova Scotia, compared to about 76% in the rest of Nova Scotia. Immigrants make up about 7% of the District s population, vs 5% for the rest of Nova Scotia. About 72% of the District s immigrant population arrived before 1991 vs 53% for the rest of Nova Scotia. This suggests that the rate of foreign in-migration to the District exceeded that of the rest of Nova Scotia before 1991 but since then has lagged behind the rate of the rest of the Province. From 2001 to 2011 the rate of foreign in-migration to the District began to recover to the rates of the 1970s and 1980s. The higher in-migration rates from 2001 to 2011, and the history of higher rates CBCL Limited Chester Industrial Park Feasibility Study 8

15 before 1991 also suggest that the District could build on its immigration history to further increase its in-migration rate. During the increase of immigration between 2006 and 2011 a large majority of the immigrants (about 53%) were from the British Isles. Another large portion (about 27%) of the recent immigrant population within the District of Chester is comprised of immigrants from Germany. The District of Chester has recently seen an increase in immigration but has seen a decline in the rate of migrants moving to the District from within the Province and from the rest of Canada Social and Community Where people live and work provides insights into the community of interest of residents. People who work out of their home area are more likely to have social interests, such as entertainment, shopping, and personal interests, such as friends, doctors and dentists, other personal service providers, outside their home area. The opposite tends to be the case where most people live and work near their home. As Table 3.1 shows, the MoDC has the highest proportion of its residents working outside of Lunenburg CD - over four-times higher than any other municipal unit in the CD. As expected, a large majority of the residents of Bridgewater and Lunenburg work within their home municipalities. Mahone Bay residents split their work locations between their home municipal unit and the two larger neighbouring towns. These data suggest that the MoDC s commercial tax base is somewhat weaker than those of Bridgewater and Lunenburg but stronger than those of the Lunenburg MD and Mahone Bay. Table 3.1 Where Lunenburg Census Division Residents Work, 2011 Where Lunenburg County Residents Work Place of Work Place of Residence Chester MD Lunenburg MD Bridgewater Lunenburg Mahone Bay Outside Lunenburg Cty. Chester MD 54% 3% 7% 3% 2% 31% 100% Lunenburg MD 3% 18% 54% 13% 4% 7% 100% Bridgewater 2% 7% 78% 4% 3% 5% 100% Lunenburg 4% 11% 13% 62% 3% 7% 100% Mahone Bay 13% 29% 27% 31% 100% Lunenburg County 15% 12% 46% 12% 4% 12% 100% Sources: Statistics Canada, Population Census; Jozsa Ma na gment & Economics The relatively high percentage of MoDC residents who work outside the CD, mainly in the HRM, suggests that the MoDC community is home to two, roughly equal in numbers, lifetstyles; one of people oriented to live and work in the MoDC and a second of people oriented to living in the MoDC and working outside the CD, mainly the HRM. This situation can have positive and negative implications. The positives centre on the variety that a mix of living and working in and outside the CD brings to the MoDC community. The negatives may be reflected in a community that is somewhat split between lifestyles. However, this situation has much more upside than down because the wider CBCL Limited Chester Industrial Park Feasibility Study 9

16 variety of lifestyles can be used to build a more vibrant community both in terms of social interactions and business interactions. Overall, the MoDC provides work for about 15% of the residents of Lunenburg CD. Bridgewater is clearly the employment centre for residents of the CD, followed by the MoDC and locations outside of the CD Potential External Developments Affecting Economic Development in the District The following section provides an overview of recent research examining the current underlying forces in rural economic growth in Canada. Understanding and leveraging these forces will help the MoDC work within the current and expected medium term economic context for the Lunenburg CD RISING RELATIVE LABOUR COSTS The price of labour has consistently risen relative to the cost of capital over the last 40 to 50 years. However, since the early 1990s the prices have risen almost in parallel. While improvements in commodity prices should improve the incomes of rural workers, the primary sectors will likely continue to shed labour in favour of capital investment thus reducing the number of jobs per dollar of output in the primary sectors RELATIVE DECLINES IN THE COST OF TRANSPORTING GOODS The price (time and money) of transporting goods by rail, truck and ship has declined over time (relative to the general price trends), which in turn, combined with the tendency for rural wage rates to be lower than urban rates, has helped rural areas compete for manufacturing investment and jobs. Over the last three decades, rural Canada has been increasing its share of total manufacturing employment. However, manufacturing output overall has been in decline in Canada and increased investments in capital have reduced the number of jobs per dollar of output. The overall price of communicating information has been declining and the quality increasing, but the quality increases and price declines have been slower coming to rural areas. Urban economies have been able to take advantage of the head start. Rural economies are now, in a sense, playing catch-up. However, Nova Scotia has recently made great headway in providing high speed communication, even fibre optic, in rural area. This has served to level the playing field somewhat RELATIVE INCREASES IN THE COST OF PERSONAL TRANSPORTATION The price of transportation services purchased by consumers has increased marginally but relative to the price of transportation of goods it has increased significantly. In spite of the decline in the price of purchasing a new vehicle, the price of land transporation of individuals has increased, due in part to the relative increase in gasoline prices in recent years (notwithstanding the significant price decline that began in the late Fall of 2014) and due to the increases in other operating costs. The price of public transportation local buses/subways, regional buses, commuter trains, subways, taxis in the 2010s is more than double (in constant dollar terms) the level of the 1960s. Overall, the CBCL Limited Chester Industrial Park Feasibility Study 10

17 price of transporting people by public transport has increased more than the price of transporting people by private transport. 1 These trends reduce the attraction of commuting to urban jobs from rural areas and reduce the potential for urban travel to rural areas for recreation and vacationing. Both could result in lower rates of economic growth for rural areas THE ECONOMICS OF AGGLOMERATION The economic advantages of agglomeration are driving the demographic and economic growth of cities. Larger numbers, greater diversity and higher living densities make more and more frequent social interaction possible. People are more likely to be exposed to unexpected experiences and almost forced to exchange ideas and consider alternative points of view. These in turn facilitate creativity, innovation and growth. The driving force of agglomeration is no less important to rural economies. Rural areas may be able to capitalize on the effects of agglomeration economies by developing speciality products and services to sell to urban markets that are open to alternative ideas and experiences. These include winery tours, bed and breakfast get-aways, festivals with enough to offer to overcome travel costs of urban tourists, and so on. In addition, rural economies should engage in land use planning that encourage the clustering of private and public investment to build their own agglomeration economies. Tendencies to spread investment over a large geography in general, serve to reduce the efficiencies of rural economies. However, at the same time, the rural areas must work to facilitate the exchange of new ideas and alterative points of view that occur almost by chance in large cities. The MoDC can help stimulate the exchange of ideas and alternative points of view by demonstrating their own willingness to take risks, treat failure as a source of new information, consider alternative ways of doing things, supporting blue-sky sessions where all ideas are welcome and no criticism is allowed in the first round, and so on. There are many sources of information from professionals and peers for a new investor in a large city. Rural areas need to work a bit harder to engender the same information flow. The MoDC could create a service within the administration dedicated to guide investors in the MoDC through the rules and regulations that apply to businesses in the MoDC. By dedicated, we mean just that, the staff person assigned would stay with an investor until opening day and the service would go beyond the provision of information into the realm of advocacy. 1 Personal air travel is has been the exception but the weak net revenue position of many airlines suggests that real prices may be on the way up. Costs to a great extent have been cut substantially to the point that the better option Airlines have for quite some time increased revenue by providing premium services, charging for seat selection and now have begun to charge for all checked baggage. CBCL Limited Chester Industrial Park Feasibility Study 11

18 The MoDC should also consider facilitating the establishment of a roster of business peers who would help investors new to the area to navigate the local rules and business networks that are essential to the efficient establishment of a business presence in any community The Economics of Demography IMMIGRATION AND RETURNING POPULATION The share of Canada s population in communities more than 50 kilometres from a metro centre declined continuously during the 1981 to 2001 period. Communities more than 50 kilometres from a metro centre grew at a slower pace than the national rate of population growth. However, rural areas are competitive in attracting two demographic groups: young adults and early retirees. Rural youth (aged 15 19) say they leave rural areas due to a lack of jobs, post-secondary educational, social and entertainment opportunities. However, when young adults (aged 20 29) are asked what would attract them to live in a rural community, jobs, education and entertainment were rarely mentioned. Instead, young adults (vs youth ) said that family and personal security made rural areas attractive. This demographic is reasonably settled into a career path and are therefore better able to accommodate the risks of opening a business or finding employment in a smaller economy. Because this demographic is reasonably established in a career path they are better able to take a risk of working in a smaller economy and, due to their career experience can, in a worst case situation, move to a new area if prospects do not work out. If MoDC wishes to begin to retain and attract more people in their prime working and investment years, then it needs to tap into the location preferences of younger adults by promoting the: i) lower costs of housing; ii) superior environment in which to raise families; and iii) relative ease (in terms of safety and time) of commuting to urban jobs in the eastern area of the Southern economic region (which is comprised of Lunenburg, Queens, Shelburne and Yarmouth Counties) and in the HRM as a fail-safe source of business and employment opportunities. Assuming there is a tendency for young adults to return to live in more rural areas the MoDC will need to develop a value proposition for young adults that overcomes the financial cost of travel to the Halifax Regional Municipality. If it can do so, or at least stem the tide of negative net migration then the prospects for generating new businesses would increase because the young adult age group is among the most active in new business creation. Rural areas are also relatively attractive to early retirees individuals from 55 to 69 years of age. For example, the Cape Breton Economic Development Authority has found that about 45% of new businesses created by in-migrants are created by people returning to Cape Breton, many in the early retiree category. CBCL Limited Chester Industrial Park Feasibility Study 12

19 Rural areas can attract immigrants, although the task is more difficult than it is for large urban centres. Statistics Canada has found that nine of the top 30 CDs in attracting immigrants are rural regions. However, their success is often tied to the attraction of niche groups, such as Mennonites to selected areas of Manitoba or the availability of jobs in relatively near-by urban centres. However, as pointed out earlier, the MoDC was quite capable of attracting foreign migrants before 1991 and the rate of foreign in-migration has recently recovered to near its pre-1991 rates. The MoDC can build on this history to attract investment from immigrants. There are many cases where immigrants have been able to see opportunities that the locals have not. A case in point is Annapolis Royal. The growth of high quality bed and breakfasts and high-end retail is credited largely to non-residents who saw opportunity in servicing the growing wealth of urban markets for short-stay but high-quality recreation and tourism. Similarly, the Cape Breton economic development agency has had success in attracting younger aged retirees who have invested in second business careers in the Cape Breton Regional Municipality ABORIGINAL DEMOGRAPHY Aboriginal peoples will remain a driver of the demography of rural Canada. They are the fastest growing segment of the Canadian population and have the youngest average age. A large proportion of this population lives in rural areas and this demographic group can have access to funds that other rural populations do not. The MoDC should consider means of encouraging First Nations entrepreneurship in the District. CBCL Limited Chester Industrial Park Feasibility Study 13

20 CHAPTER 4 FEASIBILITY ANALYSIS AND ASSESSMENT 4.1 Trend Projections Demographics Section describes the current trends in population for Nova Scotia, the Lunenburg CD and the MoDC. However, these are just trends based on past events. The trends can be turned around in subtle ways (as is the case in Saskatchewan that experienced decades of population decline until it reinvented its economic base, saw its population grow and unemployment rate decline to effectively zero) 2 and in dramatic ways (as was the case in Alberta when the discovery of large reserves of oil sent the Province into a decades long boom-cycle). In both cases stabilization and growth of the economy came first, followed by population (and labour force growth). During the extreme growth periods the labour supply was tight and wages were driven up, which in turn increased the rate of in-migration to provide some room between labour demand and supply. In all likelihood the sequence will need to be the same in Nova Scotia, and by extension the Southern economic region, Lunenburg CD and the MoDC. Labour will follow the jobs, as it is doing now as it leaves Nova Scotia. The last 15 years has seen great improvements in the rules and regulations that allow increased trade between provinces and increased acceptance of skill certifications, and hence labour mobility, between provinces. Unless the economic base of Nova Scotia improves the trend to population decline will continue. The HRM will sustain itself for a time with in-migration from the rest of Nova Scotia. However, unless it begins to serve as a growth centre for itself and the Province, its population too will stagnate and then decline. 2 The expansion of the hydrocarbon industry in Saskatchewan obviously had a major role in the reinvention of its economic base. However, the data show that the re-invention, as well as the stabilization of its population, began before the growth of the hydrocarbon sector. CBCL Limited MoDC Business Park Feasibility Study - Location Study 14

21 4.1.2 Employment Despite the appearance of the trend shown in Figure 4.1, employment growth is projected to be very modest, more or less sufficient to provide employment to additional labour that is stemming from slowly rising participation rates. 3 Figure 4.1 Nova Scotia Employment, LFS, Projected Nova Scotia Employment (place of residence) ('000s); LFS, Projected NS Emp Actual (LFS) NS Projected Hi NS Projected Low Sources: Statistics Canada (Tables , ); JO ZSA MANAGEMENT& ECONOMICS Employment projections for Lunenburg CD, the primary market area of the MoDC, are very difficult to arrive at. Data from the Labour Force Survey are grouped for the four counties in the Southern economic region (Lunenburg, Queens, Shelburne and Yarmouth Counties). Unlike the other economic regions in NS the counties in the Southern region are very different from each other. Lunenburg, in addition to having its own economic base that originally stemmed from natural resource exploitation, expanded into manufacturing due to its proximity to the HRM and shipping routes to the east by tidewater. The Yarmouth CD is not within the economic orbit of the HRM and 3 All projections have been subjected to stochastic modelling that assumed the distribution of annual differences above and below the long term trend is normal and that the standard deviation of the annual differences in the future will resemble those of the past. CBCL Limited MoDC Business Park Feasibility Study - Location Study 15

22 has seen its traditional sources of employment (manufacturing at DOMTEX, tourism declines with the loss of the ferry to New England, weakness in the finfish-fishery, etc.) weaken over the decades. Hence patterns in the data from the Labour Force Survey for the Southern region are masked by the countervailing nature of the counties in the region Analysis of Sector Trends By combining Census information with Labour Force Survey information we are able to parse-out some of the patterns of employment change among the counties in the Southern region as shown in Figure 4.2. Figure 4.2 Southern Region, Lunenburg Employment, LFS, Projected Southern Region, Lunenburg CD Employment (place of residence) ('000s); LFS, Projected Southern Region Emp Actual (LFS) Southern Emp Projected Low Lunenburg CD Emp Projected Hi Rest of Southern Emp. Estd. Rest of Southern Emp. Projected Low Southern Emp Projected Hi Lunenburg CD Emp Estd. Lunenburg CD Emp Projected Low Rest of Southern Emp. Projected Hi Sources: Statistics Canada (Tables , ); JO ZSA MANAGEMENT & ECONOMICS The Lunenburg CD has modestly increased its share of employment in the Southern region over the last 27 years. It has also been able to more or less maintain, but not increase, its share of Nova Scotia employment. Based on these trends and the overall projected employment growth for NS we find that Lunenburg CD could expect some modest employment growth over the next 10 to 20 years. CBCL Limited MoDC Business Park Feasibility Study - Location Study 16

23 GROWTH TARGETS Figure 4.3 provides some detail on employment by place of work in the Lunenburg CD. It tracks the number of jobs located in the CD. Figure 4.3 Lunenburg CD Employment, , Projected Lunenburg Census Division Employment ('000s, place of work); , Projected Lunenburg CD Emp Estd. Lunenburg CD Emp Projected Hi Target 21 Lunenburg CD Emp Projected Hi Trend Lunenburg CD Emp Projected Low Target Lunenburg CD Emp Projected Low Trend Sources: Statistics Canada (Tables , ; Catalogue no. 97F0015XCB ; Catalogue no XCB200601; 2011 National Household Survey); JO ZSA MANAGEMENT & ECONOMICS Figure 4.4, provides a closer look at the implications of our assumptions for the capture of employment growth by the MoDC and Rest of the Lunenburg CD. The target projections assume that the MoDC will be aggressive in the execution of its economic development strategy and marketing and selling of its land in parks and areas commercially zoned to investors. The work of the MoDC will naturally improve the conditions in the overall CD (as one would expect of enhanced economic development activity in the other municipal units in the CD). CBCL Limited MoDC Business Park Feasibility Study - Location Study 17

24 Figure 4.4 MoDC & Rest of Lunenburg CD Employment Targets MoDC & Rest of Lunenburg CD - Employment ('000s, place of work) Targets MoDC Estd. MoDC Hi Target MoDC Lo Target Rest of Lunenburg CD Estd. Rest of Lunenburg CD Hi Target Rest of Lunenburg CD Lo Target Sources: Statistics Canada (Tables , , Catalogue no. 97F0015XCB ; Catalogue no XCB200601;Catalogue no X , 2011 National Household Survey); JOZSA MANAGEMENT& ECONOMICS INDUSTRY CONCENTRATION AND RELATIVE COMPETITIVENESS Table4.1, shows the results of the location quotients analysis of the economic base. Location quotients measure the concentration of an economic activity relative to a reference economy. For this analysis we use the rest of Canada and the rest of Nova Scotia. The measurements are presented for 2001 and 2011 to provide some perspective on the change in the economic structure in the last 14 years. If an industry shows a high concentration relative to the reference economy it can be a sign of a competitive advantage 4. 4 The Atlantic Provinces show a high concentration of Primary Fishing as one would expect and due to their access to their resources they have a competitive advantage in fishing relative to the rest of Canada. However, a concentration and even a relative competitive advantage do not necessarily mean a sector is economically viable if there are more efficient competitors elsewhere in the world. CBCL Limited MoDC Business Park Feasibility Study - Location Study 18

25 Table 4.1 Measures of Industry Concentration, 2001 and 2011 Measures of Industry Concentration (Location Quotients)*; 2001 and ** 2001 Concentration of Lunenburg Census Division Relative to: Rest of Canada Rest of NS Concentration of RoNS Relative to: Rest of Canada Concentration of NS Relative to: Rest of Canada Concentration of Lunenburg Census Division Relative to: Rest of Canada Rest of NS Concentration of RoNS Relative to: Rest of Canada Concentration of NS Relative to: Rest of Canada Industry Agriculture, Forestry, Fishing & Hunting Mining and Oil & Gas Extraction Utilities Construction Manufacturing Food, bev erage, tex tile products and leather & allied NA NA NA NA manufacturing Wood, paper, chemical & rubber products manufacturing NA NA NA NA Primary & fabricated metal, machinery, computer & electronic, electrical, NA NA NA NA transportation equip., furniture & misc. manufacturing Wholsale Trade Retail Trade Transportation & warehousing Information & cultural industries Postal, courier, w arehousing & storage NA NA NA NA Publisihing, broadcasting, telecommunication & sound & NA NA NA NA image recording Finance, insurance & related Real Estate, rental & leasing Professional, scientific & technical services Management of companies Administrative & support & waste management & remediation services Education Health & social assistance services Arts & recreation services Accomodation & food services Personal services Public administration * by place of work 1 Standard Deviation above average 1 Standard Deviation below average ** Employment concentration deviation from the mean similar to 2007 business establishment concentration deviation. Sources: Statistics Canada: 2011 National Household Survey, 2001 Census Long Form; Jozsa Ma na gement & Economics CBCL Limited MoDC Business Park Feasibility Study - Location Study 19

26 Table 4.2, shows that relative concentration when measured with respect to the number of business establishments by type is similar to the concentration with respect to employment (place of work). Table 4.2 Relative Concentration of Business Types, 2007 Relative Concentration of Business Types (regardless of size); 2007 Concentration of Lunenburg CD Business Types Relative to: Concentration of RoNS Relative to: Concentration of NS Relative to: Lines of Business: Rest of Canada Rest of NS Rest of Canada Rest of Canada Agriculture, Forestry, Fishing & Hunting Mining, Quarrying and Oil & Gas Extraction Utilities Construction Manufacturing Wholesale Trade Retail Trade Transportation & Warehousing Information & Cultural Industries Finance & Insurance Real Estate, Rental & Leasing Professional, Scientific & Technical Services Management of Companies & Enterprises Administrative & Support and Waste Management & Remdiatiion Services Educational Services Health Care & Social Assistance Arts, Entertainment & Recreation Accommodation & Food Services Other Services (except Public Administration) Standard Deviation above average 1 Standard Deviation below average Business concentration deviation from the mean similar to 2011 employment (by industry, place of work) concentration deviation. Sources: Canadian Business Patterns, June 2007, Statistics Canada Cat No. 61C0025; Jozsa Ma na gement & Economics With Respect to the Rest of Canada: The relative concentration of agriculture, forestry, fishing and hunting related businesses and manufacturing related businesses is lower than the concentration of employment in those sectors, suggesting that firms in the CD are a bit larger than the average in the rest of Canada and hence may have the advantage of scale economies. The relative concentration of construction and retail establishments is higher than the concentration of employment in those sectors, suggesting that these firms in the CD are smaller than the average in the rest of Canada and hence may have a relative disadvantage in terms of scale economies. With Respect to the Rest of Nova Scotia: The relative concentration of manufacturing and arts, entertainment and recreation establishments is lower than the concentration of employment in those sectors, suggesting that firms in these sectors in the CD are a bit larger than the average in the rest of Nova Scotia and hence may have the advantage of scale economies. The relative concentration of construction establishments is higher than the concentration of employment in this sector, suggesting that construction establishments in the CD are smaller than CBCL Limited MoDC Business Park Feasibility Study - Location Study 20

27 the average in the rest of NS and hence may have a relative disadvantage in terms of scale economies MEASURES OF THE FORCES OF ECONOMIC GROWTH Table 4.3, shows the number of jobs located in Canada, Nova Scotia and the Lunenburg CD in 2011 and The number of jobs in the Lunenburg CD declined by about 39 from 2001 to 2011, but decline did not occur in all sectors. The job changes, by sector, were as follows: Agriculture, Forestry, Fishing & Hunting -903 Mining and Oil & Gas Extraction -5 Utilities 20 Construction -107 Manufacturing - 1,100 Wholesale Trade -38 Retail Trade 179; Transportation and Warehousing -208 Information and Cultural Industries 230 Finance, Insurance and Related 42 Real Estate, Rental and Leasing 60 Professional, Scientific and Technical Services 291 Management of Companies -14 Administrative and Support and Waste Management and 140 Remediation Services Education 539 Health and Social Assistance Services 603 Arts and Recreation Services 161 Accommodation and Food Services -305 Personal Services 85 Public Administration 290 CBCL Limited MoDC Business Park Feasibility Study - Location Study 21

28 Table 4.3 Employment in the Lunenburg Census Division, NS, 2001 and 2011 Employment (Place of Work; Canada, NS & Lunenburg Census Division) Industry Canada Rest of Canada Rest of NS Lunenburg Census Division Canada Rest of Canada Rest of NS Lunenburg Census Division Total Economy 16,528,570 16,094, ,680 20,535 14,354,298 13,962, ,525 20,574 Agriculture, Forestry, Fishing & Hunting 398, ,235 14, , ,817 18,506 1,798 Mining and Oil & Gas Extraction 239, ,260 2, , ,651 2, Utilities 145, ,320 2, , ,058 2, Construction 1,098,025 1,070,895 25,755 1, , ,541 22,230 1,482 Manufacturing 1,520,050 1,489,400 27,945 2,705 2,003,678 1,964,510 35,363 3,805 Food, bev erage, tex tile products and leather & allied 297, ,750 8, NA NA NA NA manufacturing Wood, paper, chemical & rubber products manufacturing 462, ,060 11,000 1,510 NA NA NA NA Primary & fabricated metal, machinery, computer & electronic, electrical, 759, ,590 8, NA NA NA NA transportation equip., furniture & misc. manufacturing Wholesale Trade 698, ,195 13, , ,089 14, Retail Trade 1,905,045 1,848,850 53,350 2,845 1,617,183 1,568,753 45,764 2,666 Transportation & warehousing 601, ,175 13, , ,686 17, Information & cultural industries 577, ,445 12, , ,112 9, Postal, courier, w arehousing & storage 179, ,795 3, NA NA NA NA Publishing, broadcasting, telecommunication & sound & 397, ,650 8, NA NA NA NA image recording Finance, insurance & related 744, ,480 14, , ,403 11, Real Estate, rental & leasing 307, ,675 6, , ,084 5, Professional, scientific & technical services 1,174,435 1,151,875 21, , ,515 16, Management of companies 16,535 16, ,122 13, Administrative & support & waste management & 657, ,215 19,310 1, , ,290 17, remediation services Education 1,239,475 1,202,900 34,915 1, , ,844 26,938 1,121 Health & social assistance services 1,881,870 1,824,565 54,655 2,650 1,392,762 1,349,295 41,420 2,047 Arts & recreation services 321, ,770 7, , ,820 6, Accommodation & food services 1,030,730 1,002,875 26,655 1, , ,639 26,816 1,505 Personal services 763, ,820 17,595 1, , ,265 18, Public administration 1,207,990 1,163,120 43,640 1, , ,984 32, Sources: Statistics Canada: 2011 National Household Survey, 2001 Census Long Form; Jozsa Management & Economics Table 4.4, shows the likely direction of forces that contributed to the net change of employment in each of the sectors in the CD. The sectors in the CD showing the highest concentration with respect to the Canadian and Nova Scotia reference economies, are among the worst performing sectors in CBCL Limited MoDC Business Park Feasibility Study - Location Study 22