Expect 'ripple effect' from slowdown in Alberta oil patch: economist

Declining oil prices are dissolving thousands of jobs in Alberta, and it's certain that cancelled and delayed projects out west will have a significant impact on commuting workers from Newfoundland and Labrador, an economist says. 

Although Alberta's industry is expected to rebound after a three-year downturn, Bob Collins, an economist with BuildForce Canada, says the current downturn will be equally tough for the thousands of men and women who travel west for a paycheque.  

In an interview with the St. John's Morning Show, Collins said the situation in Alberta is far from settled. 

"It's still unfolding in front of our eyes in the sense that we came into the end of last year with the signals of declining oil prices. But [what] we really started hitting in 2015 was the postponement and cancellation of projects, and so that obviously had a very large impact in terms of the job losses," he said.

Industry will have to carefully monitor the age demographic in order to sustain a long-term skilled workforce.- BuildForce economist Bob Collins 

"We're looking at it to continue all across this year and into next year. So as things unfold, this will be spread throughout the Alberta economy, not just necessarily the oil patch, but as well as all segments in construction in Alberta. The ripple effects are felt in other parts of the country, such as Newfoundland and Labrador."

BuildForce Canada, formerly known as the Construction Sector Council, is an organization that studies labour market needs for the Canadian construction industry. 

Collins said the pinch of the current downturn will carry well into 2016, and predicts that perhaps the worst is yet to come

"I don't want to paint too bleak of a picture for Alberta. There are still projects underway, projects that will continue over the next few years," he said,

"But what's happening is as some of the current projects are ending, and typically workers would have the privilege to be able to move into the next phase or move over into the next job, there will be gaps. So with the gaps, obviously the demand for workers goes down."

Other start-up projects to consider 

Collins predicts 14,000 out-of-province workers are expected to leave Alberta.

He said if Alberta stays weaker through 2016, he believes a portion of the Newfoundland and Labrador workforce could find opportunities in other provinces.

"I think as people come back home to Newfoundland and Labrador, they will start working through the various systems, as other projects that will potentially start up" he said.

"There's a fair amount of work planned, not yet started in B.C., with major developments in utilities and mining development, so they may offer some opportunity," he said. 

"And the types of workers that have worked in Alberta are very versatile, usually on these industrial major engineering-type projects."

Newfoundland and Labrador outlook

Collins said this province's outlook is "very cyclical," and although employment will be strong over the next couple of years, it is now on a down cycle.

"Newfoundland and Labrador has been riding a long wave of big resource development, such as the Lower Churchill, offshore platforms being developed, the Long Harbour [nickel processing facility]. And what's happening is that these projects are either peaking or are starting to wind down," he said.

But [what] we really started hitting in 2015 was the postponement and cancellation of projects, and so that obviously had a very large impact in terms of the job losses.- BuildForce economist Bob Collins

"So, parallel to what's happening in Alberta, we're seeing construction employment starting to ease off in the province, so that adds to the challenge that these workers will be released."

Collins said additionally, a large number of skilled workers from this province will need to be replaced.

"Despite current conditions, Newfoundland and Labrador is facing a potential of around 25 per cent of its current workforce [being] in a position to retire," he said.

"And the challenge is to convince people to come into construction, ride out these cycles that happen. Industry will have to carefully monitor the age demographic in order to sustain a long-term skilled workforce."