Photo: The Canadian Press
87-year-old oil veteran Jim Gray stands outside the YMCA named for his family, which is being closed in Calgary, Alta.
For the veteran Calgary oilman, whose name adorns the downtown Gray Family Eau Claire YMCA, the recent closure of the facility due to declining membership is the “canary in the coal mine” for the Calgary economy.
“The Y was my second home. It’s like I’ve lost my closest friend,” Jim Gray, 87, said in an interview. He co-founded oil and gas pioneer Canadian Hunter Exploration in 1973 and remains a well-known Calgary business, philanthropy, and healthy living advocate.
“It’s like the canary in the coal mine. It’s the wake-up call. There are all kinds of things that are shut down and not started (again) because we have to reposition our city.”
Between 2014 and 2019, nine main offices and 3,600 main offices were downsized in Calgary, according to Statistics Canada. The number of jobs at its headquarters in Alberta fell by nearly 5,500 while the rest of the country rose by nearly 2,800.
“(Headquarters is) the rock in the pond, it ripples,” said Rob Roach, deputy chief economist at ATB Financial.
An ATB analysis found that in January 2020 there were 9,500 fewer active companies in Alberta with at least one employee other than the owner than in January 2015, a decrease of 8.2 percent and the largest percentage decrease in oil and gas 24.8 Percent or more than 1,100 companies.
According to TMX Group, operator of the Toronto Stock Exchange, the number of publicly traded oil and gas issuers headquartered in Canada fell from 286 at the end of 2015 to 132 in late 2020, with the largest drop on the Risk Exchange from 199 to 77.
For Calgary economic observers, 2015 marked the start of a long downturn as reference oil prices, which averaged $ 93.17 a barrel in 2014, fell to $ 48.66 in 2015 and stayed close before rising last year due to pandemic. Lockdowns slipped even further to $ 39.16.
The numbers of energy companies continue to decline thanks to deals such as the acquisition of Husky Energy Inc. by Cenovus Energy Inc., the deals of Whitecap Resources Ltd. to purchase Calgary rival TORC Oil & Gas Ltd. and NAL Resources Ltd. as well as the planned merger of ARC Resources Ltd. and Seven Generations Energy Ltd.
“It is worrying to some extent, but not unexpected, that employment at the Calgary headquarters declined from 2014 to 2019,” said Adam Legge, president of the Alberta Business Council and former CEO of the Calgary Chamber of Commerce.
He said that main offices are important because they initiate big decisions, tend to “root” the company in the community, and support businesses tend to cluster nearby.
Despite Calgary’s losses, it still has more main offices per capita than any other city in Canada, Legge said.
The downturn was felt most in downtown Calgary, where real estate company CBRE put the office vacancy rate at a record high of 29.5 percent in late 2020.
Some office rental rates have fallen in half since 2014, said Scott Hutcheson, executive chair of Aspen Properties, which owns and manages 11 buildings in downtown Calgary – including the iconic Calgary Tower. And space to sublet is available at even lower prices.
“I can tell you it’s not the reason just yet. We’re seeing a lot of indecision among tenants,” he said, adding that Calgary’s recovery will likely not begin until after COVID-19 vaccines are available later this year.
Tech companies have been touted as a growth area for Calgary, but founder of one of the city’s most successful tech companies, Benevity Inc., said it will take years to reach the size and scale required for a healthy sector in the city.
“Building out of the tech ecosystem is a long-term, multi-layered strategy. The horizon for this is probably 10 years or more,” said CEO Bryan de Lottinville in an interview.
The company provides nonprofit donation management services to clients such as Nike, Coca-Cola, Google, and Apple. The British company Hg Capital LLP received an investment of 1.1 billion US dollars last year.
It has about 700 employees, but despite Calgary’s unemployment rate of more than 10 percent, it has 90 vacancies because it can’t find people with the right skills, de Lottinville said.
Gray is part of a group calling on the city council to reconsider the scope of its multi-billion dollar project to expand the mass transit system to the south and northeast.
The city should realize that an economy built on 40 years of cheaper commodity prices cannot be turned around overnight, he said.
“We have had this wonderful 40 years with all the big downtown buildings that were being built, but on a very narrow basis, and that was energy, oil and natural gas,” he said.
“We’re suffering. Calgary is in big trouble. And I think we will make it, but it will, I don’t know, take 10, 15 years … it won’t be easy.”