DEVELOPMENT OF INVESTMENT ATTRACTION

Transcription

DEVELOPMENT OF INVESTMENT
ATTRACTION STRATEGIES
Phase 3 Report
For:
Northeast AlbertaHUB
Prepared By:
Market Research and Consulting Ltd.
June 30, 2010
Market Research and Consulting Ltd.
1455 Toshack Road.
West St. Paul, Manitoba
R4A 8A6
outlook@ outlookmarketresearch.com
www.outlookmarketresearch.com
Don Whittaker
Northeast AlbertaHUB
Box 412, 5025 – 49 Ave.,
St. Paul, AB T0A 3A4
204-229-8190
June 30, 2010
Dear Mr. Whittaker,
Outlook Market Research is pleased to present to you our report for the Northeast
AlbertaHUB Regional Investment Attraction Project: Phase 3.
Building on the results of the Phase 1 and Phase 2 Studies, we have conducted extensive
research to build an Investment Attraction Strategy, along with a number of
Opportunity Analyses and 34 Community Investment Profiles.
The report is based on a lengthy, systematic research effort, leaving us confident that
the results reflect the attitudes and opinions of regional businesses and stakeholders.
The study should also serve as a strong basis for the Phase 4 work that will see the
development of a Marketing Plan and Materials.
Thank you for allowing Outlook Market Research to be a part of this exciting project.
Sincerely,
Mark Baxter
Outlook Market Research & Consulting Ltd
NORTHEAST ALBERTA HUB REGIONAL INVESTMENT ATTRACTION Phase 3 Report
Outlook Market Research and Consulting Ltd
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TABLE OF CONTENTS
1.0 Executive Summary
5
1.1 Project Purpose
5
1.2 Summary
5
2.0 The AlbertaHUB Region
9
3.0 Methodology
10
3.1 Limitations
10
4.0 Regional Investment Attraction Strategy
4.1 Introduction
12
12
4.1.1 The Six Mandates
12
4.2 The Nine Overarching Strategies
13
4.3 General Inquiry Response Path
24
4.4 Sector Advisory Network
26
4.5 The Time Commitment Issue
27
4.5.1 Community Size
27
4.5.2 Member Involvement
28
4.5.3Staffing for Investment Attraction
28
5.0 Sector-Specific Strategic Considerations: Energy Sector
29
5.1 Energy Sector Priorities
30
5.2 Responsible Actions: A Plan for Alberta’s Oil Sands
31
5.2.1 Crisp (Comprehensive Regional Infrastructure
33
Sustainability Plans)
5.3 Key Energy Sector Contacts
6.0 Sector-Specific Strategic Considerations: Agriculture Sector
34
36
6.1 Agriculture Sector Priorities
36
6.2 Bio-Products
38
6.3 Key Agriculture Sector Contacts
42
7.0 Sector-Specific Strategic Considerations: Defence Sector
7.1 CFB Cold Lake Priorities
44
44
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7.2 The High-Level Business Development Challenges
45
7.3 Opportunities Through Relationship Development
47
7.3 Short, Medium and Long Term Strategies
47
7.4 Key Defence Sector Contacts
49
8.0 Sector-Specific Strategic Considerations: Manufacturing Sector
50
8.1 Manufacturing Sector Priorities
50
8.2 Key Manufacturing Sector Contacts
52
9.0 Sector-Specific Strategic Considerations: Transportation Sector
9.1 Transportation Sector Priorities
10.0 Sector-Specific Strategic Considerations: Tourism Sector
53
53
58
10.1 Tourism Sector Priorities
58
10.2 Alberta Tourism, Parks and Recreation: Tourism Business
61
Development, Research and Investment Branch
10.3 Key Tourism Sector Contacts
11.0 Next Steps
61
63
11.1 Internal Organizational Review
63
11.2 Phase 4
63
12.0 The Prefeasibility Studies
65
Appendix 1: Survey Instrument
67
Appendix 2: Prefeasibility Study into the Viability of Brand Name Hotel
78
Development
Appendix 3: Prefeasibility Study into the Viability of a Safety Supply
99
Outlet
Appendix 4: Prefeasibility Study into the Viability of a High End
106
Recreational Vehicle Park
Appendix 5: Prefeasibility Study into the Viability of Primary
116
Agriculture Value Added Association
Appendix 6: Prefeasibility Study into the Viability of a LTL Trucking Service
147
Appendix 7: Prefeasibility Study into the Viability of Film Industry in the
153
AlbertaHUB Region
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Appendix 8: Prefeasibility Study into the Viability of Aboriginal Tourism
178
in the AlbertaHUB Region
Appendix 9: Prefeasibility Study into the Viability of a Recreational
204
Water Park/Aquatic Center
Appendix 10: Prefeasibility Study into the Viability
of a Truck Driving School
219
Appendix 11: Prefeasibility Study into the Expansion of Maple Flag Exercise 227
into Tourist Attraction in the AlbertaHUB Region
Appendix 12: Prefeasibility Study into the Viability
of an Employment Agency
264
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1.0 EXECUTIVE SUMMARY
1.1 PROJECT PURPOSE
The purpose of the study is to develop an overall Investment
Attraction Strategy that is specific to the AlbertaHUB Region,
including sub-strategic considerations for each of the
following Industry Sectors: Energy, Agriculture, Defence,
Manufacturing Transportation, and Tourism.
This is the third phase of the AlbertaHUB Investment
Attraction Project. This phase builds on two previous phases
that featured a cluster analysis of each of the six industry
sectors. Using a Business Retention and Expansion style
survey, Phases One and Two identified a number of businesses
in each sector and began to identify opportunities in the
primary, secondary and tertiary markets for each sector.
The following report features the results of Phase 3, where
the three major deliverables were:



An Investment Attraction Strategy
Opportunity Analyses
34 Community Investment Profiles
Due to the file size and length of the Community Investment
Profiles, they will be delivered to AlbertaHUB separate from
this report.
1.2 SUMMARY
The report outlines an overarching regional multi-sector
development strategy with a focus on integrating the
concerns of six featured sectors, especially in relation to the
role they believe the AlbertaHUB should play in regional
investment attraction. The views of business and stakeholders
across the six sectors and in the government/economic
development arena showed significant commonalities.
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The objective of the study was to determine what role the AlbertaHUB should take in
terms of investment attraction, although the findings lend themselves to other areas as
well.
AlbertaHUB’s Role
The research efforts in Phases 1 to 3, informed by hundreds of interviews and surveys,
provide a wide perspective that can be encapsulated like this: respondents believe that
AlbertaHUB’s role in investment attraction should be that of a regional communications
facilitator. Thus, the identification of six mandates that stakeholders feel are the
functions of AlbertaHUB, and the development of nine overarching strategies that
reflects the priorities in carrying out these mandates are as follows:
Mandates
The following six mandates were given different priorities by individual interviewees,
with businesses tending to be most interested in Mandates I, III, and VI, and those
involved in economic development, Chambers of Commerce, and various administrative
bodies most interested IV and V and VI.
I. Labour attraction/retention programs
(marketing material development and strategy development, etc)
II. Public domain industry information
(R&D, business statistics, feasibility studies, opportunity analysis, etc)
III. Identification of governmental and non-governmental business resources
(grants, loans, information, etc)
IV. Site selection awareness
(raising the regional profile to potential investors and acting as an investment
information portal)
V. Training
(seminars, best practices, new opportunities, etc)
VI. Facilitation on key regional business issues
(between stakeholders, business, government, citizens, etc)
Strategies
The following are a set of nine overarching strategies for AlbertaHUB to consider as part
of their investment attraction efforts, with objectives listed below them in bullets.
Strategy 1: Be a Centre for Communications Excellence
 be a partnering organization
 act as a government facilitator
 disseminative opportunity information to members
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



inform members about other REDA initiatives
act as an information funnel
conduct and participate in regional meetings and roundtables
bolster website maintenance
Strategy 2: Raise Awareness of the AlbertaHUB
 promote the results of this and other investment attraction studies
 develop a marketing strategy and materials
 use training courses to raise the organizational profile
Strategy 3: Investment Attraction Training
 focus on marketing training for the region and individual communities
 bring Edmonton and Calgary seminars/courses to the region
 encourage a mentorship program
 play a role in labour attraction and retention
Strategy 4: Promote the Region’s Strengths
 increase web presence
 communicate regional strengths and opportunities to provincial officials
 do more promotion of the region within the province
Strategy 5: Promote Investment Opportunities within the Region
 leverage investment support from businesses in the communities
Strategy 6: Assist Existing Local Business
 provide funding information from government programs
 work actively with chambers of commerce
Strategy 7: Foreign Investment: Build On Existing Ties
 leverage local connections to the international business community
Strategy 8: Play a Role in Regional Infrastructure Development
 be at the table to promote regional infrastructure development
Strategy 9: Develop an Investment Attraction Incentive Information Package
 develop partnering opportunities
 aggressively market unique regional assets
 explore a financial incentives policy
Other Important Notes:

AlbertaHUB should play an integral role in a General Response Path to investor
inquiries. Whether inquiries come through to local communities or provincial
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


sector specialists, it is AlbertaHUB’s role to disseminate information so all
stakeholders can work cooperatively to help facilitate the investment activity.
AlbertaHUB needs wider participation from its membership to make the
investment attraction strategies and opportunities in this report actionable.
Related to this, AlbertaHUB may want to address a perceived disconnect
between small community members and large community members regarding
its regional role.
Budget permitting, AlbertaHUB may want to consider hiring additional staff to
implement the Investment Attraction Strategy and other economic development
initiatives.
The beginnings of a Sector Advisory Network are taking shape as a result of this
project and other initiatives. The Advisory Network can grow from the extensive
ground level research effort from this project that provides AlbertaHUB with a
wealth of business contacts, and a gateway to these key contacts.
Opportunity Analyses
Based on extensive interviews and surveys with local stakeholders and provincial sector
specialists, the consulting team developed Prefeasibility Studies for the following
opportunities which are presented in the Appendices of this report:

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Value Added Agriculture Association (and sub opportunities)
Recreational Vehicle (RV) Park
Oil And Gas Safety Supply Operation
Less Than Load (LTL) Trucking Operation
Water Park
Limited Movie Industry Opportunity
Class 1 Driver School
Aboriginal Tourism Opportunities
Regional Brand Name Hotel Opportunities
CFB Cold Lake/Aero-Enthusiast Tourism Opportunity
Employment Agency
The Next Steps
We recommend that the Investment Attraction Task Team and any interested
AlbertaHUB members set aside an extended meeting time for the consulting team to
present the report. This should serve as internal organizational review in regards to the
long term investment attraction strategy for the organization. During this meeting,
discussions can also take place regarding the next step of the overall initiative: Phase 4
of the AlbertaHUB Investment Attraction project, the Detailed Marketing and
Communication Plan and Training & Capacity Phase.
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2.0 THE AlbertaHUB REGION

Northeast Alberta Information HUB Ltd., also known as
"The HUB", is a partnership of 34 communities in northeastern Alberta (www.albertahub.com)

The total population of the HUB region, according to
2008 population estimates from AlbertaFirst.com, is
121,169.

7. AlbertaHUB
Region
AlbertaHUB’s mission is “to promote and facilitate
economic development that supports business and
enhances the quality of life and environment within its
member communities”
The AlbertaHUB Region
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3.0 METHODOLOGY
The first two Phases of the project saw the research team develop and utilize a BR&E
style questionnaire with the majority of the survey work conducted by phone or on-line
through the Outlook Market Research website. The on-line questionnaire delivery was
augmented with phone interviews and in-person company interviews to help maximize
the survey results. The study focused on medium to large sized businesses in the three
sectors. To the extent possible, the research team utilized a top-down approach, but
also worked to identify opportunities at the tertiary level.
This third Phase relied heavily on extensive interviews with the public and private
sectors, from inside and outside the region. These interviews framed the core of the
three major components of Phase 3: Strategic Recommendations, Community
Investment Profiles, and Pre-feasibility Studies.
Of course, significant secondary research was also conducted, but the primary research
through interviews informs the majority of the report. It was always the intention of the
research team to ensure that the data supplied was of a grassroots nature, informed by
the facts on the ground, in the region. This approach was especially necessary due to the
breadth of the AlbertaHUB membership. It was vital to the study to ensure that all
members had an opportunity to voice their opinion and that a wide array of businesses
could participate.
NOTE regarding quotations: There are a number of quotes listed in the body of the
report that cannot be specifically referenced in the document due to an agreement to
keep the specific sources of all interview comments confidential.
3.1 LIMITATIONS
The main limitation to the study was accessing thorough information from businesses.
There are such a wide variety of businesses in a region the size of AlbertaHUB that
creating a contact list is a challenge in itself.
All three phases of the project saw the research team and AlbertaHUB members make
significant efforts to develop the list of businesses. However, even once this list was
complete; it was a challenge to conduct the necessary interviews due to the relative lack
of respondent availability and interest. Regardless, we are confident that the 3 phases
allowed us to create a significant business list that garnered valuable input and
relationships that can be fostered in the future.
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Another limitation was the discrepancy in the ability and willingness of the 34 members
to participate. (The consulting team went through a well documented effort to
repeatedly contact each member.) This is of some concern because the differential
between input of the communities and their businesses might skew some strategic
recommendations towards the opinions of the members that had the greatest
involvement in the study.
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4.0 REGIONAL INVESTMENT ATTRACTION STRATEGY
4.1 INTRODUCTION
The objective of this section is to develop the overarching
regional multi-sector development strategy with a focus on
integrating the six independent strategies. The overarching
strategy is meant to identify the commonalities and
divergences amongst the separate sector strategies.
What the research team learned was that there are many
more commonalities as opposed to divergences when it
comes to the six sector strategies. Plainly put, most business
and stakeholders across the six sectors and in the
government/economic development arena have similar views
of what is needed for AlbertaHUB to play a meaningful role in
long term investment attraction.
Section 4.0 will highlight these commonalities by providing
nine strategies for consideration, usually accompanied by
goals or activities designed to meet these strategies
Before discussing the nine strategies, we begin by looking at
the six areas that businesses and stakeholders regarded as
possible mandates for AlbertaHUB in terms of investment
attraction. These mandates can be used to inform future
organizational investment attraction planning, and also
helped inform the strategies outlined in this report.
4.1.1 THE SIX MANDATES
Several items were identified in this study regarding the role
AlbertaHUB should take in terms of investment attraction. The
primary responsibilities/mandates are thought to be:
I. Labour attraction/retention programs (marketing
material development and strategy development, etc.)
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II. Public domain industry information (R&D, business statistics, feasibility studies,
opportunity analysis, etc.)
III. Identification of governmental and non-governmental business resources (grants,
loans, information, etc.)
IV. Site selection awareness (raising the regional profile to potential investors and
acting as an investment information portal)
V. Training (seminars, best practices, new opportunities, etc.)
VI. Facilitation on key regional business issues (between stakeholders, business,
government, citizens, etc.)
Businesses tended to be interested more in Identification of Governmental and Nongovernmental Business Resources. (Although it should be noted that there are many
misconceptions about what role an organization like AlbertaHUB can play in finding
funding. AlbertaHUB needs to communicate that it can help industry sectors in various
ways, but cannot furnish individual businesses with such resources.) Businesses were
also interested in Facilitation on Key Regional Business and Labour Attraction/Retention
Programs.
Organizations such as EDOs, Chambers of Commerce, and various administrative bodies
tended to be very focused on Training and Site Selection Awareness specifically as it
relates to raising the regional profile to potential investors. Most often, these
organizations mentioned an issue that cuts across all these roles: that of
Communication.
4.2 THE NINE OVERARCHING STRATEGIES
The core of the strategic effort was designed to identify how members, businesses and
outside government organizations perceived what the role of AlbertaHUB should be in
terms of investment attraction. This effort, informed by hundreds of interviews and
surveys, gives a wide perspective that can be encapsulated as such: respondents believe
that AlbertaHUB’s role should be that of a regional communications facilitator.
STRATEGY 1: Be a Centre for Communications
Excellence
In a broad sense the role of AlbertaHUB must be a
center of excellence for business development and
investment attraction. But at its core, business
development and investment attraction is about
communications: Communications between the 34
members, regional businesses, Provincial and
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Federal agencies, investment targets, etc.
While the original intent behind the HUB acronym was “Hooking Up Business”, the word
“hub” actually represents the perceived purpose of the organization very well: it is in
fact, as the full name says, an Information Hub. And specifically with respect to
investment attraction, the AlbertaHUB should furnish investors with that information.
As one interviewee from a Chamber of Commerce said:
“An investor should just be able to ask questions and not have to worry about
which agency he needs to go to. There needs to be a synergy between the HUB,
local Chambers of Commerce and local town/city councils to supply all the
information together. If they worked together then the center of excellence could
inform the investor as to the best place to take his business within the region;
whichever community is the best fit for his investment instead of the investor
himself trying to find that out and each community then competing against each
other.”
Inter-organizational communication was brought up in this study more than almost any
other issue in regards to the role of AlbertaHUB. This comment sums up the sentiment:
“The Chamber of Commerce, Community Futures and the AlbertaHUB are all
information sharing organizations at their core and we need to partner up in a more
cooperative effort in order to better service the business communities in the area.”
The term “inter-organizational communication” refers to AlbertaHUB disseminating and
sharing information from all levels of government and community. It is a wide ranging
objective that may include the following activities:

Be a Partner
AlbertaHUB’s strength is as a partnering organization. This Investment Attraction
Project serves as an example. AlbertaHUB is building a multi-sector investment
strategy; but the purpose of that strategy is not to act as a leader in each sector,
but rather to help enable the leaders in those sectors to attract investment.
Given the limited staffing level at AlbertaHUB, the wide array of sectors in the
region, the significant number of communities they represent, and its solid
connections with a number of organizations, the role of facilitator is the
appropriate one.
Regional businesses and organizations should know that AlbertaHUB is ready
willing and capable of facilitating communications between relevant parties, and
is willing to ‘be at the table’ assisting with relationship building, strategic
development, feasibility work, government funding information, etc.
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
Government Facilitator
It is seen as important to act as a conduit and facilitator between local EDOs and
the Provincial Government. There are a number of Government of Alberta
departments working on provincial investment attraction efforts. Informing
these officials of the assets and activities in the region is vital. It is also important
to know what information and initiatives are available on the provincial side to
help the region attract investment

Disseminating Opportunity Info to Members
Passing on information about potential investment opportunities to appropriate
members (which means acting to a degree as a filter for investors so they are not
discouraged by being directed to all 34 communities when a concept may only
be appropriate for a few of the communities)

Inform Members About Other REDA’s Initiatives
Bring the activities of other REDAs to the attention of AlbertaHUB members and
local EDOs. It is important to know what has worked and not worked in other
regions of the province. Sharing information about project successes and failures
between REDAs would be a fruitful exercise.

Act as an Information Funnel
A number of people see the role of AlbertaHUB as the business investment
attraction hub for the region. It should be the funnel or portal from which
investment inquiries, and other communications about important regional
business issues flows. There should be a general communication’s path for all
information that the AlbertaHUB can disseminate from government, business,
potential investors, etc. The AlbertaHUB website is key in this effort.

Meetings and Roundtables
There were suggestions of holding more roundtables and conferences to
disseminate information. Of course, there is a critical mass of these types of
functions you can hold after which you risk losing participant interest. As much
as people want to see AlbertaHUB act as a communications facilitator,
communication redundancy is a concern that was often raised by the same
respondents.

Website Maintenance
The issue of website maintenance and redesign surfaced a number of times,
sometimes relating to communication, sometimes relating to marketing. For
instance, one respondent said, “I tried to cross reference the chamber and the
HUB’s websites but there were so many inconsistencies and many of the
businesses on the HUB’s site were no longer even in business”
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If AlbertaHUB is going to serve as a regional center for communications and
facilitation regarding investment attraction (and other mandates), having its
website up to date with the latest statistics, maps, business information, etc. is
vital. Members would like to see more economic data and market research on
the AlbertaHUB website. One example was, “…what kind of numbers does a
grocery chain require in population and potential sales numbers in order to come
to a community?”

The Rumour Filter
In a more informal sense, communities talk about weeding out truth from
rumour in terms of investment attraction information. Businesses are always
hearing rumours of upcoming projects, initiatives, laws, etc. Having a central
organization to serve as a ‘rumour filter’ would be helpful. Another comment
was that AlbertaHUB should promote the results of the projects that they start.
Some say that they hear more about a project getting funding or starting, but
less about the results when the project is finished.
Overall, communication issues run a common thread through almost all of the interview
data gathered for this project. The organization is formally recognized as the Northeast
Alberta Information HUB. The good news is that the respondents’ commentary reflects
an attitude that information is the business of the organization. However, they believe
more needs to be done in terms of communicating information, and expanding the type
and amount of this information.
AlbertaHUB is seen as an organization with a centralized regional role that should
ensure that lines of communication between all stakeholders remain open and
available, and also gather and disseminate information about investment attraction to
all pertinent groups.
STRATEGY 2: Raise Awareness of the AlbertaHUB
One of the most common themes cited throughout
the three phases of the Investment Attraction
Project has been respondents’ lack of awareness of
the AlbertaHUB organization. This lack of awareness
is particularly acute with regional businesses. There
were several suggestions regarding how to address
this issue:

Use of the Investment Attraction Studies
It was suggested to use this study and the significant primary research conducted
in the region as a step to raise the profile of AlbertaHUB. This requires the
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distribution of the study to all appropriate organizations and individuals. The
most appropriate method for this may be an email including a link to the
AlbertaHUB website once the report is posted.

Continued Investment Attraction Efforts
Further to the previous point, the organizations should ensure that businesses
that have been contacted are encouraged to participate in continuing
investment attraction efforts. As part of the project, the names of businesses
(that may be more likely to participate) will be provided to AlbertaHUB to help
form a significant Regional Business Leaders Advisory Network.

Marketing Strategy and Materials
It was often suggested that AlbertaHUB develop better and more marketing
materials, including an expanded web presence. Part of this effort could include
helping members with their branding and marketing efforts. Phase 4 of the
Investment Attraction Project should address the promotional effort, bringing
much of the information and analysis from Phases 1 to 3 to a variety of
marketing platforms.

Training
Using training courses is a way to raise the organization’s profile. Many of the
training opportunities that AlbertaHUB can bring to the region will bring
participants and attention to the organization. Leveraging this publicity with
announcements in local newspapers and other media outlets will multiply its
effectiveness in raising AlbertaHUB’s profile.
STRATEGY 3: Investment Attraction Training
While some organizations and businesses recognize
that AlbertaHUB delivers or hosts training courses,
there is still a number of people who are not aware
of such opportunities. This, of course, goes without
saying for people who have not heard of
AlbertaHUB. Therefore, this challenge can be related
to the lack of awareness problem, particularly with businesses.
Even among people with knowledge of the AlbertaHUB and its training programs, there
is a sense that specific investment attraction training should be part of the AlbertaHUB
mandate. Building on CEDTP programs offered in St. Paul like the Training- Business
Retention & Expansion (September 29, 2010) and Business & Investment Attraction
(September 30, 2010) is a good start.
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Following are some of the suggestions from interviewees regarding training:

Marketing Training
As a part of the overall investment attraction training efforts, the communities
need marketing training. Marketing is at the core of investment attraction, but it
is a wide ranging and often misunderstood discipline, especially at the
community level. There were numerous comments from interviewees regarding
the need for marketing training for businesses, EDOs, towns, chambers of
commerce, etc.

Bringing Edmonton Seminars/Courses to the Region
There were several acknowledgements that AlbertaHUB is already doing a good
job offering/sponsoring training courses. But an emphasis was made that there
are a variety of educational opportunities that are offered in Edmonton (and
Calgary) that are not offered in rural regions. Bringing as many of these courses
to the region as possible is seen as a good fit for AlbertaHUB’s perceived role.

Mentorship
It was suggested that if AlbertaHUB could find funding it could sponsor
mentorship sessions using successful business people or investment attraction
specialists to visit small communities in the region and provide guidance and
inspiration.

NOTE: Labour Attraction and Retention
It is debatable whether the issue of labour attraction, retention, and job training
belongs with a set of strategies outlining investment attraction plans. Concerns
with these human resource issues are so pervasive and important that they likely
deserve their own study and set of strategies. However, with respect to the
hundreds of study participants who listed labour issues as a major business
concern, the research team feels it only appropriate to outline these concerns.
Furthermore, there will be mention of labour issues in the Sector-Specific
Strategic Considerations in Sections 5 to 10 of this report.
STRATEGY 4: Promote the Region’s Strengths
It is a common sentiment that one of AlbertaHUB’s
primary mandates should be regional promotion.
There were several suggestions to that end:

Web Presence
Developing a very strong web presence is key
to the marketing effort. While many interviewees like the basic layout of the
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AlbertaHUB website, most say that it needs to focus considerably more on
marketing the region – a large part of which is investment attraction. Proper
search engine optimization will also lead investors to the website; especially if
there are specific sectors or opportunities that are highlighted and optimized on
the webpage.

Communicating to Provincial Officials
This study involved interviews with a number of provincial officials that are
heavily involved with investment attraction. Every one of these officials was
eager to discuss investment attraction and wanted to hear about what is
happening in the AlbertaHUB region. But they are clear that their job is to
promote Alberta for investment; the geographic location of the investment in
the province is immaterial to them. They just want to find the right fit.
They often rely on regional organizations and communities to effectively
communicate their assets and interest in order for these officials to find the right
investment fit. Therefore, actively communicating with these officials is integral
to AlbertaHUB’s regional investment attraction efforts.

Promotion Within the Province
Some interviewees suggested that AlbertaHUB focus some of its promotion
efforts on marketing the region around Alberta. While there is a strong argument
for this type of activity, the target of promotion should be focused on investment
attraction, wherever it’s source.
STRATEGY 5: Promote Investment Opportunities
Within The Region
Initially many investment attraction efforts are
focused on finding investors from outside a region.
However, it is well recognized by economic
development professionals that the core of business
development comes from building on existing
industry clusters within a region. Following that logic,
it is sensible to try and tap local investors for
business development first. There are several
reasons for this including:
1. Local businessmen and investors know what makes sense locally.
2. There are almost always people with spare capital in a region looking for a place
to invest, or that would be amenable to the right opportunity. As was said by one
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of the interview participants, “there is a lot of money in this community that
people don’t know about.”
3. If given a chance, most local people when presented a choice between two
opportunities of equal potential will choose the local opportunity to support the
community
4. Following the last point, another reason people like to invest locally is that they
can ‘keep an eye’ on their investments
5. An adage in economic development is to ‘sell your strengths and buy your
weaknesses’. Few people understand this better than the businesses on the
ground, which helps local business development.
STRATEGY 6: Assist Existing Local Business
Not surprisingly, when interviewing local business
people, a common sentiment was that ‘investment
attraction is great, but how about helping existing
local businesses?’ There were a few suggestions to
this end:

Funding Information
Assist local organizations and businesses in finding funding. This is the most
common request, but it is also a much more complex request than businesses
realize.
Funding can mean government grants, government loans, bank loans, etc. In
general CFDCs tend to be better equipped to deal with funding requests. But
AlbertaHUB can serve as an information portal for regional business funding.

Chambers of Commerce
It was suggested many times that AlbertaHUB must create tighter ties to local
Chambers of Commerce. These are the organizations that tend to be most in
tune with what the local business community needs.
Equally important, businesses voluntarily join Chambers. This type of
involvement would greatly help AlbertaHUB with continuing investment
attraction efforts like recruiting to form a Regional Business Leaders Advisory
Network.
20
STRATEGY 7: Foreign Investment: Build On Existing
Ties
Foreign Direct Investment (FDI) is a high priority of
communities, regions, provinces and countries. As
AlbertaHUB knows, there are a variety of public and
private agencies in Canada trying to attract FDI. And
a key but sometimes undernoted staple of FDI work
was brought up by several interviewees at the
community and provincial level: one of the most basic and effective ways of attracting
FDI is leveraging local relationships with people and businesses that already have
foreign connections.
A tenet of good economic development work is that building on local business clusters is
the best way to develop new businesses. On a similar note, it is vital to identify and
leverage existing foreign business relationships in the region. This sentiment was echoed
a number of times by a variety of interviewees:

Local Interview:
“We have to identify key organizations from foreign countries that may have
ethnic ties to your region from which it is easier to then draw on the common
ground that they hold. For example, we have large contingencies of Korean,
Chinese and Ukrainians in the area, so make contact with these countries and see
what common industries would benefit both of us.”

Provincial Interview:
“Proactively going after international companies is a waste of time unless there
are solid links in the region to businesses/governments internationally. Local
people need to focus on making these links.”
There is a wealth of international connections in the region, but a systematic effort to
leverage these connections needs to take place. The connections can be with existing
business owners and managers, but can also come from less obvious places.
It was noted that there are a number of international students who are attending
college classes in this region. There is also a significant Philippine and Mexican labour
force in the region. Developing business ideas with these types of human resource
connections could bear long term fruit.
21
STRATEGY 8: Play a Role in Regional Infrastructure
Development
Many of the business interviews that were
conducted brought ground level commentary about
what is needed for business to succeed, expand and
be attracted to the region. While many of these
suggestions fall outside the purview of a REDA, it is
conceivable that AlbertaHUB could take an active role in areas that involve being a
proponent for business interests, such as regional infrastructure development.
In short, AlbertaHUB is seen as an organization that should ‘be at the table’ for meetings
and events that may assist regional businesses with infrastructure development or other
pertinent issues.
The development of assets such as local industrial parks was mentioned by several
interviewees. In addition, Phase 1 and Phase 2 saw repeated commentary about the
need for better private and public transportation. AlbertaHUB’s involvement with
initiatives like the Eastern Alberta Transportation Corridor Project suggest that it is
appropriate to be involved with infrastructure issues related to business development.
AlbertaHUB may need to tread carefully in this area, because while acting as a
proponent for regional infrastructure development will engender positive feelings and
create relationships with regional businesses, the organization likely does not want to
excessively interfere with the responsibility of other government departments. This
might jeopardize the very relationship building that is needed to be a regional
communications facilitator.
STRATEGY 9: Develop an Investment Attraction
Incentive Information Package (for Government
Investment Attraction Specialists and Large Scale
Investors)
Much of the data gathered by the research team
pointed to the desire for attracting or developing
small to medium size businesses to fill gaps in value
chains across the six sectors. However, there was also a recognition that the region
needs to be prepared to go after large scale investment.
When talking to investment attraction specialists with the Government of Alberta it was
a common sentiment that REDAs and other local EDOs should focus on the Pre-Active
22
Stage of investment attraction preparation. As one interviewee put it, a REDA’s
investment attraction focus should be:
“Knowing your targets; knowing what programs and services are available
provincially and nationally; knowing your regional assets; and knowing where in
a region your targets should locate”
Investment attraction specialists with the Government of Alberta outlined three of the
most prominent methods of major investment attraction: partnering, unique assets, and
financial incentives. It was suggested that if AlbertaHUB could create a policy statement
and marketing materials regarding these incentives, it would enable investment
attraction specialists at various levels of provincial and federal government to match
opportunities they come across.
There is an acknowledgment that creating a coherent incentive package for all 34
members of AlbertaHUB would be challenging if not, in some cases, impossible but this
is a strategy that should at least be investigated.

Partner Opportunities
Cluster development is one of the primary methods of investment attraction
leverage by communities; hence the prevalence of BR&E projects across North
America. If there is an opportunity for an outside company to partner with a
company inside the region, it often reduces their risk, capitalization costs, human
resources costs, etc. Creating a list of companies open to business or technology
partnerships is a proactive step in the investment attraction process.

Unique Regional Assets
This is essentially tied to Strategy 4, Promote the Region’s Strengths. However,
an extra emphasis needs to be placed on assets that are truly unique to the
region or a community in the region. This takes insight into your target markets
and a discerning eye on what really matters. Access to labour, transportation,
markets, etc. are important as many regions can boast similar strengths.
However, few regions have a Canadian Forces Base with flight testing facilities on
site. Promoting these types of strengths can become challenging when a regional
organization wants to represent all members fairly but doing an ineffective (i.e.
untargeted) job of promoting assets serves no one in the region.

Financial Incentives
As one investment attraction specialist with the Government of Alberta put it,
this is about “offering a nice carrot, which usually equates to cash”. Communities
are justifiably wary of this practice, as it can be fraught with long term peril. If a
company takes an incentive and leaves, there can be little recourse, especially if
it is a foreign company or one entering bankruptcy protection. Sometimes these
23
companies are offered tax breaks, property, utilities, loan guarantees, or even
cash.
It is advisable to offer an incentive that will remain a valuable asset in the
community even if the company leaves; like infrastructure. Cash or loan
guarantees can be more problematic. In any case, this is a practice that is
difficult to formulate a regional policy on because each community will have its
own tolerances. However, this is something that should be looked at in a
proactive manner. Even a loose policy statement will equip investment attraction
specialists with a starting idea of what is possible.
4.3 GENERAL INQUIRY RESPONSE PATH
The research team posed the same question to the vast majority of the interviewees
across all sectors, government agencies, economic development organizations: “Can you
describe the communications path on which investment inquiries should be routed?” On
a similar note, interviewees were often asked, “What should be the first point of investor
contact?”
The simple answer to this inquiry was that it is impractical to try and form a sectorspecific set path. The potential source of the inquiries and the number of potential first
contacts makes it almost impossible to even envision a set path. Instead, almost all
interviewees expressed the need for open channels of communication, and believe that
AlbertaHUB can facilitate that communication. They expressed, what might be called a
General Inquiry Response Path.
This open channel of communication or General Response Path has five typical parties
involved:
1.
2.
3.
4.
5.
The investor
The community
The AlbertaHUB
The Provincial (or sometimes the Federal) Government
The affected local business cluster
The investor inquiry usually enters one of two channels: a community representative
(economic development officers, chambers, councils, etc), or through the government
(provincial sector specific specialists, investment attraction officers, Foreign Affairs and
International Trade Canada, etc).
In either scenario, there is a vital information sharing role for a regional representatives
like AlbertaHUB for two reasons:
24
1. Community representatives often do not have knowledge of or immediate
access to the appropriate government specialists who are eager to help.
2. Government officials often do not know where in a region to route specific
inquiries or opportunities.
Almost every interviewee believes that AlbertaHUB is the proper organization to fill that
intermediary role. Those who declined comment, invariably had little prior knowledge
about AlbertaHUB.
Figure 1 illustrates the two General Response Paths that inquiries likely take:
Figure 1: General Investment Inquiry Response Paths
General Path #1 –
Community is the 1st Point of
Contact
General Path #2 –
Government is the 1st Point
of Contact
Investor
Investor
Community
Local Business
Cluster
Government
Specialists
AlbertaHUB
Government
Specialists
AlbertaHUB
Local Business
Cluster
Community
This type of model reflects the beliefs of many investment attraction specialists in the
provincial government. As one Government of Alberta interviewee said, “There are two
levels of investment attraction – ones that are important for province, and ones that are
important mainly for communities. With the first class of investment attraction, if a
company is of major importance to the province then the province takes the lead or gets
much more involved; with the second class of investment attraction: a smaller
25
opportunity may be headed by the REDA or another community economic development
group with support of the province.”
While the characterization that larger opportunities will always come through the
Government of Alberta first is not necessarily the case, it is likely that these
opportunities would bring in the provincial government’s involvement at some point in
the development process.
4.4 SECTOR ADVISORY NETWORK
One of the objectives for the consulting team at the start of Phase 3 was the
development of a Sector Advisory Network comprised of business leaders from each of
the six sectors. Considerable headway was made in this effort, with the beginnings of
such a network starting to take place but it will take time to continue building a
significant body of participants in each sector.
This challenge partly stems from the issue outlined in Strategy 2: Raise Awareness of
the AlbertaHUB. Most businesses had never heard of the AlbertaHUB and, therefore,
were reluctant to take time to participate.
Those who did take part echoed this
unfamiliarity, making it difficult to ask for
further time. The research team did however
tell all respondents that they may be contacted
in the future in regard to regional investment
attraction efforts, thereby leaving the door
open for the possible development over time of
a larger Sector Advisory Network.
The research team spent a considerable amount of time on the ground in the region,
and has a sense of which businesses were more keen for further potential involvement
with investment attraction efforts. AlbertaHUB management has a list of study
participants, and the extensive contact log developed.
These tools, along with consultations with the research team can be used to start
developing more targets for the Sector Advisory Network. Concentrating on General
Strategy 2: Raise Awareness of the AlbertaHUB will help in this effort. More of these
businesses will feel comfortable if not compelled to be involved in an Advisory Network
or other investment attraction initiative.
26
4.5 THE TIME COMMITMENT ISSUE
4.5.1 Community Size
One of the interviewees made a comment that struck the research team as important,
although it was not in direct relation to investment attraction. “Businesses and smaller
communities are so time strapped that it is hard to get their participation. Many smaller
communities just do not have the time or the resources that the larger ones do and so
they often miss out on many of the opportunities.”
It is easy for a consultant to suggest that the client strike a task force or committee for
every issue that is raised in a study. But this is where strategy and implementation often
diverge, and the core reason may be that organizations and their people simply don’t
have the time to commit. This often covers up a deeper issue: the various parts of an
organization may have differing needs, resources, and priorities that affect its
ability/desire to tackle an issue. This is particularly evident in a diverse 34 member
organization like AlbertaHUB.
The consulting team heard a number of varied comments about the general role and
focus of the AlbertaHUB organization. Some comments represent a certain level of
apathy towards the organization. These similar feelings are arrived at from two
directions: from larger communities and smaller communities. Here is a sampling of
what the research team heard:

From Small Communities:
“The HUB needs to include and pay attention to the voices that are coming out of
the smaller communities. They need to feel like they are included in the process.
You need to reach out to some of the communities in the HUB who are starting to
feel the apathy of not feeling included and are therefore pulling away from the
process and starting to attend less and less, losing their voice in the process”

From Large Communities:
“We just don’t have much time to be involved with HUB. We have a lot of our
own initiatives going on that are a priority. HUB is more use to smaller
communities with less economic development resources to draw on.”
The perceived role of the organization seems to change in correlation to the size of the
community you are talking to. There is, of course, an irony that in terms of investment
attraction, small communities require more assistance from an organization like
AlbertaHUB, but the large communities feature the assets that are often more
marketable to investors.
27
4.5.2 Member Involvement
Further to the previous section regarding community size, there is a point that requires
attention.
If communities feel that AlbertaHUB’s role is that of a regional communications
facilitator, there needs to be interested, involved parties to communicate with. As
evidenced by extensive contact lists that detailed every call, email and visit over a year
and a half, the research team often went to extraordinary measures to work with
businesses and other regional organizations, but also AlbertaHUB members.
If AlbertaHUB is expected to facilitate important, time sensitive investment attraction
efforts, then a time commitment is also required from its members.
The strength of the organization and its ability to carry out an investment attraction
mandate is dependent on the level of support it has from the communities it represents.
If there can be agreement within the organization about the priorities of all members or
subsets of members, the time commitment issue to work on the various initiatives
raised in this study might be better addressed.
4.5.3 Staffing for Investment Attraction
Some of the time commitment issues listed above might be alleviated if extra staffing
was in place to address all the tasks necessary to carry out a multi-sector investment
attraction strategy. As one interview noted, “AlbertaHUB does a good job with the staff
they have, but they are stretched thin on a number of projects.”
The consulting team has years of experience planning and executing investment
attraction strategies, and there is no doubt in our estimation that AlbertaHUB could
keep a new staff member busy for several years continuing to build and implement
these programs. Having this dedicated staff member as an active liaison with regional
businesses is particularly effective, especially in relation to executing strategies involving
raising the organizational profile and involvement in the myriad of private and public
meeting and functions that can impact investment attraction.
Realistically, a dedicated Economic Development Officer could handle an investment
attraction portfolio as well as a number of other functions. It is up to AlbertaHUB
management to assess if funding is available for such staff, and what functions would be
appropriate in relation to the mandates of other regional organizations such as
Community Futures, Chambers of Commerce, and local Development Corporations.
28
5.0 SECTOR-SPECIFIC STRATEGIC CONSIDERATIONS:
Energy Sector
There is a wide array of business activities within this sector, suggesting many individual
value chains. The majority of sales and sourcing come from inside the region or the
province, with a much lower amount coming nationally and internationally. This
suggests there are few gaps in the primary and secondary sectors. This conclusion is
matched by on-site analysis verifying that small operators are quick to open or expand
to fill unmet industry needs.
Defining the needs and desires of the Energy
sector in the AlbertaHUB region can be
challenging due to the breadth of the sector.
Much of the transportation and manufacturing
sectors in the region identify themselves as
part of the energy sector due to the large
proportion of business they do in the oil and
gas industry.
The Oil and Gas Equipment and Services industry is comprised of two main sectors and
further sub-sectors:


Services Sector includes: Geophysical Prospecting, Contract Drilling, Pumping,
Pipeline Services, Field Processing, Transportation, Engineering, Geomatics,
Marketing, and Other Services
Manufacturing Sector includes: Drilling Equipment, Drilling Consumables,
Pipeline Equipment, Storage, and Oil Sands Equipment
The industry employs approximately 230,000 people within the two main industry
sectors. 1 In 2008 there were approximately 170,000 people listed as directly employed
in the sector. 2
In short, to say that there is one coherent set of opinions about what AlbertaHUB can do
for the Energy Sector would be misleading due to the diversity of the sector. But there
were a few common themes:
1
2
http://www.ic.gc.ca/eic/site/ogt-ipg.nsf/eng/home
http://employment.alberta.ca/documents/WIA/LMILFS_1208_public_package.pdf
29
5.1 ENERGY SECTOR PRIORITIES

Facilitation with Government Agencies
When asked which of the six mandates (see 4.1.1 The Six Mandates) were of
most interest to the energy sector, respondents seemed most interested by:
“Facilitation on key regional business issues (between stakeholders, business,
government, citizens, etc)”
The majority of the regional interviewees for the Energy Sector had opinions that
are reflected in Section 4.0 General Investment Attraction Strategy. But they are
even more likely to see the AlbertaHUB organization as a body that should
actively communicate with the Provincial Government on a variety of business
issues.
Businesses in the Energy Sector see bureaucracy, especially in terms of
environmental issues, as one of if not the major impediment for their industry. If
AlbertaHUB is able to sit at the table, where appropriate, with government
agencies to discuss business development in the Energy sector, it would likely
raise the profile of the organization significantly in the sector.
The Phase 1 results saw Energy Sector employers cite inadequate labour supply,
bureaucratic delays, and transportation inadequacies (mainly air) as barriers to
doing business in the region.

Quality of Life - Services
As per Phase 1 of the Investment Attraction Project, far and away the primary
businesses that the Energy Sector are interested in seeing expand are in the
tertiary sector. There is an overwhelming desire for new restaurants, retail
stores, and entertainment. Businesses are more interested in seeing new
ventures that will improve the overall quality of life rather than plug the minimal
holes in the primary and secondary value chains.
The desire for new services was a common theme throughout the six sectors
that were studied by the research team. But it is worth pointing out that this
trend was particularly noticeable in the Energy Sector.
The reason for this exceptional desire for new services stems from the often
transient nature of the energy work force. This means there are a lot of workers
comparing one community to another, and they will often opt for a community
that can better service them and their family’s needs. This issue also leads to a
difficulty in worker retention, not just worker attraction.
30

Labour Attraction and Retention
Another one of the six mandates (see 4.1.2 The Six Mandates) that was
mentioned by Energy Sector respondents was “Labour attraction/retention
programs (marketing material development and strategy development, etc)”
Besides a desire for agencies such as
AlbertaHUB to assist with government
facilitation, the need for labour attraction
and retention assistance was the most
often mentioned challenge that the sector
would like to see addressed.
The sector representatives seemed to be
aware that AlbertaHUB could not act as an
employment agency. But they were very
eager to see the organization work on
marketing the region as a “worker
destination”. Creating a Labour Attraction
Strategy would be seen as a very
worthwhile endeavour; especially if
AlbertaHUB is able to implement most recommendations. In other words, if
AlbertaHUB was able to act as champion in a labour attraction effort, the Energy
Sector would see this as very useful and important.
Another way that AlbertaHUB can assist the labour attraction effort is through
initiatives like this study, with the development of an Employment Agency
Prefeasibility Study.
5.2 RESPONSIBLE ACTIONS: A PLAN FOR ALBERTA’S OIL SANDS
The Government of Alberta has created a 20 year strategy for the development of
Alberta’s Oil Sands. The Cold Lake Oil Sands is one of the three oil sand regions
identified in the strategy (see Figure 2) making its development and implementation
pertinent to any energy sector strategy developed by AlbertaHUB.
31
Figure 2- Alberta Oil Sands Regions
http://treasuryboard.alberta.ca/ResponsibleActions.cfm
The following is an overview of the Responsible Actions: A Plan for Alberta’s Oil;
highlighting its intended outcomes and strategies:
Responsible Actions: A Plan for Alberta’s Oil Sands outlines an integrated approach for
all levels of government, for industry, and for communities to address the economic,
social and environmental challenges and opportunities in the oil sands regions. In the
near term, it identifies priority actions, some of which are already underway, to address
immediate challenges associated with oil sands development. The plan also looks to the
future to guide long-term investment in social and physical infrastructure and innovative
technology, and to reduce the environmental footprint associated with oil sands
development.
The plan aims to achieve the following outcomes related to Alberta’s oil sands:
32
I.
II.
III.
Optimized economic growth;
Reduced environmental footprint; and
Increased quality of life for Albertans today and in the future.
To achieve these specific outcomes, we will undertake a number of strategies:
1.
2.
3.
4.
5.
6.
We will develop Alberta’s oil sands in an environmentally responsible way.
We will promote healthy communities and a quality of life that attracts and
retains individuals, families, and businesses.
We will strengthen our proactive approach to Aboriginal consultation with a view
to reconciling interests.
We will maximize long-term value for all Albertans through economic growth,
stability, and resource optimization.
We will maximize research and innovation to support sustainable development
and unlock the potential of Alberta’s oil sands.
We will increase available information, develop measurement systems, and
3
enhance accountability
The General Investment Attraction Strategy (Section 4.0) and the Energy Sector
Priorities listed above in Section 5.1 are not at odds with any of the six Provincial
strategies. It would be suggested that future investment attraction plans for the Energy
Sector coincide with the Responsible Actions strategies, considering Provincial
assistance might be useful or integral in attracting new ventures.
5.2.1 CRISP (Comprehensive Regional Infrastructure Sustainability Plans)
The interviews with Oil and Gas Sector professionals in the Oil Sands Secretariat
lead the research team to Responsible Actions: A Plan for Alberta’s Oil. As part of
the implementation plan 4 for the second strategy (2-We will promote healthy
communities and a quality of life that attracts and retains individuals, families,
and businesses), the Treasury Board is drafting CRISP for each of the three oil
sands regions. Sustainability is a major part of the Provincial energy strategy, and
the interviewees from the Energy Sector in the AlbertaHUB region showed
similar concerns.
The CRISP for the Athabasca Oil Sands Area (AOSA) is currently underway. The initiation
of a CRISP for the Cold Lake Oil Sands Area has recently begun and a CRISP for the Peace
River Oil Sands Area will be completed over the next two years. Provincial
representatives stressed that a long term energy sector plan for the AlbertaHUB region
should take the Cold Lake Oil Sands Area CRISP under consideration.
3
4
http://treasuryboard.alberta.ca/ResponsibleActions.cfm
http://treasuryboard.alberta.ca/docs/Responsible-Actions-Implementation-Plan.pdf
33
The following is an overview of what the Government of Alberta hopes to achieve with
CRISP:
Comprehensive Regional Infrastructure Sustainability Plans (CRISP) are a new long-term
and collaborative approach to planning infrastructure in Alberta's three oil sands
areas. Each plan will establish a long-term blueprint for future infrastructure development
based on possible future oil sands production rates and associated population growth, and
will enhance the way provincial and municipal governments work and plan together.
CRISP stands for Comprehensive Regional Infrastructure Sustainability Plan. Each of these
words holds important meaning regarding the intent and scope of the project:
• Comprehensive – The plan will look at ways that communities accommodate growth
and will cover a wide range of key infrastructure areas including schools, health
facilities, water and wastewater treatment, transportation and multi-use corridors that
will respond to the diverse community needs.
• Regional – Planning will be done across municipal boundaries and in collaboration with a
number of regional stakeholders.
• Infrastructure – The scope of this plan is very specific and focuses on an area that is
critical to increasing quality of life in communities.
• Sustainability – CRISP provides an opportunity to develop infrastructure in a new way;
one that has a lessened impact on the environment, creates vibrant communities and
promotes a wider range of economic opportunities to benefit future generations.
• Plan – CRISP will provide a concrete set of steps that will guide infrastructure
development to keep pace with growth in the area.
CRISP make recommendations to the province’s capital planning process, which considers
5
overall provincial priorities in addition to regional needs.
5.3 KEY ENERGY SECTOR CONTACTS

5
Janelle Wyman
Senior Manager - Community and Regional Planning
Oil Sands Secretariat
Infrastructure and Planning
Treasury Board
2001 Scotia Place 2
10060 Jasper Avenue
Edmonton AB T5J 3R8
P: 780.644.4542
F: 780.427.2852
E: [email protected]
http://www.treasuryboard.alberta.ca/1211.cfm
34

Dr. Bert Faber
Senior Staff Environmental Advisor - Health, Safety and Environment
Husky Energy
P: 1-306-825-1266
[email protected]
35
Agriculture Sector
Similar to the Energy Sector, defining the needs and desires of the Agriculture Sector in
the AlbertaHUB region can be challenging due to the breadth of the sector. There are a
wide variety of businesses in the Agriculture Sector, but the majority of businesses in
the region identify themselves as corporations that operate in Farming, Agricultural
Services, and Food Processing.
Less than half of the businesses are involved
with international trade, some on the supply
side, some on the sales side, and a few on
both. The Agriculture and Energy Sectors both
cited environmental regulations as a major
concern. But most of their major strategic
concerns are features in the General Strategy.
The following priorities are of note, as well as
an overview of the potential in the bioproducts industry:
6.1 AGRICULTURE SECTOR PRIORITIES

Value Added Focus
A number of interviewees pointed to the need for more value added agriculture
in the region. There is a common feeling among many economists that the agrifood industry will be a driving force in Alberta’s economy for the next century.
Value added is primarily a concept that refers to adding value to a primary
agricultural product by changing its nature through additional processing
operations. Transforming wheat into bread or grapes into wine are examples of
this process.
The value added concept can also be applied to a primary agricultural product by
increasing its intrinsic value. For example, a product that meets organic
production standards or is naturally grown can be perceived by customers as
having value in excess of that grown in a conventional manner. It is clear then
that, if intrinsic and processing value can be combined in a single product, it is
possible to significantly increase that proportion of the final consumer price that
accrues to the primary producer.
36
This is the rationale behind the research team’s recommendation of the
formation of primary producer generated value added association. Please refer
to Appendix 5: Prefeasibility Study into the Viability of Primary Agriculture Value
Added Association.
The myriad of opportunities possible, combined with the often capital intensive
nature of the start-up operations, and the degree of knowledge necessary to get
a value added venture moving make it a natural fit for a partnership approach to
development. AlbertaHUB would fit the role of facilitator for such a partnership
endeavour.
The Agriculture Association idea was also mentioned by experts in the bioproducts field, again due to the need to pool knowledge and resources in a fast
evolving field.

Quality of Life - Services
Just as with the Energy Sector responses, companies are interested in seeing
expansion in the tertiary sector. There is an overwhelming desire for new
restaurants, retail stores, and entertainment. Businesses are more interested in
seeing new ventures that will improve the overall quality of life rather than plug
the minimal holes in the primary and secondary value chains.
The desire for new services was a common theme throughout the six sectors
that were studied by the research team. But it is worth pointing out that this
trend was particularly noticeable in the energy, manufacturing, and agriculture
sectors. When these workers compare one community to another, they will
often opt for a community that can better service them and their family’s needs.
This issue also leads to a difficulty in worker attraction and retention.

Labour Attraction and Retention
Labour Attraction and Retention issues are most often mentioned by
interviewees in the energy, manufacturing, and agriculture sectors. This is partly
due to competition for the same workers – namely trades people and general
labour workers. The Agriculture Sector has difficulty in recruiting skilled and
unskilled labour. A further contributing factor is that the higher paying Oil and
Gas industry tends to exert a pressure on the skilled and unskilled labour pool.
Many companies said the lack of and quality of training (particularly industrial
training), is an issue in the region as well.
Companies and organizations in this sector see a role for AlbertaHUB as a body
that can help attract workers and provide training courses that will assist the
Agriculture Sector with its labour issues.
37
6.2 BIO-PRODUCTS
The government of Alberta has invested tens of millions of dollars in various bioinitiatives in recent years. The research team was able to interview several specialists in
this area who feel that there is great opportunity for the AlbertaHUB region, as a strong
agriculture sector, to take advantage of new programs, facilities and funding
opportunities.
The value added association model mentioned above and in the prefeasibility studies
lends itself to the cutting edge, knowledge based bio-products field. AlbertaHUB can use
its connections and central regional role with members to act as a facilitator to help put
together such an association. This association could bring the multitude of partnerships
to bear that will be necessary to properly investigate the options for further developing
the bio-products industry in the region.
Here is an overview of major bio-product sub-sectors that are being actively supported
by the Government of Alberta:

BioChemicals
A comprehensive effort by Alberta’s Bio-Industrial
Opportunities Team is finding innovative ways to
develop and commercialize new-generation
chemicals through the bio-refining of crops and
forest resources. The role of petroleum in chemical
applications is well-established, technically proven
and economically viable. In the long run, however,
using biomass as feedstock for chemicals makes
sense.
Alberta farmers will have a new, high-value market
for their crops. Novel crop varieties, tailor-made for biochemistry, will encourage
this evolution. Rural economies will benefit when bio-refining facilities set up
shop, with many being locally owned. By addressing the biochemical
opportunity, Alberta is turning its competitive feedstock advantage into a new
renewable industry.
Alberta’s Bio-Industrial Opportunities Team is working to stimulate growth of a
globally competitive bio-based chemicals industry in the province. This work
spans primary research, technical development and commercialization, with a
goal of attracting new entrants and significant private investment, across two
project areas: Industrial Organic Chemicals and Specialty Cosmetic Ingredients.
38
Industrial Organic Chemicals: The possibilities in the Industrial organic chemicals
category include bioplastics, polymers, coatings, insulation, as well as, a whole
array of high performance chemicals that can only be derived from plants.
Alberta is putting its expertise behind crops its producers grow, for example,
canola and triticale.
Specialty Cosmetic Ingredients: By one estimate, the world market for organic
and natural personal care products will hit $10 billion in 2010. Within Alberta’s
bio-based chemicals initiative, a dedicated project team is pursuing this market.
The team’s mission is to demonstrate to global ingredient manufacturers that
high-value, safe, functional, bio-active ingredients can be extracted economically
from plants grown in Alberta.
Please refer to the Appendix 5: Prefeasibility Study into the Viability of Primary
Agriculture Value Added Association for more specific information on Specialty
Cosmetic Ingredients.

BioMaterials
In terms of their environmental impact, most of us
take aim at the fossil fuels used to heat our buildings
and fuel our vehicles. What is often overlooked is the
role of petroleum products in constructing those
buildings and manufacturing those vehicles in the
first place. From insulated wall panels to furniture to
automotive bodies and interior components, these
products are often made with materials derived from
petroleum.
The adoption of plant-based biomaterials in
construction and manufacturing offers significant
environmental benefits. Unlike a non-renewable resource like petroleum, the
plant feedstock of biomaterials is renewable and sustainable. Bio-based
materials could also improve air quality in buildings, compared to potentially gasemitting synthetics. Alberta agriculture will benefit as well.
Current biomaterial feedstocks such as flax, hemp, and cereals grow well in the
province, as well as other high-potential feedstocks like canola straw and pea
straw. As demand for these crops increases, so in time will the value that farmers
receive for growing them to rigorous standards of quality. Rural communities
also stand to gain, as biomaterials processing facilities are established close to
where their feedstock grows.
39
Within Alberta’s Bio-Industrial Opportunities Team, a dedicated group of
scientists, engineers and business specialists is working to build on Alberta’s
natural advantage in feedstock and bring biomaterials to market. The group
functions as a mediator between biomaterial demand and supply and between
scientific potential and technical practicality.

BioEnergy
The bioenergy sector in Alberta has arrived. Several
Bio-energy plants are operational, others are under
construction and many more are on the drawing
board. The result: a steadily growing stream of biobased fuels and power.
One of the strengths of bioenergy for Alberta is the
diversity of its possible feedstocks. The best-known
form of bioenergy is ethanol, a grain-derived alcohol
that has long been used as a fuel or fuel additive.
Another is biodiesel, produced from vegetable oil or
animal fat. A third and highly promising kind of bioenergy is biogas methane,
resulting from the decomposition of organic matter such as manure in an
anerobic biodigester. Taken together, these bioenergies are now meeting a
modest but growing share of the province’s overall energy mix.
Alberta is ideally positioned to be a bioenergy leader in the coming years. Crops
and forest resources are produced in abundance here, along with large volumes
of livestock, providing ready feedstocks for ethanol, biodiesel and biogas. The
Lamb- Weston facility in Taber, for example, creates biogas from potato
renderings. Cargill’s High River facility does the same with livestock by-products.
And of course, in the AlbertaHUB region there is Highmark Renewables and
Highland Feeders.
Highmark's technologies are based around the world's most advanced Anaerobic
Digestion System - IMUS™ (Integrated bioMass Utilization System). Anaerobic
Digestion is a natural biological process that Highmark's technology primes and
accelerates - converting virtually any organic material into 100% renewable
energy in the form of bioGas.
And as a last point, the bioenergy sector enjoys a wide array of funding
opportunities that an agriculture association could take advantage of. Please
refer to the Appendix 5: Prefeasibility Study into the Viability of Primary
Agriculture Value Added Association for more specific information on BioEnergy
funding programs.
40

Agri-Food Discovery Place
Agri-Food Discovery Place, (AFDP) a 5000 sq metre world-class innovative
research, training and technology transfer facility in Edmonton, Alberta is “Open
for Business”, says Executive Director, Bob Rimes. “We are predominantly an
applied research pilot plant facility with scale-up equipment that can help
entrepreneurs with good projects validate their bench scale opportunities. There
is an opportunity here for industry clients, and we have all the right elements to
be able to follow through.” This facility may of particular interest to agriculture
producers or associations in the AlbertaHUB region that have an interest in bioproducts.
In operation since 2008, AFDP is
the very first facility in North
America with a partnership
serving not only the University of
Alberta academic staff, but also
the Bio-Industrial Technologies
Opportunities Team of Alberta
Agriculture and Rural
Development (ARD). The
intention of this partnership is to bring the facility to full capacity and develop
cross-functional technical and business development teams that can support the
needs of all stakeholders. Teaching and training of highly qualified people is a
high priority as well.
Dr. Feral Temelli, working together with the Bio-Industrial Opportunities Team
engineers, has led the development of Crop Utilization and Enhanced Materials
Research Unit (CUEMRU) focusing on integrated biorefining of crops. “Although
our focus in the past was primarily on food ingredients, as other applications
started emerging and growing in Alberta, we realized we needed to expand to a
broader biorefining and crop utilization perspective,” says Temelli, who is also
the Division Director, Food Science & Bioresource Technology at the University
of Alberta. “The way we define biorefining and what has become the foundation
for the design of AFDP's Crop Wing, is the separation, conversion and
applications development of various isolates for their highest and best use.”
The biomass is separated into various components such as lipids, proteins, fibers,
starch and other minor components, and then through various technologies is
converted to their highest value and best use, whether that is for food,
cosmetics, nutraceuticals or industrial applications. For example, fractionating
barley grain results in various isolates such as beta-glucan, which is a high value
fiber ingredient for the food industry, oil potentially for food, nutraceutical or
41
cosmetics, and starch, which may find its way into food or for ethanol production
or other uses. 6
6.3 KEY AGRICULTURE SECTOR CONTACTS

Mike Kotelko
General Manager
Box 130
Vegreville, AB Canada T9C 1R1
Tel: 1-780-768-2466
Fax: 1-780-768-3888
Cel: 1-780-632-1284
[email protected]

Norm Janssen
Investment Attraction and Retention Specialist
Processing Industry Business Development Branch
Agriculture and Rural Development
2nd fl JG O'Donoghue Building
7000 - 113 Street
Edmonton Alberta
T6H 5T6
Phone: 780 422-5577
Fax: 780 422-3655
Email: [email protected]

Kathy Lowther,
Team Leader, Specialty Cosmetic Ingredients
Bio-Industrial Development Branch
Alberta Agriculture and Rural Development
97 East Lake Ramp, NE
Airdrie, Alberta Canada T4A 0C3
Direct: (403) 948-8537
Fax: (403) 948-2069
mailto:[email protected]
6
Sources for Biochemicals, Bioenergy, Biomaterial, and Agri-Food Discovery Place section above from
Fact Sheets, March 2010 Cosmetic Industry Connect Newsletter, and interviews provided by Alberta
Agriculture and Rural Development, Bio-Industrial Technologies Branch
42

James Jones
Senior Development Officer, Biogas
Bio-Industrial Development
Agriculture and Rural Development
Building F-83, 6004 -118 Street
Edmonton AB, T6H 2V8
Phone: (780)422-5028
Fax: (780) 638-3586
Email:[email protected]
43
Defence Sector
In the Phase 1 Cluster Analysis of the Defense Sector, the research team concluded “The
Defense Sector might be quite difficult to conduct a thorough gap analysis. Challenges
include, the limited number of companies to draw research from, their tendency to be
exclusively involved with government business, and the security worries of the
businesses doesn’t always allow market
research to be conducted.”
While some of these assertions initially held
true, the research team was eventually able
to glean valuable data about the sector in
Phase 3 interviews. And with an emphasis on
building a relationship between the base and
AlbertaHUB with this Investment Attraction
Project, there appears to be a door opening
for future partnerships.
This section outlines the priorities of the CFB Cold Lake, the issues regarding business
development, and the likely strategic path that should be pursued in the short, medium
and long term.
7.1 CFB COLD LAKE PRIORITIES
The research team was of course interested in
potential business opportunities as perceived by the
leadership at CFB Cold Lake. However, a number of
social issues were of the highest priority to the base,
although several of these issues may have business
implications. The Wing Commander was given three
priorities by his commander, General of 1 Canadian Air
Division, out of Winnipeg in July 2009:
Figure 3: 4 Wing Badge
44
1. Medical:
Dependent Medical Facilities (doctors for dependents of service people) are an
issue; 4 or 5 doctors have recently left. They are trying to attract new doctors.
For instance there is a Speed and Shine Show (a car show) to raise funds to
attract doctors to local areas
2. Daycare:
The CFB’s Family Resource Centre is running daycare for most of the city which
can be a drain; there are 13,000 citizens in Cold Lake, 1,600 in uninform, and 400
civilian employees. The base looks after a license for 500 slots which includes
daycare, aftercare, etc. The other childcare facility in Cold Lake has only 80 slots.
3. Housing:
The housing on base was mostly built in 1954. It is considered expensive for the
housing. Forty percent live in Private Married Quarters, whereas the standard is
usually about 15%. CFB residents can’t afford to purchase housing because of the
housing costs being driven up by the oil industry. RTMs would be great – they
would like to see 10 RTMs in the next year, but there are many issues to address
before this can take place.
7.2 THE HIGH-LEVEL BUSINESS DEVELOPMENT CHALLENGES
Many of the interviewees in the study, particularly provincial investment attractionrelated positions, list CFB Cold Lake as the single biggest asset for economic
development in the region. They cite the highly unique nature of the infrastructure, skill
sets, and other resources involved with the base. The base would seem like a natural fit
for AlbertaHUB to work with on investment attraction initiatives but all of this upside
comes with certain challenges including:

Security/Confidentiality
Being a military base there are, of course, a myriad of security protocols that
must be addressed when conducting most types of business with CFB Cold Lake.
This provides a number of impediments to an expedient business development
process, and outright blockages for many potential enterprises. AlbertaHUB may
be able to assist in the development process over time as a proponent or
intermediary for potential investors but the reality is that the internal concerns
and protocols of the base will usually trump business development efforts when
they are in conflict.

Federal Involvement
Most of the investment attraction efforts that AlbertaHUB may seek to promote
will require community involvement and often provincial involvement. This
45
applies to opportunities in and around Cold Lake as well. In addition, many
business opportunities that are related to the base will bring Federal
involvement. It is undetermined if AlbertaHUB will have a seat at the table when
Federal agencies are making decisions that affect development in and around
CFB Cold Lake.
For instance, here was a business case put forward by the AETE (Aerospace
Engineering Test Establishment which is a unit within the Defense Department
that does all the testing for aircraft) for much of the base’s operations to move
to the Ottawa area. There would be about 145 positions lost. The move has been
put on hold due to the recession. AETE is worried about attracting the skilled
labour to the Cold Lake area, which is one of the reasons for a move to Ottawa.
Trying to attract engineers and technologists is difficult in Cold Lake and
retaining them is difficult as well because pressures of the from the oil industry
which offers higher wages. It might be argued that such high-level moves would
be beyond the sphere of influence of an organization such as the AlbertaHUB.

Technical Challenges
Following from the first and second point regarding security, there are certain
high level business opportunities that may be blocked due to security concerns
and federal involvement. A number of interviewees spoke about the great
potential of unmanned aerial vehicle (UAV) and unmanned ground vehicle (UGV)
testing.
One of the issues trying to attract U.S. companies is that the data is unencrypted
that goes back to the Flight Test Centre. The U.S. Air force requires encrypted
data. The cost of upgrading the systems to provide encrypted data is one of the
major reasons AETA has looked to move to Ottawa to be closer to a large
aerospace sector.
These types of issues are largely internal, involving high level security, Federal
government decision-making in Ottawa, and even international concerns with
clients such as the U.S. Air Force. These are examples of why it may be very
difficult for an organization like AlbertaHUB to have a significant impact on the
investment attraction process in the regional Defense Sector, at least in terms of
high-level projects.
The result of these various challenges requires that the investment attraction process be
segmented into steps that are manageable and realistic. The ‘high-level’ business
development process might have to be looked at as a long term goal while AlbertaHUB
builds up the knowledge base, relationships and capacity to affect the investment
attraction process for large scale ventures. But there are short and medium term
strategies that can be looked at.
46
7.3 OPPORTUNITIES THROUGH RELATIONSHIP DEVELOPMENT
As mentioned in the regional investment attraction strategy, lack of awareness of the
AlbertaHUB organization is a common issue across the region. This is true with CFB Cold
Lake as well. Their main interest was working more with the City of Cold Lake, with one
interviewee saying it might be more use to work with the city than an organization like
the AlbertaHUB.
The CFB also says they need to work more with the Cold Lake First Nation. CFB Cold Lake
uses traditional lands already. They would like to see regional First Nations bid on
government contracts more often. The Cold Lake First Nation has about 50 businesses
already in the region, but the CFB command would welcome these businesses servicing
the base more often.
Command has stated that there is room to grow a relationship with AlbertaHUB. Being
aware of the three main priorities is a start and relationship building is vital for
AlbertaHUB to assist regional businesses and organizations. Working with CFB Cold Lake
on projects such as this study provides a chance to build a relationship that will
engender long term trust and respect.
It is worth noting that during this phase of the project there has been advancement in
the relationship between AlbertaHUB and CFB Cold Lake, with the base now being
represented on the Investment Attraction Task Team. The communications that
resulted actually necessitated the consulting team to alter portions of the report to
reflect new opportunities and ideas. This is the type of progress that can be made when
AlbertaHUB can partner with regional organizations to look at investment attraction and
other issues.
7.4 SHORT, MEDIUM AND LONG TERM STRATEGIES
The issues listed in the previous sections make AlbertaHUB involvement in investment
attraction (especially on a large scale) challenging. However, that is not to say that there
are a lack of opportunities to be explored; specifically in terms of smaller scale
opportunities that directly serve the base. In fact, more opportunities were uncovered
involving the Defence Sector than any other sector, necessitating the following
overview:

Short Term (Easy Win Category)
As one interviewee said, “anything that serves the base is low hanging
investment attraction fruit” For instance, there is talk of a Singaporean Fighter
lead-in training squadron arriving in 2011. Businesses that can service these
students with restaurants, hotels, churches, etc are going to be well positioned.
47
There might be 50 or 60 students plus teachers plus families. On a similar note,
one interviewee agreed that more cultural foods and services are needed in the
area because there are a lot of Philippine workers in Cold Lake.
There has also been discussion of a
tourism based initiative centered around
the base’s assets. There are a number of
aviation enthusiasts across North America
that would likely have great interest in
events that featured greater access to the
base, its operation and aircraft. Perhaps
the visitors could even use the base’s
barracks as lodging.

Medium Term
Air servicing the north in terms of oil exploration, survey arctic ice; etc has
significant potential. Any business that involves air service is obviously a fit for
the region. But as stated before, a number of issues must be looked at in depth
to develop these types of businesses.
There is also great potential for air passenger services. North Western Air based
out of Fort Smith) is using a terminal called the Cold Lake Passenger Terminal
(Medley Terminal) which is being used twice a week for a stopover to Edmonton
and Calgary. The facility has passenger screening, etc. and there is extra capacity
to be utilized there. The planes board outside so the stops are short, but there is
a possibility for more flights. A challenge is that the flights have to take place
during de-conflicted times. Also, hanger-age is a problem in terms of availability.
It has been suggested that there could be limited movie industry in the region
centred around the base’s assets (and other regional attractions). For instance,
part of the A-Team movie was recently shot in Cold Lake. While it is unlikely that
the base wants to convert to a movie set, there is some opportunity for revenues
here, and this maybe a tie-in with the tourism sector.

Long Term
Long term opportunities are centred on non-traditional use of the base’s
everyday assets. There is potential for commercial dark field testing, CGI
capturing, film production, etc.
According to sources in the Government of Alberta, six ‘lighter than air’ (blimp)
companies are looking to manufacture in Alberta. There are 3 that would situate
a manufacturing company right away if an investment attraction package (i.e.
cash) was out on the table.
48
And there is talk of attracting an unmanned air vehicle company to do testing
during de-conflicted use of base. Positioning the region as a test-zone, for
General Dynamics, Bombardier, and other companies is definitely an attractive
concept. This will require attention to the security concerns listed above and the
status of the possible plan to move the testing facilities to Ottawa.
In order to attract these types of long-term/large scale investments, the
strategies listed in ‘4.2 Strategy 9: Develop an Investment Attraction Incentive
Information Package are especially’ pertinent.
7.5 KEY DEFENCE SECTOR CONTACTS

Eldon Ellis
Lieutenant Colonel
Wing Administration Officer
4 Wing
Department of National Defence
Cold Lake, AB Canada T9M 2C6
Telephone/ 780-840-8000 ext 8102/Facsimile 780-840-4825
Government of Canada
E-mail: [email protected]

Greg Penner
Major
Wing Personnel Administration Officer
4 Wing
Department of National Defence
Cold Lake, AB Canada T9M 2C6
Telephone 780-840-8000 ext 8103 / Facsimile780-840-4825

David Peace
Senior Director, Aerospace and Defense Industry
Advanced Industries Development Unit
Finance and Enterprise
5th fl Commerce Place
10155 - 102 Street
Edmonton, AB T5J 4L6
Phone: 780 427-5299
Fax: 780 422-2091
49
Manufacturing Sector
The Manufacturing Sector is heavily linked to other regional sectors, in particular Oil and
Gas. Often these manufacturing firms are more likely to consider themselves as part of
the Energy or Agriculture sectors. As a result, many of the concepts in the General
Strategy hold true for the Manufacturing Sector. In addition, most of the priorities listed
in 8.1 are also indicative of other sectors as
well.
Very few of the Manufacturing companies
in the region engaged in international or
even national trade. The size and location
of the companies are mainly situated to
supply the Oil and Gas industry. The hiring
of skilled labour was noted as the most
common hurdle with competition and high
wages offered by the Oil and Gas industries
making recruitment especially difficult.
During the course of Phases 1 to 3 of the investment attraction project, metal
fabrication was identified as by far the most frequently manufactured product (73% of
the interviewees in the Phase 2 study). From 2005 to 2010, Alberta’s metal products
fabrication sector is expected to generate about $48 billion in revenues. These sectors
employ over 40,000 people in 2,600 companies, 85% of which have fewer than 50
employees. 7 The AlbertaHUB region similarly reflects these smaller business sizes.
8.1 MANUFACTURING SECTOR PRIORITIES

7
Shipping Concerns
While many interviewees list the relative proximity to Edmonton as a big
advantage for business, there were also a number of comments regarding the
lack of transportation services; in particular the lack of a small haul centralized
trucking firm.
http://www.alberta-canada.com/ab-business/metal-fabrication-and-machinery-manufacturing.html
50
There are hot shot services in the region, but they are very expensive. This is the
driving force behind the Less Than Load (LTL) Prefeasibility Study. Please see
Appendix 6: Prefeasibility Study into the Viability of a LTL Trucking Service.

More Professional Firms (i.e. Engineering)
Complaints about the lack of professionals were common across all six sectors.
While professions like management consulting and financial management were
mentioned a few times, the predominant complaint was a lack of engineering
firms. It was noted that there could be a lot more infrastructure development,
housing projects, and a wealth of other projects if there was a roster of local
professionals available.
For example, one interviewee said in regards to the need for an electronic
engineering firm "We have so many oilfield based companies and innovators in
the oilfield that could really benefit from having the engineering here in
Lloydminster, as it is extremely cost prohibitive to have those services come from
outside the community. If a firm had 5-10 guys who really knew what they were
doing they would be able to ‘make a killing here”

Labour and Training
Similar to other sectors, there are issues in attracting and retaining workers. But
the specific issues interviewees often mentioned were a lack of welders and
general laborers. One interviewee said, ‘The HUB region is perfect to find these
type of workers, because they have a lot of farm kids who grow up handy. They
often just need some formal training.”
Complicating the labour issue, it is far from region-specific. Alberta Finance and
Enterprise commissioned a report called: Alberta Metal Fabrication and
Machinery Manufacturing: Sector Overview in 2008 that stated:
Labour issues dominated the weaknesses of individual (manufacturing)
firms. 35% of all the firms identified lack/supply of skilled workers as a
weakness. As a result, work is being turned down. Other labour related
weaknesses included:
- Wages and labour costs
- Getting the right people to train as journeymen
- Problems getting skilled floor trades people
- Retention of skilled workers
- Inability to attract workers due to lack of rental accommodation
Workers driving 100 kilometers to work
- Quality of the labour force
8
- Availability of technical personnel
8
http://www.alberta-canada.com/documents/AIS_MF_metalfab_overview.pdf
51
Many firms in the sector see labour attraction and training as an area that
AlbertaHUB might be able to provide long term assistance.
8.2 KEY MANUFACTURING SECTOR CONTACTS

Lynn Wyton
Senior Director - Advanced Industries Development Unit
Finance and Enterprise
5 Floor, Commerce Place
10155 – 102 Street
Edmonton AB T5J 4L6
P: 780.427.6533
F: 780.422.2091
E: [email protected]
52
Transportation Sector
Transportation issues were cited as important by respondents from across all sectors.
Most interviewees discussed the trucking industry, but air cargo and public
transportation were frequent concerns as well. Trucking company availability and road
infrastructure were most often mentioned as issues that require attention for existing
businesses to reach their full potential; the airline and airport industry was most often
mentioned as having the greatest potential as
an investment attraction draw.
The majority of trucking companies in the
AlbertaHUB region engage solely in local
trade due mostly to remoteness from
international markets and the difficulties in
obtaining international certification. But more
importantly, the regional Energy and
Agriculture Sectors provide the vast majority
of business for transport companies.
The Transportation Sector has difficulty in recruiting skilled labour. Many cited the
problem of getting qualified drivers to move to the area as their biggest hurdle. But the
major concern for the Transportation Sector involves the adequacy and upkeep of the
highway systems in the region which is the lifeblood of their industry. There are several
priority issues for the Transportation Sector:
9.1 TRANSPORTATION SECTOR PRIORITIES

Underutilized Airport Facilities
A number of stakeholders in member communities and the Government of
Alberta listed the airport assets of the region as one of the strongest investment
attraction assets in the province. Much of this enthusiasm involves the assets in
and around CFB Cold Lake.
The assets and associated opportunities in Cold Lake are numerous (see Section
7 on the Defence Sector). For instance, North Western Air based out of Fort
Smith) is using a terminal called the Cold Lake Passenger Terminal (Medley
Terminal) which is being used twice a week for a stopover to Edmonton and
Calgary. The facility has passenger screening, etc. and there is extra capacity
available as well. The planes board outside so the stops are short, but there is a
53
possibility for more flights. A challenge is that the flights have to take place
during de-conflicted time. Also, hanger-age is a problem in terms of availability.
Other regional airports have development potential as well. As one interview
said, “Elk Point can use their great airport as a selling point; a landing strip
capable of landing even larger planes. It used to be utilized by big Oil Companies
to land corporate jets”
In 2002 an Inventory of Alberta Regional and Local Airports Assessment of
Facilities report was done that outlines the potential capacity for air
transportation service in the province. A total of 173 airports were initially
identified for assessment, which included all registered and certified sites across
Alberta excluding Edmonton International Airport, Calgary International Airport,
and 4 Wing Cold Lake. The sites evaluated consisted of regional, community,
corporate, private, and forestry aerodromes/airports. The following AlbertaHUB
region airports were featured:
9
Andrew
Bonnyville
Cold Lake Regional
Elk Point
Glendon
St. Paul
Lloydminster
Lac La Biche
Two Hills
Vegreville
Vermilion
Wetaskiwin
These smaller regional airports often feature excess capacity that can be utilized
directly or indirectly in support of new investment attraction initiatives.

Transportation Infrastructure
As stated in Strategy 8: Play a Role in Regional Infrastructure Development, many
regional businesses see infrastructure improvement as a core issue in attracting
new investment. They believe AlbertaHUB can act as a proponent for regional
infrastructure improvement, facilitating between local groups and the
9
http://www.transportation.alberta.ca/Content/docType54/Production/ASAGAssessmentofFacilitiesFinal
ReportFeb0803.pdf
54
government, and research or helping access government funding. This is most
often mentioned in relation to highway upgrades.
Conversely, some of the government interviewees tend to believe that the
ground Transportation Sector is largely out of the sphere of investment
attraction strategies, because the infrastructure it relies on is government
funded and therefore not related to attracting private companies as investors.
As noted in the General Strategy, AlbertaHUB might need to tread carefully in
this area, because while acting as a proponent for regional infrastructure
development will engender positive feelings and create relationships with
regional businesses, AlbertaHUB likely does not want to excessively interfere
with the responsibility of other government departments. Engendering poor
relationships with other government departments may in the long run have a
negative impact on investment attraction.

Public Transportation
A lack of public transportation was listed as an issue across all sectors. This tends
to be more of a quality of life or services issue, which as we know from Phase 1
and 2 of the Investment Attraction Project is a core concern for businesses in the
region. The consulting team recommended in earlier studies that a public
transportation study be conducted in the region. Whether this would be in the
purview of AlbertaHUB is unclear. But acting as a regional facilitator to start such
an initiative likely would be appropriate.

Small-Haul Centralized Trucking Firm.
The need for a small-haul centralized trucking firm was mentioned by several
interviewees. “We need a smaller local trucking company that can ship using
shortbox hauling or 1-5 ton service instead of large expensive semi-hauling. There
are hotshot services around but they are very expensive to use.”
There is more detail on this opportunity please see Appendix 6: Prefeasibility
Study into the Viability of a LTL Trucking Service.
55

Ports To Plains
The Ports-to-Plains Alliance, based in Lubbock, Texas, is a non-profit, nonpartisan, community-driven advocacy group led by mayors, councilpersons,
economic development officials, business and other opinion leaders from a ninestate, 2300-plus mile economic development corridor between Texas, and
Alberta, Canada. AlbertaHUB is already closely involved with the initiative.
Figure 5: Ports to Plains Map from “An Analysis of the Economic Impacts &
Opportunities on Alberta’s Eastern Corridor Resulting from Upgrading Port of Entry –
Wild Horse”; GTS Group International, March 8, 2008
There are a number of functional reasons to work closely with the Ports to Plains
initiatives. As one interviewee said, there is a sentiment that the initiative can
help “put the AlbertaHUB region on the map”. Since the corridor runs through
the heart of the region and it is at its core an economic development initiative, it
fits well into a long term Transportation Strategy for the region.
56
AlbertaHUB has done studies regarding Ports-to-Plains (see Downloads section
of www.albertahub.com), and the consulting group Activation Analysis Group
Inc/GTS Group International Inc is conducting the Eastern Alberta Transportation
Corridor Project which is excepted to result in a development and marketing plan
being ready for presentation to regional stakeholders by summer 2010.
Therefore any long term investment attraction strategies involving the
Transportation Sector should consider the results of these studies.

Labour and Training
Labour issues are commonly raised in all sectors. But the specific issue of Class 1
driver training is mentioned most often in the Transportation Sector. As listed in
Alberta Finance and Enterprise’s Alberta Industry Sector Performance and
Prospects Study from May, 2009:
As with the broad Canadian population, the transportation workforce is aging and a
large portion of workers are nearing retirement. The sector will need to address
human resource challenges presented by the retirement of baby-boomers by
initiating education, training and other programs that will attract young workers
into the transportation industry. The trucking sector already has problems finding
workers, partly because of the long hours and time away from home. 10
The Class 1 Driver School Prefeasibility Study in Appendix ## features a partial
solution to the labour challenge.
10
http://www.alberta-canada.com/documents/PWC_Sector_Report__Final__June_17.pdf
57
Tourism Sector
Alberta's tourism industry generates over $5 billion in annual expenditures, and is
supported by a range of tourism, hospitality and service-related businesses that cater to
the needs of provincial, national and international tourists. Expenditures from Alberta's
tourism industry are expected to grow to an estimated $6 billion in 2011. This growth is
based on worldwide tourism demand and the significant historical growth in tourism
that Alberta has experienced over the past 10 years. 11
The Tourism Sector in the AlbertaHUB region
is vital because it speaks to the desire for
services and quality of life, an overarching
theme of this project throughout the three
phases. The tourism operators in the region
help improve the quality of life by offering
activities, culture, and adventure to locals as
well as tourists.
When investigating possible business
development or investment opportunities,
the Tourism Sector, at first sight, might appear to be less impactful than other sectors
such as Energy or Agriculture. However, tourism is a sector that can cross over a number
of other sectors to form unique opportunities. There can be agri-tourism, aero-tourism,
eco-tourism, etc. A prime example is the possible investigation of hosting aviation
enthusiasts at CFB Cold Lake. This might be deemed as a Tourism Sector opportunity, or
a Defence Sector opportunity.
Following are the priorities for the Tourism Sector in the region and an overview of the
role Tourism Business Development, Research and Investment can play in regional
development.
10.1 TOURISM SECTOR PRIORITIES

11
Tourism Association Overlap Issues
The two Tourism Associations in the region are Kalyna Country and Alberta’s
Lakeland. These organizations represent overlapping geographic areas within the
AlbertaHUB region. This can create confusion for tourism operators and
duplication of services between the organizations.
http://www.tpr.alberta.ca/tourism/investment/default.aspx
58
Businesses have commented on two issues related to the two tourism
organizations: 1. They often like belonging to two organizations but don’t want
the cost of belonging to two organizations (Kalyna charges $50-$100 for
businesses and $100-$750 for communities, Lakeland charges $50 for businesses
$200-$1500 for communities); 2. They tend to be in an organization’s geographic
area, but feel that they fit better with another organization.
Changing the geographic boundaries of the organizations is not an option, but
both agree that cooperation only makes sense. This is where AlbertaHUB can
play a role.
Having AlbertaHUB come to the table with Kalyna Country and Alberta’s
Lakeland to act as a region partner might enable greater cooperation.
AlbertaHUB’s role will not be to act as a tourism marketing organization, but as a
facilitator between the two organizations, regional community members,
businesses, and the provincial government. AlbertaHUB would not add another
level of management that would confuse any overlap issue further, rather it
would facilitate projects that both organizations have an interest in promoting,
thus bringing all parties together working on common goals.
Alberta HUB is a tourism promoter, it partners to facilitate communication that
forms an integral part of the product development activity. As one interviewee
put it, “I see AlbertaHUB as a facilitator between the organizations to discuss
product development, investment attraction, feasibility work, and funding
access.”

Funding Acquisition
There was mention by several interviewees of how difficult it is for tourism
organizations and operators to access government funding for various initiatives.
There is a feeling that most of the government assistance goes to sectors like
Energy and Agriculture. There is some assistance from Alberta Tourism, Parks
and Recreation with strategy work, but some interviewees say these dollars
would be better spent if the organizations and operators on the ground had
more say in their use. So there is a sense that acting as a researcher and
facilitator with funding organizations is a very appropriate and valuable role for
AlbertaHUB to play.

Training
The cost of training was mentioned as a very common problem faced by the
Tourism industry because hospitality training only takes place in major centers.
This requires that employees be sent out of the region to obtain the necessary
training. The most common area of concern is marketing. If AlbertaHUB can work
59
with the Destination Marketing Organizations to bring training programs specific
to the Tourism Sector this would provide operators with valuable tools for
development and raise the profiles of all the organizations involved.

Tourism Web Portal for Operators
It is anticipated that the Market Strategy (funded by Alberta Tourism, Parks and
Recreation) presently being done for Kalyna Country will recommend a tourism
web portal. This web portal would be a resource for operators providing
information on training, funding, mentoring opportunities, marketing and
promotion. It would not be a tourist portal.
This may fit into the often mentioned recommendation in the General Strategy
that AlbertaHUB update and improve its web presence. By linking to such a web
portal, providing content, or even helping access various resources for its
development, AlbertaHUB would be working as a valuable strategic partner with
the Tourism Sector.

Facilitation for Regional Accommodation Upgrades
Interviewees from all sectors, and in particular the Tourism Sector, often noted
the need for more accommodations in the region. There were many specific
mentions of a need for more brand name
hotels, but also bed and breakfast operations.
As one interviewee said “Anytime we can get
people to stay overnight in the region is a
benefit to the whole region.”
The multitude of comments regarding
accommodations lead to the consulting team
developing Appendix 2: Prefeasibility Study
into the Viability of Brand Name Hotel
Development.
Stress on accommodations mounts when the Provincial Government closes or
reduces the operations of regional campgrounds like Whitney Lake Provincial
Campground. AlbertaHUB may be able to act as facilitator between regional
interest and the government when these types of closures occur. And related to
General Strategy 8: Play a Role in Regional Infrastructure Development; it may be
appropriate for AlbertaHUB to be at the table to act as a proponent for the
development of more hotel properties in the region.
60
10.2 ALBERTA TOURISM, PARKS AND RECREATION: Tourism Business
Development, Research And Investment Branch
The General Strategy encourages AlbertaHUB to “Promote the Region’s Strengths”, in
part by communicating with provincial officials. There are a number of provincial
officials that are heavily involved with investment attraction. In the case of the Tourism
Sector, there is a specific branch of government dedicated to investment attraction.
Their websites states:
Alberta Tourism, Parks and Recreation's Tourism Business Development, Research and
Investment Branch offers a variety of services for investors seeking to invest in and develop
tourism projects, businesses and land in Alberta. Our interest is in helping investors and
developers identify viable tourism development opportunities in the province.
With our knowledge of the resources, land base and characteristics of tourist visitation across
Alberta, we can tailor our assistance to your needs. Once you decide on a particular location in
the province, we will direct you to key community business contacts.
Our services are free of charge to qualified business investors. 12
10.3 KEY TOURISM SECTOR CONTACTS
12

Kevin D. Kisilevich
Kalyna Country Tourism
Phone: 1-888-4-Kalyna
E email: [email protected]

Marianne Price
Industry Coordinator – Lakeland DMO
Alberta's Lakeland Box 874
5101 - 50 Street St Paul Alberta T0A 3A0
Phone: (780) 645-2913
Fax: (780) 645-5790
E email: [email protected]

Bill Hodgins
Manager, Tourism Business Services
Tourism Business Development, Research and Investment Branch
Tourism, Parks and Recreation
6th fl Commerce Place
http://www.tpr.alberta.ca/tourism/investment/default.aspx
61
10155 - 102 Street
Edmonton, AB
T5J 4L6
Phone: 780 427-6485
Fax: 780 427-6454
NOTE: The Kalyna County Tourism Strategy is coming out in the summer of 2010.
Contact Kevin Kisilevich for details.
62
11.0 NEXT STEPS
11.1 INTERNAL ORGANIZATIONAL REVIEW
As per the original Phase 3 workplan, it was recommended that at the end of this phase
the consulting team and the client “Conduct an internal organizational review and
planning session for all members of the AlbertaHUB Investment Attraction Team to
review the input from the business leaders and stakeholder consultations.”
In essence, it is recommended that the IATT and the lead consultant, Mark Baxter,
conduct an in-person, in-depth review of the contents of the report.
The consulting team has conducted three phases of the project over approximately 18
months. During that time the results of the first two phases were reviewed in two half
hour sessions. We believe that after the hundreds of hours of consultations with
stakeholders, a more in-depth review is warranted; especially since any subsequent
phases will involve expenditures on actualizing the Phase 3 strategies in the form of
various marketing initiatives (listed in 11.2).
The organization might also want to hold a one or two day Strategic Planning Session to
review a number of the strategies in Section 4. Objectives, responsibilities and timelines
could be planned by the IATT and/or general membership.
11.2 PHASE 4
The next steps will likely take place in Phase 4 of the AlbertaHUB Investment Attraction
project. The keys steps in this Detailed Marketing and Communication Plan and
Training & Capacity Phase will be:




The creation of a Marketing and Communication Plan to actively promote
investment opportunities, including specific investor targeting.
Conducting in-depth consultations with community and business leaders to
ensure a uniform approach that addresses/incorporates existing sector and
community approaches
Include an Investigation of micro and macro business environment implications
within the Plan
Training and development of marketing and initiative materials (Investment
Training, Website Development, Translation, promotional material development)
63

Development of a regional investment attraction portal to communicate regional
investment readiness. This website will be linked in if not fully integrated into
www.albertahub.com
The next step after Phase 4 would be Phase 5, Implementation and Targeted Investment
Attraction that will identify target investors and market the region and its business
investment opportunities. Parts of this implementation could take place in Phase 4 or a
Phase 5, depending on timelines and budget.
64
12.0 THE PREFEASIBILITY STUDIES
The Appendices feature eleven Prefeasibility Studies (or Opportunity Analyses). These
studies are designed to analyze a series of opportunities, some specific to a particular
venture, and some featuring the possibilities within an industry. These Analyses are
meant help determine whether these opportunities warrant further study.
All of the opportunities listed are derived directly from the extensive survey and
interview research conducted in Phase 1 to 3. The aim of the consulting team was to
create a grass-roots opportunity analysis based on the experience of stakeholders in the
six sectors.
Further study on the opportunities may take place in the form of a full feasibility study
and/or business plan. A feasibility study is an analysis and evaluation of a proposed
project to determine if it 1) is technically feasible, 2) is feasible within the estimated
cost, and 3) will be profitable. A business plan is developed once a project is deemed
viable in the feasibility study.
Several of the Prefeasibility Studies are developed in enough detail that they could be
considered feasibility studies, meaning a sound, immediate judgement could be made if
to proceed with the venture. However, most will require review of the IATT and other
stakeholders to asses if they warrant further investigation.
Here is an overview of the results of each study, from the viewpoint of the consulting
team. The IATT and other stakeholders may have differing opinions:
Brand Name Hotel Development
The consulting team heard of a strong need for more brand name hotel facilities
from a wide range of respondents. The opportunity has significant cross-sector
benefits for the region. AlbertaHUB should furnish interested investors with
information regarding the opportunity.
Safety Supply Outlet
This is a limited retail opportunity with potential for expansion in the right location
and economic circumstance.
High End Recreational Vehicle Park
Similar to the Brand Name Hotel Development, the need for regional
accommodations for tourists and workers makes this venture a natural fit for the
region. More than one RV Park could be developed, as there is a need in several
areas. Ands there are numerous potential tie-ins to other tourism attractions.
65
Primary Agriculture Value Added Association (and Sub-Opportunities)
The research and capital necessary to start new agriculture enterprises can be
significant, especially in some of the high potential areas like bioproducts and
bioenergy. Pooling resources and ideas in an association is a method of business
development recommended by many sector stakeholders, including government
specialists that can help with access to sizeable funding programs.
Less Than Load Trucking Service
The LTL trucking service is a smaller opportunity with great potential for expansion.
There is cross-sector need for such a service. It requires relatively little capital input
but has a significant growth potential for the right investor – likely an owner operator
to begin with.
Film Industry in the AlbertaHUB Region
There is long term potential for this industry, especially with tie-ins to the tourism
sector. But it is an industry that should be looked at on a grass roost basis, where a
regional or community organization can provide information to individual people
interested in renting their property for filming. Trying to develop a region wide film
industry attraction effort is expensive, time consuming, and may be fraught problems
with since the costs and benefits of film production tend to be community specific.
Aboriginal Tourism in the AlbertaHUB Region
This is a burgeoning field with a number of opportunities for interested First
Nations and Métis Settlements. The ground work exists with successful aboriginal
attractions in the region, supportive Destination Marketing Organizations, and a
variety of government programs and incentives. Opportunities like a fishing lodge
and Aboriginal themed restaurants should be explored further.
Recreational Water Park
A water park is a concept that is financially untenable without significant public
funding support for initial capital costs. It would have to be viewed as a public
resource, possibly as part of a recreation centre or aquatic centre.
Class 1 Driver School
There is a solid case foe development of a class 1 driver’s school, especially it is
able to form close partnerships with in the Energy and Transportation Sectors. It
would serve a need in the region, and could provide workable business for a
dedicated owner/operator.
Defence Sector Tourism Opportunities and Regional Employment Agency
Both cases under review…
66
APPENDIX 1: Survey Instrument
Hello
Thank you for filling out this survey. This information will help AlbertaHUB collect
important information to assist businesses in the region. To show our appreciation for
your participation in our survey we would like to send you a TIM HORTON gift card.
Please be sure to fill in your company name and personal information, your
information will be kept in the strictest of confidence.
Company Name:
Name of Person Interviewed:
Position:
E-Mail Address:
Phone #:
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
Part A: Business Profile
Q1 What business structure does your business fit into?
Corporation
󲐀1
Sole Proprietorship
󲐀2
Branch Plant
󲐀3
Partnership
󲐀4
Cooperative
󲐀5
Other (Specify)
󲐀6
Q2 What primary business activity is conducted by this company? By primary we
mean the portion of the business that is responsible for the largest share of the
revenue.
Farming
Manufacturing
Metal working
Plastics
Textiles
Wood Products
󲐀1
󲐀2
󲐀1
󲐀2
󲐀3
󲐀4
67
Wholesale trade
󲐀3
Food Processing
󲐀4
Agricultural Services
󲐀5
Transportation
󲐀6
Retail Trade
󲐀7
Oil and Gas
󲐀8
Government
󲐀9
Mining and Mineral Products 󲐀 10
Forestry and Forest Products 󲐀 11
Financial Services
󲐀 12
Real Estate
󲐀 13
Construction
󲐀 14
Public Utilities
󲐀 15
Business Services
󲐀 16
Professional (Office) Services 󲐀 17
Tourism
󲐀 18
Institutional
󲐀 19
Warehousing
󲐀 20
Information Technology
󲐀 21
Automotive
󲐀 22
Other (Specify)
󲐀 23
Q3 What are the main products or services you provide? Please list up to 4 in order of
importance.
1.
2.
3.
4.
Q4 Where do you sell these products/services?
Locally
%
Provincially
%
Nationally
%
Internationally
%
Q5. Do you expect the demand for your services/products to increase, stay the same,
or decrease over the next 2 years?
Increase
󲐀1
Stay the Same 󲐀2
Decrease
󲐀3
Q6. Where are your major suppliers located?
68
Locally
%
Provincially
%
Nationally
%
Internationally
%
Q7. Where is the headquarters for this business?
󲐀1
󲐀2
󲐀3
󲐀4
󲐀5
Locally
Provincially (specify city)
Canada (specify province)
United States (specify state)
Internationally (specify country)
Part B: Employees
Q1. How many employees are at your location (including management)?
Part Time
󲐀 1-10
󲐀 11-25
󲐀 26-50
󲐀 51-100
󲐀 101-250
󲐀 251-500
󲐀 Over 500
󲐀0
Full Time
󲐀 1-10
󲐀 11-25
󲐀 26-50
󲐀 51-100
󲐀 101-250
󲐀 251-500
󲐀 Over 500
󲐀0
Total
󲐀 1-10
󲐀 11-25
󲐀 26-50
󲐀 51-100
󲐀 101-250
󲐀 251-500
󲐀 Over 500
󲐀0
69
Q2. Over the next two years, do you think the number of employees in this business
will increase, decrease or stay the same? If you anticipate and increase or decrease,
please write in the number you will gain or lose.
Increase
Decrease
Remain the Same
Don’t Know
󲐀1
󲐀2
󲐀3
󲐀4
Q3. Does your company have problems recruiting employees in any of the following
groups?
Unskilled
Semi-skilled
Skilled
Clerical
Professional
Management
󲐀1
󲐀2
󲐀3
󲐀4
󲐀5
󲐀6
Q4. If yes, which of the following best describe your recruiting problems? (Tick any
that apply)
Low skill levels
Low literacy levels
Poor Work Attitude
High competition for skilled employees
High wage rates for skilled employees
High costs of training employees
Skilled employees reluctant to move to your area
󲐀1
󲐀2
󲐀3
󲐀4
󲐀5
󲐀6
󲐀7
Q5. (a) Are there any major innovations/changes looming in your industry, which
might affect your
business?
Yes
No
Not Sure
󲐀1
󲐀2
󲐀3
70
(b) What are these innovations or changes?
Q6. Different types of businesses require employees with different skills and
professional qualifications. For each one please indicate how important it is that
some of your employees
possess the skill or qualification.
Very
Important
5
Somewhat
Important
4
Not
Important
3
2
Not
Applicable
1
Basic computer skills
Advanced computer
skills
5
4
3
2
1
5
4
3
2
1
Sales skills
5
4
3
2
1
Management skills
5
4
3
2
1
Community college
5
4
3
2
1
Technical trade skills
5
4
3
2
1
University
5
4
3
2
1
Literacy Skills
Unimportant
Q7. What skills or qualifications do you feel are lacking in the local workforce?
Q8. Overall, how do you rate your employees?
Excellent
Good
Fair
Poor
Very Poor
Skill levels
5
4
3
2
1
Attitude towards work
Productivity
5
5
4
4
3
3
2
2
1
1
Part C: Local Environment
Q1. Generally, is being located in this region a help or a hindrance to your business?
Help
Hindrance
50/50
󲐀1
󲐀2
󲐀3
71
Q2. From this list of local services, tick any you find inadequate for running your
business efficiently.
Airport facilities
Access to highway
󲐀
󲐀
Adequacy of highway
󲐀
Disposal of waste
Recycling
Fire Protection
Inspections (licensing)
Public Parking
󲐀
󲐀
󲐀
󲐀
󲐀
󲐀
󲐀
Public Transportation
Electricity
Development approval
process
Telecommunications
Waste water treatment
Water supply
Natural gas
None
󲐀
󲐀
󲐀
󲐀
󲐀
󲐀
Q3. Please explain any problems you have experienced with these services.
Q4. In your opinion, which of the following factors are attractive assets to new
businesses coming to this region?:
󲐀1
󲐀2
󲐀3
󲐀4
󲐀5
󲐀6
󲐀7
󲐀8
󲐀9
󲐀 10
󲐀 11
󲐀 12
󲐀 13
󲐀 14
󲐀 15
Community attitude
Community attractiveness
Education and training facilities
Educated and trained labour force
Bilingual labour pool
Public utilities
Transportation infrastructure
Taxation rate
Information technology infrastructure
Location
Business climate
Business costs
Business support services
Land availability
Lack of competition
Q5. Listed here are a variety of services provided for the community. For each of
these, please indicate your level of satisfaction with the service provided.
Health department permit
Excellent
Good
Fair
Poor
Very Poor
5
4
3
2
1
72
Policing
5
4
3
2
1
Fire services
5
4
3
2
1
Medical health services
5
4
3
2
1
Public Utilities
5
4
3
2
1
Public Transit
5
4
3
2
1
Local community college
5
4
3
2
1
Industrial training
5
4
3
2
1
Schools
5
4
3
2
1
Child care services
5
4
3
2
1
Cultural/recreation services
5
4
3
2
1
Senior facilities
5
4
3
2
1
Federal approvals (licensing)
5
4
3
2
1
Provincial approvals (licensing,
environmental)
5
4
3
2
1
Planning, zoning & building
permit
5
4
3
2
1
Q6. What is your overall opinion of this community as a place to conduct business?
Excellent
Good
Fair
Poor
No Opinion
󲐀5
󲐀4
󲐀3
󲐀2
󲐀1
Q7. What opportunities do you see for this region in terms of making the local
economy stronger and creating more jobs?
Q8. IMPORTANT - What new business(es) or services would you like to see added to
this region?
Q9. Are you aware of any customers, suppliers or related industries from outside of
this area that are not located locally that are looking to relocate their business?
Yes
No
󲐀1
󲐀2
73
If yes, name the business(es) and their product or service.
Q10. Please list the community’s strengths as a place to do business.
Q11. Please list the community’s weaknesses as a place to do business.
Part D: Trade: Local and International
Q1. Is this business currently involved in international trade? (If Yes go to Q3)
Yes
No
󲐀1
󲐀2
Q2. Are you interested in becoming involved in international trade?
Yes
No
󲐀1
󲐀2
If yes, which countries are you interested in trading with?
Q3. To which countries do you export most of your products and services? If USA,
indicate the specific states. If more than three, please indicate the top three.
Q4. Does the business import products or services directly?
Yes
No
󲐀1
󲐀2
Q5. From which provinces or countries do you import products or services? If more
than three, please indicate the top three.
Q6. What products or services do you purchase from these provinces or countries?
74
Q7. During the past two years, would you say that your total sales at this location
have?
󲐀1
󲐀2
󲐀3
󲐀4
Increased
Decreased
Uneven sales pattern
Same/no significant change
Q8. What are your expectations for next year’s total sales compared to this year? Will
they be…
󲐀1
󲐀2
󲐀3
󲐀4
Higher
Lower
Same
Not sure
Q9. In what ways, if any, could local Chamber of Commerce, business associations
and/or economic
development offices help your business?
Part E: Future Plans
Q1. Which range does the annual sales of your business fall into? (Optionalconfidential)
󲐀
󲐀
󲐀
󲐀
Less than $50,000
$51,000 - $100,000
$101,000 - $250,000
$251,000 - $500,000
$501,000 - $1,000,000
$1,000,000 - $5,000,000
$5,000,000 - $25,000,000
Over $25,000,000
󲐀
󲐀
󲐀
󲐀
Q2. Do you have any plans to relocate this business within the next two years?
Yes
No
󲐀1
󲐀 2 (if No, skip to Q7)
Q3. If you are relocating where are you planning to move to?
In this community
Elsewhere in the province
󲐀1
󲐀2
75
In another province of Canada (specify)
In the United States (specify)
Outside of North America (specify)
󲐀3
󲐀4
󲐀5
Q4. Why are you planning to relocate the business from this community?
Head office decision
Inadequate facilities in terms of space
Has been a change in markets
Distance to markets and suppliers
Lack of appropriate labour (skills)
Expansion limitations
Utility infrastructure is inadequate
Local regulations too restrictive
Profits too low
󲐀1
󲐀2
󲐀3
󲐀4
󲐀5
󲐀6
󲐀7
󲐀8
󲐀9
Q5. If relocating what assistance could help to prevent the relocation of this business?
Finding another appropriate site
Financing
Assistance with approval process
Finding and securing adequate labour
Securing training services for staff
Accessing appropriate research and development
Infrastructure updates (roads, telecommunications etc)
󲐀1
󲐀2
󲐀3
󲐀4
󲐀5
󲐀6
󲐀7
Q6. If relocating out of town/region, what major benefits would the new location
offer?
Q7. Within the next two years, are you planning to expand your operations in this
community?
Yes
No
󲐀1
󲐀 2 (if No, skip to Q9)
Q8. Will the expansion lead to …
Increase in workforce
Increase in floor space
Additional product line(s)
Additional services for customers
󲐀1
󲐀2
󲐀3
󲐀4
76
Additional Investment in equipment & technology
Increase in goods sold provincially
Increase in goods sold in Canada
Increase in exports to US
Increase in exports overseas
󲐀5
󲐀6
󲐀7
󲐀8
󲐀9
Q9. Within the next two years, do you plan to close this business? That is shut down
this location and not reopen in some other place.
Yes
No
󲐀1
󲐀 2 (if No, skip to End)
Q10. What are the reasons for closing this business?
Head office decision
Inadequate facilities (size or age of building)
Loss or change of customer
Distance to markets
Labour issues
Inadequate local infrastructure
Expansion limitations
Lack of profitability
Health/environmental regulations
Unable to find purchaser
Retirement
Lack of access to research and development
Other (specify)
󲐀1
󲐀2
󲐀3
󲐀4
󲐀5
󲐀6
󲐀7
󲐀8
󲐀9
󲐀 10
󲐀 11
󲐀 12
󲐀 13
Q11. What assistance, if any, could help to prevent the closure of the business?
END OF SURVEY
THANK YOU!
77
APPENDIX 2: Prefeasibility Study into the Viability of
Prefeasibility Study into the Viability of
Submitted to: AlbertaHUB
By:
Outlook Market Research and Consulting Ltd.
Date:
June 30, 2010
78
1.0 OVERVIEW OF THE BRAND NAME HOTEL FRANCHISE INDUSTRY
As with any franchise opportunity, there are positives and negatives. The positive in a
hotel franchise situation is the instant brand recognition when the doors open, a
marketing network and hopefully a turn-key start up scenario. The negatives are the
additional costs and possible loss of freedom in all decision making. The following table
shows a list of approximate start up investment costs for hotels in U.S. dollars:
Overview of Hotel Start-Up Investment Ranges (U.S.$)
America's Best Inns & Suites
Franchise
$170,000-$577,000
AmericInn Franchise
$5,000,000-$10,000,000
AmeriHost Franchise
Systems Franchise
$3,700,000-$4,700,000
AmeriSuites Franchise
Hotel chain
$5,900,000-$9,700,000
Aston Hotels and Resorts
Franchise
$250,000-$500,000
Baymont Inn & Suites
Franchise
$393,600-$5,500,000
Choice Hotels Franchise
$4,000,000-$10,000,000
Country Inns & Suites By
Carlson Franchise
$4,200,000-$6,500,000
Courtyard By Marriott
Franchise
$5,000,000-$7,000,000
Days Inns Worldwide
Franchise
$4,069,000-$6,700,000
Doubletree Hotels, Suites,
Resorts, Clubs Franchise
$24,500,000-$39,000,000
Econo Lodge Franchise
$2,000,000
Embassy Suites Hotels
Franchise
$17,000,000-$36,700,000
Fairfield Inns Franchise
$3,000,000-$4,000,000
Hampton Inn/Hampton Inn &
Suites Franchise
Mid-priced hotels
$3,700,000-$13,100,000
Hawthorn Suites Franchise
$4,400,000-$7,400,000
Hilton Garden Inn Franchise
$112,000,000
Hilton Hotels & Resorts
Franchise
$53,300,000-$90,100,000
Homewood Suites by Hilton
Franchise
$10,100,000-$17,800,000
Howard Johnson Franchise
$393,100-$7,300,000
JW Marriott Hotels & Resorts
Franchise
$5,000,000-$7,000,000
Kampgrounds of America KOA Franchise
$716,000-$1,600,000
Knights Franchise Systems
Franchise
$167,100-$4,900,000
La Quinta Franchise
$4,990,000-$7,600,000
Marriott Conference Centers
Franchise
$5,000,000-$7,000,000
Marriott Hotels & Resorts
Franchise
$5,000,000-$7,000,000
Motel 6 Franchise
$2,900,000-$3,300,000
Quality Inns Franchise
$2,000,000-$10,000,000
Radisson Hotels & Resorts
Worldwide Franchise
$2,200,000-$2,800,000
Ramada Worldwide
Franchise
$402,500-$11,700,000
Red Roof Inn Franchise
$2,600,000-$4,750,000
Ritz-Carlton Company, The
Franchise
$5,000,000-$7,000,000
Rodeway Inns Franchise
$2,000,000-$10,000,000
Settle Inn Franchise
$3,000,000
SpringHill Suites Franchise
$4,000,000-$5,000,000
Studio 6 Franchise
$2,700,000-$3,200,000
Suburban Franchise
$3,500,000-$6,700,000
Super 8 Franchise
$285,400-$5,300,000
Travelodge Hotels Franchise
$383,000-$6,300,000
Vagabond Inns Franchise
$2,800,000-$5,800,000
Value Place Franchise
$3,500,000-$7,300,000
Wellesley Inn & Suites
Franchise
$338,900-$7,800,000
Wingate by Wyndham
Franchise
$5,900,000-$6,500,000
Source: www.justhotelfranchises.com/
79
2.0 SITUATION ANALYSIS OF BRAND NAME HOTELS IN THE ALBERTAHUB
REGION
During Phases 1 to 3 of the Investment Attraction Project, dozens of interviewees
mentioned a need for more brand name hotels in the region. Several reasons were
cited:




There is nothing wrong with independent hotels, but almost all of the hotels in
the region are independents. A few more brand names would provide diversity
and strengthen the market for visitors who prefer brand named hotels
More accommodations are needed in general for workers and tourists
The impression that a brand name hotel serves to lift the image of a community
to travellers
More brand name services are needed in the entire service sector to attract
workers and new businesses
There is a Ramada Inn in Lac La Biche, Best Western Wayside Inn & Suites, Ramada,
Holiday inn in Lloydminster, and the Super 8 in St Paul. There are few other hotels that
would be considered brand names in the 34 AlbertaHUB communities. Yet business
leaders are confident that there is a need for more brand name hotels, and a feeling
that these ventures would be very viable.
2.1 Linkages to Other Tourism Initiatives
Aboriginal Tourism
A prominent opportunity in the region may be an Aboriginal Tourism Lodge. The land
assets, local knowledge, and unique cultural experiences of aboriginal people in the
AlbertaHUB region provide an opportunity to leverage the need for additional
destination accommodations.
The issue that some aboriginal tourism operators face is in large scale start-up costs and
management expertise for major destinations like a Fishing Lodge or Casino. The
sections below outline some of the costs associated with brand name hotel start ups,
but the interesting fit between brand name hotel development and aboriginal tourism is
the management expertise that is provided by these franchisers.
Festivals
Regional research yielded a wealth of festivals, sporting events, conferences, etc where
accommodations can become an issue. The location(s) of new brand name hotels make
hosting these events much easier for organizers. Attendees, for better or worse, are
often comforted by the familiarity and perceived quality that a hotel franchise provides.
And at a bare minimum, any hotel will provide the extra lodging that is often necessary
to host community events.
80
Attractions
The concept of bundling attractions and accommodations is a staple of tourism
development. For instance, the development of a water park that is near a casino, in a
community that holds events and festivals can and should be bundled with quality
accommodations. As one tourism specialist said in an interview, “Our goal is to get
people to say overnight. Once they do that there are all sorts of regional benefits.”
Many of the attractions that this study looked at, like a water park or air enthusiast
displays are natural reasons to bundle with new accommodation’s development.
81
3.0 MARKETING MIX AND START-UP COST FOR BRAND NAME HOTELS
In-depth research was conducted with three hotel franchises that were amenable to
discussing new business opportunities: Ramada, Holiday Inn or Travelodge. The research
yielded the following key considerations:
• Capital costs for constructing a new hotel franchise are often between $6M and
$11M.
• A 50% occupancy rate for a 100 room operation with $125 night rooms should
yield between $2M and $2.5M revenue a year.
• An investment to this magnitude warrants an in-depth market study to analyze
hotel room occupancy patterns in the AlbertaHUB region
The research team has chosen to highlight Wyndham Hotel Group to outline some hotel
possibilities due to their strong franchising program and detailed information packages.
There is already a Super 8 (one of the Wyndham brands) in St. Paul, Wetaskiwin, and
Vermillion, so this franchise is a fit for the region. Our conversations with their
franchising specialists also assured us that the existing placement of one of their hotels
in a region does not preclude others from being developed in the same area, particularly
in a geographic area as large as the AlbertaHUB region.
Wyndham Hotel Group was also of interest because they have a wide range of brands to
suit multiple purposes. And with a market analysis necessary to build a business case for
a lodge, a hotel, or a hybrid of the two, it was prudent to have discussions with a
specialist whose company has experience with many types of operations.
Wyndham franchises hotels and provides property management services (perhaps
suitable for the Lodge concept) around the world. They are the world's largest lodging
franchisor, as measured by the number of franchised hotels and the franchisor of ten
lodging brands that include the upscale through economy accommodations. Their
brands include more than 6,500 franchised hotels and more than 550,000 rooms on six
continents, which constitute more than 10% of all U.S. hotel-room inventory:
•
•
•
•
•
•
Amerihost
Baymont
Days Inn
Hawthorn Suites
Howard Johnson
Knights Inn
•
•
•
•
•
•
Microtel Inns & Suites
Ramada Worldwide
Super 8
Travelodge
Wingate by Wyndham
Wyndham Hotels and Resorts
We have chosen to look at Wingate, Howard Johnson, and Ramada due to their varied price
structures and target markets:
82
3.1 Wingate By Wyndham
Wingate by Wyndham was designed with input from seasoned travelers, travel agents, and
hotel developers to be the premier upper mid-market limited-service business hotel. Wingate
by Wyndham is an almost all-new construction brand, with all-inclusive pricing and
standardized amenities. The first Wingate hotel was opened in 1996. Today, there are over 150
hotels in the United States and Canada. The Wingate by Wyndham advantage is in the
prototype details, all of which are designed to exceed the guests’ expectations. In 2007,
Wingate became affiliated with the upscale Wyndham Hotels and Resorts brand. Wingate hotel
owners benefit substantially from the enhanced awareness and strong customer perceptions of
the Wyndham brands.
3.1.1. Marketing
Target Market
Wingate is geared specifically to business travelers, most often in larger urban centres and
therefore at a mid to high price point. The hotels are comparable to the Holiday Inn Express
brand, which caters mostly to business travelers and is never the lowest priced hotel in a
geographic area, but rarely the highest priced either.
Advertising
Wyndham will handle the advertising but the franchisee may conduct their own local marketing
program provided that all materials meet with corporate system standards. Franchisees must
also participate in certain mandatory marketing programs and may be required to purchase
specified promotional materials.
3.1.2 Finance
Initial Franchise Fee
• Must pay $1,000 “application Fee” when submitting “Franchise Application”
• Must pay initial fee equal to the greater of $35,000 or $350 for each guest room
Property Management System
Must purchase computer hardware and software to communicate with Central Reservation
System
• PMS cost ranges from $35,000 to $45,000
• Training for Employees on PMS approximately $10,000 plus lodging for trainers
Other Fees
Name of Fee
Royalty
Amount
4.5% of Gross Room Revenues
NORTHEAST ALBERTA HUB REGIONAL INVESTMENT ATTRACTION Phase 3 final report
83
System Assessment Fee
Loyalty Program Charge
Taxes
Interest
Extension fee
Training Fees and Expenses
Public Offering Fee
Liquidated Damages
PMS Maintenance Fees
Agency Commissions
GDS and Internet Booking Fees
Chain Conference Fee
Rooms Addition Fee
Audit Fee
Dispute Resolution Costs
Re-inspection Fee and Costs
100% Guest Satisfaction
Program
Guaranteed Best Available Rate
Processing Fee
ResCentral Call Handling Fee
4% of Gross Room Revenues
Up to 5% of Gross Room Revenues
Amount assessed by federal, provincial and local tax authorities on
Royalties and Services Assessment Fees
18% per annum
$67.00 per day
General Manager = $1,250 and Owner = $825
$25,000
$2,000 per guest room
$43 per room per year, plus $1,100 for credit card interface
$5.15 per reservation booked through Global Distribution System
$990 for up to 2 people
$350 for each guest room added when facility has more than 100 rooms
$1,000
Costs, expenses, reasonable legal fees
$1,000 for first inspection and $1,500 for any subsequent re-inspections
$10 Processing Fee for each complaint received about your facility
$25 plus non-reimbursed immediate room night redemption at the
Facility
$1.65 per transferred call with $50 minimum per month
Cost of a 100 Room Wingate New Construction Facility
Item
Application Fee
Market Study
Phase 1 Environmental Survey
Design & Testing Fees
Facility Construction
Furniture, Fixtures & Equipment
Signage
Opening Inventory & Supplies
Insurance
Utility Deposits
Training Expense
Technical Systems
Opening Marketing Expenses
Miscellaneous Non-Tangible Asset Costs
Construction Contingency
Funds for 3 Month Initial Period
Land Acquisition & Site Preparation
Amount
$36,000
$7,000 - $10,000
$2,500 - $5,000
$25,000 - $75,000
$5,084,235 - $5,419,459
$810,125 - $865,996
$23,300 - $42,000
$20,000 -$30,000
$9,014 - $11,518
$5,000 - $10,000
$2,850 - $5,050
$159,000 - $181,000
$20,000 - $31,600
$55,000 - $100,000
$254,212 - $270,973
$51,000 -$71,000
Varied - need approximately 3.5 acres for building
84
and parking
Total Estimated Initial Investment
Total New Cost Per Room
$6,565,936 - $7,172,596
$65,659 - $71,726
The funding for working capital, and to cover the initial period of operations during which it is
typical to not be profitable until market demand is built up, would be additional to the above
capital costs. Thus, total uses of funds could be between $7 million and $8 million.
3.1.3 Operations
Selection and Development of Facility Location
Wyndham reserves the right to require the franchisee to obtain a positive market feasibility
study prepared by a prominent independent accounting or consulting firm. Some important
factors to consider when selecting the site are:
• Geographical Area
• Population and Density
• Proximity to Transportation
• Proximity to major Attractions and Destinations
• Commercial Development
• Traffic Patterns
• Competition
• Accessibility
• Other Demographic Factors
Purchasing From Approved Suppliers
To assure consistency among Chain Facilities, each facility must purchase equipment from
Wyndham`s list of approved suppliers that meet Wyndham’s standards for:
•
•
•
•
•
•
•
•
Construction
Equipment
Decor
Amenities
Guest Room Size
Signage
Bath & Bed Linens
Fixtures
•
•
•
•
•
•
•
•
Furnishings
Draperies
Bedspreads
Carpet
Wall Coverings
Lighting
Ice Machines
Telephone Systems
Other important factors and equipment that must be either purchased directly from Wyndham
or their approved suppliers include:
• Insurance from approved supplier
• Must purchase certain training and marketing material from Wyndham
• Must purchase a computer system to function as the facility’s PMS (Property
Management System) from Wyndham or designated supplier
85
•
•
•
Facility must be equipped with a telecommunications system approved By Wyndham
Facility must be equipped with fully integrated electronic locking system including
electronic card keys providing a room entry audit trail
Facility must be equipped with both wired and wireless high speed Internet access in all
guest rooms and meeting rooms from LodgeNet Entertainment Corporation (LEC)
3.1.4. Human Resources
Training Fee
• All general managers must attend orientation program Strategic Training and
Exceptional Performance (S.T.E.P.) – cost $1,250
• Owners orientation program – cost $825
3.1.5 Business Administration
Permits and Licenses
In accordance with local municipality requirements the franchisee must obtain the following
necessary permits:
• Building and Development Permits
• Fire Safety Permit
• Plumbing and Electrical Authorizations
• Elevator Permit
• Road or Highway Access Agreement
• Operating and Maintenance Permit for Swimming Pool and Waterslide
• Local Health Authority Authorization
• Local Business License
• etc
Obligation to Participate in the Operation of the Business
Although the franchisee is not required to take an active role in the operation of the facility a
management company or individual manager with significant training and experience must
manage the facility. The manager must complete the training program offered by Wyndham
and must remain available for supplemental or remedial training as needed.
86
Territorial Rights
The franchisee will be assigned a “Protected Territory” in which neither Wyndham nor its
affiliates will own, operate or manage another Chain Facility without the franchisee’s consent.
Wyndham will negotiate the territory with the franchisee which will take into account one or
more of the following:
•
•
•
•
•
•
•
The nature of the market the facility will serve (urban/suburban/rural)
Population Density
Demographics
Natural Travel Boundaries (i.e. Rivers or impassable lands)
The ‘seasonal’ versus year round nature of the anticipated occupancy of the facility
The weekend versus weekday anticipated occupancy of the facility
What public and private facilities will generate lodging demand including:
airports
sports
entertainment venues
military bases
hospitals
commercial activities
highways
recreation venues
colleges
tourist attractions
shopping malls
industrial activities
87
3.2 Ramada Worldwide
With nearly 875 hotels in more than 35 countries, Ramada Worldwide is truly global. It was
begun in 1954, when a group of investors opened a Ramada Inn in Flagstaff, Arizona. Positioned
to appeal to mid-market leisure and business travelers, Ramada Hotels aims to offer a blend of
comfort and affordability to its customers.
3.2.1 Marketing
Target Markets
Most Ramada hotels tend to be mid-range facilities much like a family oriented Holiday Inn,
however they do have some more upscale brands. But they have developed four tiers of hotels
in the chain:
Ramada Limited:
Ramada Limited hotels offer high-quality accommodations at value prices. Guests will enjoy
free continental breakfast newly enhanced with more variety and swimming pools at most
locations.
Ramada Inn:
Ramada properties are high-quality hotels that feature attractive accommodations for the
mid-market traveler. Amenities include swimming pools (at most locations), on-site
restaurants or a-la-carte food service and enhanced continental breakfast.
Ramada Plaza:
Ramada Plaza takes the Ramada experience one step further in terms of service and style.
Designed for today’s most discerning travelers, these premier properties have a unique flair
and feature a contemporary décor that is both attractive and comfortable.
Ramada Hotel - Canada only:
Ramada Hotels are mid-priced full-service properties, conveniently located near either city
centers or airports (Canada Only). Ramada Hotels have on-site restaurants and lounges,
enhanced continental breakfast, and swimming pools (at most locations). For business
travelers, meeting rooms and boardrooms are also available.
Advertising
Wyndham will handle the advertising but the franchisee may conduct their own local marketing
program provided that all materials meet with corporate system standards. Franchisees must
also participate in certain mandatory marketing programs and may be required to purchase
specified promotional materials.
3.2.2 Finance
Initial Franchise Fee
•
•
Must pay $1,000 “application Fee” when submitting “Franchise Application”
Must pay initial fee equal to the greater of $35,000 or $350 for each guest room
88
Property Management System
Must purchase computer hardware and software to communicate with Central Reservation
System
Cost ranging from $30,000 - $100,000 depending on:
• #of guest rooms
• Food and beverage or catering services
• Amount of group and convention business anticipated
3.2.3 Operations
Purchasing From Approved Suppliers
To assure consistency among Chain Facilities, each facility must purchase equipment from
Wyndham`s list of approved suppliers that meet Wyndham’s standards for:
•
Construction
•
Furnishings
•
Equipment
•
Draperies
•
Decor
•
Bedspreads
•
Amenities
•
Carpet
•
Guest Room Size
•
Wall Coverings
•
Signage
•
Lighting
•
Bath & Bed Linens
•
Ice Machines
•
Fixtures
•
Telephone Systems
Other important factors and equipment that must be either purchased directly from Wyndham
or their approved suppliers include:
•
•
•
•
•
•
Insurance from approved supplier
Must purchase certain training and marketing material from Wyndham
Must purchase a computer system to function as the facility’s PMS (Property
Management System) from Wyndham or designated supplier
Facility must be equipped with a telecommunications system approved By Wyndham
Facility must be equipped with fully integrated electronic locking system including
electronic card keys providing a room entry audit trail
Facility must be equipped with both wired and wireless high speed Internet access in all
guest rooms and meeting rooms from LodgeNet Entertainment Corporation (LEC)
Other Fees
Name of Fee
Royalty
Services Assessment Fee
Loyalty Program Charge
Taxes
Amount
4.5% of Gross Room Revenues
Up to 5% of Gross Room Revenues
Amount assessed by federal, provincial and local tax
89
authorities on Royalties and Services Assessment Fees
Interest
Extension fee
Training Fees and Expenses
Public Offering Fee
GDS and Internet Booking Fees
Chain Conference Fee
Rooms Addition Fee
Audit Fee
Dispute Resolution Costs
Re-inspection Fee and Costs
PMS Maintenance Fees
Fee for Broadband Internet Access Service
Guaranteed Best Available Rate Processing Fee
RMA Fees
ResCentral Call Handling Fee
18% per annum
$2.00 per room per month
General Manager = $1,250 and Owner = $825
$15,000
$5.35 per reservation booked through global distribution
systems
$995 and additional charge for each attendee
$350 for each guest room added to facility
$1000 subject to increase
Costs, expenses, reasonable attorney's fees
$1000 for the first re-inspection
$39.90 - $52.50 per room per year plus $1,100 per year for
credit card interface
$150-$160 per month for 36 month term
$60 plus you must match the lower Internet rate less 10%
Currently $24 per guest per room per year
$1.65 per transferred call with $50 min per month
Estimated Expenditures For A 150 Room Ramada Plaza Construction
Item
Application Fee
Market Study
Phase 1 Environmental Survey
Design & Testing Fees
Facility Construction
Signage
Utility Deposits
Grand Opening & Advertising
Insurance
Training Expenses
Technical Systems
Miscellaneous, Non-Tangible Asset Costs
Construction Contingency
Additional Funds for 3 Month Initial Period
Land Acquisition
Total Cost Per Room
Amount
$53,500
$5,000 - $12,000
$2,500 - $5,000
$25,000 - $75,000
$7,735,301 - $8,925,346
$1,452,639 - $1,676,121
$20,150 - $43,000
$30,000 - $45, 000
$5,000 - $10,000
$20,000 - $31,600
$13,521 - $17,277
$2,700 -$4,900
$120,500 - $196,000
$55,000 - $100,000
$386,765 - $446,267
$60,000 - $80,000
Varied - need approximately 3.5 acres for building and
parking
$9,987,576 - $11,719,012
$66,584 - $78,127
90
Estimated Expenditures For A 150 Room Ramada Plaza Converted
Item
Application Fee; Initial Fee
Facility Improvements
Signage
Insurance
Grand Opening Advertising
Training Expenses
Technical Systems
Miscellaneous Non-Tangible Asset Costs
Additional Funds for 3 Month Initial Period
Total Cost Per Room
Amount
$53,500
$166,215 - $252,720
$150,000 - $225,000
$12,000 - $36,000
$9,000 - $37,500
$13,521 - $17,277
$20,000 - $31,600
$2,700 - $4,900
$45,000 - $195,500
$25,000 - $45,000
$60,000 - $70,000
$556,936 - $968,997
$3,713 - $6,460
3.2.4 Human Resources
Training Fee
necessary permits:
•
•
•
•
•
•
•
•
Building and Development Permits
Fire Safety Permit
Plumbing and Electrical Authorizations
Elevator Permit
Road or Highway Access Agreement
Operating and Maintenance Permit for Swimming Pool and Waterslide
Local Health Authority Authorization
Local Business License
Obligation to Participate in the Operation of the Business
91
Although the franchisee is not required to take an active role in the operation of the facility a
management company or individual manager with significant training and experience must
manage the facility. The manager must complete the training program offered by Wyndham
and must remain available for supplemental or remedial training as needed.
Territorial Rights
The franchisee will be assigned a “Protected Territory” in which neither Wyndham nor its
affiliates will own, operate or manage another Chain Facility without the franchisee’s consent.
Wyndham will negotiate the territory with the franchisee which will take into account one or
more of the following:
• The nature of the market the facility will serve (urban/suburban/rural)
• Population Density
• Demographics
• Natural Travel Boundaries (i.e. Rivers or impassable lands)
• The ‘seasonal’ versus year round nature of the anticipated occupancy of the facility
• The weekend versus weekday anticipated occupancy of the facility
• What public and private facilities will generate lodging demand including
airports
sports
entertainment venues
military bases
hospitals
commercial activities
highways
recreation venues
colleges
tourist attractions
shopping malls
industrial activities
92
3.3 Howard Johnson
Howard Johnson International Inc., today franchises approximately 495 hotels in the USA,
Canada, Mexico, South America, The Middle East, China and India. Each year over 15 million
business travelers and vacationers visit Howard Johnson properties worldwide. There are
currently 41 Howard Johnson franchised locations in Canada with expectations that the brand
will open an average of 4 new build locations each year for the next four years.
3.3.1 Marketing
Target Market
Howard Johnson targets a similar market to Ramada with mostly mid-range rooms. However
this package provides more detail regarding building guidelines than Ramada, making it
worthwhile to include. Howard Johnson also builds hotels based on tiers:
Howard Johnson Plaza Hotel
Mid-rise or high-rise full service hotels
Features contemporary furnishings
Offer extensive banquet facilities
Bell and room service
Swimming pool
Exercise rooms (varies by location)
Express check-out
Howard Johnson Hotel
Mid-rise full service hotel
Adjacent restaurant or restaurant at hotel (varies by location)
Swimming pool (varies by location)
Exercise rooms (varies by location)
Howard Johnson Inn
Primarily smaller, low-rise hotel
Free deluxe continental breakfast will be offered, if restaurant is not on-site
Swimming pool
Small meeting room
Howard Johnson Express Inn
Primarily smaller, low-rise hotel
Free continental breakfast
Features contemporary interior furnishings and exterior design
93
Advertising
The Howard Johnson brand is supported by an integrated local advertising program, a Canadian
national marketing and sales program and a worldwide sales and marketing program. Each
franchise location is obligated to contribute a pre-determined percentage of their rooms’
revenue to HJCFSL in support of the national and international marketing programs.
3.3.2 Finance
The financial projections are subject to changes in the general economic climate, availability of
debt and equity financing, and interest rates.
Howard Johnson Capital Cost Estimates for 80 Room Facility
36,000 ft2
Approx. Cost
$800,000
$288,000
Square Footage
Item
Site/2 Acres
Development Levies
Professional Fees
Architectural
Landscape
Civil
Site Plan
$170,000
$6,000
$15,000
$15,000
Finance Fees
Equity
Debt
Construction
Signage
Furniture & Furnishings
Franchise Fees
Project Management System
Pre-Opening Expenses
Development Fees
Contingency
Total
Cost Per Room
$100,000
$35,000
$4,320,000
$40,000
$520,000
$30,000
$25,000
$75,000
$200,000
$400,000
$7,039,000
$88,000
Howard Johnson Capital Cost Estimates for 120 Room Facility
Square Footage
Item
Site/2.5 Acres
Development Levies
53,400 ft2
Approx. Cost
$1,000,000
$427,200
94
Professional Fees
Architectural
Landscape
Civil
Site Plan
$255,00
$9,000
$22,500
$15,000
Finance Fees
Equity
Debt
Construction
Signage
Furniture & Furnishings
Franchise Fees
Project Management System
Pre-Opening Expenses
Development Fees
Contingency
Total
Cost Per Room
$120,000
$55,000
$5,874,000
$40,000
$780,000
$37,000
$30,000
$85,000
$300,000
$600,000
$9,649,700
$80,400
95
C. Operations
New Build Prototype
The new builds should be directed to the corporate business traveler market segment while
continuing to provide services levels and amenities requested by the leisure market. The key
amenities that should be included in every new build Howard Johnson must include as a
minimum the following:
• A superior bed
• A large desk and comfortable work chair
• Full wired and wireless internet service in each room and public area
• Appropriate quality lighting
• A business centre located near reception
• Depending on location a meeting room with a capacity of 50 persons class room style.
• Be 100% smoke free
• A micro-wave oven, coffee maker and small refrigerator in each room
• An exercise room with at least 3 pieces of professional exercise equipment
• A commitment to build and operate to the latest LEED standards
The new build prototype will, at a minimum, consist of the following:
• 80 rooms
• Meeting space of 750 square feet, with the ability to handle leisure and small meetings
(up to 25 persons).
• Indoor/outdoor swimming pool. In certain markets the option of adding an indoor water
slide.
• The facility should have a strong commercial direction
• Each facility will have a breakfast area adjacent to the main reception area appropriately
designed to provide the serving of an expanded Rise and Dine continental breakfast.
• The properties will be located in market areas with a minimum population of 30,000
persons.
All aspects of the design, construction and operation of a new build Howard Johnson must
embrace an “eco friendly” commitment. This “eco friendly” commitment includes all operating
supplies and the use of recyclables where practical.
Recommended Guestroom Breakdown
•
•
•
•
•
King
King/Jacuzzi
Double/Double
Hospitality Suite
Total
Rooms
20
8
50
1
79
96
Corridors
• Shall be designed to provide architectural interest while promoting guest circulation
without confusion or need for excessive directional signage. They shall consist of:
• Patterned carpet
• Vinyl wall covering
• Wall light sconces
• Additional recessed ceiling lighting as necessary
• Directional and room designation graphics
• Electronic guestroom locks
• Linen storage rooms off of elevator vestibules of 100 square feet per floor or per 50
rooms
• Vending machine areas near guest elevator foyers of 60 square feet per floor.
Long corridors without breaks are discouraged. The plan should allow for architectural
articulation at guestroom entry door areas.
Motor Entrance
A covered motor entrance with a minimum of two full size cars in length and three cars wide
shall be provided for arrival. All guests will self park their vehicles.
All parking will be surface parking:
• One parking space for each room plus 10 employee spaces.
• In those locations where meeting space will be available to non-guests additional
parking spaces need to be provided.
• Compliance with provincial Disability Act is mandatory
Hotel Lobby
The hotel lobby sets the image of the hotel as it is the first interior space seen by the guest. It
must be welcoming to arriving guests and include:
• Entry vestibule that is weather protected
• Comprise of not less than 1350 square feet
• Lobby seating for 6-8 persons
• Include a gas fire place
• Guest elevator foyer
• Guest registration desk with 2 stations minimum (12 feet in length)
• Luggage storage area of 100 square feet. Depending on location this may be increased
to accommodate sports equipment. Consider the inclusion of an access door from the
exterior.
97
Training Fee
necessary permits:
• Building and Development Permits
• Fire Safety Permit
• Plumbing and Electrical Authorizations
• Elevator Permit
• Road or Highway Access Agreement
• Operating and Maintenance Permit for Swimming Pool and Waterslide
• Local Health Authority Authorization
• Local Business License
98
A Safety Supply Outlet
Prefeasibility Study into the Viability
Of A Safety Supply Outlet
By:
Date:
June 30, 2010
99
1.0
OVERVIEW OF THE OCCUPATIONAL HEALTH AND SAFETY INDUSTRY:
1.1
Alberta Legislation
The industry is driven by the Alberta Occupational Health and Safety Act.
This act outlines responsibilities that accrue to both employers and employees and is
particularly detailed as it applies to Alberta’s energy sector.
Every employer is mandated by the act to ensure that workers engaged in employment have
their health and safety protected as far as reasonably practical. These responsibilities also apply
to other workers not specifically working for the employer, but are present at the work site.
Every employee is expected to ensure that the health and safety of him/her self as well as
others employed or present at the job site are observed.
The act also applies to suppliers of materials and equipment. Tools and equipment supplied by
vendors must leave the suppliers’ possession in safe operating condition and that it complies
with all terms of the act.
The act also applies to a prime contractor that may sub-contract work to a number of
companies engaged in completing various components of a project.
Concurrent with the act are regulations, vocational protocols and provisions for inspection and
enforcement.
1.2
Response of the Petroleum Industry
The Alberta petroleum industry has been extremely proactive in meeting the requirements of
the Act. Enform is the safety association for the drilling and production operations of Canada’s
oil and gas industry. It is an alliance of the six major industry associations and offers 120
training programs that cover safety, operations, technology and environmental management.
Of these, 47 courses are directly related to health and safety on the job and job site.
In some cases the industry has taken the lead in professionalizing some aspects of the work. For
example, a new trade program identified as rig technician is now available to those individuals
that are directly involved in drilling operations. Enrollment in this program is now a
requirement in the province of Alberta.
100
2.0
THE PETROLEUM INDUSTRY IN THE HUB REGION
The AlbertaHUB region is the home of vast oil reserves and increasing production thereof. The
northern sector of the region contains reserves comprising oil sands very similar to the Fort
McMurray area. However the southern sector around Lloydminster contains large pools of
heavy oil. Some of this can be extracted by conventional means while a considerable proportion
is produced by heating it with steam.
Drilling and production operations in this region were not affected to the extent as those areas
of the province that depended on the exploitation of natural gas reserves.
For example Canadian natural Resources Limited is a significant producer of heavy crude oil in
the AlbertaHUB region. They are in the forefront of using innovative technology to increase oil
recovery rates. In addition the company now operates five crude oil processing plants and uses
four salt caverns for the disposal of solid material found in the oil. The company sees value in
increasing production so that larger economies of scale can be realized.
A new series of vertical wells are being developed in the area by the company. The break even
point for these wells is projected to be around $52 U.S. per barrel. This compares favourably
with a selling price of approximately $70 U.S. per barrel.
Husky Energy recently purchased all of Penn West’s heavy oil ground in the AlbertaHUB Region.
This purchase gives Husky an additional 6,000 barrels of production per day. In addition the
company gained an additional 12 million barrels of proven reserves and 8 million barrels of
probable reserves.
The company also purchased 16,000 acres of undeveloped oil land that will be explored and
brought into production. It is felt that this transaction will eventually add about one billion
barrels of heavy oil to Husky’s proven reserves.
At the present Husky operates a heavy oil upgrader, asphalt refinery, power plant and pipeline
in the AlbertaHUB Region.
These are two examples of petroleum development in the region that translate into an
increased level of secondary oilfield business growth. However this development is multiplied
as it applies to the sale of safety equipment and supplies.
The multiplication results from the fact that safety items are used extensively by those
employed and operating in both the primary and secondary sectors of the petroleum value
chain.
101
3.0
SAFETY SUPPLY ENTERPRISE MARKETING MIX CONSIDERATIONS
3.1
Product
Products sold should be appropriate to the specific methods used to drill and complete the
wells in the area. It is likely that they will differ from areas producing conventional oil and gas.
Because the Hub Region is reasonably wooded, hilly and somewhat isolated, consideration
should be given to a hot shot delivery service if it is inconvenient for customers to stop at the
store every time it is necessary.
Credibility on behalf of the owner and staff is critical. Many store enterprises have been
initiated by individuals that have worked in the drilling and production sectors of the value
chain for a time.
3.2
Price
Clothes and personal equipment are large sellers to individuals that are working in the oil patch.
The enterprise can expect to sell an individual the following items at least once per season.
Required Supplies and
Equipment
Flame Retardant Coveralls or
Bibs
Regular Steel-Toe Work Boots
Winter Steel-Toe Work Boot
Flame Retardant Clothing
(Shirts, Pants & Sweaters)
Flame Resistant Winter
Outerwear
Thermal Underwear
Hardhat Winter Liner
Hardhat
Safety Glasses/Goggles
Work Gloves
Cost
$50-$330
$50-$250
$ 39-$250
$80-$220
$700
$40-$350
$25
$35
$225 (15 pairs a year at $ 15 each)
$600 (40 pairs a year at $15 a pair)
102
3.3
Place
The size of the village or town where the business is located is not as important as the location
of oil field activity. An enterprise located in a village close to an oil play can expect to be as
viable as one in a larger area far from the work setting. There are a number of AlbertaHUB
communities that might be appropriate.
3.4
Promotion
Advertising should be seasonal to reflect the environmental conditions under which production
and drilling takes place. The industry experiences constant innovations and frequent changes to
safety regulation and protocols. New safety products should be advertized when available to
industry stakeholders.
In addition to employing knowledgeable staff the enterprise should feature new product
demonstration days as well as offering safety seminars. These are valuable aids to the personal
selling process.
4.0 FINANCIAL PROJECTIONS
Source and Application of Start-Up Funds – Safety Supplies - $500,000 Sales per Year
Start – Up Costs
Building and Land Rental
Utilities and deposit
One Month Inventory
Inventory Freight Cost
Telephone
Bank Fees
Office Supplies
Marketing and Advertising
Vehicle and Fuel
Insurance for Business and Vehicle (one month)
Legal Fees and Accounting
Lease Improvements
First Month Salary
Benefits and W.C.
Delivery
Janitorial Service
Miscellaneous
Unforeseen
Total Start-Up Cost:
$3000.00
$1,000.00
$23,150.00
$1,200.00
$1,200.00
$50.00
$2,000.00
$900.00
$10,300.00
$385.00
$2,500.00
$40,000.00
$3600.00
$498.00
$100.00
$100.00
$400.00
$5,000.00
$95,383.00
103
Source:
Personal Finances(40% of start-up cost)
Term Loan(vehicle and leasehold imp.)
Operating Loan
Total Finance:
$38,153.00
$50,000.00
$7,230.00
$95,383.00
Projected Income Statement Year One - $500,000 Sales Per Year
Revenue:
Sales
Total Revenue
Variable Expense:
Cost of Goods Sold
Inventory Freight Cost
Office Supplies
Wages
Benefits
W.C.
Vehicle/Operating/Depreciation
Misc.
Maintenance
Total Variable Expense
Fixed Expense:
Salaries
Rent
Utilities
Telephone
Insurance (Business and Vehicle)
Professional and Legal Fees
Term Loan Interest
Operating Loan Interest
Bank Charges
Depreciation
Delivery
Marketing
Unforeseen
Total Fixed Expense
Net Income Before Tax
$500,000.00
$500,000.00
$277,800.00
$5,000.00
$3,600.00
$19,200.00
$5,616.00
$360.00
$10,300.00
$4,800.00
$1,200.00
$327,876.00
$24,000.00
$19,500.00
$6,500.00
$6,050.00
$4,620.00
$8,000.00
$3,355.00
$122.00
$600.00
$8,000.00
$1,200.00
$10,000.00
$5,000.00
$96,947.00
$75,177.00
104
5.0
REFERENCES












ERCB Alberta Drilling Activity
Canadian Association of Oilwell Drilling Contractors
Oil and Gas Inquirer
Zapata Energy Corporation
Nordic Oil and Gas Ltd.
National Energy Board of Canada
Canadian Wellsite.com
Canadian Natural Resources
Husky Energy Inc.
Canadian Occupational Health and Safety Act
Alberta Occupational Health and Safety Act
Alberta EUB
105
A High End Recreational Vehicle Park
Prefeasibility Study into the Viability of a High
End Recreational Vehicle Park
By:
Date:
June 30, 2010
106
1.0 OVERVIEW OF THE TOURISM / RV RECREATIONAL VEHICLE INDUSTRY
1.1 The High End RV Industry in Alberta:
It is significant to note that approximately 40% of Albertans engage in overnight camping in
Alberta and that 75% of this activity is by some form of recreational vehicle. The recreational
vehicle ranges from a tent trailer through the continuum of travel trailers, fifth wheel truck
campers, slide in truck campers and motor homes.
This activity is of such popularity that fully 18% of all Alberta households own an RV. In Canada
RV sales grew by 12% in 2008 over 2007. Of this, travel trailers posted a gain of 16% and fifth
wheel units grew by 8%. Truck campers and motor homes showed negative growth. About
20,000 RV units are sold in Alberta yearly.
The age segment of the Alberta population that is the highest consumer of high end RV product
(exclusive of tent trailers) is the 55 – 64 year old range. This segment comprised approximately
233,000 individuals in 2000.
It is expected to grow by 72% by 2011 and 102 % by 2016. About 13% of families in this
segment own a high end (exclusive of a tent trailer) recreational vehicle.
By 2016, based on a two person family household, this means that an additional 15,000 RV’s
could be owned by this segment.
Large fifth wheel and pull behind luxury RV’s are displacing the class A motor home. The advent
of “slide outs” and the flexibility of a truck that can be used to provide transportation to
regional tourism venues surrounding a base RV park make these an attractive choice for many
RVers.
The fifth wheel configuration makes towing a boat or off-road recreational toy a practical
option. However, this increases the length of a large unit to about seventy feet.
1.2 Demographics of the high end RV purchasers:
Notwithstanding the effect of the recession, family incomes of baby boomer families are still
relatively high. Since the pre boomer generation maintained extremely high saving rates it is
clear that discretionary income of boomers gained by inheritance will enhance retirement. Part
of these funds appear to support the yearly increase in sales of high end RV product.
The average household size of this segment is less than three people. Therefore time taken to
raise a family appears to be coming to an end, thus creating time for extensive leisure activities.
1.3 Psychographics of the high end RV purchasers:
107
Studies by Travel Alberta indicate that consumers of tourism product in Alberta fall into four
target markets. These comprise urban explorers, adventure seekers (accomplishers), comfort
seekers and real relaxers.
Those purchasing this product fall into the latter two categories. Comfort seekers seek safety,
reliability and familiarity in their purchases. Because many have developed long time social
connections with family or friends, many activities are undertaken as a collective. This is
demonstrated through group RV activities, i.e. staying at the same campground, purchasing
the same make of RV and tow vehicle and the like. This pattern will be repeated until one of the
motivators changes.
Real relaxers seek to “get away from it all” and do no nothing. From the perspective of RV camp
operators peace and solitude are the prime motivators of this target market.
1.4 Emerging Leisure Activity Trends Relating to the RV Lifestyle:
Camping in well developed RV parks, hiking/ sightseeing, photography, cycling, fishing and
boating are all gaining in popularity. Many of these pursuits take place in natural settings. The
flexibility of a high end RV and an appropriate park that satisfies the needs of the client will
tend to maximize the enjoyment and pleasure of engaging in these activities.
108
2.0 IMPLICATIONS FOR THE MARKETING MIX PERTAINING TO THE
DEVELOPMENT OF A HIGH END RECREATIONAL VEHICLE PARK
2.1 Location (place):
The park should be located within convenient driving distances of Calgary and Edmonton and
recreational venues – preferably on paved roads. A four to five hour trip including mobilization
and demobilization would find an RV in most areas of the AlbertaHUB region. Proximity to a
lake or river with good fishing and boating is a major attribute that is almost a requirement.
The park should be situated within reasonable proximity of a paved numbered highway. The
possibility of acceleration and deceleration lanes should be investigated.
Arrangements should be made with the appropriate municipality to ensure that gravel roads
connecting the park to the highway are well maintained at all times.
If the park is to be used as a base for visiting regional venues via day trips, the area around Saint
Paul should be considered as an ideal location.
2.2 Rental Fees (price):
RV campers insist on value for money. They resent paying what they perceive as a large fee for
sub-standard, dirty or run down facilities. Conversely a well treed park that provides isolation,
privacy, a high level of up to date amenities and well trained and courteous staff can charge
fees that a considerably higher than average. The average fee for an overnight stay at a private
campground in Alberta is $32.00. High end pull through parks in the South West USA were
charging $50.00 per night $USD in 2008
2.3 Advertising and Personal Selling (promotion):
Strategically located signage should be erected featuring easy to understand directions to the
park. These should also be located at the Travel Alberta ports of entry to the AlbertaHUB
Region. Travel Alberta maintains numerous advertising programs that are cost shared with
tourism operators. These include web –based opportunities as well as trade show attendance.
These should be accessed.
2.4. Physical Plant (product):
The land on which the park is constructed should feature trees or alternatively shrubbery that
can be used for wind breaks, protection from the sun and privacy. Comfort seekers and real
relaxers are distinct target markets and should be placed in different sections of the park.
109
Consideration should be given to surrounding the park with a security fence and employing
discreet security staff. This is especially important for those customers towing expensive boats
and off road vehicles.
In addition, after dark lighting should be installed to deter theft and vandalism.
Pads must be sized to account for the potential length of an upscale unit and the extra width of
the slide-outs. Fire pits are an absolute requirement. Pull through pads are necessary and could
be rented for a premium price.
Amenities as flush toilets, showers, a holding tank dump as well as electrical, water and sewer
pad hook ups should be considered. In addition cable service and internet connection are
becoming a requirement.
The type of RV envisaged is voracious consumer of energy and likely to become more so.
Therefore fifty amp electrical services should be installed if possible. Thirty amp services should
be considered as a minimum.
2.5. Ancillary Profit Centers:
Additional profit centers should be considered. The destination RVer who will be staying for a
number of days is a potential purchaser of groceries, sundries, fishing tackle, fuel, bicycle
rentals, regional tours and the like. For the real relaxer segment an on pad pump – out and
fresh water service should be investigated should the park not be equipped with these hookups.
An important profit center may be developed around the itinerant oil field service target
market. This segment employs technical people on the field site typically for a few weeks. More
and more of these individuals are finding it profitable to stay in their own fifth wheel or travel
trailer rather than seek accommodation at a near by motor hotel.
110
3.0 FINANCIAL PROJECTIONS
The following financial projections are based on a sixty pad facility. The projected income
statements are based on $344,750 and $405,000 gross revenue respectively.
Ancillary profit centers were not considered in the projections.
Projected Application and Source of Start-up Funds - 60 sites
Application:
Construction Costs
Land(25 acres@$3,000 per
acre)
Land Improvements (roads, pads, landscaping, etc 60@ $6000)
Utility Servicing (water, power, gas, etc 60@$4000
Infrastructure (office, water, sewer, showers, bathrooms, etc
60@$14,000)
Vehicle / Equipment
Licences/Permits
Professional Fees
Contingency
Total construction Costs
840,000
8,000
2,000
10,000
50,000
$1,585,000
Other Start Up Costs
Pre-Opening Marketing Costs (radio, print, TV advertising)
Pre-Opening Human Resource Costs (project assistant)
Pre-Paid Operating Expense (insurance, utility deposits, etc.
Office Supplies, Equipment
Misc. Costs
Total Other Start-Up Costs
10,000
30,000
15,000
8,000
10,000
$73,000
Total All Start-up Costs
$1,658,000
Source:
Owner Equity (43% const.)
Term loan/Builder mortgage (57% const.)
Revolving Operating Loan
Total Financing
679,000
906,000
73,000
$1,658,000
75,000
360,000
240,000
111
Projected Income Statement - $344,750 Sales/Year
Revenue:
Pad Rental
Total Revenue
344,750
$ 344,750
Expense:
Direct Expense:
Staff Salaries and Benefits
Marketing
Office Supplies
Property Taxes
Park Repairs / Maintenance
Vehicle & Equipment Fuel / Maintenance
Utilities
Total Direct Expense:
$
Fixed Expense:
Owner Salary
Insurance
Depreciation
Professional Fees
Travel
Term loan Interest
Misc.
Total Fixed Expense:
Net Profit Before Taxes
24,000
14,000
71,750
2,000
3,000
53,254
5,840
1,000
$ 174,844
$ 108,795
Cash Flow Analysis:
Net Profit Before Taxes:
add: depreciation
less: term loan principal
Net Cash Surplus: (assumes operating loan continuously revolved)
25,512
5,000
2,000
4,000
6,000
1,800
16,800
61,112
108,750
71,750
-16,305
$ 164,195
Projected Income Statement - $405,000 Sales/Year
Revenue:
Pad Rental
Total Revenue
405,000
$ 405,000
112
Expense:
Direct Expense:
Staff Salaries and Benefits
Marketing
Office Supplies
Property Taxes
Park Repairs / Maintenance
Vehicle & Equipment Fuel / Maintenance
Utilities
Total Direct Expense:
$
Fixed Expense:
Owner Salary
Insurance
Depreciation
Professional Fees
Travel
Term loan Interest
Misc.
Total Fixed Expense:
30,000
14,000
71,750
3,500
4,000
53,254
5,840
1,000
$ 183,344
$ 146,686
Cash Flow Analysis:
Net Profit Before Taxes:
add: depreciation
less: term loan principal
Net Cash Surplus: (assumes operating loan continuously revolved)
20,250
6,000
2,500
4,000
6,200
2,000
34,020
74,970
146,686
71,750
-16,305
$ 202,131
NOTE: Sales are based on 9850 billable nights @ $38 per night.
113
Projected Balance Sheet Before Tax - $344,750Sales/Year
Assets:
Liabilities:
Current Assets:
Current Liabilities:
Cash
Inventory
$
$
164,195
5,000
Total Current Assets:
$
169,195
Fixed Assets:
Land
Infrastructure
Buildings
Vehicle/Equipment
Less depreciation
Total Fixed Assets:
Total Assets:
$
$
$
$
$
75,000
662,000
840,000
8,000
71,750
Accounts Payable
Current Portion
Term Debt
Total Current
Liabilities:
$
$
5,000
17,298
$
22,253
Term Liabilities:
Mortgage
Total Term Liabilities
$
$
872,397
872,397
Owner's Equity:
Beginning Equity
Add profit
Ending Owner Equity
$
$
$
679,000
108,795
787,795
Total Liabilities and
Owner Equity:
$ 1,682,445
$ 1,513,250
$ 1,682,445
114
4. REFERENCES





Alberta Recreational Vehicle Campground Study, Western Management Consultants,
2001 commissioned by Alberta Tourism, Parks, Recreation & Culture.
Alberta Campground Business Profile, 2002 produced by the Province of Alberta.
Recreational Camping in Alberta, The Praxis Group, 2451 Dieppe Ave. S.W. Calgary. –
Produced for Alberta Tourism, Parks and Recreation
Market Research Into the Four Tourism Target Markets in Alberta- produced by Alberta
Tourism, Parks and Recreation.
2008 Visitor Guide for Alberta Central – Produced by Alberta Tourism, Parks and
Recreation
115
Primary Agriculture Value Added
Association
Of A Primary Agriculture Value Added
Association
By:
Date:
June 30, 2010
116
1.0 OVERVIEW OF TWO SIGNIFICANT DRIVERS RELATING TO PRODUCTION
AGRICULTURE:
1.1.
The Revenue Economic Environment
Production agriculture refers to the raising of plants and animals on a mass production scale. In
order to facilitate the generation of large amounts of product all of the principles of “perfect
competition” have been adopted by the industry. These comprise:

A grading system that specifies all characteristics of the product so that plants or
animals described by grade are virtually identical throughout the production area. For
example, wheat graded one red spring with a specific protein level grown in Alberta will
be indistinguishable to that grown on a Manitoba farm.

A system for discovering price that involves a large number of buyers and sellers and a
nearly instantaneous communication system. Grain exchanges in all parts of the world
make it possible for a producer or broker to sell product at any time. This is evident in
other areas of non – agriculture commodity production also.

Ease of entry and withdrawal by producers from the industry. This ensures that
investment can flow in and out of the industry at will and contributes to the efficient use
of capital.
Taken together the above factors ensure that the industry supply and demand curves respond
to internal strengths and weaknesses as well as external opportunities and threats in a dynamic
way.
However, the demand curve facing an individual producer differs significantly from that of the
industry. Because production agriculture implies that many producers and buyers are engaged,
each has a negligible effect on the industry supply and demand curves. The result is that the
demand faced by an individual producer effectively becomes a horizontal straight line.
This means the producer can sell an unlimited amount of product at a price below the demand
line (curve) and nothing above it!
1.2.
The Cost Economic Environment
Decreases in costs of production typically are the result of innovations cycling through the
system of individual producers comprising the industry.
Innovations that lower costs will allow the producer to lower the cost of production per unit on
the amount produced at present or alternatively allow the producer to expand output and
retain the existing cost of production level.
117
Typically producers will elect to take a follow the middle path by expanding production
somewhat and lowering production costs somewhat. However, the reaction to innovation takes
place over time. Producer social systems comprise individuals that fall into the categories of
innovators, early adopters, early / late majorities and laggards.
While the innovation makes its way through the social system the first three sectors of the
producer social system will reap large profits due to lower costs made possible by the
innovation as well as economies of scale due to larger levels of production.
However the innovation is also a signal to outside investors to enter the industry. The increase
in industry production will serve to lower the industry market clearing price thus causing a
return to “normal” producer profits. The introduction of four wheel drive tractors and air
seeders are examples of this paradigm.
118
2.0
THE STRATEGIC “VALUE” OF VALUE ADDED
Value added is primarily a concept that refers to adding value to a primary agricultural product
by changing its nature through additional processing operations. Transforming wheat into
bread or grapes into wine are examples of this process.
Notwithstanding the above, the value added concept can also be applied to a primary
agricultural product by increasing its intrinsic value. For example a product that meets organic
production standards or is naturally grown can be perceived by customers as having value in
excess of that grown in a conventional manner.
It is clear then that if intrinsic and processing value added can be combined in a single product
it is possible to significantly increase that proportion of the final consumer price that accrues to
the primary producer.
This is the rationale behind the formation of a primary producer generated value added
association.
119
3.0
FORMING A VALUE ADDED ASSOCIATION IN THE HUB REGION
3.1.
Gauging Interest in the Association
Potential members of the association will be primary producers in the AlbertaHUB Region that
ultimately subscribe to the goal of building wealth by maximizing the value of the primary
product including its transformation to the ultimate consumer.
Members of this group value the input of like minded associates in assessing the cost / risk /
reward of generating an organization not previously in existence.
An efficient method of gauging interest is to hold a series of meetings to be attended by the
innovator / early adopter / early majority members of the regional social system. In addition to
AlbertaHUB staff several resource people from Alberta Agriculture and Rural Development
should be in attendance.
The first information meeting will produce more questions than answers. The result will be a
decision to hold a second meeting that will resolve these questions.
Assuming that the second meeting is a success, the third meeting will evolve into an
organizational meeting.
3.2
Formalizing The Organization
The organization most commonly used in Alberta is the “Not for Profit Entity”. This type of
organization comprises a board of directors, a slate of officers and members at large.
It offers a certain amount of liability protection to officers and directors. However a not for
profit organization incorporated in the Province of Alberta may purchase additional liability
insurance to protect directors and officers. It should be noted that the additional insurance
does not protect against acts that are proven to be those of wilful recklessness.
In addition, provincial and federal governments maintain extensive financial grants and
contributions targeted specifically to incorporate not for profit associations.
The organization is simple to form under the Corporations Act. A name search is required as
well as a completed application form. Generally the services of a lawyer are not required.
The value added association may elect to use the pro-forma by-laws provided by the province.
However it is strongly suggested that the organization develop a set particular to its needs.
120
3.3.
The Board of Directors and the Planning Process
The formal board of directors is elected at the first general meeting of the organization. At this
meeting the founding directors (if not formally elected to the board will have completed their
task.
One of the more important responsibilities of the board should be the completion of a strategic
management system. This is a living document and identifies:



Where the organization is at the present
Where it wishes to be at an identified point in the future
The actions that have to be taken to arrive at this point
There are a number of steps that the board must undertake to complete the plan.
Planning to Plan involves identifying those individuals who are committed to engaging in the
process during their term of office or employment. It is important that there is continuity even
though personnel changes are inevitable.
The Visioning Stage results in a description of the planners and other stakeholders’ dream of
the enterprise a significant number of years into the future. It is extremely important that
conflicting stakeholder futures be reconciled at this stage before proceeding to subsequent
stages of the process.
The vision should be subjected to a S.W.O.T. analysis. Strengths and weaknesses of the
organization are examined as well as external opportunities and threats. This serves as a final
check on viability and may result in some modifications.
The Mission Statement derives from the vision, but is couched in more specific terms. It is a
positioning statement and serves to differentiate the organization from those in the region that
undertake complementary projects.
The mission statement answers three questions:
 What will we do?
 How will we do it?
 For whom will we do it?
A suggested mission statement for the organization is as follows:
The mission of the Regional Value Added Association is to conduct economic and agronomic
research on crops with value added potential that can be produced and processed in the region.
This will be accomplished by engaging the efforts of direct stakeholders as well as the assets of
the region to the benefit of all citizens residing in the area.
121
The Development of One Overall Goal is extremely difficult for an organization of this nature.
Rather, the planning group should focus their efforts on developing sub-goals for the functional
areas of the enterprise. The functional areas are:





Marketing
Operations
Human Resources
Management/Administration
Finance
Based on the above the organization should develop the Yearly Tactical Objectives and the
Implementation Regimes. Specific 12 month objectives in each of the five functional areas of
the association should be developed. Progress against objectives should be such that it can be
easily measured on a month to month basis.
Implementation regimes must identify what is to be done, by whom and with what resources.
At the end of the planning year the plan should be evaluated and modifications made to the
next year if necessary. At the same time, a further planning year should be added to the
planning horizon. This will ensure that the planning horizon remains constant.
3.4.
Composition of the Board of Directors
The Board of Directors should comprise those individuals that demonstrate a strategic interest
in the value added aspects of agriculture in the AlbertaHUB region. These would include elected
members of municipalities, producers falling into the innovator / early adopter class,
employees of Alberta Agriculture and the like.
In addition, organizations that have goals complementary to the value add association should
be encouraged to sit on the board. For example, Areca is a provincial association of a non-profit
producer association with a mandate to enhance the sustainability of agriculture in Alberta.
Lakeland Agricultural Research Association is the entity operating in the AlbertaHUB region.
This organization represents primary producers and concerns itself with the agronomic side of
primary agriculture by conducting field trials of cultivars.
Local field trials are a necessary component of any business plan relating to a value added
enterprise. This aspect of business planning could be sub-contracted to an organization
presently operating in the region.
122
3.5
Finance
Partial financing of the association can be accomplished by grants from local municipalities and
major players in the agribusiness industry i.e. Viterra, UFA and the like. Funds raised in this
manner can be used to leverage contributions from provincial and federal agencies.
A suggested budget appears below for Year One of association operation.
REVENUE:
Municipal government Funding
Industry
funding
Donated In
Kind
Provincial / Federal Project Contribution
TOTAL REVENUE:
EXPENDITURE:
Part Time Coordinator
Office
Supplies
Rent /
Utilities
Insurance
Accounting
Advertising
Mileage
Office Equipment (one time
charge)
Project Development
TOTAL EXPENDITURE
$ 30,000.00
$ 10,000.00
$ 10,000.00
$ 50,000.00
$ 100,000.00
$ 25,000.00
$
400.00
$
$
$
$
$
2,000.00
1,200.00
1,000.00
700.00
1,200.00
$ 2,500.00
$ 66,000.00
$ 100,000.00
123
4.0
STRATEGIC VALUE ADDED PROJECTS TO BE CONSIDERED
4.1
Natural and Organic Personal Care Market
The Government of Alberta’s Bio-Industrial Development Branch is actively engaged in finding
uses for Value Added Plant Based Ingredients. Discussions with the Branch indicate this is a
burgeoning industry that should be on the radar of producers and potential processors in the
AlbertaHUB region.
The core stakeholders in the public and private sector are looking for new uses for non
traditional crops for the cosmetics and personal care ingredient industry. The Specialty
Cosmetic Ingredient Initiative (SCI) is focused on and helping to build a globally competitive
plant-based cosmetic & personal care ingredient industry in Alberta. Alberta is strategically
placed to capture part of the growing natural plant-based cosmetic and personal care
ingredient market.
The SCI initiative maintains a market-focused business development approach using preliminary
research and prototype ingredient development in collaboration with local and international
industry.
The cosmetic and personal care industry is looking for botanical ingredients/actives with the
following six functional uses:






Anti-bacterial
Anti-inflammatory
Anti-microbial
Anti-aging
Preservative booster
UV enhancer
The Natural and Organic Personal Care (N&OPC) market is considered to be a long-term trend.
According to Nutrition Business Journal (NBJ), N&OPC continues to gain a bigger share of the
total US$57 billion Health & Beauty Care Market (HBC). Theory behind the ‘lipstick index’ 13
appears to be holding, even in this unprecedented global recession.
According to the 2009 NBJ, the N&OPC market grew in the U.S. 8.4% to US$7.6 billion, (despite
the sinking economy) and is continuing on an upward trajectory - accounting for 13.4% of the
13
This economic term – coined after sales of Estee Lauder’s lipsticks surged following the September 11 terrorist
attacks – is based on the dual idea that people care about their appearance as much, if not more, during troubled
economic times, but that they will trade expensive luxuries for less-expensive ones when their purses are
pinched.” - NBJ report 2009
124
total US$57 billion health & beauty care (HBC) market. NBJ estimates that through to 2017, the
total N&OPC market is expected to continue growing at a compound annual rate approximately
8%. This compares to conventional petroleum-based cosmetic and personal care market growth
typically of only 1-3%.
NBJ projects N&OPC will continue to gain a bigger share of total HBC sales and estimates by
2017- almost one quarter of all HBC sales will be in the N&OPC market.
The top companies in the N&OPC market are Burts’ Bees , now owned by Clorox, is at the top of
the list. Aveda (owned by Estee Lauder) and Aveeno (Johnston & Johnston) maintained the
second and third slots. The top organic products include Origin Organics (owned by Estee
Lauder).
The staff at the Bio-Industrial Development Branch would like to see more processing
capability, but first they have to find the characteristics that the industry wants, that Alberta
can growers can grow, that are safe, and that have the six functional characteristics.
The Branch says that most pressing industry gap in Alberta is with processing ability. Extracting
the functional ingredients (i.e. processing) is what is needed. There are a handful of processing
companies in Alberta, but it is a risky business to get into at this stage of the product life cycle.
A processing facility has to have more that one ingredient and one market to be viable.
In terms of primary ingredients oats and safflower amongst other crops are already being used
as cosmetic ingredients in Alberta. And there are many other ingredients that are being tested.
But the industry runs purely by a pull-through marketing mechanism. Most of the industry
powerhouses are in New York, New Jersey, and Europe, and they set the demand for what type
of characteristics they need in ingredients, and this drives the search for new development.
This high-level international pull-through demand combines with the risky nature of the start
up (especially in processing) requires a collaborate effort. A representative at the Bio-Industrial
Development Branch through that the Value Added Association is a very good way to proceed
due to the rapidly forming nature of the industry, the information required, and the potential
entry costs.
The Bio-Industrial Development Branch through would encourage an association to form and
liaise with them on a regular basis. For instance, they have ‘alerting systems’ that inform them
what the industry is looking for, this is a first step for the Branch and farmers to see what types
of crops may be in demand. In addition, a well organized association that has a strong
relationship with the Branch and other government departments is more likely to be able to
access the significantly funding available to participants in an innovative agricultural field like
Specialty Cosmetic Ingredients. The role of information conduit and facilitator is where
AlbertaHUB could be of great use to an Association.
125
4.2
Bioenergy and Bioproducts in General
The government of Alberta has invested tens of millions of dollars in various bio-initiatives in
recent years. The research team was able to interview several specialists in this area who feel
that there is great opportunity for the AlbertaHUB region, as a strong agriculture sector, to take
advantage of new programs, facilities and funding opportunities.
AlbertaHUB can use its connections and central regional role with members to act as a
facilitator to help put together such a Value Added Association and bring the multitude of
partnerships to bear that will be necessary to properly investigate the options for further
developing the bio-products industry in the region.
Representatives at Bio-Industrial Development Branch at Agriculture and Rural Development
were very interested in working with the agriculture sector in the AlbertaHUB region. Their
involvement in the bioenergy field and the region’s successes with cluster development around
Highmark's Renewable and Highland Feeders has the region high on their radar. And the
concept of a Value Added Association to work cooperatively on research and capital cost issues
would led itself very well to biogas and other bio-industries.
Bio-Industrial Development Branch staff was also quick to point out the funding opportunities
for the bioenergy and bioproducts industries. Please refer to Appendix 1 for an extensive listing
of Federal and Province of Alberta Bioenergy and Bioproducts Funding Sources
4.3 Camelina
Camelina and Triticale were both mentioned a number of times by agriculture specialists during
the course of the study.
Camelina is an oil seed crop that has unique agronomic properties that make it a good
candidate for use as a biofuel feedstock. It is similar to canola in oil content and the meal can be
used as an animal ration supplement. However the seed is much smaller than canola.
The plant grows well on soils that are not comparable with the best in the province. It is
resistance to drought is high and is a vigorous competitor to weeds. It also fits into a cereal
grain / pulse / canola rotation and can be sown as a no till crop.
Input requirements are approximately two thirds to three quarters of those required for canola.
Camelina is poised to replace canola and soybeans as a lower cost and culturally acceptable
feedstock for biodiesel. Moreover it appears to have unique characteristics that render it ideal
as a jet fuel blend.
Several airlines are flight testing this fuel with good results and it is expected it will gain general
acceptance as it has that potential of lowering greenhouse gases by 70%. A U.S. supplier
recently supplied 20,000 gallons of camelina oil to a European airline for in depth testing. In
126
addition, the U.S. air force is conducting tests of a 50 –50 blend of refined camelina and
petroleum jet fuel. The latest test involved an F-18 successfully flying at supersonic speeds.
Great Plains Oil and Exploration and Sustainable Oils LLC have been in the forefront of the
camelina initiative. This spring Great Plains contracted 80,000 acres of production with growers
in Montana and expects to significantly expand operations into the Canadian Prairie Provinces.
4.4 Triticale
Triticale is another value added crop that should be considered for analysis. It is a hybrid of
wheat and rye and in fact was developed in Canada as a cereal cultivar about 30 years ago.
Yields are similar to wheat (40-50 bu/acre). However input prices and production costs are
lower. About 200,000 acres of triticale are grown in Western Canada. The main use of triticale
at this time is for animal production although it is considered a foodstuff in other countries.
Tests indicate that it is a superior feedstock when compared to utility wheat regarding the
production of ethanol. In addition the straw appears to be amenable to the production of
cellulosic alcohol.
Some additional value added uses projected for triticale are:




A high fiber replacement for wheat in the production of snack / energy bars.
Biodegradable plastic packaging for all manner of goods. Triticale based packaging can
even be composted.
A replacement for wood pulp in the manufacture of paper.
A binder for asphalt in road construction.
Work is continuing regarding the commercialization of the grain and straw into value added
products through the Canadian Triticale Biorefining Initiative. This is a partnership of five
universities, three industry operators and six government departments.
Alberta Agriculture is one of the members as is Agriculture Canada who contributed $15.5
million to the project last year. There appears to be credible industry and government support
for value added development and production regarding the above primary products.
In addition the soil, climate, primary producer social system and values of the AlbertaHUB
Region seem amenable to growing these grains and taking the next step of creating wealth
through value added activities.
4.5 Industrial Hemp Production
One of the agricultural specialists at the Agriculture and Rural Development was eager to
discuss the possibility of industrial hemp production in the AlbertaHUB region. He feels there is
127
a great opportunity for new production due to soil conditions and new potential markets. Here
is an overview of the industry:
Effective March 12, 1998, the commercial production (including cultivation) of industrial
hemp was permitted in Canada, under licenses and authorization, issued by Health
Canada. This action was prompted by several years of field research and lobbying by the
agricultural and business community. Prior to 1998, there were only a handful of licenses
issued to grow industrial hemp in Canada. In 1998, the first year after Health Canada
opened up the licensing process, 241 licenses were issued. These licensees grew almost 2
370 hectares (5,857 acres) of hemp for industrial use. In 1999, the number of applications
to grow hemp jumped dramatically to 545 with the area of hemp production increasing
six-fold to nearly 14 031 hectares (34,657 acres).
It looked as though the industrial hemp was well on its way to becoming the "Cinderella"
crop in Canada. However, events in the summer of 1999, i.e., the demise of the
perspective hemp processing company in Manitoba, changed the outlook for hemp
production in Canada.
The industrial hemp production received a lot of attention in the early years. However,
the sudden demise of Consolidated Growers and Processors (CGP) Inc. of California left a
large number of hemp growers in Manitoba sitting with a huge crop and nowhere to
market it. This company was largely responsible for the rapid increase in acres in 1999 and
the fallout in 2000. The CGP contracted an estimated 40 per cent of the total industrial
hemp area licensed in Canada in 1999. However, the company went into receivership
after failing to meet contractual obligations. This left the hemp producers with a huge
surplus of hemp seed and fiber hanging over the market. This surplus was stored in
warehouses and farmers’ bins, awaiting bankruptcy settlement. A considerable portion of
the hemp crop did not get sold and producers had to absorb the losses. Thus, the negative
events of 1999 have brought a lot of scepticism and fear for the future growth potential of
hemp industry in Canada.
However, the downturn in hemp cultivation during the last three –four years is buoyed by
a steady increase in the processing of hemp, and the development of many small
businesses engaged in developing new products and marketing of these products. In
Alberta, work is well underway at Alberta Research Council (ARC) and Alberta Agriculture
and Rural Development (AARD) to evaluate hemp as a potential source of producing pulp
and fiber.
In 2009, area licensed for hemp production increased by 72 percent across Canada over in
2008. Currently, there are many Canadian companies – including Hempola Valley Farms;
Fresh Hemp Foods; Ruths Hemp Foods; HMF Sales and Marketing; Hemp Oil Canada; Cool
Hemp; Natures Path; However; among others – working with hemp food. Many of these
companies have strong regional distribution but there is no clear national leader yet. All of
these companies are involved in the hemp seed market and are producing a wide range of
128
products. These are snack foods, hemp meal and flour, edible oil, shampoo and
conditioners, moisturizers, commercial oil paints, beer and aromatherapy and cosmetic
products. Most of the companies are reporting good growth. Another trend worth noting
is that much of the hemp food industry has switched to certified organic production
because of strong demand. A few industry experts estimate that around 1/3 of Canadian
hemp seed production is certified organic.
History of Commercial Hemp Production in Alberta and Canada, 1998 - 2009
Year
Alberta
Hectares
Alberta
Acres
Canada
Hectares
Canada
Acres
%
Alberta
1998
38
93
2 371
5,857
1.59
1999
745
1,840
14 031
34,657
5.31
2000
306
756
5 487
13,553
5.58
2001
113
279
1 316
3,250
8.59
2002
123
304
1 530
3,780
8.04
2003
153
379
2 733
6,750
5.61
2004
639
1,577
3 531
8,721
18.09
2005
916
2,262
9 725
24,021
9.42
2006
2 103
5,194
19 458
48,060
10.81
2007
1 455
3,593
6 132
15,145
23.71
2008
582
1,437
3 259
8,050
17.85
2009
782
1,932
5 602
13,837
13.96
Source: Health Canada
129
5.0
COMMERCIALIZATION OF THE OUTPUT FROM THE ASSOCIATION
Value added processing will entail the development of a business organization. One of the
options available to the AlbertaHUB Region is the formation of a New Generation Cooperative
(NGC).
It can take the form of a marketing organization for a differentiated primary product as well as
a processing enterprise that further transforms a primary product.
In terms of a start up organization the NGC exhibits the following advantages:
 It is an agricultural organization that is generally limited to primary producers in a
region.
 Because it is regionally owned and managed by directors chosen from the membership
it can be expected to have high credibility in the community.
 Start-up equity is raised from the membership and existing investment shares used for
this purpose can only be sold to members on approval of the board of directors. This
ensures that the organization continues to be operated by regional producers.
 A well designed and operationalized coop can attract a significant number of members
thus holding the equity requirements and financial risk to any one member at an
acceptable level.
Other characteristics are:
 Only one voting share is issued per member. However more than one investment share
can be purchased by a member. The equity share confers the right and obligation to
deliver a specified quantity and grade of primary product to the coop.
 This ensures that the coop will have a continued supply of input and that the member
will have certainty that the coop will buy his product.
These shares have a value based on the supply and demand of the value added product
produced by the coop and may be traded within the coop on this basis.
Product delivered through an equity share will generally have an initial payment made to the
producer and a final payment made at the end of the fiscal l year after the coop income
statement has been produced.
As will be appreciated this pre-feasibility study offers a system by which the primary agricultural
sector in the AlbertaHUB Region can reduce the effects of cyclical demand and prices thus
allowing the industry to generate wealth on a consistent basis.
130
6.0
REFERENCES

















New Generation Cooperatives – Scott Wolfe Management Inc.
PureVision Technology Inc.
Canadian Business Online
Canadian Triticale Biorefinery Initiative
Top Crop Manager
Agriculture Marketing Resource Manager
Iowa State University
E/C Consulting
Areca
Great Plains Oil and Exploration Company
Purdue University
Sustainable Oils LLC
Alberta Agriculture and Rural Development
Alberta Corporations Act
Agriculture and Agrifood Canada
Manitoba Agriculture, Food and Rural Initiatives
Saskatchewan Agriculture
131
7.0 APPENDIX 1: FEDERAL AND PROVINCE OF ALBERTA BIOENERGY AND
BIOPRODUCTS FUNDING SOURCES
Organization
Funding
Program
Contact
Description
Canadian
Agricultural
Adaptation
Program
(CAAP)
Phone: 613-773-1914
Fax: 613-759-7977
http://www.agr.gc.ca/a
caaf/index e.html
Agricultural
Bioproducts
Innovation
Program
(ABIP)
1-877-BIO-4682
Email:
[email protected]
a
http://www4.agr.gc.ca/
AAFC-AAC/displayafficher.do?id=1195566
837296&lang=eng
AgriProcessing
Initiative (API)
1-877-246-4682.
Email [email protected]
For further details on
AgriFlexibility, visit
www.agr.gc.ca/agriflexi
bility. For more
information on
Canada’s Economic
Action Plan, visit
www.actionplan.gc.ca.
The Canadian Agricultural Adaptation
Program (CAAP) is a five-year (20092014), $163 million program with the
objective of facilitating the agriculture,
agri-food, and agri-based products
sector's ability to seize opportunities, to
respond to new and emerging issues, and
to pathfind and pilot solutions to new
and ongoing issues in order to help it
adapt and remain competitive.
The Agricultural Bioproducts Innovation
Program (ABIP) is a $145 million, multiyear (2008-2011) program that seeks to
mobilize Canada's creative talent in
academia and in the private and public
sectors and to integrate resources to
build greater research capacity in
agricultural bioproducts and
bioprocesses. Through supporting
networks and clusters, the program
promotes research, development,
technology transfer and
commercialization activities in areas such
as biofuels, other forms of bioenergy,
biochemicals, biopharmaceuticals, etc.
The Government of Canada is investing in
new processing technologies and
projects that will create new, more stable
markets to improve income
opportunities for farmers and the
processing sector. The AgriProcessing
Initiative (API) will deliver $50 million
over five years in repayable contributions
to processing facilities. API will provide
contributions for the purchasing and
installing of equipment in Canadian
facilities to enable the adoption of new
manufacturing technologies and
processes. The initiative may also
contribute towards costs related to the
contracting of external expertise for
services related to equipment
installation, and consultation, design, and
Federal
Agriculture &
Agri-Food
Canada
(AAFC)
132
AgriOpportunities
Program
Phone: 1-877-BIO4682
(1-877-246-4682)
http://www4.agr.gc.ca/
AAFC-AAC/displayafficher.do?id=1195488
674667&lang=eng
advice regarding new (novel to facility)
manufacturing technologies, processes
and products. (AAFC, September 11,
2009).
The $134 million, Agri-Opportunities
Program, announced in January 2007, is a
five-year program that aims to accelerate
the commercialization of new
agricultural products, processes or
services that are currently not produced
or commercially available in Canada, and
are ready to be introduced to the
marketplace. Agri-Opportunities is
delivered nationally by Agriculture and
Agri-Food Canada.
Funding is provided to projects that focus
on new agri-food, agriculture or
bioproducts that can be expected to
increase market opportunities for the
Canadian agricultural industry across the
value chain and generate demand for
primary agricultural products.
Federation of
Canadian
Municipalities
Green
Municipal
Fund
Federation of Canadian
Municipalities
24 Clarence Street,
Ottawa, Ontario
K1N 5P3
Tel.: 613-907-6357
Fax: 613-244-1515
http://gmf.fcm.ca/GMF
/
Incentives to
go Green
Phone: 1 416 869 8700
Email:
https://secure.ca.pwc.c
om/85256FDA004ECA8
The Agri-Opportunities Program provides
a maximum repayable contribution of
$10 million per project and per recipient
regardless of the number of projects,
over the life of the program, ending in
March 2011.
FCM's Green Municipal Fund™ (GMF) is a
unique program that supports municipal
initiatives across Canada that benefit the
environment, local economies and
quality of life.
GMF grants and below-market loans
directly support municipal initiatives,
while GMF education and training
resources help municipal governments
share expertise and strengthen their
ability to set and surpass their
sustainable goals.
The Government of Canada endowed the
Federation of Canadian Municipalities
(FCM) with $550 million to establish
GMF.
PricewaterhouseCoopers identifies a
concise list of federal and provincial
sustainability-related incentives. Leading
companies recognize that social,
133
6/frmContact?ReadFor
m&Lana%20Paton~333
8A6708B48D21B85257
1EF00566FCCE
http://www.pwc.com/
CA/en/sustainability/gr
een-incentives.jhtml
Canada School
for Energy and
Environment
(CSEE)
http://www.canadasch
oolofenergy.com/curre
ntprojects/proof
environmental, economic and ethical
factors directly affect their business
strategy and success. As sustainability
becomes an integral part of the executive
agenda, organizations need to find the
right balance between generating profits
and reducing the impact of operations on
people and the environment.
Now for the first time in Canada, PwC has
brought to the marketplace a clear,
concise list of incentives that exist
federally and provincially across Canada.
The Canada School of Energy and
Environment (CSEE) invites proposals
from University of Alberta, University of
Calgary and University of Lethbridge
researchers for funding under the
Canada School of Energy and
Environment (CSEE) Proof of Principle
program.
The Canada School for Energy and
Environment (CSEE) aims to facilitate
technology transfer and
commercialization in the area of natural
resources, energy development and
environmental sustainability through
proof of principle funding.
The objective of the proof of principle
program is to advance initial research
and technology results to the next level
of impact on knowledge transfer, policy
development or technology
commercialization. Proof of principle
projects have as their purpose a
refinement or investigation of a specific
issue that is critical to the further
development or adoption of policy,
technology, or practice in one of the
following areas:
 Reducing the environmental
footprint of fossil energy
exploration, extraction and
processing;
 Alternative and renewable
energy technologies;
 Energy efficiency and
conservation technologies;
 Improved management of
energy-related greenhouse gas
134
emissions;
Policies and practices leading to
solutions for energy-environment
challenges
Full-time continuing faculty members
from the University of Alberta, the
University of Calgary, and the University
of Lethbridge are eligible to apply for
CSEE Proof of Principle funding.
The Innovative Co-operative Projects
component of CDI is particularly
interested in projects in the following
sectors:
Agriculture, including farmer-driven
projects for value-added agriculture and
biofuels;
Rural/northern community development;
Innovative goods and services, including
innovative uses of technology
Capacity building and sustainability
The program will provide grants of
$5,000 to $75,000 per project per year.
Multi-year projects with a maximum
duration of four years are also eligible, as
long as the project will end before the
program expires on March 31, 2013. The
deadline for proposals this year will be
July 31, 2009.
To provide an accelerated rate of writeoff for certain capital expenditures on
equipment that is designed to produce
energy in a more efficient way or to
produce energy from alternative
renewable sources.

Canadian
Cooperative
Association
Co-operative
Development
Initiative (CDI)
Phone: 613-238-6711,
ext. 227
Email: Stéphane
Audet, CDI program
manager
at stephane.audet@cdi
-idc.coop
http://www.coopscana
da.coop/en/coopdev/C
DI
Industry
Canada
www.ic.gc.ca
Funding
Technologies
for the
Environment
http://www.ic.gc.ca/eic
/site/ftefte.nsf/eng/00004.html
Accelerated
Capital Cost
Allowance
Innovation in
Agribusiness
Management
Fund (IAMF)
Phone: (780) 955-3714
ext. 228
E-mail:
[email protected]
m
http://www.agfoodcou
ncil.com/funding/iamf.
aspx
To qualify for Class 43.2, Higher
efficiency (efficiency = 72 percent)
systems that use fossil fuels, specifiedwaste-fuelled electrical generation
systems and renewable energy systems
must be acquired between February 22,
2005 and January 1, 2012.
The Innovation in Agribusiness
Management Fund (IAMF) supports
projects that are focused on one or more
of the three key objectives of the IAMF
program: human resource management,
transition initiatives, and leadership. The
goal of IAMF is to advance Alberta
agribusiness through assisting in the
development of innovative management
and leadership resources to build
135
Natural
Resources
Canada
EcoEnergy
Renewable
Initiative
Phone (business
inquiries only): 1-800O-Canada (1 800 6226232)
TTY: 1-800-926-9105
Email:
[email protected]
c.ca
http://www.ecoaction.
gc.ca/ecoenergyecoenergie/faq-2eng.cfm#a1
ecoENERGY
Efficiency
Initiative
Telephone: 613-9950947
Natural Resources
Canada
580 Booth, Ottawa, ON
K1A 0E8
http://oee.nrcan.gc.ca/
corporate/programs.cf
growing businesses.
All approved IAMF projects must have
activities completed by February 15,
2010 and final reports completed by
March 31, 2010. IAMF will close March
31, 2010.
The ecoENERGY Renewable Initiative is
an investment of more than $1.5 billion
by the Government of Canada in two
initiatives to make clean, low-impact
renewable energy more available in
Canada and less expensive. The two
initiatives are ecoENERGY for Renewable
Power and ecoENERGY for Renewable
Heat.
ecoENERGY for Renewable Power will
significantly increase the electricity
production from low-impact renewable
energy sources such as wind, small hydro
and biomass. The program will support
up to 4000 megawatts (mw) of new
renewable electricity capacity by 2011.
These new sources of clean power will
generate enough electricity for about 1
million homes.
http://www.ecoaction.gc.ca/ecoenergyecoenergie/power-electricite/indexeng.cfm
ecoENERGY for Renewable Heat will also
help launch solar and geothermal
technologies in the marketplace.
Preliminary estimates suggest that by
2011, the program will support the
installation of solar space and water
heating in about 700 buildings, as well as
the installation of solar hot water
systems into several thousand homes
across the country.
http://www.ecoaction.gc.ca/ecoenergyecoenergie/heat-chauffage/indexeng.cfm
Through the ecoENERGY Efficiency
Initiative, the Office of Energy Efficiency
(OEE) works to improve energy
conservation and energy efficiency in
every sector of the Canadian economy.
The OEE offers grants and incentives and
other resources, including workshops for
professionals, statistics and analysis,
awards and hundreds of free
publications.
136
m?attr=0
commercial/financialassistance/existing/retr
ofits/index.cfm?attr=0
ecoAgriculture
Biofuels
Capital
Initiative
(ecoABC)
Phone: 877-BIO-4682
(877-246-4682)
E-mail:
[email protected]
ahttp://www4.agr.gc.c
a/AAFC-AAC/displayafficher.do?id=1195672
401464&lang=eng
ecoENERGY
for Biofuels
Email –
common/sendemail.cfm?id=1241639
885&attr=16
Fax 613-995-8961
http://www.ecoaction.
gc.ca/ecoenergyecoenergie/biofuelsinc
entiveincitatifsbiocarburantseng.cfm
ecoENERGY for Biofuels
ecoENERGY Retrofit
ecoENERGY for Buildings and
Houses
 ecoENERGY Efficiency –
Regulations
 Energy-efficient products or
equipment (ENERGY STAR®)
 ecoENERGY for Industry
 ecoENERGY for Personal
Vehicles
 ecoENERGY for Fleets
Transportation (manufacturers, federal
and alternative fuels)
The ecoABC Initiative is a federal $200
million four-year program ending on
March 31, 2011 that provides repayable
contributions for the construction or
expansion of transportation biofuel
production facilities. Funding is
conditional upon agricultural producer
investment in the biofuel projects, and
the use of agricultural feedstock to
produce the biofuel.
The ecoABC Inititiave is delivered
nationally by Agriculture and Agri-Food
Canada. It is designed to provide an
opportunity for agricultural producers to
diversify their economic base and
participate in the biofuels industry
through equity investment/ownership in
biofuels production facilities. As well,
ecoABC will help achieve the federal
government's goal of reaching an
average of 5% renewable content in
gasoline by 2010 and 2% renewable
content in diesel fuel and heating oil by
2012.
On December 3, 2007, while speaking at
the 4th Annual Summit of the Canadian
Renewable Fuels Association, the
Minister of Agriculture and Agri-Food
officially announced details and eligibility
requirements for the ecoENERGY for
Biofuels program, which supports the
production of renewable alternatives to
gasoline and diesel and encourages the
development of a competitive domestic
industry for renewable fuels. ecoENERGY
for Biofuels will invest up to $1.5 billion
over nine years in support of biofuels
production in Canada. Recipients will be



137
transportation/biofuels.cfm?attr=16
Clean Energy
Fund Program
Telephone: 613-9950947
http://www.nrcan.gc.c
a/eneene/science/ceffe
p-eng.php
entitled to receive incentives for no more
than seven consecutive years.
Administered by Natural Resources
Canada, the ecoENERGY for Biofuels
program runs from April 1, 2008 to
March 31, 2017. Recipients will be
entitled to receive incentives for up to
seven consecutive years.
Clean energy is energy that is produced,
transmitted, distributed and used with
low or zero greenhouse gas (GHG) and
other air emissions. The Government of
Canada has committed that Canada’s
total GHG emissions be reduced by 20
percent from 2006 levels by 2020 and
that 90 percent of Canada’s electricity be
provided by non-emitting sources such as
hydro, nuclear, clean coal and wind
power by 2020.
In support of these goals, the Clean
Energy Fund provides $850 million over
five years for the demonstration of
promising technologies, including largescale carbon capture and storage (CCS)
projects, and renewable energy and
clean energy systems demonstrations. It
also provides $150 million over five years
for clean energy research and
development (R&D).
National
Research
Council
Canada
Sustainable
Development
Technology
Canada (SDTC)
The National
Research
CouncilIndustrial
Research
Assistance
Program (NRCIRAP)
SDTC
Phone: 1-877-9944727
Fax: 613-952-1086
Email:
[email protected]
The deadline for the receipt of full
Project Proposals is 11:59 EDT, 14
September, 2009.
The National Research Council-Industrial
Research Assistance Program (NRC-IRAP)
is Canada's premier innovation assistance
program for small and medium-sized
enterprises (SMEs).
ttp://www.nrccnrc.gc.ca/eng/ibp/irap
.html
NRC-IRAP offers you direct technical
assistance, access to the latest
technological advances, expertise,
facilities, and resources, as well as costshared financing of innovative technical
projects.
Sustainable
Development
Technology Canada
45 O’Connor Street,
Suite 1850
The $550M SD Tech Fund™ is aimed at
supporting the late-stage development
and pre-commercial demonstration of
clean technology solutions: products and
processes that contribute to clean air,
138
Ottawa, Ontario K1P
1A4
Tel: 613.234.6313
Fax: 613.234.0303
Email:
[email protected]
http://www.sdtc.ca/en
/funding/advice/who.h
tm
Avrio
Ventures
Industrial Life
Sciences Fund
Avrio Ventures
Management
Corporation
Crowfoot West
Business Centre
#235, 600 Crowfoot
Crescent N.W.
Calgary, AB T3G 0B4
Phone: 403.215.5490
Fax: 403.215.5495
http://www.avrioventu
res.com
clean water and clean land, that address
climate change and improve the
productivity and the global
competitiveness of the Canadian
industry. SDTC does not require any
repayments of the financial contributions
it provides to funded projects through
the SD Tech Fund.
The $500M NextGen Biofuels Fund™ is
aimed at supporting the establishment of
first-of-kind commercial scale
demonstration facilities for the
production of next-generation renewable
fuels and co-products. The fund will help
Canada sustainably meet its Renewable
Fuels Standards. The purpose of the
fund is to encourage retention and
growth of technology expertise and
innovation capacity for cellulosic ethanol
and biodiesel production in Canada.
Avrio Ventures provides Canada's
promising industrial bioproducts,
nutraceutical ingredients and food
technology companies with the
investment support and resources they
need to succeed.
Avrio looks for investments in three highgrowth sectors:
 Industrial Bioproducts: Industrial and
consumer goods manufactured wholly
or in part from renewable biomass
(plant based resources) applied to
produce fuels and energy, lubricants,
animal feed, polymers, solvents,
emulsifiers as well as natural fiber
composite materials.
 Nutraceutical Ingredients: Food or
agricultural inputs that provide health
and medical benefits, including the
prevention and treatment of disease.
Food technology: The application of food
science to the selection, preservation,
processing, packaging, distribution, and
use of safe, nutritious and wholesome
food.
Provincial
Advanced
Education and
Technology
AERI Funding
Alberta Energy
Research Institute
500 Phipps-McKinnon
AERI is responsible for positioning
Alberta for the future in energy and in
the development and implementation of
139
Building
10020 - 101 A Avenue
Edmonton, Alberta T5J
3G2
Phone: (780) 422-1032
Fax: (780) 427-0821
http://www.aeri.ab.ca/
sec/fun opp/fun opp
001 1.cfm
http://www.environme
nt.alberta.ca/2264.html
Innovation
Vouchers
Phone: 780-427-2192
Email:
techcomm.services@go
v.ab.ca
http://www.aet.alberta
.ca/technology/support
/vouchers.aspx
the Alberta Energy Innovation Strategy.
AERI supports the strategy by investing
with industry and other organizations in
research and technology development in
six program areas: bitumen upgrading,
clean carbon/coal, improved recovery,
renewable and alternate energy, CO2
and emissions, and water use.
All potential applicants are encouraged
to discuss their projects and obtain
advice from the appropriate Program
Director prior to providing any
documentation. AERI operates in six
research areas, please contact the most
applicable person:
• Clean Carbon/Coal Duke du
Plessis
• Bitumen Upgrading Shunlan Liu
• Improved Recovery Les Little
• Renewable Energy Richard
Nelson
• CO2 and Emissions Surindar
Singh
Water Use Richard Nelson
The Innovation Voucher program is open
to businesses that are technology or
knowledge-driven and are developing
new products or services for growing
markets. The business must be registered
in Alberta or Canada, conduct more than
50 percent of its business in Alberta, have
50 or fewer staff and had a gross revenue
that, in the preceding fiscal year, did not
exceed $5,000,000.
Application Deadline
Second Round of the Alberta Innovation
Voucher Pilot Program Announced!
Application forms will be made available
on October 26, 2009. The application
deadline is November 20, 2009.
Western
Economic
Diversification
Canada
Western
Economic
Partnership
Agreement
(WEPA)
Western Economic
Diversification Canada
Rosy Amlani: 780-4955779
Shelley Heidecker: 780495-4438
Alberta Advanced
Education and
The Canada-Alberta Western Economic
Partnership Agreement (WEPA) is a $50
million joint federal/provincial program
that supports economic development in
Alberta.
The Canada-Alberta WEPA, announced
March 20, 2009, is jointly administered
by Western Economic Diversification
140
Technology
Sharlotte Weslosky:
780-427-2192
Email:
TechComm.Services@g
ov.ab.ca
http://www.aet.alberta
.ca/technology/wepa.a
spx
Agriculture
Funding
Consortium
Alberta
Energy
Bioenergy
Infrastructure
Development
Program
(BIDP)
http://www.fundingco
nsortium.ca
Alberta Energy
c/o Alternative and
Renewable Energy
6th floor North
Petroleum Plaza 9945108 Street Edmonton,
Alberta T5K 2G6
Phone: (780) 427-8929
or (780) 415-1283
http://www.energy.gov
.ab.ca/BioEnergy/1400.
Canada and Alberta Advanced Education
and Technology. WEPA is equally funded
by both partners, with each contributing
$25 million over four years.
The Canada-Alberta WEPA has identified
four priority areas of activity: Technology
Commercialization, Business Productivity
and Competitiveness, Trade and
Investment, and Value Added Processing.
The purpose of collaborative funding in
agriculture R&D is to provide coordinated
funding and stimulate private/public
sector participation for R&D in the Life
Sciences area that helps achieve the
Alberta agriculture and food industry
vision for the future.
Proposals should address one or more of
the strategic R&D priority areas endorsed
by the Funding Consortium are as
follows:
 Agri-Food and Health –
Functional Foods and
Nutraceuticals
 Crop Sciences
 Environmental Sustainability
 Food Safety
 Livestock Sciences and Animal
Welfare
 Non-Food, Fibre and Industrial
Uses
 Value-added Processing
The call opens July 6, 2009 and closes
September 2, 2009. Applications will be
accepted only through the electronic
application system.
Grants are available through the
Biorefining Commercialization and
Market Development Program and the
Bioenergy Infrastructure Development
Program to encourage the growth of a
sustainable bioenergy industry.
The funding deadline for these programs
has been extended from 2009 to 2011. In
addition, the five million dollar cap on
grants under these programs has been
revised.
141
asp
Biorefining
Commercializa
-tion and
Market
Development
Program
(BCMDP)
Alberta Energy c/o
Alternative and
Renewable Energy
6th floor North
Alberta T5K 2G6
Phone: (780) 427-8929
or (780) 415-1283
asp
Bioenergy
Producer
Credit
Program
Alberta Energy c/o
Alternative and
Renewable Energy
6th floor North
Alberta T5K 2G6
Phone: (780) 427-8929
or (780) 415-1283
asp
Enabling Alberta biorefining
processors/investors of biodiesel, biogas
(methane), ethanol and other new
generation fuels to connect to the
market place. Development and
expansion of distribution structure.
The funding deadline for these programs
has been extended from 2009 to 2011.
In addition, the five million dollar cap on
grants under these programs has been
revised.
Purpose is to
develop/expand/strengthen Alberta’s
biodiesel, biogas (methane), ethanol and
other new generation fuel production
capacity in response to market demands.
Program will assist with Biorefining
Development, Technology Development
and Commercialization and Market
Development Program is for existing or
prospective processors looking to build
or expand biorefining facilities or
capabilities in Alberta.
To assist with the production of biofuel
or biogas in Alberta:
9 cents per litre for production from
plants with capacity of 150 Million (M)
litres or more per year
14 cents per litre for production from
plants with capacity of less than 150 M
litres per year
A project that produces 150 M litres or
more per year will be eligible for credits
from the program up to a maximum of
$20 million per year and a total of $75
million for the project
A project that produces less than 150 M
litres per year will be eligible for credits
from the program up to a maximum of
$15 million per year
2 cents per kilowatt hour (kWh) for
production from capacity of 3 megawatts
(MW) or more and six cents per kWh for
production from capacity of less than 3
MW
142
Alberta
Environment
Energy
Environment
Technology
Fund
Alberta
Utilities
Commission
http://www.aeri.ab.ca/
sec/fun opp/fun opp
001 1.cfm
http://www.environme
nt.alberta.ca/2264.html
Email:
Rob Thomas
[email protected]
.ca or Raymond Lee
[email protected]
a)
http://www.auc.ab.ca/
ruledevelopment/microgeneration/Pages/defa
ult.aspx
AFSC
Government
of Alberta
Value Added &
Agribusiness
Program
(VAAP)
Rural Alberta’s
Development
Fund
Email:
[email protected]
http://www.afsc.ca/Def
ault.aspx?cid=3-16598&pre=view
Toll Free Phone:
1.877.940.7233
Phone: 436-9585
(Edmonton area)
Toll Free Fax:
1.866.312.6253
Mailing address:
Site 4, Box 17, RR#4
Tofield, AB T0B 4J0
Funding will be determined by the
budgetary allocation for the year and for
the overall program
The fund was established in 2006 by
Alberta Environment and Alberta Energy
Research Institute to fund projects that
advance environmental friendly and
energy efficient technologies for western
Canada’s energy industry.
On February 1, 2008 the Government of
Alberta issued the Micro-Generation
Regulation. This regulation allows
Albertans to generate their own
environmentally friendly electricity and
receive credit for any power they send
into the electricity grid.
The Alberta Utilities Commission will
oversee the implementation of this
regulation and has developed processes
to simplify approvals and interconnection
agreements between customers and
owners of electric distribution systems.
The Value Added & Agribusiness Program
(VAAP) was designed to provide
enterprises with suitable financing to
start, develop and grow their businesses.
Only projects that contribute to the
growth, prosperity or quality of life of
rural Alberta will be considered. A
project must demonstrate how it
supports the community and it must
involve the community and/or
communities where it is to be
implemented.
Cell: 780.901.6980;
Email:
valerie.golka@ruralalb
ertasfund.com
The Fund defines ‘rural’ as the
approximately one million Albertans who
live outside of Calgary and Edmonton.
This would include all mid-size cities. A
community and/or communities can be
defined as geographic (e.g. municipality)
or interest (e.g. education) based. It can
be a combination of both. It could also be
a group of communities (i.e. involving a
region).
Office location:
Ukrainian Cultural
The Fund is particularly interested in
considering projects that fit the priorities
www.ruralalbertasfund
.com
143
Heritage Village
(located 25 minutes
east of Edmonton along
Hwy 16)
Growing
Forward
Programs
(federalprovincialterritorial
initiative)
http://www4.
agr.gc.ca/AAF
C-AAC/displayafficher.do?id
=12003394707
15&lang=eng
Growing
Forward
On-Farm
Energy
Management
http://www.growingfor
ward.alberta.ca/growin
gforward/pg gf Progra
ms.htm
http://www.growingfor
ward.alberta.ca/growin
gforward/program On
FarmEnergyManageme
nt.htm
of comprehensive community planning
processes or where a broad cross-section
of the community is involved.
Project applicants must provide 25% or
more of the overall cost of the project.
The Fund’s minimum contribution level is
$50,000 and its maximum is $5 million.
Think locally, grow globally. Growing
Forward is a new commitment from
Canada’s Federal, Provincial and
Territorial Ministers of Agriculture to
develop an Agricultural Policy Framework
that better positions the agriculture
industry for success.
A new vision. A vibrant industry.
Albertans have indicated that they want
a profitable, competitive, marketoriented agriculture and agri-foods
industry. The programs and people
behind Growing Forward are here to
assist.
With a suite of programs to choose from,
Growing Forward offers something for
your changing needs.
Alberta Agriculture is committed to
cultivating the Growing Forward
objectives that have been developed in
partnership with Agriculture and AgriFood Canada. The Growing Forward team
has developed a one-window approach
to program delivery to make access
easier for you.
The On-Farm Energy Management
program is designed to achieve
incremental energy efficiency in Alberta
agricultural operations, resulting in cost
savings, energy conservation, and
reduced carbon emissions.
Program Eligibility: Alberta producers
with $10,000 gross farm income annually
or new producers with a projected 3-year
average gross farm income of $10,000.
Rural
Community
Adaptation
Grant Program
Tel: 780-427-2409
Fax: 780-427-4227
Web:
http://rural.alberta.ca
Program Start Date: April 24, 2009.
The Rural Community Adaptation Grant
Program (RCAP) consists of $15 million
new funding to increase the capacity of
rural communities and regions to
transition and adapt, resulting in greater
144
http://www1.agric.gov.
ab.ca/general/progserv
.nsf/all/pgmsrv366
resilience and new, more diverse
economic opportunities. This grant is
part of a Government of Alberta (GOA)
Community Adaptation and Transition
Initiative to support communities.
Overall funding for the Initiative was
made available through the National
Community Development Trust.
Eligible Activities
The program will support eligible projects
that are community based and focus on
creative community driven actions and
solutions that include at least one of the
following project themes:
 Assessment and Planning
 Capacity Building
 Rural economic development
Unique community solutions
Other – Non Profit
Alberta Deal
Generator (ADG)
Phone 1-888-492-8977
E-mail
director@dealgenerato
r.com
http://www.dealgenera
tor.com/
We work to facilitate investment in highgrowth Alberta technology companies.
Alberta Deal Generator (ADG) has
established the largest network of
accredited investors in Canada who are
actively pursuing opportunities in
Alberta’s early and growth-stage
companies.
Through a screening process ADG
identifies technology companies that are
“investment ready” and then connects
these firms with our network of angel
investors, Venture Capital firms and
other investor groups in special
presentation forums.
AVAC Ltd
220, 6815-8 Street NE
Calgary, Alberta T2E
7H7
Ph. 403-274-2774
Fax 403-274-0101
Email
[email protected]
Alberta Deal Generator is the most
effective mechanism to connect great
business ideas with the financial support
needed to make both the investors and
the entrepreneurs’ winners in the global
marketplace. Quite simply, ADG exists to
help make deals happen.
AVAC Ltd. is a private not-for-profit
company that invests strategically in
promising early-stage commercial
businesses focusing on the expansion of
Alberta’s value-added agri-business, ICT,
life sciences, and other industrial
technology sectors, and is also Alberta’s
145
Edmonton Research
Park
213 Advanced
Technology Centre
9650 - 20 Ave NW
Edmonton, Alberta T6N
1G1
Ph. 780-485-2411
http://www.avacltd.co
m
leading fund-of-fund investor in early
stage venture capital. Created in 1997,
with the support of the Alberta and
Canadian Governments, AVAC has been
able to invest in and provide guidance to
more than 110 early-stage companies, 38
agriculture research programs and
projects, and 3 venture capital funds. To
date 35 of AVAC’s portfolio companies
have reported in excess of $379 million in
aggregate commercial sales that can be
attributed to the investments made in
them by AVAC.
Other – Profit
VentureAlberta
General Manager
Elan Lynes
Tel: 780-761-3526
Cell: 780-970-3616
http://venturealberta.c
om/
jcowan@venturealbert
a.com
VentureAlberta Forum is one of the
largest gatherings of business angels in
the City of Calgary and Edmonton, with a
significant affiliation to the larger
InvestIN Forum of Angel Investors as well
as strong ties to the other Canadian
Angel Investor forums.
VentureAlberta Forum is relatively new,
having been established in the spring of
2003, with a community of members
having oil and gas, information and
communication technologies, biotech,
real estate, health and life sciences,
hospitality, and transportation
backgrounds. VentureAberta Forum has
now grown to over 40 accredited
investor members in Calgary and 15
members in Edmonton, which was
founded in January 2006. As of
November 2006, the Forum had assisted
21 companies with capital and another
dozen with resources and customer
referrals.
146
An LTL Trucking Service
A Prefeasibility Study into the Viability
Of a Less Than Load (LTL) Two Axle Trucking
Service
By:
Date:
June 30, 2010
147
1.0
OVERVIEW OF THE LTL TRUCKING INDUSTRY IN ALBERTA
LTL stands for “less than truckload”. LTL carriers provide a complementary function to the
typical long haul carrier that is seen on highways throughout North America.
The LTL carrier will perform a gathering operation by picking up smaller shipments and
delivering them to a terminal. This is performed by smaller van type trucks that can be
maneuvered easily in the urban environment. The smaller pieces are sorted by destination and
aggregated for shipment. The shipment is then delivered by a long haul over the road tractor –
trailer unit.
At the destination of the tractor – trailer, the load is then delivered to a terminal. At the
terminal the load is sorted and delivered to the receiver. Again the delivery is facilitated by
smaller two or three axel trucks.
Most individual shipments of this type have a weight of 670 kilograms and are moved an
average of 630 kilometres. The average size is that of a standard pallet. It is the responsibility of
the originating shipper to package the shipment.
The advantage of this system is that the consolidation of a number of smaller shipments into
one larger shipment offers significant cost advantages to the final user.
The LTL industry comprises two types of operating regimes. Small trucking companies generally
own all of their equipment and operating authorities.
Owner operators own their own trucks and work under contract for a motor carrier. All
operating instructions, insurance and administrative functions are provided under the contract.
About 15% of the trucking industry in Alberta comprises owner operators and LTL operations.
This segment is noticeably growing. In addition in 2010 increasing demand is forecasting an
increase in freight revenue on individual shipments by as much as 8% over 2009.
2.0
MARKETING
2.1.
The Regional Opportunity
On several occasions, interviewees in the Transportation and Manufacturing Sectors noted the
need for a different type of tucking service in the region. One respondent said, “We need a
smaller local trucking company that can ship using shortbox hauling or 1-5 ton service instead of
large expensive semi-hauling. There are hotshot services around but they are very expensive to
use.”
148
At present there appears to be only one regional trucking company in the AlbertaHUB Region
that addresses the LTL market. However, this company concentrates its activities on the heavy
hauling opportunities available in the petroleum industry. In excess of 100 large specialized
units are employed in this endeavour.
Consequently there appear to be two niches for an LTL company. The first is the delivery of
individual shipments to customers directly from terminals in Lloydminster and Bonnyville.
The second is to gather shipments from Edmonton consignors by motor carrier and transport
them directly to the final users in the AlbertaHUB Region. This is possible due to the relatively
short distances involved. However this would entail the operation of two trucks.
This system of delivery has two advantages. Freight charges would be less than the typical “hot
shot” operation. Delivery time would be faster than using over the road tractor – trailers and
terminals.
3.0
OPERATIONS
Delivery operations from Edmonton to the Hub region would call for the use of two four ton
trucks with 22 – 24 van bodies. A power lift would be necessary for loading and unloading
cargo. Additionally the office / shop located in the AlbertaHUB Region would function as a small
storage terminal.
The specific location of the office would be determined by the clientele that the company
targets. The Town of St. Paul is a central location in the region, but if the oil and gas sector is
the target customer then the Bonnyville or Cold Lake areas might make more sense. There also
might be an argument for a head office in Smoky Lake County, Lamont County another western
location if the customers tend to need service in and out of Edmonton.
The use of two trucks would allow second day delivery of most LTL consignments from
Edmonton or points surrounding the city.
4.0
STAFFING
Two people would be required to operate this enterprise. The owner would operate one truck
and be responsible for all administration duties. An employee would operate the second truck.
149
From time to time it is likely that a part – time person would be required to perform unforeseen
duties.
One of the advantages of this venture is that the driver(s) will not be required to have a Class 1
driver’s licence. However, either a Class 1 or Class 3 with air brakes designation would still
obviously be an asset.
5.0
MANAGEMENT
The owner would be required to take responsibility for the successful operation of the business.
One of the strengths of the business is the relatively limited managerial needs of the business.
Of course, as a business grows this could change. With more drivers the owner could quickly
become a dispatcher, perhaps taking himself off driving duties.
6.0
FINANCE
6.1.
Source and Application of Start Up Costs
Projected start up costs and a financing paradigm comprising owner cash contribution, a five
year term loan and a revolving operating line of credit are found on the following page.
LTL Trucking Enterprise - June 2010
Application and Source of Start up Costs
Application of Funds
Used trucks (2 @ $75,000)
Rent on Shop (DD and First Month)
First Month Wage (One Employee)
Supplies and Parts
Legal / Accounting Fees
Utilities / Communication
Advertising
Vehicle / Business Insurance ( 6 months)
$ 150,000.00
$
4,000.00
$
4,000.00
$
2,000.00
$
3,000.00
$
3,500.00
$
500.00
$
5,000.00
150
Owner Salary
Unforeseen / POL
Total Start Up Costs
$
4,000.00
$
5,000.00
$ 181,000.00
Source of Funds
Operating Loan
Term Loan
Owner Equity
$ 17,000.00
$ 104,000.00
$ 60,000.00
Total Funds Required
$ 181,000.00
6.2. Projected Income Statement
LTL Trucking Enterprise - June 2010
Projected Income Statement - Year One
Revenue
Freight Charges
Total Revenue
$ 260,000.00
$ 260,000.00
Expense
Wages and Benefits (one driver)
Repairs and Maintenance
Fuel
Utilities and Communication
Depreciation
Rent (shop)
Interest / Bank Charges
Professional Fees
Advertising
Insurance / Licenses
Unforeseen
Owner Salary
Total Expense
$ 48,000.00
$ 20,000.00
$ 60,000.00
$ 20,000.00
$ 23,000.00
$ 10,000.00
$
7,000.00
$
3,000.00
$
800.00
$ 12,000.00
$
5,000.00
$ 48,000.00
$ 256,800.00
$
3,200.00
151
7.0
REFERENCES













Highway Star Magazine
Owner Operator Business Association of Canada
Transport Canada
Private MotorTruck Council of Canada
Truck News
Truck West
Owner Operator Independent Driver Association
Canadian General Freight Index
Statistics Canada
Danfoss Freight
KiJiJi
Alberta Truck Trader
Bizpal
152
The Television and Film Industry in the AlbertaHUB Region
The Television and Film Industry in the
AlbertaHUB Region
By:
Date:
June 30, 2010
153
1.0
OVERVIEW OF THE FILM AND TELEVISION INDUSTRY IN CANADA
1.1 Introduction
It should be noted that the scope of the “motion picture production” industry is not limited to
feature films and network television. The “industry” is a broad term that encompasses types of
productions including cable television, made-for-television movies (MOWs), music videos,
commercials, documentaries, etc. In addition, the “industry” produces business, industrial, and
government films.
1.2 The Economics of the Film Industry
Motion picture production generates significant economic activity in the U.S. and Canada with
many jobs associated with film production. The majority of these jobs were in the motion
picture production and related services sector. This involves casting, acting, directing, editing,
film processing, motion picture and videotape reproduction, and equipment and wardrobe
rental. By industry estimates, 70 to 80 percent of such jobs occur at the location where the
production is filmed.
Many individuals in the motion picture production and distribution industry work on a
freelance, contract, or part-time basis. Thus, accurate statistics on their numbers are not
available. Further, other people in the industry are self-employed and work on productions for
different companies throughout the year.
The industry is dominated by several large producers (the major studios) based primarily in
Hollywood. In California alone, motion picture production is estimated to be over a US$30
billion per year industry. However, due to the proliferation of new mediums for production
such as cable television, video recorders and DVD players, and the Internet, coupled with
technology that has facilitated on-location production, and production-related infrastructure
filmmaking companies have established themselves outside of the traditional production
centers. This represents significant opportunities for smaller regions, provided the appropriate
environment, labour force, and infrastructure is in place.
1.3 Economic Impacts of the Industry
Among the direct impacts of the motion picture production is:
• The employment of a local workforce
• The need for local materials and supplies
• The generation of room nights at area hotels
• Increased restaurant and retail revenues
154
Employment of a local workforce is particularly noteworthy since film production/crew jobs
tend to pay higher wages than comparable employment using the same skills. For instance, an
electrician or costume designer working on a film production can, in many instances, nearly
double or triple their regular earnings during the course of production than they would
otherwise make in a non-production-related job.
Similar to tourism, visitor-related expenditures for crew members and production personnel
are spent on everything from air service and car rentals to food service, lodging, entertainment,
recreation and a wide range of retail activities. In addition to employment and visitor-related
expenditures, the generation of room nights at area hotels can offer cities more funding to
build infrastructure. For instance, most city hotels charge a hotel and bed tax, the funds of
which are used to build public assembly facilities (e.g., arenas, convention centers, etc.).
1.4 Indirect Impacts of the Industry
In addition to direct expenditures, motion picture production also has a multiplier effect for
non-quantifiable factors such as market identity and an expression of local or national culture.
1.5 Impact on Tourism
Perhaps the most notable indirect impact of film production is increased tourism. As an
example, the 2004 release of the feature film, Sideways, has been an economic boon to the
tourism industry in the Santa Barbara/Santa Ynez region. In fact, the Santa Barbara Conference
and Visitors Bureau produced “Sideways – The Map,” a guide to the film’s locations, and a local
tour company has even created a now popular “Sideways” tour. The CVB has reported a
significant rise in visitation centers around the locations featured in the movie.
There have been a number of film productions in Alberta, many with associated tourism
impacts. See section 2.3.
1.6 Impact on Infrastructure
In terms of land use impacts, film production activity sometimes creates infrastructure that is
left behind for future utilization. Cases include Fox Studios Baja in Mexico, which was created
by film director James Cameron when he was shooting the 1997 feature film Titanic. The studio
has since expanded and is used for a variety of productions ranging from feature films to video
shoots. Film and video production also requires support that generally involves cutting-edge
technology. If not locally supplied, such technology is imported (e.g., cameras, lights, cranes,
etc.). As production activity increases, however, suppliers of such equipment are more likely to
establish rental houses in the community. Digital and post-production facilities are also likely to
grow with increased film production.
155
1.7 Impact on Arts Community
The film industry depends on the synergistic relationship of creative arts professionals and
skilled technicians working in highly specialized crafts. Writers, painters, actors, directors, etc.,
all benefit by working on a production or merely being close to it. As previously noted, they are
also generally paid higher wages working on a film production than they would otherwise be
paid in their normal course of work.
1.8 Economic Factors
Given increasing pressure on independent producers to create film product at reduced costs, a
diverse knowledge of international macroeconomics, tax credits, production incentives, and
monetary exchange rates becomes an important issue on a cost-revenue basis. Many foreign
producers gain an immediate advantage in terms of lowering production costs with the
strength of their home currencies in international markets. This is particularly true for U.S.
producers.
Some of the primary economic drivers behind the localization of production include:
 Monetary exchange rates
 Tax incentives
 Less expensive labour
 Less expensive infrastructure
 Less expensive set construction
1.9 Production Incentives and Film Incentives
Given the benefits associated with film and television production, many governments in both
the U.S. and abroad have become actively engaged in growing their local film production
industries, either through production incentives or other collaborations. Currently, Canada is
the strongest and best-known example of a government using financial and tax incentives to
attract production. The Canadian government offers numerous financial and tax incentives at
both the federal and provincial levels. See Appendix 1 and Appendix 2.
Production incentives generally consist of tax breaks, sales or use tax exemptions rebates on
labour, etc. However, they can be as diverse as special variances, etc. Production incentives
may be available directly to foreign producers or only to local ones.
Several provinces in Canada have their own incentives, in the form of tax credits or grants.
Canada does have country-wide Federal film incentives such as the Production Tax Credit
(CPTC) and the Production Services Tax Credit (PSTC). These tax credits, which cover up to 25
percent of labour expenditures, are available to national and international Canadian
156
productions and co-productions that qualify. The tax credits are issued jointly by the Canadian
Audio Visual Certification Office (CAVCO) and Canada Revenue Agency (CRA).
At present, the most common types of state or city incentive programs to attract film
production in the U.S. consist of either sales tax rebates on equipment used during the course
of production, hotel tax rebates on stays of 30 days or more, and/or fee-free permitting or use
on public lands and properties. The principal aim of these or any tax/monetary-related services
is to attract film production by reducing production budgets.
In the 1980s, Canada emerged as a low cost production center for U.S.-based film and video
projects. Hollywood production companies found a trained and educated English speaking work
force in Canada, which would work at wage rates considerably lower than their U.S.
counterparts. This foreign production augmented local production and increased demand for
Canadian labour. Increase in activity attracted investment in facilities and infrastructure. The
result, among other things, was a growth in the Canadian labour force available to support
production. But as the exchange rate evened out between Canada and the U.S. Production
Incentives and Film Incentives have become even more important.
157
2.0
OVERVIEW OF THE FILM AND TELEVISION INDUSTRY IN ALBERTA
2.1 History of Film in Alberta
Alberta (particularly the southern region and Calgary region) have been involved in the
development and production of films ever since the beginning of the film industry. Within the
past 15 years, Alberta’s presence in the industry, particularly in Calgary, has seen a substantial
increase. From 1990-1994, Alberta produced a total of 16 feature films and 12 television
productions. Those numbers more than tripled to 58 and 72 respectively in the 2000-2005 YTD
period. For the southern Alberta region, the numbers similarly jumped from 7 features and 9
television products to 35 and 55 respectively over the same time period.
Some notable western-themed films include Clint Eastwood’s “Unforgiven” (1992), “Legends of
the Fall” (1994) starring Brad Pitt and Anthony Hopkins, and Kevin Costner’s “Open Range”
(2003). All of these films grossed over US$50M on budgets of US$20M-$30M.
The Calgary region and surrounding areas has served as the host to many mainstream films as
well. More well-known films include the original “Superman” (1982), “The Edge” (1997) starring
Anthony Hopkins, and “Rat Race” (2001) starring John Cleese and Whoopi Goldberg. These are
high budget films that have individually yielded grosses in upwards of US$67M.
2.2 Alberta Film Expertise
Alberta is home to expert crews that have been nominated for 48 Academy Awards since 1948
and have received 22 Emmy Award wins out of 92 nominations. Crews are highly skilled in
working on North American, European and Bollywood productions including small and large
budget feature films, series, pilots, documentaries, made-for-television movies, lifestyle
programs and commercial production. The provinces wranglers, hair and make up artists set
designers and many others are sought around the world.
Alberta Film (www.albertafilm.ca) is a full service commission offering location packages and
scouting and a one- stop source for all one needs to know to film in Alberta. The unique
locations in Alberta will ensure a quality production, produced on time and on budget. Alberta
Film will ensure that time spent filming in the province of Alberta is a positive experience.
Location Packages & Scouting:
Nowhere else in the world will you discover such diverse locations within such a close
proximity. The offices of Alberta Film are willing to assist any and all production
companies in location scouting if required.
158
One-Stop Information:
The Alberta Film offices offer access to information about outstanding location scouts,
union and guild offices, services and suppliers, permit offices, studio and post-production
facilities and immigration agencies.
Western Hospitality:
The province of Alberta is promoting a “film friendly” environment. The Alberta Film
industry is willing to provide production companies and film makers assistance to save
valuable time and money by providing them with the best information in the shortest
time possible.
Production Resource Guide:
The Alberta Film industry has on online database from which production companies and
film crews are able to search out and connect with reliable services ranging from
Accommodations to Animal Wrangling to Casting Companies to Studio Facilities and many
other services besides.
2.3 Alberta Productions
The province of Alberta has hosted nearly 400 television series or movies in the past including
such popular shows and films as:
•
•
•
•
•
•
•
•
•
Brokeback Mountain
Body of Evidence
Dante’s Inferno
Gunsmoke
High Noon
Legends of The Fall
Lonesome Dove
Little House on The Prairie
Mystery Alaska
•
•
•
•
•
•
•
•
Northern Lights
North of 60
Passchendaele
Shanghai Noon
Superman I, II, III
Texas Rangers
The Edge
The Legend of Butch Cassidy and the
Sundance Kid
At present the province of Alberta is host to numerous TV and film productions including such
shows as:
• Blackstone Cycle I (Canadian Television Series)
• Heartland Season 4 (Canadian Television Series)
• 19th Wife (Canadian Made for TV Movie)
• Heartland Christmas (Canadian Made for TV Movie)
• Truth Below (Joint Canada/US Made for TV Movie)
159
2.4 Shooting in Alberta
Working in Alberta
It makes cents to shoot in Alberta and savings begin with no provincial sales tax, add to that the
lower cost for more services than you'll find elsewhere, from crew rates to accommodation,
lumber to groceries, and the bottom line of production companies is important to the well
being of the movie and television industry in Alberta.
Labour Market Opinion
Prior to arrival in Canada where work permits are required for entry, productions are required
to apply for a Labour Market Opinion (LMO) from Human Resources and Social Development
Canada. A LMO is designed to take into account career development and employment
opportunities for Canadians. A LMO must be obtained before a work permit is issued. A copy of
the application must be faxed to the appropriate guild and union and the Alberta Film
Commission
Work Permits
Non Canadian Residents working in Alberta are required to have work permits. Work permits
may be obtained at any point of entry at a cost of $150 per person. Work permits are not
required for film and television producers.
Crew Rates
Alberta crew rates are competitive in both long and short format.
ACTRA IPA
Effective Dates January 1, 2010 to December 31, 2010
Guaranteed
Daily ($) Hourly ($)
Weekly ($)
Performers:
Principal
630.50
79.25
2,680.00
Singers, etc
472.50
59.25
2,008.50
Actor, etc
425.75
53.50
1,809.25
Variety Principal
945.75
118.25
4,020.00
Chorus Performer
613.25
76.50
2,606.75
Stunt Coordinator
820.00
102.25
NA
Stunt Actor
945.75
118.25
NA
Extras:
Stand In
192.25
24.25
864.25
Photo Double
182.50
23.00
NA
Special Skills
243.75
30.25
NA
Background Performer
182.50
23.00
NA
Off Camera Performers:
160
Principal
Actor, etc
442.00
297.75
79.25
52.50
NA
NA
2.5 The Alberta Film Development Program
The Alberta Film Development Program offers a flexible program able to accommodate a broad
range of needs for both local and guest productions. It is easy to understand, simple to apply
and highly competitive.
The Alberta Film Development Program (AFDP) provides funding support for the development
of a strong Alberta production industry, helping Alberta compete in motion picture production
and investment within the national and international marketplace. The Alberta Film
Development Program encourages:
• Development of local production expertise and talent.
• Sustained industry development.
• Increased investment in Alberta-based production.
• Use of Alberta as an international film location.
You are eligible for Alberta Film Development Program if:
• are incorporated or registered to do business in Alberta;
• are supported by a broadcast license of fair market value, or a theatrical distribution
agreement;
• spend greater than $25,000 in Alberta, and;
• have proof of other confirmed financing
Please see Appendix 3: Applying For Alberta Film Development Program Grants fro more
information.
2.6 Guaranteed Government Grants
Alberta’s unique production incentive offers a grant against all eligible production expenses
incurred in Alberta. Alberta will contribute between 20% - 29 % of all eligible expenses. This is
equivalent to a 36% - 53% labour based tax credit. Alberta's level of contribution increases with
Albertan ownership and the employment of Albertan key creative personnel. Alberta is the
only province in Canada that doesn’t have a provincial sales tax. This means there is more
money for production companies and film crews to put on screen.
Provincial Funding
Many public and private funds are available in Alberta to film producers which include:
 Alberta Foundation for the Arts - Film and Video Projects
 Canwest Alberta Legacy Fund (CALF)
161



Alberta Cultural Industries Loan Fund
Shaw Rocket Fund
Alberta Film Development Program (See Appendix 4)
Federal Funding
Many public and private funds are available in Canada to film producers. The Guide published
annually by the Canadian Film and Television Producers Association is an excellent source of
information. The AFDP can be used in conjunction with the CFTPA incentives. Some federal
funding options include:
 Canada Media Fund
 Telefilm Canada
 National Film Board of Canada
 Canadian Film and Video Production Tax Credit (CPTC)
 Film or Video Production Services Tax Credit (PSTC)
For more see Appendix 1 and Appendix 2
2.7 Climate and Sunlight in Alberta
A vital factor in film production is climate. Alberta is one of the official best weather locations in
Canada with up to 16 hours of sunlight on summer days.
Temperature
Edmonton
January
February
March
April
May
June
July
August
September
October
November
December
Calgary
Avg.
High
Cº
-8.7
-5.1
0.1
9.9
17.4
20.9
22.5
21.8
16.6
11.3
-0.4
-6.9
Precipitation
Avg.
High F
Avg.
Low Cº
Avg.
Low F
mm
inches
16.3
22.8
32.2
49.8
63.3
69.6
72.5
71.2
61.9
52.3
31.3
19.6
-29.8
-26.7
-21.1
-2.7
3.2
7.4
9.4
8.2
3.2
-2.2
-21.1
-27.7
-3.6
1.9
12
27.1
37.8
45.3
48.9
46.8
37.8
28
12
0.1
22.9
15.5
15.9
21.8
42.8
76.1
101
69.5
47.5
17.7
16
19.2
0.9
0.6
0.6
0.9
1.7
3
4
2.7
1.9
0.7
0.6
0.8
Sunrise Sunset Daylight
Edmonton Sunrise Sunset Daylight
162
Hours
January
February
March
April
May
June
July
August
September
October
November
December
8:32
7:48
6:49
6:40
5:45
5:20
5:38
6:23
7:11
7:59
7:53
8:33
16:58
17:52
18:41
20:32
21:20
21:53
21:44
20:56
19:49
18:42
16:47
16:29
8:25
10:04
11:52
13:52
15:35
16:32
16:05
14:33
12:37
10:42
8:54
7:55
Hours
January
February
March
April
May
June
July
August
September
October
November
December
8:42
7:52
6:47
6:33
5:32
5:03
5:24
6:13
7:07
8:01
8:00
8:44
16:45
17:44
18:38
20:35
21:29
22:05
21:55
21:01
19:49
18:36
7:21
16:14
8:03
9:52
11:50
14:02
15:55
17:01
16:31
14:48
12:41
10:35
8:35
7:29
163
3.0
THE FILM INDUSTRY IN ALBERTAHUB REGION
With the recent shooting of the A-Team motion picture in Cold Lake, there have been
suggestions that the region could host more film productions in the future. As listed in 1.2 to
1.7 above, there are a number of direct and indirect benefits that a community can reap from
the movie industry.
The Alberta Film Commission website has a Location Database of over 15,000 locations photos.
Eleven AlbertaHUB member communities are already listed in the database. Here is an
overview of some of the AlbertaHUB region communities with sample site shots:
Andrew – 8 sites listed
NAME: Andrew - Townsite
Photo ID: # 9668
Description: Main street shooting east
Date: 2002
Bonnyville – 14 sites listed
NAME: Lakeshore Drive
Photo ID: # 10981
Description: Town of Bonnyville, 51A st shooting south east
Date: 2003
164
Cold Lake – 35 sites listed
NAME: Lakeshore Drive
Photo ID: # 10955
Description: Travel time/ Distance from Edmonton : 3 hrs/300km
Date: 2003
Elk Point – 6 sites listed
NAME: Elk Point - Town
Photo ID: # 10990
Description: Main Street, South End shooting west
Date: 2003
Innisfree – 5 sites listed
NAME: Village of Innisfree
Photo ID: # 11239
Description: 1 hr and 30 minutes from Edmonton
Date: 2003
165
Lac la Biche – 36 sites listed
NAME: Lac la Biche - Mission
Photo ID: # 10405
Description: Exterior church shooting south
Date: 2003
Lloydminster – 14 sites listed
NAME: North Saskatchewan River - Long View
Photo ID: # 9064
Description: Shooting South West
St. Paul – 9 sites listed
NAME: St. Paul - Legasse Park
Photo ID: # 10873
Description: Park shooting west
Date: 2003
166
Vegreville – 6 sites listed
NAME: Vegreville
Photo ID: # 10242
Description: Main street
Date: 2002
Vermillion – 15 sites listed
NAME: Vermilion - Lakeland College
Photo ID: # 10832
Description: Residence building shooting south east
Date: 2003
Wetaskiwin – 72 sites listed
NAME: Wetaskiwin - Main Street
Photo ID: # 19089
Description: Wetaskiwin - Main Street
Date: 2007
167
3.1 The Macro Approach to Attracting the Film Industry
There is the possibility of engaging in a region wide effort to attract filming. However this could
require dedicated staff, and bring a number of regional conflicts since the costs and benefits of
film production tend to be relatively community specific.
It is more likely that a specific community(s) in the AlbertaHUB region would put together a
systemic effort to attract filming. These types of organized efforts are usually driven by a local
economic development organization.
Many economic development organizations have active strategies to attract filming in their
regions. In fact, Edmonton and Calgary are at the forefront of this movement with their
economic development organizations.
The core of the attraction effort is two-fold:
Marketing: It is vital for site selection consultants to be aware of the assets your
community offers. The first factor looked at is the physical locations available to a
production company. The sites have to match a need that a production company has. So
similar to any investment attraction effort, it is vital to get to know the players in the
industry and form relationships with them so they know what your community has to
offer. A well designed website with a high quality media centre featuring photos and
film of the community is a significant asset.
Incentives: Tax credits are the lifeblood of the incentive programs that governments use
to attract filming. Appendix 1 to 4 outlines a number of incentives and programs that
Canada and Alberta offer the film industry. A community can offer extra incentives on
top of provincial and federal ones if they wish. But a caution; film makers like other
industries will flock to the best deal, but that deal is not always beneficial to the
community in the end. For instance:
A look at the numbers suggests that new film activity has come at considerable cost. During the past
fiscal year, according to a recent study, New Mexico granted $38.2 million in tax rebates for TV and
movie production, but in return saw only enough increase in economic activity to generate $5.5
million in public revenue. "For every one dollar in rebate," the study concluded, "the state only
received 14.44 cents in return."
Governing Magazine, December 31, 2008
Discussion with managers at Telefilm Canada yielded some general information about how to
attract film production to a region. (It should be noted that they suggested contacting the BC
Film Commission and the Ontario Film Commission as they have the most experience attracting
the film industry in Canada.) Here were a few rules of thumb they use:

Make the process (especially regulatory) as easy for the producer or production
companies as possible
168







Spend time in Los Angeles marketing what your region has to offer the studios and
producers
Put together a marketing package of what the region has to offer and preferably in
electronic form (flash drive etc because easier to pass lots of information in a small
package without requiring bulky paper publications)
Let them know that your area has multiple potential landscapes to be used, the
more variety the better
Inform them of what potential staffing solutions and partnerships can be formed
within the region
Inform them where the nearest studio is so they can and edit their shoots
The biggest incentive is price point for any producer or production company, so any
economic incentives offered by regions can go a long way to attracting the
production companies
And any way of showing how your region is cost effective in the market will also be
attractive
3.2 The Micro Approach to Attracting the Film Industry
Another approach to attracting the film industry is to provide individual citizens, businesses or
groups in a community with knowledge about the attraction process, and let them work on
marketing their own individual properties.
There are still indirect financial and marketing benefits to a community or region with this
approach, although on a much more limited scale. But positive aspects to this limited approach
include less incentives, marketing costs, administrative costs.
And organizations like AlbertaHUB, Kalyna Country, Alberta’s Lakeland or any number of
organizations could use their websites and other marketing materials to inform the public of
the opportunities in renting their properties for film production, and provide guidelines on how
to get started.
The Alberta Film Commission lists factors that the property owner should consider when
attempting to attract film production to a property:
1. Initial contact is generally made by a location scout or location manager, who is hired
locally by the film company. This person will be your contact during the duration of the
"shoot". Call Marla Touw, Alberta Film (403.297.6241) or the Directors Guild of Canada
(403-217-8672) to check the credentials of the scout and/or the project.
2. Agree upon the exact number of days required for the shoot plus preparation and wrap
time. (A shooting day is approximately 14 hours long.)
3. Arrange for a walk-through with the location manager to determine exact interiors and
exteriors desired for filming; where equipment and vehicles will need to be positioned
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or parked; any "off-limits" areas specified by the owner; and any areas such as roof,
trees, fences, windows, which may need to be used or altered during filming.
4. Decide which of your (the owners) personal property may be used for filming, how and
where to store items not used, and who will be responsible for packing and moving.
5. Determine who will be allowed on "set" during period of use.
6. Set rules regarding: smoking, use of washrooms, laundry, water, electricity, kitchen,
protective floor coverings, trash, etc.
7. Establish guidelines for production company's use of owner's phone. (and payment)
8. Location manager must inform the owner where cast and crew will be eating their
meals.
9. Decide how the owner will be accommodated during filming and any living expenses
that may be required.
10. Set vehicle parking for cast and crew.
11. Find out the nature of the project and how your location will be used. Will there be
special effects like smoke, fire, gunshots?
12. Establish clean-up requirements, who is responsible and when it is to be completed
(within 24-48 hours), and arrange with location manager for final "walk-through" for the
owners approval.
13. Location fees are negotiable. The owner should feel comfortable with the amount
agreed upon, and a payment schedule should be established prior to any filming.
14. Owner should have a written agreement detailing specifics and may wish to add the
following: "The applicant (film company) agrees to indemnify owner and to be solely
and absolutely liable upon any and all claims, suits and judgments against the owner
and/or applicant for personal injuries and property damages arising out of or occurring
during the activities of the applicant, his (its) employees or otherwise. This agreement
may be revoked at any time." This contract should be signed by a principal or agent of
the production company.
15. Owner must get a certificate of insurance including a hold harmless clause for
protection in case of any injuries on the property. All production companies should carry
insurance policies that cover third-party rentals for property damage and liability. A
photocopy of the insurance certificate should be given to the owner before any crew
comes on the property.
For more information on offering a property for film production, call Alberta Film's Marla Touw
at 403-297-6241.
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4.0
REFERENCES
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Alberta Film Commission: www.albertafilm.ca
Alberta Motion Picture Industries Association: www.ampia.org
Market and Feasibility Analysis for Motion Picture Production Facilities
Prepared for Calgary Economic Development by Economics Research Associates,
November 2005
2009 CRTC Communications Monitoring Report
Canadian Heritage: www.pch.gc.ca/eng/1268163020695/1268242291270
Slaw: www.slaw.ca
Calgary Economic Development: www.calgaryeconomicdevelopment.com
Edmonton Economic Development Corporation: www.edmonton.com
Telefilm Canada
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APPENDIX 1: CANADIAN HERITAGE
Film and Video
The Government of Canada is committed to fostering a more cohesive and creative Canada,
and to ensuring that a strong Canadian identity is reflected in and accessible to Canadians in a
wide variety of cultural products. To that end, the Department of Canadian Heritage oversees
federal audio-visual policy and program activities that seek to:
• Reaching audiences by ensuring a healthy supply chain continuum from creator to citizen,
so that Canadian content is available and accessible to Canadians;
• Reflecting ourselves by reflecting Canada's rich linguistic, ethno-cultural, Aboriginal, and
regional diversity as our shared citizenship and common values;
• Investing in excellence by focusing on cultural excellence and rewarding success;
• Harnessing the opportunities of new technologies by taking a proactive approach to
technological change in order to take full advantage of its benefits; and
• Reaching the world by developing international markets so that we can share Canadian
talent and culture with the world.
Together with the National Film Board of Canada, Telefilm Canada, the Canadian Television
Fund, the Canada Council for the Arts, provincial governments and the private sector, Canadian
Heritage plays a role in helping to sustain a strong domestic film and video industry in Canada.
Through the Canadian Audio-Visual Certification Office (CAVCO), the Department also coadministers Canada's film and video tax credit programs with the Canada Revenue Agency.
http://www.pch.gc.ca/eng/1268163020695/1268242291270
Audiovisual Coproduction
A coproduction is a film and/or television production that has been created by pooling creative,
technical and financial resources of Canadian and foreign producers. Governed under the terms
of an international treaty between partnering countries, these productions are granted national
status and can be used to meet domestic broadcast quotas. These productions are also eligible
for federal and provincial tax credits and additional funding sources from the Canadian
Television Fund and the Canada Feature Film Fund.
Canada was one of the first countries to recognize the advantages of audiovisual coproductions.
These agreements have advanced the audiovisual industry in Canada, strengthening
international ties in the cultural sector; and promoting and disseminating Canadian culture
abroad. Over the course of 40 years, Canada has signed coproduction agreements with 53
countries, and over the past decade, Canada has produced over 800 films and television
productions.
Film & Video Policy and Programs Directorate
The Film and Video Directorate is responsible for the domestic policy related to official
coproduction. As such, it monitors coproduction activity and assesses its impact on the
Canadian Audiovisual Sector. The Directorate also provides input and policy advice regarding
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the Canadian audiovisual sector and industry to assist in the negotiation and administration of
coproduction treaties.
APPENDIX 2: TELEFILM CANADA
Telefilm Canada is a public cultural agency in the Canadian Heritage Portfolio. It assesses
applications from producers and ensures they meet treaty requirements. More than thirty
years of experience analyzing coproduction projects, as well as strong ties with various
international cultural agencies, have placed Telefilm Canada in a position to provide invaluable
help to producers with funding and legal arrangements for projects. Telefilm Canada also serves
as an essential source of information on the Canadian market, its creators, and its infrastructure
Canada's Official Audiovisual Coproduction Policy
Given the continued demand from countries wishing to enter into agreements with Canada, in
addition to changes in other countries' approaches and practices related to coproductions, a
review of the Coproduction Policy has been undertaken by the Department of Canadian
Heritage.
The purpose of the review is to examine and refine the objectives of coproduction, ensure that
they are properly aligned with other federal audiovisual policies and programs, and with overall
government objectives. Over time, the review will result in clearer objectives for official
coproduction between Canada and foreign partners.
Since the new policy is likely to have an impact on future coproduction treaties to be signed
between Canada and other countries, a moratorium on new coproduction treaty negotiations
has been in place during the policy development process.
National Status
International treaty coproductions receive national status designation in their respective
countries and as such, are able to access federal funding programs and are recognized as
national content for broadcasting purposes.
Canadian broadcast quotas
Official coproductions obtain national status, and can also be included in the Canadian content
quota for the broadcasters. This allows producers spin-off benefits such as obtaining higher
license fees for their productions while offering Canadian broadcasters the opportunity to show
high budget quality Canadian programming to their audiences.
Canadian Program Certification Canadian Program Certification helps independent Canadian
program producers to obtain Canadian certification for TV productions that use mainly
Canadian crews and talents.
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Why is certification needed?
Conventional television, pay TV and specialty TV licensees must broadcast a certain percentage
of Canadian Content (CanCon). To monitor compliance, the CRTC requires licensees to maintain
program logs for the Canadian programming they broadcast; these Canadian programs or
productions are identified using a certification number.
This means that an independently produced program requires a certification number if it’s to
be broadcast by a licensee. Without a certification number, the broadcaster can’t claim the
program against CanCon requirements and the program is not recognized as being Canadian.
Eligible programming
In general, the CRTC certifies a Canadian program or series that meets the following criteria:
• the producer must be Canadian and is responsible for monitoring and making decisions
pertaining to the program
• the production earns a minimum number of points based on the key creative functions
that are performed by Canadians
• a minimum percentage of program expenses is paid for services provided by Canadians
or Canadian companies
Where to apply for certification
The type of production determines where producers should apply for certification:
• if the production is independently produced and meets certification requirements as a
Canadian program, apply for Canadian Program Certification with the CRTC
• if the production is eligible for a tax credit, file an application with CAVCO of Canadian
Heritage
• if the production involves an official co-production with a treaty country, file with
Telefilm Canada
Canada Feature Film Fund
Montreal, August 28, 2007 – Telefilm Canada announces the creation of the Slate Development
Pilot Program for the English-language market through the Canada Feature Film Fund (the
“CFFF”). Through the provision of predictable funding, the program will assist Canadian
companies in their efforts to ensure that their development slate is positioned to help achieve
the CFFF’s primary objective – to increase Canadian audiences in theatres for Canadian feature
films.
The primary objective of this pilot program is to encourage the companies to develop Canadian
feature films that have high box office potential, in a range of genres. Second, the initiative
seeks to achieve the objective of building more meaningful relationships between producers
and distributors.
The Pilot Program serves as an alternate source of financing for Canadian production
companies who have not benefited from a performance envelope, and will take the form of a
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non-interest bearing line of credit for companies that have three (3) or more projects in
advanced stages of development.
The Slate Development Pilot Program is a three-year initiative, and is specifically geared
towards Canadian production companies in the business of feature film development and
production.
Key points:
• The successful applicant(s) will have multiple projects requiring development financing.
• The successful applicant(s) will be working with an eligible distributor at the early stages
of development in order to solidify a stronger working relationship.
• The successful applicant(s) will remain actively involved in the development of all
projects within their slate.
• The funds allocated to this pilot program should allow producers additional decisionmaking autonomy, increased flexibility in using the financial resources, and the ability to
undertake in longer range planning.
• Projects supported in the Slate Development Pilot Program, benefiting from improved
distributor and producer relationship, will increase their potential for a positive
production investment decision at Telefilm.
International Marketing Program
The new International Marketing Program of Telefilm Canada aims to consolidate the financial
support initiatives for international promotion and sales. The Program is comprised of two
Initiatives:
•
•
•
International Festival Participation Pilot Initiative: This Initiative was launched to
support the promotion of Canadian productions at top-level, world-class international
festivals most apt to generate additional publicity. The Pilot Initiative focuses primarily
on providing financial assistance for the marketing of English- and French-language
Canadian feature films officially selected at Cannes, Berlin, Pusan, Sundance and Venice.
International Sales Promotion Pilot Initiative: The goal of this Initiative is to enhance
the sales potential of films by financially supporting promotional activities for feature
films that have a clear foreign-sales strategy and solid foreign-sales potential. The
Initiative is aimed at films that received funding through the Canada Feature Film Fund
(CFFF) – French-Language Market since the fiscal year 2005-2006.
APPENDIX 3: APPLYING FOR ALBERTA FILM DEVELOPMENT PROGRAM GRANTS
Potential applicants for Alberta Film Development Program funding should be aware there are
no deadlines for submission of applications; however, applications must be received prior to
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commencement of principal photography. Assessment, approval and funding payout will take
place on a first in, first out basis.
The application process for Alberta Film Development Program funding is a three step process:
•
Step 1: Applicants should carefully review the guidelines prior to completing their
application form and preparing their submission. Definitions that are crucial to an
accurate interpretation of the information requested are available in both the program
glossary and the guidelines of the Alberta Film Development Program Guidelines and
Submission Information which can be accessed through the Alberta Film Development
Program’s website.
•
Step 2: After carefully reviewing the Program Guidelines and Submission Information
form to determine their eligibility requirements, potential funding stream and grant
recipient obligations, applicants should carefully read, complete, and submit the Alberta
Film Development Program Application Form with required accompanying
documentation, using the Submission Checklist to ensure a complete application
package. Incomplete submissions will be returned to the applicant.
•
Step 3: Following the completion of production, successful applicants are required to
submit a number of Deliverables to Alberta Film Development Program staff to receive
program funds, and should use the Deliverables Checklist which can be found on the
Alberta Film Development Program’s website to ensure the complete submission of
required documentation.
APPENDIX 4: Production Incentives - Alberta Foundation for the Arts
Alberta Foundation for the Arts (AFA) commissions The Alberta Film Development Program
(AFDP), which works to increase opportunities available to Alberta’s film community by
encouraging the Alberta production industry. While other Provincial and State programs apply
grant money toward labour tax credit programs, the AFDP awards grants, which are applied
towards all dollars spent during production.
The grants offered by the AFDP are only available to Alberta parent film production companies,
or full partner co-production companies. An Alberta parent production company must be at
least 51 percent owned by Alberta residents who control the management, creative and
financial decisions, as well as have its head office in Alberta, have film production as its primary
activity, be duly registered, have an active development program, and have at least 75 percent
of all salaries and wages paid to Alberta residents. In order to receive the grant, all filming must
be conducted within the Alberta Province unless exceptions have been granted.
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The production must be supported by a Canadian broadcast license or have a distribution
agreement from a recognized distributor. Productions with budgets over C$500,000 must
demonstrate 65% third party financing and a broadcast license or distribution agreement;
productions with budgets less than C$500,000 only require the license or distribution
agreement. The grant covers up to 20% of their total expenses or a maximum of C$1.5M per
project or series. Grants are paid upon completion of projects, and must have complied with all
production stipulations.
These conditions include providing the AFA with a copy of the finished product, appropriate
financial statements, a list of all personnel engaged in the project, and a declaration confirming
that the applicant and the production still meet all eligibility requirements. The AFA may
request an audited cost report at any time, and the applicant must present the report before
any funds are released. Applications for the grant can be made at any time during the fiscal
year, but must be submitted and accepted prior to filming.
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Prefeasibility Study into the Viability of
By:
Date:
June 30, 2010
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1.0 DEMAND FOR ABORIGINAL CULTURE TOURISM IN ALBERTA
Results show that there is significant demand for aboriginal culture tourism products both
domestically and internationally. In terms of geography, there are three main geographic
markets that are the potential markets for Aboriginal Tourism in the AlbertaHUB Region:
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The Short-Haul Market encompasses Alberta and its border provinces / states – i.e.,
British Columbia, Saskatchewan, NWT, Nunavut, Yukon and Montana.
The North American Long-Haul Market is defined as encompassing all regions of
Canada and the United States that are not included in the Short-Haul Market.
The Long-Haul Overseas Market is defined as all regions outside of Canada and the
United States.
In addition to the geographic markets, there are two sub-segments that have a better than
average potential for the aboriginal tourism industry in Alberta and the AlbertaHUB Region.
These segments are defined as follows:
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Primary Market – The Aboriginal Culture Segment: For both the Short-Haul and North
American Long-Haul markets, the Aboriginal Culture segment is defined as travellers
who have either “attended aboriginal culture experiences in a remote or rural location”
or “attended a powwow or other aboriginal celebration” during the past two years. For
the Long-Haul Overseas market, the Aboriginal Culture segment is defined as travellers
who “saw or experienced unique aboriginal or native groups” on their most recent (longhaul) trip.
Secondary Market – The Culture Segment: For both the Short-Haul and North American
Long-Haul markets, the Culture segment is defined as travellers who fall into the
“Knowledge Seekers” segment defined as part of the TAMS study. Culture travellers are
likely to have sought out exploratory vacation experiences (such as visiting historical
sites and art galleries and museums) and have above average interest in visiting
aboriginal cultural attractions. For the sake of interest, a Culture segment was also
defined for Canada’s top four Long-Haul Overseas markets – the U.K., Germany, France
and Japan. The definition varies for each of the overseas markets depending on the
available data.
There are well over 100 tourism sites in Alberta that can be considered to offer an aboriginal
culture experience. It should, however, be noted that, while there is an abundance of aboriginal
tourism sites in Alberta, many are not market ready. In other words, while they are open for
business, they do not provide the level of service and amenities required to attract key market
segments. The industry is very concentrated in the southern regions of the province,
particularly around Calgary. There is also a high concentration of sites around Edmonton.
With respect to Alberta’s tourism infrastructure to support aboriginal tourism:
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Road and air access to and within Alberta is strong and is well established to support
aboriginal tourism in Alberta
Accommodations are not a significant issue, with the exception of the Rockies and
Northern Tourism Destination Regions (TDR) in peak periods, and near reserve-based
operations;
There are sufficient retail and services throughout Alberta to support aboriginal tourism;
The visitor information centre (VIC) and convention and visitor’s bureaus (CVB) are well
established in larger communities and those devoted to tourism. Smaller communities
and those based on or around reserves, are typically lacking these types of structures
and organizations. For those smaller communities and reserves with significant tourism
operations, efforts should be made to establish locally based VIC’s or CVB’s.
Additionally, participation in partnership marketing programs and Niitsitapi are below a
level at which their full benefits can be realized; and,
A high percentage of aboriginal tourism operators utilize new technologies and either
maintain their own web site or have their product marketed on another web site
While the number and magnitude of the barriers that each operator faces will differ depending
upon their situation, it is obvious from the research and interviews that the large majority of
operators face at least some of these challenges. Overall, a general lack of product
development and readiness is the result of these challenges and barriers, specifically:
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Limited funding and access to capital;
Limited awareness and inadequate marketing of the aboriginal tourism industry in
Alberta;
Limited experience and training in tourism business management;
Limited understanding of the market for aboriginal tourism; and,
Social issues such as band politics and labour force attitudes.
1.1 Size of the Potential International Tourist Market to Canada and Alberta
1.1.1 China
Total potential long-haul pleasure travellers (aged 18 plus)
Target Market for Canada
Very/somewhat interested in visiting Canada in the next 2
years
Size of the target market
Immediate Potential for Canada
Will definitely/very likely visit Canada in the next 2 years
Immediate potential
Size of Potential Chinese
Tourist Market to Canada
5,740,000
79%
4,535,000
40%
2,296,000
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Source: Global Tourism Watch: China Key Findings – Canadian Tourism Commission, 2009
Chinese travellers that are likely to visit Canada were asked to indicate their reasons for
considering a visit. Echoing the product interest results, nature is the predominant driver for
visiting Canada, with the top five motivations all relating to nature. Again, Chinese travellers
show a desire to explore nature from a nearby city and to see the beauty of the surrounding
natural environment while in the big city, making them a natural target for Aboriginal Tourism
in the AlbertaHUB Region situated as it is close to Edmonton.
Culture takes a backseat to nature for travel to Canada, with sampling local specialities,
exploring the culture of indigenous peoples and gaining insights into local lifestyles sparking
interest for the majority of likely travellers to Canada. Chinese travellers are also highly
interested in historical/cultural attractions, which suggests that attractions like the Métis
Crossing and Fort George and Buckingham House are potential draws that already exist in the
AlbertaHUB region.
1.1.2 Japan
Size of Potential Japan
19,070,000
years
69%
13,158,000
21%
Immediate potential
4,005,000
Source: Global Tourism Watch: Japan Key Findings – Canadian Tourism Commission, 2009
With solid gains in its popularity over the last few years, British Columbia has become the
leading regional destination in Canada for the Japanese tourist. At 82%, the province has seen
more than a ten point increase in travellers likely to visit since 2007, with Vancouver, Victoria
and Whistler all up substantially in appeal. Ontario (76%), Québec (51%) and Alberta (40%) are
the next most popular provinces for Japanese travellers, with no significant shifts in interest
over the past two years. The significant number of Japanese tourists visiting the province of
Alberta is a great potential pool from which to draw further tourism to the AlbertaHUB region.
Nature clearly leads the way in terms of reasons for Japanese tourists visiting Canada, with the
top five motivations all relating to, or leveraging, Canada’s spectacular nature. While
historical/cultural attractions were the top vacation pursuit for travel in general, this ranks sixth
for travel to Canada.
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1.1.3 Germany
Size of Potential Germany
14,916,000
years
73%
10,889,000
23%
Immediate potential
3,431,000
Source: Global Tourism Watch: Germany Key Findings – Canadian Tourism Commission, 2009
Little has changed in terms of the top five regions German travellers are likely to visit, with
Ontario, British Columbia, Québec, Alberta and Yukon continuing to be the most favoured
regions in 2009. Interest in parts of western Canada has grown this year, specifically British
Columbia (driven by gains for Vancouver, Victoria and Whistler), and Alberta (driven by
increases for Calgary, Edmonton and Jasper). Once again the popularity of Alberta as a tourism
destination for the European market indicates great potential for the AlbertaHUB region’s
tourism industries.
While Canada does not tend to fare well on cultural attributes generally, the good news is that
there is some recognition of the country’s unique cultural offerings among likely German
visitors. Experiencing Canada’s unique character/local lifestyles and aboriginal
culture/attractions are key motivations for around three-quarters of German travellers, while
historical and cultural attractions also garner a healthy rating at just under 70%, indicating a
strong potential market for Aboriginal Tourism in the AlbertaHUB region.
1.1.4 France
years
Immediate potential
Size of Potential France
15,177,000
78%
11,838,000
36%
5,464,000
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Source: Global Tourism Watch: France Key Findings – Canadian Tourism Commission, 2009
Québec (91%) continues to be the top destination in Canada for French travellers in 2009,
followed by Ontario (79%) and British Columbia (69%). However, Alberta has now usurped
Newfoundland in fourth place, gaining a remarkable 11 percentage points since 2007. In fact,
Alberta is the only province to see a significant increase in 2009, with most provinces headed in
the opposite direction. The Aboriginal Tourism industry in the AlbertaHUB region could greatly
benefit from the growing French tourism market interested in shared cultural roots with the
Métis nations.
With nature being Canada’s strong suit, it is understandable that beautiful scenery, national
parks and wildlife are the top three reasons for French tourists visiting Canada, each rated at
between 85% and 90%. However, cultural motivations are also fairly high on the list, carried by
the ubiquitous importance of culture to French travellers regardless of the specific destination
visited. Local lifestyles, historical/cultural attractions, aboriginal culture and local flavours all
rank among the top ten reasons to visit Canada. Once again the strength of the potential
French tourist market in the AlbertaHUB region for Aboriginal Tourism is evident.
Alberta
BC
Ontario
China
Immediate
Potential for
Canada
2,296,000
299,000
2,021,000
1,469,000
Japan
4,005,000
1,602,000
3,284,000
3,044,000
Germany
3,431,000
1,990,000
2,813,000
2,882,000
France
5,464,000
2,076,000
3,770,000
4,317,000
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2.0 ABORIGINAL CULTURE TRAVELLER TRENDS
2.1 North America
2.1.1 Canada
The domestic market is the primary market for the Canadian tourism industry accounting for
upwards of 70% of total Canadian tourism revenues and nearly 80% of total visitation. Virtually
all regions of the country contribute to tourist activity in Canada. Free time is increasing in
importance, and many Canadians are choosing to make the most of their time off work by
travelling away from home. Some key trends in the Canadian market include:
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The overwhelming majority of trips taken by Canadians are for pleasure purposes
(including visiting family and friends).
Canadians tend to be somewhat less exploratory and somewhat more sports and hobby
oriented. They are likely to choose a destination that is familiar and travel to escape the
Canadian winter weather.
Participation in winter activities (e.g., skiing and snowboarding, snowmobiling and
skating / hockey) and seeing natural phenomena (e.g., seeing the Northern lights or
other arctic experiences) are common vacation activities on their recent trips.
Canadians have a growing interest in nature, eco-tourism and experiences that are
authentic and natural, all of which are available within close proximity to where they
live.
They are highly value-conscious travellers who look for good deals year-round.
The weak Canadian dollar provides a competitive advantage against destinations
abroad. However, Canadians are slowly becoming accustomed to the depreciated value
of the dollar, and are altering their travel plans accordingly.
The Internet has become the dominant medium for both information distribution and
commerce, although Canadian consumers appear to still have concerns about security,
privacy, customer service and reliability.
They prefer to travel independently and many prefer to pre-book only a small amount of
their travel arrangements. This suggests that tourism businesses place an importance on
marketing to walk-by traffic.
The baby boomer generation is on the verge of becoming the most lucrative travel
segment in Canada. They dream of retiring at age 50, resuming the search for the
meaning of life.
Older / retired travellers are more interested in travelling internationally than
domestically.
However, Canadian outbound travellers are a prime segment to be targeted for
domestic travel. They are most likely to be the non-family market (singles, couples,
empty-nesters), are interested in buying packages, and have a propensity for mid-tolong-haul travel.
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Canadians perceive Canada as having much to offer in terms of culture and entertainment and
opportunities to experience nature and participate in outdoor activities. In addition, Canadians
are also likely to view Canada as popular, trendy place with many outdoor activities and lots for
families to see and do. They have a strong awareness of Alberta and its attributes, and Alberta
has traditionally enjoyed good visitation levels from Canadians outside Alberta.
It is interesting to note that Canadians are more likely to have encountered aboriginal
experiences in a remote setting, than to have visited aboriginal attractions, suggesting that
Canadian travellers may be more open to the idea of stepping off the beaten track.
Participation levels are highest among mature and well educated travellers, as well as those
who took a domestic trip in the past two years.
Canadian Aboriginal Culture travellers are likely to participate in other cultural activities when
they travel (i.e., going to museums, art galleries, concerts, plays, dance and opera
performances, local fairs and festivals) and are keen on “soft” outdoor activities (i.e., they want
to see wildlife / wildflowers, go whale watching, go hiking / backpacking in wilderness settings,
and take to the lakes by fishing, canoeing and kayaking). Because of their strong secondary
interest in nature and the outdoors,
Canadian Aboriginal Culture travellers can also be targeted for lakeside or seaside resorts,
wilderness camping, ski or mountain lodges and drive-in wilderness lodges. These trends
indicate a healthy potential Canadian tourist pool from which the Aboriginal Tourism market in
the AlbertaHUB region could benefit from.
2.1.2 The U.S.
The U.S. tourism market may be the most competitive in the world, with Americans travelling
more, both home and abroad. The U.S. is Canada’s largest international tourism market,
accounting for 15.2 million trips of one night or more in 2000, however Europe has now
surpassed Canada as the most popular destination for U.S. outbound leisure travellers.
Tourism is a discretionary expense in the minds of Americans and is largely dependent on the
consumer’s levels of both confidence and disposable income. Americans work the longest hours
in the industrialized world, with the chronic shortage of time moulding their lifestyle and travel
behaviour. The greatest challenges in getting Americans to travel outside the U.S. remain the
American market's 'lack of time' and short paid vacation periods.
The American traveller’s state of mind and attitudes towards travel has clearly been affected by
the September 11th events. But, while their willingness to travel has certainly decreased, they
are still quite willing to do so. Some key market trends include:

The overwhelming majority of trips taken by Americans are for pleasure purposes
(including visiting family and friends).
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While pleasure travel is more frequent during the summer season in the U.S., Americans
are also likely to travel during the spring and fall seasons.
American pleasure travellers are likely to seek out natural wonders, historical sites,
adventure and excitement and different cultures when they travel. They also want to
visit a casino to gamble.
Vacation activities enjoyed by American travellers include in water sports (sailing, wind
surfing, scuba diving), extreme summer sports (e.g., hang-gliding, parachuting, bungee
jumping), extreme winter sports (e.g., rock climbing, ice climbing), fishing / hunting and
fitness activities.
Americans are likely to have participated in most types of cultural and entertainment
activities while travelling during the past two years.
Americans are also likely to have taken a greater number of tours and cruises.
When it comes to selecting a destination post-September 11th, the top considerations
for American travellers are safety (both personal and environmental), airport security
and cleanliness of the destination. Conversely, international flavour and different
cultures rank low on the consideration scale.
The extremely favourable exchange rate for Americans continues to enable tour
operators to deliver excellent value packages to Canada.
Tour operators believe that there will be an increase in demand for motor coach and
non-air travel packages post-September 11th. In other words, a larger Short-Haul
market.
American consumers are embracing the Internet as their preferred medium for
researching and booking travel.
Americans are likely to have purchased resort or cruise vacation packages. Adventure
packages and educational packages are also commonly chosen.
As the market ages, 'baby boomers' who are reaching retirement age hold a lot of
potential.
Mature and middle aged travellers have an affinity for nature, the natural and
authenticity.
Interest in and likelihood of visiting Canada by American travellers is very strong. Moreover,
Canada (and Alberta) enjoys a high ratio of repeat visitors from the U.S. resulting in high loyalty.
“The U.S. markets with the highest incidence of travel to Canada are primarily situated along
the Canadian border and include urban centres such as Rochester, Seattle, Buffalo, Detroit,
Cleveland and Toledo. However, Detroit, Boston, Chicago, New York City and Seattle are the
urban centres that generate the largest number of trips to Canada. Not surprisingly, proximity
dictates the prime markets for each province.”
American travellers rate Canada high on safety and security, cleanliness, friendliness and
political stability – all of which are of increasing importance in light of the events of September
11th. American travellers view Canada as being very similar to the U.S. when it comes to culture
and international flavour, but sees Canada as a place offering abundant opportunities to
experience nature and participate in outdoor activities. Many do not name Canada as a top of
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mind destination to see and experience aboriginal culture. Traditionally, Canada attracts an
older, more affluent, and higher educated U.S. traveller.
It must be noted that most Americans have little of no knowledge of Alberta’s whereabouts and
many are confused as to whether it is a city or a province. Some Americans are aware of the
names Edmonton and Calgary, but there is very little tourism association and a weak link
between these two cities and Alberta. It is felt that Alberta offers a different, but not too
foreign experience to American travellers – an authentic outdoors destination (e.g., unspoiled,
uncrowded and peaceful). Its cities are safe, clean and slower paced, but not behind the times.
Albertans are seen as friendly, caring and welcoming.
It is interesting to note that Americans are more likely to have visited aboriginal attractions,
than to have encountered aboriginal experiences in a remote setting. Participation levels are
highest among mature / senior and well-educated travellers, as well as among those who took
a trip to Canada from the U.S. in the past two years.
Like Canadian Aboriginal Culture travellers, American Aboriginal Culture travellers are also likely
to participate in other cultural activities when they travel (i.e., take in art galleries, attend
cultural performances, visit carnivals and local fairs) and are also keen on “soft” outdoor
activities (i.e., they want to see natural wonders, wildlife / wildflowers, go hiking / backpacking
in wilderness settings, and take to the lakes by fishing, canoeing and kayaking).
Because of their strong secondary interest in nature and the outdoors, Aboriginal Culture
travellers can also be targeted for lakeside or seaside resorts, camping, ski or mountain lodges
and drive-in wilderness lodges. Interestingly, casinos and gambling, antique shopping and
shopping for local arts and crafts are also common interests among American Aboriginal
Culture travellers. With the wealth of attractions the Aboriginal Tourism industry in the
AlbertaHUB region has great potential to market to the US tourist while including such existing
attractions as the Casino Dene and Métis Crossing that are already present in the area.
2.1.3 Long-Haul Aboriginal Culture Travellers
Aboriginal Culture travellers in North America are very likely to have sought out vacation
experiences associated with exploration (e.g., visiting historical sites, natural wonders) and
sports and learning (e.g., to experience a hands-on learning experience) and are likely to have
participated in natural sightseeing activities. They are also likely to have toured in their own
personal vehicles and to have camped in a public campground or in the wilderness, to stay at a
lakeside or wilderness lodge, or remote fly-in lodge.
Aboriginal Culture travellers are likely to have consulted with a large number of information
sources (e.g., articles in newspapers / magazines, travel information offices and travel guides) in
planning their vacations, suggesting that print media may be the way to go. In addition, a key to
attracting Aboriginal Culture travellers to Alberta will be product packaging. Aboriginal Culture
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travellers look for a mix of experiences on their vacations beyond just aboriginal culture. They
look for destinations that offer a combined natural, cultural and learning related experience for
their trips, all of which Alberta has in abundance.
2.2 Europe
2.2.1 Germany
Over the last few years, the German long-haul pleasure travel market has been hit hard by
tough economic conditions in Germany. As a result, travellers of lesser means and enthusiasm
have been temporarily forced out of the long-haul market. What remains is a group of die-hard
travellers – younger, better educated and more affluent than before – who are also increasingly
more cost conscious in planning their trips. This has led to many striking changes in this market:
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Family travel is on the rise, while VFR travel has been steadily declining – a clear sign
that the market is maturing.
German travellers are taking shorter trips, participating in fewer vacation activities and
have lower per person trip expenditures than five years ago.
History products are growing in appeal, while interest in nature and ethnic / aboriginal
culture products have waned.
Safety has always been very important to German travellers, and is currently the
number one travel motivation in this market.
Other key motivations include clean destinations, good environmental quality, nice
scenery, seeing something new, enriching one’s knowledge, good service and friendly
local people, good weather and relaxation and escapism.
In addition, Germans want to experience all of these things for a good price.
Planning and booking horizons are longer, with travellers taking advantage of early
booking discounts.
The use of the Internet in travel planning is on the rise, as is the use of books and travel
guides. However, German travellers still turn to travel agencies when it comes to
actually booking their trips.
Packages are becoming the way to go for most German long-haul travellers, with 61%
having used a package on their most recent long-haul trip. Getting added into packages
is key if tourism businesses want to succeed in this market.
Canada enjoys high interest levels among the die-hard German travellers that remain, resulting
in 5.6 million potential travellers to Canada in the next five years. However, the tough economic
climate has made it increasingly difficult for Canada to convert this potential into actual arrivals,
resulting in a drop-off in German arrivals to Canada. Recent travellers to Canada are now older,
better educated and more affluent than the market as a whole and travel to Canada remains
strongly driven by VFR.
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Beyond a cultural experience (i.e., seeing local festivals, local crafts, local people and enjoying
ethnic culture and events), Aboriginal Culture travellers have a strong secondary interest in
nature and history and can also be targeted for visiting national parks and visiting places of
religious significance, historical interest or archaeological interest.
Culture is a prime area for development and marketing since Canada, and specifically Alberta,
has abundant cultural products with the authenticity that the German traveller seeks.
Moreover, Culture travellers are interested in Canada, and travellers interested in Canada are
more likely to be motivated by culture. For now, adding on a cultural component to a more
general trip may be the way to go, since Germans seldom think of themselves as taking a
“cultural trip” per se.
Alberta is generally well perceived in the German market. It has a dynamic image, offering
visitors something different and a chance to escape from the ordinary, alongside thrills and
excitement. Within Canada, it is definitely seen as one of the best places to go for cultural
experiences and for broadening one’s horizons. It is also rated best on small towns, national
parks, outdoors activities, winter sports and sports in general. All the above mentioned
amenities exist in the AlbertaHUB region making its Aboriginal Tourism a potentially high
sought after destination piece for the German traveller.
2.2.2 France
French outbound travel has experienced a general slowdown in recent years due to a difficult
economic climate, general social unrest, high unemployment and sliding disposable incomes, all
of which have contributed to making vacations abroad a much more difficult prospect for this
market. However, the French view their holidays as a high priority and are reluctant to forego
them, and many continue to travel despite these tough market conditions. Recent French longhaul travellers tend to be middle-aged, married and very well educated. On the other hand,
their incomes are typically fairly low with a large portion being out of the workforce (i.e.,
retired, in school, unemployed or working in the home). Some key market trends include:
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VFR travel is very popular in the French market, accounting for 30% of all recent trips
taken. However, it appears to be declining in importance, with only a 17% share of
future trips.
Each French citizen has a minimum of five weeks vacation per year. The obligatory fifth
week of leave must be taken outside the main summer holiday season.
The introduction of the 35-hour working week will have a direct impact on people’s
leisure time – people are now able to take shorter breaks more often during the year.
However, most French take their vacations during the peak travel seasons (July, August
and December) rather than spread throughout the year.
Universal activities for French travellers revolve almost exclusively around local and
ethnic culture, including the foods, the crafts and the people. In addition, they look for a
peaceful safe environment for their trips.
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French travellers are fairly budget conscious, no doubt as a result of their lower
household incomes. Price is often the determining factor on who gets the business.
French travellers rely heavily on travel agents in planning their trips, however Internet
bookings have been increasing.
The number of French citizens with Internet access is rapidly growing, and tourism
related offers are now accompanying this trend.
French travellers have traditionally taken far fewer package holidays than other major
European markets.
France represents Canada’s third largest market within Europe. Canada ranks second as a
dream destination, behind the U.S. and the Caribbean (which are tied for top spot). Canada
tends to attract a fairly upscale market, with those interested in visiting Canada being well off
by French standards and enthusiastic about travel in general. Touring trips and VFR account for
close to 80% of all trips to Canada, with packages being used by over half of recent travellers.
French Aboriginal Culture travellers are motivated by opportunities to try local foods, see local
crafts, meet different ethnic groups, and of course, meet unique indigenous peoples. This group
has a strong secondary interest in nature and sports and can also be targeted for visits to
natural ecological sites, wilderness adventures, snowmobiling, other winter sports and
spectator sporting events. They are likely to partake in sightseeing opportunities in combination
with culture-related activities, including visiting small towns and villages, sightseeing in cities,
taking walking tours and visiting scenic landmarks all activities that can be discovered in the
AlbertaHUB region featuring its Aboriginal Tourism at the fore.
2.3 Asia-Pacific
Markets covered in this section include Alberta’s primary target markets (i.e., Japan, Taiwan
and Australia) and one secondary markets (i.e., Hong Kong). Other secondary markets (i.e., New
Zealand and South Korea) are not profiled as part of this study due to a lack of recent
information.
2.3.1 Japan
The key influence on outbound travel continues to be the Japanese economy. Whilst many
believed Japan had turned the corner into sustainable economic growth in 2000, the reality has
been disappointing. Japanese consumers' unwillingness to spend disposable income during
uncertain economic times has impacted on travel through the growing popularity of either
fewer or lower cost holidays. Thus, while the willingness to travel amongst Japanese consumers
remains very strong, it is difficult to say what the coming year will bring. Today’s Japanese longhaul traveller is more likely to be female, older, better educated and have higher household
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incomes. They are more sophisticated than in the past, and are starting to make their own
destination decisions and plan their own trips. Some key market trends include:
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Pleasure / vacation travel has grown, while combined business-pleasure travel and
company paid vacations have dropped.
Japanese who are working are often limited to 7 to 10 days vacation a year, resulting in
a strong shift to shorter trips.
Safety and security, good travel infrastructure, cultural and heritage products, shopping
and escorted flexible tours in Japanese are important elements of the tourism
experience.
Nature is a key draw for the Japanese, with additional interest in touring and city
products.
The Japanese are very price conscious and Japanese travellers are now spending
considerably less on their trips. Moreover, many are putting off their long-haul plans
until the economy strengthens.
Top information sources for planning a trip continue to be brochures / pamphlets and
travel agencies. Travel guides / books, advertisements and the Internet have increased
in importance in trip planning process.
Japanese still prefer pre-packaged tours, but look for more flexibility and customization
than the fully planned itineraries offered in the past.
Outbound travel in the senior, middle-aged and family segments are growing. The
growing New 50s segment is seeing increasing demand for fully structured tour
packages to multiple destinations.
In spite of the slowdown in the past few years, Japan is still by far Canada’s most important
tourism market in Asia / Pacific. The middle-aged traveller offers the best potential for Canada,
with high interest levels and good price-value perceptions of the destination.
Japanese Aboriginal Culture travellers are motivated by visiting some place new where they can
meet new people, including different ethnic groups and unique indigenous peoples. This group
has a strong secondary interest in the outdoors and can also be targeted for visits to natural
ecological sites, outdoor activities, roughing it and rural countryside. They also look for thrills
and excitement on their trips. Aboriginal Culture travellers are likely to partake in other local,
cultural and nature-related activities on their trips. These trends indicate a healthy potential
Japanese tourist pool from which the Aboriginal Tourism market in the AlbertaHUB region
could benefit from.
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3.0 ABORIGINAL TOURISM IN THE ALBERTAHUB REGION
3.1 Present Aboriginal Tourism Attractions in the AlbertaHUB Region
In the AlbertaHUB region there is already in place a number of Aboriginal Tourism destinations.
These attractions serve as a core of Aboriginal Tourism in the region on which to build. Here is
a listing of those destinations
3.1.1 Métis Crossing
Located on the banks of the North Saskatchewan River in the historical Victoria District, Métis
Crossing allows visitors to step back in time and experience one of the earliest Métis
communities in Alberta. Stretching 512 acres with campground and RV parking, Métis Crossing
is home to a unique history, culture, and celebrations. While its origin was built on farming,
buffalo hunting, and trading, today Métis Crossing attracts visitors for its beauty, history, and
sense of adventure. It is Alberta's premier centre for Métis cultural interpretation.
History
The North Saskatchewan River, or Kis-is-ska-tche-wan, meaning the "swift current", has played
a central role in Western Canada's history. It was the water highway used by Métis and all
Aboriginal people, missionaries, explorers, and fur traders. Any spot on the river where
crossings could be made became a vital intersection for all who traveled the area. Métis
Crossing had already been such a spot for centuries - archaeological excavations have
unearthed the remains of a 6,000 year old campsite! Before European contact, Métis Crossing
was a connecting point for First Nations peoples on their age-old overland journeys. In 1862,
Methodist Minister George McDougall established a mission here. A Hudson's Bay Company
Trading Post was also constructed. Many English-speaking Métis from Manitoba arrived and
farming began and the fur trade thrived. Over the years, this Métis settlement became a
permanent river lot community.
3.1.2 Frog Lake: A National Historic Site of Canada
Frog Lake is of national historic significance because:
• Of its associations with the tragic events of 2 April 1885;
• Its meanings for the various parties involved;
• Its association with the events and tensions which led to, and arose out of that event of
1885.
Frog Lake National Historic Site is situated along the south boundary of the Unipouheos 121
Indian Reserve, which is part of the Frog Lake First Nation. The area encompasses the cemetery,
the archaeological remains of the historic Frog Lake Settlement, and the sites of the Woods
Cree and Plains Cree camps in 1885. Most of the land within the historic area is owned either by
the Province of Alberta or the Frog Lake First Nation. Parks Canada looks after the plot of land
that encompasses the cemetery of the nine men who were killed in 1885.
History
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Just inside the Alberta border, the site of this tragic event is laden with memories of lives lived
and lost: archaeological remains, a cemetery, and depressions in the earth representing the
church, the mill, the milk house, stables… remnants of old wagon trails still exist. Frog Lake
became a rallying cry for the Canadian Militia who were sent west to deal with the rising
conflicts. Frustrated with the Canadian Government, especially the provision of food rations,
Kah-Paypamhchukwao, also known as Wandering Spirit, and other warriors took control of
Mishtahimaskwa’s (also known as Big Bear’s) Cree band and come to Frog Lake to take up
issues with the Indian Agent. Tension erupts in the small settlement and nine people are killed
and the rest taken hostage. The deaths at Frog Lake drove the Canadian Government to take a
stronger law and order stance in the West.
3.1.3 Fort George and Buckingham House
At Fort George and Buckingham House they believe history and culture are most easily
understood when grounded in experience. The site offers a variety of interactive, hands–on
educational programs that give students the opportunity to experience the past for themselves.
Take a trip through time and visit Fort George & Buckingham House Provincial Historic Site, the
location of two competing fur trade posts. Step into the world of the Aboriginal people whose
lives were so affected by the arrival of the fur traders. Meet the "Country Wife" and learn about
the important role she played as the link between two cultures. Your visit would not be
complete without a stroll down the interpretive path to the archaeological site of the two forts.
3.1.4 Lac la Biche Mission
Lac La Biche Mission is a national historic site and provincial resource located 2.5 hours north
east of Edmonton in the heart of Alberta's Lakeland. This Alberta museum offers visitors a link
to the past through guided tours and period role playing all within a short of distance of your
campsite.
History
The Lac la Biche Mission was an important geographical crossroads and supply depot officially
established in 1853. It was one of the first Albertan sites for exchanges between the Native,
Metis, Francophone, and Anglophones populations. The oblate Missionaries, the Grey Nuns and
the Daughters of Jesus Built this mission to be the root of colonization through their devotion in
education, healthcare and commitment towards the populations of Northern Alberta and
Western Canada.
3.1.5 Riel Beach
Riel Beach is a camping destination that is administered by the Fishing Lake Métis Settlement
and is located just 7km off Highway 897, Riel Beach is a great place to bring the whole family
and has so much to offer, from long beach side walks on the pedway, to jet skiing and fishing.
Whether you want an old fashion camp-out, a camp site with power or a fully sheltered stay,
you’re bound to have a great time. They have an extensive jungle gym for kids of all ages to
enjoy. They also have an exclusive staging area for all types of functions, such as festivals and
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jamborees. The facility offers standard rooms, plus a conference room, family room with TV,
bathrooms with showers, kitchen and dining room.
History
The Fishing Lake Métis Settlement shares a border with the Elizabeth Métis Settlement, near
the Alberta-Saskatchewan border and is situated between two large lakes Fishing Lake and Frog
Lake. Fishing Lake is important to Métis history in western Canada, including the Metis
Settlements. Oral history of the community tells how Métis leader Louis Riel and his supporters
camped at Fishing Lake during the 1885 Métis Resistance at Batoche, Saskatchewan. Many of
the ancestors of families at Fishing Lake made their homes in this area prior to the formal
establishment of the Settlements and were connected to the St. Paul des Métis Settlement. It
was at this community that Métis settlers first began to organize for the primary purpose of
securing land for future generations.
3.1.6 Victoria Settlement
Located 10 km south of Smoky Lake on secondary highway #855, and 6 km east on the historic
Victoria Trail. Today, step inside the 1864 Clerk's Quarters or the 1906 Methodist Church to
hear the story of a once bustling community that saw a new surge of missionary and
commercial activity at the turn of the century. Learn why this thriving settlement experienced a
sudden decline and all but vanished. Catch a glimpse of an exciting period of Alberta's past
through exhibits, trails, and a variety of activities provided by costumed interpreters.
History
Discover history on the North Saskatchewan River along the Victoria Trail, where Reverend
George McDougall founded a Methodist Mission to the Cree in 1862. This is where the
Hudson's Bay Company established Fort Victoria in 1864 to trade with the local natives. The
Mission and Fort became the nucleus for a Métis community whose river lots extended six
miles along the bank of the river.
3.2 Key Segments for Marketing Aboriginal Tourism in the AlbertaHUB Region
The following two market segments were identified as being good opportunities for the
Alberta Aboriginal Tourism Industry to pursue:
 Aboriginal Culture Segment
 Culture Segment
These segments are defined by motivations and recent trip activities that include elements of
aboriginal culture or general culture. Further to this segmentation, the market was also divided
into three geographic regions:
 Short-Haul Market (Alberta, BC, Saskatchewan, NWT/Nunavut, Yukon and Montana)
 North American Long-Haul Market (Other Canada and US)
 Long-Haul Overseas Market (Germany, France and Asia Pacific).
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3.2.1 Short-Haul Product Market Match
As defined earlier, this market is motivated by chances to experience aboriginal products that
are active/recreation/outdoor oriented and those that are nature and eco-tourism based.
More specifically, Canadians are more likely to “step off the beaten path” and look for
opportunities that provide excitement, adventure and authenticity. Their key activities include
visiting historic and cultural sites, natural areas, going for hikes/backpacking, camping,
wilderness lodges, viewing wildlife, birds or flowers and attending local festivals and events,
powwows and native dances.
The key products that the Aboriginal Tourism industry has to offer this segment include
(product strengths):
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The approximately 52 historic and cultural aboriginal sites and interpretative centres /
attractions that are dispersed throughout the province of Alberta including such
attractions as Métis Crossing, Fort George and Buckingham House, and Victoria
Settlement in the AlbertaHUB region.
The numerous (about 32) aboriginal festivals and events, including Buffalo Days, the
Calgary Stampede and Métis Week to name a few;
Ample opportunities to experience nature through AlbertaHUB region`s extensive Parks
and trail system where one can experience hiking, viewing wildlife, canoeing, etc.
Given the above list, the Aboriginal Tourism industry might want to consider some of the
following product enhancements/additions:
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While wildlife opportunities exist in abundance in AlbertaHUB region, there is a need for
additional opportunities for visitors to participate in the viewing of and learning about
the wildlife and ecosystem of the region, including how the aboriginal people interpret
it, perhaps through interpretative trails, walks, guided canoe trips, etc. For example,
bird-watching trips could be organized and combined with a native dinner and/or an
aboriginal cultural exhibit;
Similarly on the recreation side, the AlbertaHUB region offers abundant streams, rivers,
mountains and parks. The aboriginal community could take greater advantage of this
terrain through activities such as horseback riding, canoeing, fishing and visiting native
sites.
The key is that these opportunities would allow visitors to learn more and experience
the traditional native way of life; and
Many of the aboriginal museums and interpretative centres are small and cannot draw
groups on their own. Thus, museums and points of historical interest need to be
packaged together with other aboriginal opportunities to create one or two day visit
experiences.
Although, there are numerous accommodations throughout the Parks such as
campgrounds, lodges and resorts, few of these are aboriginal owned and themed.
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3.2.2 Long- Haul North American Product Market Match
The motivations for this segment are similar to the above. The long-haul market tends to look
for a mix of experiences including those that combine the active, learning, natural and
entertainment side. This group is more likely to take touring vacations by car, especially the US
market. As well, the US market is more likely to look for shopping and casino/gambling
experiences. Experiencing and learning about native culture and hunting, fishing and trapping
opportunities will be more popular with the Long-Haul visitor.
In addition to the products described for the short-haul market, key products that the
Aboriginal Tourism industry has to offer this segment include (product strengths):
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There are strong opportunities to learn about the native culture and way of life through
the interpretive centres and numerous festivals and events that take place; and
There are 11 different tour operators in Alberta focused on aboriginal tourism. The
focus of these operations appears to be more on the interpretive tours.
To better succeed in attracting visitors to the Province from this segment, some of the following
ideas might be pursued:
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Consider adding driving tours based on nature and aboriginal cultural experiences and
sites. The stopping points could include historic points of interest and visitors could refer
to a guidebook or audiocassette describing the tour.
Expand the breadth of tour operators and have some more focused on the
backcountry/wilderness lodges together with hunting/fishing/trapping experiences.
Tour companies, local accommodations and other aboriginal attractions need to
collaborate more to offer packages geared toward families and individuals. For example
a two day tour could be packaged that includes a day of canoeing at Lac la Biche and
overnight at Kikino Métis resort.
Consider more promotion of the amenities and services offered by the Dene Casino
3.2.3 Long-Haul Overseas Product Market Match
The third market identified as offering potential for aboriginal tourism is the long-haul overseas
segment. This group wants to participate in a combination of sightseeing, recreation and
cultural experiences, but they also place a strong emphasis on experiencing authentic products
and learning about the local culture. Combination packages are important to this group as well.
Once again, Alberta’s aboriginal product is strong in terms of the number of cultural and
historical experiences. But it is the packaging of these with other elements (like
accommodation, dining and festivals) that the industry falls short on and this is key for
capturing the overseas market. Additionally:
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There appears to be a shortage of market ready product to meet a growing demand
from overseas visitors for traditional native attractions, music, cuisine and shopping.
Overseas visitors, especially from Germany, want to experience native lifestyle in an
interactive way, such as helping to build a canoe, dog sledding, building a tepee and
visiting a sweat lodge; and
Visiting national parks and viewing wildlife are important to this group, especially within
the German and Japanese markets. While wildlife and national parks are numerous,
there is a need for packaging these experiences together with the aboriginal culture
side.
3.3 Aboriginal Themed Lodge Concept
The lodge concept is an opportunity that has garnered a great deal of support in other First
Nation and Aboriginal communities in areas across Canada. The concept has often been a
popular option because of the opportunity it affords the communities to retain an important tie
to the land and employ members as guides and instructors. There is also the component of
including a retail store inside the lodge to sell Aboriginal arts and crafts and the regalia used for
ceremonies and powwows.
The idea of an Aboriginal Themed Lodge received a great deal of interest and support from
numerous interviewees during the process of the AlbertaHUB Investment Attraction Project,
suggesting in many cases that the aboriginal communities in the region have a growing interest
in such a conceptual venture.
This prefeasibility study can provide an overview of some important considerations, but much
of the detail would be left to a full feasibility study because:
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The operation would be highly dependent on the land available, the size of the lodge, it
amenities, and its purpose.
If applicable, a specific franchise model would have to be chosen to follow
Most Lodges grow organically over decades and have many of their buildings, titles,
permits, licences, etc grandfathered in when they change ownership
In short, a more complete picture requires a full feasibility study and business case to be
developed after serious consultation with any interested bands in the AlbertaHUB region. It
would be necessary to learn about their desires for the facility, and to liaise with government
officials to see what type of operation is possible from an environmental and financial
standpoint.
The consulting team does have experience with Lodge operations, and can provide
prefeasibility analysis in the five functional areas of business planning:
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3.3.1 Marketing
There are typically several types of Aboriginal lodge options:
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Fishing
Fishing/Hunting
Guided Fishing/Hunting
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Eco Tourism
Conference Centre
Hotel/Motel Services
Our initial thoughts after conducting consultations in the region and having experience with
other First Nation tourism ventures is that a Fishing Lodge might be the most feasible and
safest option for the following two reasons:
1. Every business should build on a sustainable competitive advantage. The access to lakes
and its fishing is a simple, straight forward reason for a visitor to come.
2. We have been involved with many First Nations attempting to leverage traditional
knowledge and land assets to attract eco-tourists from abroad, This is an expensive
proposition in terms of marketing costs, and often fails due to long ROI periods or
operational and human resource difficulties.
In short, there is an ample supply of fishermen and hunters in the region, and especially in the
United States who often make the trip to northern Alberta to access the abundant fishing and
hunting experiences that exist in the region.
Target Market
If fishermen or hunters become the key target market, it is likely that most marketing efforts
will be focused on Montana and Washington. These states have a large population of
outdoorsman, close proximity to the region, and a lack of comparable hunting and fishing
resources available.
Marketing on the internet, in trade magazines, and at trade shows will be the best form of
initial advertising. Most successful lodges build up a loyal clientele after a while; this reduces
their need to advertise heavily. Most marketing costs will occur in the first 5 years of operation.
3.3.2 Finance
Building and start up costs are simply impossible to estimate at this point. A piece of land would
have to be identified, and the cost of that last could range widely. Building costs are likely to
run in the $130 to $150 per square foot range.
3.3.3 Operations
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Location
Locating in a more remote location offers the owner the ability to adjust prices accordingly.
However, being located on a busier route lets the owner take advantage of drive by traffic to
sell a greater volume of goods and services. (More on this in the next section.) In the end,
location will be primarily driven by the Lodge’s intended target market/purpose and what land
is available. At this time it is assumed a lodge would be located somewhere within the
AlbertaHUB region utilizing one of the many potential lakes in the region and partnering with
one of the 3 First Nations or 4 Métis Settlements in the area.
Multiple Profit Centres
Many successful hotel operations and lodge operations attempt to create many profit centres
within the business. With hotels, it is common to see lodging, restaurants, lounges, stores,
nightclubs, liquor vendors and conference centers all acting as independent profit centres. This
spreads out the risk of the venture and offers a chance at significant returns by building on
economies of scale and human resource capabilities. And it offers the customers convenience.
Successful lodge operations often use the same model, but they rely on remoteness of the
location to accentuate the convenience for the customer. Many lodge operations offer:
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Lodging
Boat Rentals
Convenience Store
Gas Bar
Gift Shop
Movie Rentals
Dining and Entertainment
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A Liquor Vendor
Bait and Tackle Shop
Guides
Fishing and Hunting Licenses
Docking and Launches
RV Spots and Hook-Ups
The list goes on, depending on your target market and location. The key is ensuring that all of
the customer’s needs and wants are met on-site.
One of the reasons this opportunity often draws so much interest in consultations is the fact
that there will be multiple career opportunities available due to the potential breadth of
services that will be offered. Potential jobs would be in:






Management
Accounting
Business Systems
Guides
Front Desk
Cleaning





Retail
Maintenance
Kitchen
Waiters
Etc.
Even if it is unlikely that any of the Aboriginal communities in the AlbertaHUB region
members would have the manpower to staff the entire operation there are other
199
solutions that can be explored. Significant human resources could to be brought in from
around the region for day to day operations, and a much more widespread search
would have to be done for experienced management. The management of such a
facility, especially in the beginning, would be crucial.
The regulatory issues involved in building and operating such a facility would be
significant. The first areas of research would be in:



Zoning
Health
Natural Resources
Much of the building guidelines come from septic system allowances. And operationally,
a fishing lodge would want to make sure it is abiding by all conservation regulations. But
the fact that the venture would be owned and operated by a First Nation might
dramatically affect much of the regulatory guideless. Important regulatory research
would have to be conducted before a land search is even begun.
3.4 Other Potential Aboriginal Tourism Attractions in the
AlbertaHUB Region
Listed below are examples of other potential Aboriginal Tourism Attractions as
suggested in a study called Alberta Aboriginal Tourism Product Opportunity Analysis
which was commissioned by Alberta Tourism, and that could be opportunities in the
AlbertaHUB region.
3.4.1 Tour Routes



A tour route is a formally mapped out and marketed itinerary linking several
tourism products (i.e., historical sites, museums, accommodations, hiking trails,
etc.) of a similar theme in a particular geographic area, for example, to tell the
story of a particular tribe’s migration. They are typically driving routes that can
be explored by car or tour bus.
They could be long multi-day routes covering the entire province or short twohour routes covering limited kilometres.
These tour routes would incorporate the AlbertaHUB region’s aboriginal history
and culture and would essentially be a story telling mechanism that would be
capable of bringing stories and legends to life.
200


Usually, these routes are marked with a series of signs that provide users with
both direction and interpretation.
In some cases, users can purchase a CD (or cassette) at the start of the route.
The CD provides a narrative explaining the story/sights of the route as the user
drives the route. The narrative is timed to an average driving speed.
3.4.2 Aboriginal Themed Accommodation
•
•
•
•
This may be developed as a new accommodation or from existing
accommodations.
These accommodations would be designed to offer visitors the opportunity to
experience the traditional aboriginal way of life.
There are many possible ways in which to go about theming an accommodation.
Some possibilities might include:
 A tipi village
 A fly-in fishing/hunting lodge that offers the experience of hunting and
fishing as the aboriginals once did.
 A campground offering hiking or canoeing along historical aboriginal trails
or passing by historic sites such as a burial ground.
 A resort offering programs designed to allow visitors to experience the
traditional aboriginal way of life. For example, participation in sweat
lodges, pipe ceremonies and native dances.
3.4.3 Aboriginal Themed Restaurant
•
•
•
A themed restaurant would be designed to offer visitors the opportunity to
experience the traditional aboriginal cuisine.
Again this could be developed from scratch or from an existing restaurant.
Some options to consider for the themed restaurant include:
 Dishes could be served in the traditional manner, including customs,
ceremonies or rituals. Alternatively, while the food would be prepared in
an aboriginal style, dishes could be served in a traditional North American
restaurant style.
 Staff could be dressed in traditional aboriginal attire or in modern day
wait staff attire.
 The physical setting could also be that of a typical North American
restaurant, or meals could be served in a more traditional setting (e.g.,
recreate the dining area in which the tribe used to eat).
3.3.4 Packaging Opportunities
201
Packaging is defined as the presentation of a number of select products and services
that would normally be purchased separately, but which in a package are offered as a
single product at a single price. In the case of the aboriginal tourism industry, packaging
of events, attractions and accommodations is key to expand the market reach,
particularly for overseas markets. Packages could be built around sub-themes that are
relevant to the target markets, such as:
 Culture and History: touring, experiencing native cuisine, visiting an aboriginal
village;
 Adventure/Eco-tourism: hiking/canoeing, interpretive nature trails,
accommodation, native cuisine; and/or
 Experiential: Sleeping in a Tipi; experiencing a sweat lodge; and dining on native
cuisine.
3.4.5 Aboriginal Cultural Centre
•
•
This attraction would represent a learning centre, where visitors could get an
appreciation for aboriginal life and culture.
The attraction could incorporate a vast array of components both indoors and
outdoors. Some examples of potential offerings may include:
 museums;
 interpretive videos;
 self guided hiking trails using interpretive signs;
 story telling using 3D story boards (i.e., model villages, a model of a
traditional hunt);
 shows including native dances, ceremonies or rituals;
 hands on learning of processes; and
 viewing of ancient ruins, burial grounds or significant carvings/drawings.
202
4.0 REFERENCES








Canada’s Tourism Competitiveness – A Call for Action for Canadian Tourism 2008,
Tourism Industry of Canada
Global Tourism Watch Year 3 – China Report 2009, Canadian Tourism
Commission
Global Tourism Watch Year 3 – Japan Report 2009, Canadian Tourism
Commission
Global Tourism Watch Year 3 – France Report 2009, Canadian Tourism
Commission
Global Tourism Watch Year 3 – Germany Report 2009, Canadian Tourism
Commission
Global Tourism Watch Year 3 – Summary Report 2009, Canadian Tourism
Commission
Overseas MC&IT Market Study – Final Report 2008, Canadian Tourism
Commission
Explorers of the Western Canadian Wilderness, TASK

Alberta Aboriginal Tourism Product Opportunity Analysis – Industry Canada/Aboriginal
Business Canada and Alberta Economic Development












www.actp-ptca.ca
www.albertaslakeland.ca
www.anfca.com/coldlake.html
www.en-corporate.canada.travel
www.fishinglake.ca
www.metiscrossing.com
www.pc.gc.ca/eng/
http://canada.travelall.com/promos/aboriginal.htm
http://cnc.virtuelle.ca/cnc/laclabiche/
http://tpr.alberta.ca/tourism/research/devopportunities.aspx
http://culture.alberta.ca/museums/historicsiteslisting
http://strategis.ic.gc.ca/eic/site/fednor-fednor.nsf/
203
of a Recreational Water Park/Aquatic Center
Prefeasibility Study into the Viability of a
Recreational Water Park/Aquatic Center
By:
Date:
June 30, 2010
204
1.0
OVERVIEW OF THE WATER PARK DEVELOPMENT PROCESS
There is general agreement that the water park development process begins with the
preparation of a market and financial feasibility study. As a precursor to this, Outlook
has prepared this pre-feasibility study in order to determine if the development of a
water park in the Alberta HUB region is worthy of further investigation. At a later date,
this may or may not include the development of a full-scale feasibility analysis for the
project.
A feasibility study would address two major issues: (1) the attendance potential of a
proposed water park; and (2) potential financial performance. The first issue is typically
addressed in the market study segment of a feasibility study, while the second issue is
addressed in the financial analysis.
For the purposes of this pre-feasibility report, several of the aspects of a full feasibility
study have been assessed in order to determine the reasonableness of pursuing further
study into the development of a water park in the Alberta HUB region.
205
2.0
A WATER PARK/AQUATIC CENTER IN THE ALBERTA HUB REGION
There is a potential for the development of a water park in the Alberta HUB region.
Currently, there are no water parks located in the area and it has been determined that
the development of such a facility may present an opportunity to enhance the region for
both local residents and tourists alike.
Although the final location of such a facility has yet to be determined, two potentially
feasible locations for such a facility include the towns of St. Paul and Cold Lake. Based
primarily on the population characteristics of the towns and their surrounding areas,
these two sites would appear to have the potential to support a new or redeveloped
water park/aquatic center.
206
3.0
MARKET ANALYSIS
The market analysis of a feasibility study focuses on the attendance potential of the
proposed water park. It has two objectives: (1) to derive physical planning parameters
for the park; and (2) to provide the basis for revenue projections in the financial
analysis.
Key factors to be evaluated in the market analysis are as follows:
• Site Features
• Demographics
• The Tourist Market
• Competition
• Weather
• The School Year Schedule
• Attendance Projections/Park Sizing
• Park Features
3.1
Site Features
There are a number of site features that need to be evaluated in assessing the suitability
of a physical site for a water park.
Site Size and Configuration
The amount of land required to accommodate the park core, parking lot and support
facilities will depend on the scale of park development envisioned. Large commercial
water parks require a site in the range of 12 to 20 acres, while family facilities require
smaller sites, perhaps in the range of 5 to 10 acres. In any event, the feasibility study
should provide general guidelines regarding acreage requirements. In terms of the
configuration of the land parcel itself, a square parcel is most often preferable to a
rectangular shaped parcel due to the design constraints the latter would pose.
Based on conversations with industry experts, the most feasible size for a water park in
an area with population characteristics similar to the Lakeland region would be a smaller
sized park in the 5 to 10 acre range. Typically, larger commercial parks require a highly
concentrated population and are located near major metropolitan areas since the
majority of water park attendance most often comes from local residents. This is
discussed further in the Demographics section of this report.
Land Costs
207
Relative to other land uses, such as retail, offices and hotels, water parks do not
typically rank as one of the highest and best uses of real estate. In terms of return on
investment, water parks cannot compete with most commercial uses, nor should they.
As such, land suitable for water park development is typically less costly than that of
other commercial real estate developments.
Access and Visibility
Good regional access is a prerequisite for a water park. Proximity to a major
thoroughfare is highly desirable. In general, visibility is desirable but not mandatory for
the success of a water park. Research has proven that people do not visit water parks
on impulse; rather, they know beforehand that they are going to attend a water park.
The advantage to having good visibility from a major thoroughfare is increased public
awareness. In the AlbertaHUB region, one key to ensuring that tourists along the Iron
Horse Trail and other tourism attractions are aware of the existence of the park would
be visibility along the route or sufficient signage along the Trail. Parks without good
visibility are usually required to spend extra marketing dollars to achieve public
awareness.
Site Constraints
Any potential site should be evaluated to insure that there are not physical constraints
that could inhibit or prevent development of the proposed water park. Examples of site
constraints include the presence of wetlands, shallow bedrock and rough terrain.
3.2
Demographics
It is widely accepted in the industry that, except for major tourist markets, the
demographics of a water park’s resident market area are the major factors in generating
attendance. Generally, the market area for a large commercial water park has a 100
kilometer radius from the proposed site. For smaller water parks, smaller radii of
approximately 25 to 50 kilometers are often used. The factors that combine to
determine the size of the market area are park size and psychographics.
Generally, the larger the park, the longer the length of stay at the park. A rule of thumb
used in the industry is that attendees will travel up to one-fourth of the time that they
spend in the park. Therefore, a four-hour length of stay will result in a one-hour drive,
or roughly 100 kilometers. Smaller aquatic centers usually result in shorter lengths of
stay, resulting in a shorter driving time.
The second factor influencing market size is a park’s psychographics, or guest mix.
Research has revealed that pre-teens and young teens make up a disproportionate
208
percentage of attendance at water parks and family aquatic centers. This is also a
segment of the population that cannot drive a vehicle, making it dependent on parents
or older adolescents for transportation. Discussions with industry experts revealed that
market penetration for water park attendance tends to drop in half for every 10
kilometers of distance from home to the park.
Since the majority of attendees to a water park will be local residents, it will be
imperative that a new water park in the AlbertaHUB region be developed in close
proximity to one of the more populous towns in the region.
The demographic factors most commonly included in the analysis include the following:
• Population levels and trends
• Incomes
• Age distribution
Population Levels and Trends
The significance of population as a demographic factor is self-evident. More than any
other demographic factor, population dictates the attendance potential of a water park.
Of particular interest in an analysis of population are total market area population,
distribution among various distance bands and the rate of growth or decline in market
area population.
The two locations currently under consideration for water park development are the
towns of St. Paul and Cold Lake. The Town of St. Paul has a population of
approximately 5,000 but is centrally located in the AlbertaHUB region. Based on a
recent study conducted by the County of St. Paul, the population within a 25 minute
radius of the community is approximately 40,000. The population of Cold Lake is
considerably larger at approximately 14,000 not including Cold Lake First Nation with a
population of approximately 500. Cold Lake is also home to CFB Cold Lake and, during
the summer months, the regional population increases significantly with visitors to the
areas many campgrounds.
Incomes
The likelihood of attending a water park does not correlate with income level. Unlike
golf, for example, water park attendance is not greater among the more affluent income
brackets. In fact, the reverse is most often the case. Simply put, water parks appeal to
blue collar families to a greater extent than they do to white collar families.
There is, however, a reason to evaluate income levels within the market area:
209
affordability. Lower incomes may not limit the likelihood of attending a water park but
the experience must be affordable, both in terms of admission and in-park spending.
Age Distribution
Again, the need to evaluate age distribution should be self-evident. As previously
noted, the young teen and pre-teen age groups are a target market for water parks.
Consequently, it is imperative that the age distribution of the market area be
determined, especially, if more than one site (and market area) is under consideration.
Further analysis as to the age distributions of potential locations under consideration
should be conducted in a full-scale feasibility study.
3.3
The Tourist Market
Every water park, regardless of location, is likely to draw some portion of its attendance
from the tourist market. For purposes of analysis, a tourist can be defined as a person
that spends at least one night in proximity to the water park. Included in this definition
are leisure travelers as well as persons visiting friends and relatives in the area. For
most water parks, tourists account for a relatively small percentage of total attendance.
Given that a water park in the AlbertaHUB region will not likely be a large-scale park due
to the lack of a populous metropolitan center, it is likely that the park will be of a
smaller scale. Smaller-scale, family water parks are not typically destinations for
tourists. However, a smaller-scale water park will be an attraction to tourists who may
be staying in the area or travelling in the area for other reasons.
An important consideration when determining the location of the water park will be to
combine the park with other services and amenities that may be able to increase nonlocal attendance at the park. Coupling the water park with other tourist attractions
such as a recreational vehicle park is likely to impact usage of the facility significantly. In
addition, locating the park in a location that hosts other multi-day events such as
sporting tournaments or festivals will position the water park to capture some of the
patrons attending these other events.
3.4
Competition
The water park industry generally started in the mid-1970’s and the first parks did not
have to be concerned with direct competition from other water parks. That situation
has changed in many markets. Outdoor water parks now also receive competition from
hotels with indoor/outdoor water parks. In the two locations under consideration, the
towns St. Paul and Cold Lake, there does not appear to be direct competition for water
210
park patrons.
On another level, competition can be considered beneficial. This is certainly true in
tourist destination areas that depend on the critical mass of attractions to draw the
market to them. In these instances, an area’s attractions work together to induce
tourists to come to the area, rather than a competing area. Once there, however, the
various attractions must compete among themselves for the tourists’ leisure spending.
3.5
Weather
Water parks are probably more sensitive to weather conditions than any other type of
leisure attraction. The consumer envisions a visit to a water park to be a day in the sun,
in the water and relaxing by the pool. This is only possible if the weather cooperates. If
temperatures are too cool, it is raining or the sky is overcast, the water park experience
is diminished. Given the climate in central Alberta, the length of the season that an
outdoor park will be operational will be limited to a considerable extent. Average
temperatures for the region are presented in the table on the following page.
Lakeland Temparatures (30-year average)
Average Temperature
Month
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Daily
Minimum
-19
-16
-10
-2
3
8
10
8
3
-2
-11
-17
Daily
Maximum
-8
-5
1
11
17
21
22
22
17
11
0
-6
Average
Precipitation
(mm)
23
13
16
26
50
87
95
70
47
20
18
17
Average
Number of
Precipitation
Days
11
8
9
8
11
14
14
13
10
7
9
10
Source: World Meteorological Organization
Due to weather constraints, it is anticipated that an outdoor facility could only be open
for a period of approximately 16 weeks spanning from approximately the last week in
May through the first week in September.
3.6
The School Year Schedule
The schedule for local schools is perhaps the most important factor in determining the
operating schedule for a water park. Water parks in both the U. S. and Canada operate
211
on a schedule that mirrors the local school year schedule. As a consequence, the typical
operating schedule for a water park consists of less than 100 days per season. Water
parks are usually open on weekends and holidays, with daily operations throughout
most of June, July and August.
3.7
Attendance Projections/Park Sizing
All of the factors discussed above have a bearing on the attendance potential of a water
park. After a thorough analysis of these factors, the market study enters a subjective
phase: one that involves estimating market penetration for the defined market area
segments and the tourist market. As previously noted, attendance projections have two
purposes: (1) to provide a basis for sizing the park; and (2) as one of the factors in
projecting revenue.
Based on the parameters of the local market characteristics in the AlbertaHUB region
and based on discussions with industry experts, a conservative estimate is that a water
park in the region may be able to attract an average weekend attendance of
approximately 160 patrons and an average weekday attendance of approximately 80
patrons per day. This average includes peak days and accounts for days when inclement
weather will reduce attendance. It is anticipated, that the optimum capacity for the
park will be approximately 250 to 300 patrons to accommodate peak days, typically
Saturdays in July.
3.8
Park Features
It is envisioned that a water park developed in the AlbertaHUB region would be of a
smaller scale than larger commercial parks near large metropolitan areas. It is
envisioned that a smaller, family oriented park, built in conjunction with other
attractions such as campgrounds, RV parks, and/or other entertainment attractions can
enhance the parks appeal as a recreational venue to both the local population and
visitors to the area.
One way that several smaller municipalities have succeeded in developing such water
parks has been to build venues that are both water parks and public aquatic centers at
the same location. These types of venues not only address the entertainment aspects
that the park can feature (slides, lazy rivers, children’s play areas) but can also
incorporate the development or renovation of existing aquatic centers (typically
community pools) at the same site.
Water park venues with features similar in scope and size to those briefly outlined
above, are typically operated by public entities or under public/private partnerships.
The aquatic center (community pool) portion of the venue is often considered a public
212
recreation facility that is operated in conjunction with the ‘water park’ features such as
water slides and children’s play areas.
There are a multitude of configurations and design combinations that can be created
that fit the parameters for a park with a capacity of 250 to 300 patrons that includes
both water park features and a public aquatic center. Because the combination of
features and design possibilities can be exhaustive, only two possible development
scenarios are presented below. These development specifications are based on parks
of similar size constructed in rural Canadian communities over the past several years.
Scenario 1
8,600sq/ft Leisure/Junior Olympic Pool
10,000sq/ft PVC Membrane
174’ Proslide Fibreglass Closed Flume Slide
195’ Proslide Fibreglass Flume Slide
27’ Proslide Kiddie Mini River Slide
Scenario 2
9172 sq/ft Junior Olympic Pool
Zero Beach Entrance
Water Spray Package
Proslide Body Flume Waterslide
Twin Racer Speed Slide
One & Three Meter Diving Boards
The typical site size required for parks with features similar to those outlined above
described is typically between 5 to 10 acres. The research team held discussions with
numerous water park developers, engineers and rural Canadian municipalities that have
developed parks similar in size and scope to those outlined above. Based n these
discussions, total development cost of similar facilities has ranged from $3.0 to $4.5
million at full build-out. These development estimates include the all park features
including power plants, pools, water park features and outbuildings required to operate
the venues.
213
4.0
FINANCIAL ANALYSIS
This analysis involves projections of revenue, operating expenses, net operating income
and an assessment of overall feasibility.
4.1
Revenue Projections
Water park revenue is a product of two factors: (1) attendance; and (2) per capita
spending. Attendance projections were discussed above, leaving per capita spending to
be discussed here.
The most important point about per capita spending is that the objective is to optimize
rather than maximize total spending. It is important to understand that entertainment
has a measurable value that can be expressed as dollars per hour. A standard
calculation used in the water park industry is that water parks appear to have an
entertainment value approximating $5.00 per hour. Using this standard, a park with a 5hour length of stay would have an entertainment value of $25.00 or a park with a 2hour length of stay would have a value of $10.00.
One must consider the times we have come out of an attraction thinking we have
overpaid for the value offered and may not go back again. With that in mind, it must be
considered that most water parks depend on repeat business to survive. Accordingly, it
would not be smart business to overcharge your core market. Thus, it is only prudent to
keep the cost of a visit to your water park at a reasonable level.
All water parks charge admission as a condition of entry; however, parks almost never
have just one admission rate. The highest rate is the general admission rate, which is
charged to adults, or anyone over the age of 11 or 12. In addition to the general
admission rate, there a number of discounted rates, including a child’s general
admission, group rates, promotional rates and season passes for individuals and
families.
The purpose of having multiple rates is to maximize attendance. According to industry
experts, less than half of all attendance at water parks is accounted for by general
admission entries. Therefore, to maximize attendance, various discounted rates should
be considered. This practice is called yield management and is employed in other
industries such as the hotels, airlines and telephone companies. In the water park
industry, it is common practice to formulate a ticket mix budget before the start of the
season that lays out the park’s ticket pricing and objectives for the mix of ticket sales.
A typical breakdown for per capita spending at a water park is as follows:
214
General Admission 65%
Food & Beverage 20%
Tube Rental 5%
Merchandise 5%
Other 5%
The financial projections provided herein are based on the above averages for a smallscale family park with a typical 2-hour length of stay.
4.2
Operating Expenses
Operating expenses for a water park are those expenses incurred in the day to day
operation of the park. Operating expenses do not include capital charges such as debt
repayment, interest on loans, depreciation or income taxes. The operating projections
presented herein are based on operating expenses ratios derived from parks of similar
scale based on discussions with park and municipal representatives. Operating ratios
among various parks are similar among parks of similar size.
4.3
Pro Forma Projections
The financial projections provided herein are based on an analysis of potential
development parameters for a water park in the Alberta HUB region, discussions with
industry experts, discussions with park operators and discussions with government
officials in municipalities with similar water park/aquatic facilities.
215
The operating scenarios presented below are based on a stabilized year of operations
for a small-scale, family oriented water park and aquatic center. Low, moderate and
high projections have been provided and are based on potential attendance estimates
at the park.
Projected Pro Forma Income Statement
Potential Alberta HUB Water Park
Stabilized Year of Operations
Low
Scenario
Moderate
Scenario
High
Scenario
11,520
$13.95
14,400
$13.95
17,280
$13.95
$115,800
$0
$1,700
$40,300
$1,700
$1,200
$160,700
$144,700
$0
$2,200
$50,400
$2,200
$1,400
$200,900
$173,700
$0
$2,600
$60,500
$2,600
$1,700
$241,100
$14,637
$18,299
$21,960
Gross Revenue
$146,063
$182,601
$219,140
Expenses
Labor (including management)
Marketing
Insurance
Property Tax
Operating Licenses/Permits
Travel & Business
Outside Professional Services
Office Supplies
Office Equipment
Recruitment/Relocation
Dues and Subscriptions
Operating Supplies
Printing
Employee Uniforms
Telephone
Postage
Utilities
Pest Control
Equipment Rental
Outside Maintenance Services
Minor Repairs & Maintenance
Cash Over/Short
Contingency Expense
Total Operating Expense
$93,500
5,000
10,000
0
2,000
0
1,500
450
0
200
500
10,000
0
600
1,200
50
12,000
400
1,500
0
1,500
100
500
$141,000
$93,500
5,000
10,000
0
2,000
0
1,500
450
0
200
500
10,000
0
600
1,200
50
12,000
400
1,500
0
1,500
100
500
$141,000
$93,500
5,000
10,000
0
2,000
0
1,500
450
0
200
500
10,000
0
600
1,200
50
12,000
400
1,500
0
1,500
100
500
$141,000
$5,063
$41,601
$78,140
$15,000
$195,154
($168,553)
$15,000
$195,154
($132,014)
$26,601
$63,140
Annual Park Attendance (1)
Per Capita Revenue
Revenue
Admissions (2)
Rentals
Retail
Food/Beverage
Corporate Sponsorship / Signage
Other Revenue
Total Revenue
Cost of Sales
Operating Income Before Debt/Capital Reserves
Capital Reserve Fund (3)
Debt Service (4)
Net Income/(Loss) after Debt Service
Net Income/(Loss) prior to Debt Service
$15,000
$195,154
($205,091)
($9,937)
(1) Low scenario based on an average of 80 patrons per weekday and 160 per weekend during 3.5 months of operations.
(2) Admission revenue based on an average daily fee of $9 per child and $12 per adult.
(3) Capital reserve based on 1/2 of one percent of the total $3 million construction costs of the project.
(4) Debt service based on a thirty year note with a 5 percent interest rate.
216
As shown, based on typical operations of a water park under a moderate operating
scenario, park revenues could approach approximately $180,000 with operating
expenses of $141,000 which would result in an annual operating income (EBITDA) of
approximately $41,000. The operating scenarios presented are based primarily on
estimated attendance projections for similar small-scale parks. Actual operating results
will fluctuate depending various other factors including the physical location of the park
and uncontrollable factors such as inclement weather.
Although the operations of a water park seems to present an opportunity for
investment given the potential to produce positive annual operating income, the biggest
constraint to park development would be the considerable capital costs required to
develop such a venue. As previously discussed, the size and scope of a water
park/aquatic center facility suitable to the region can range in costs from approximately
$3.0 to $4.5 million to construct. This considerable cost would lead to annual debt
service requirements of approximately $200,000.
Due to the fact that there is a considerable capital outlay required to develop a water
park, the public sector is most often involved in funding the construction costs of
small-scale, family oriented water parks. Often, the reasoning behind this is that the
local public benefits from the recreational aspects of the project and the aquatic center
(community pool) is viewed as a public good.
Depending on the need for a new or redeveloped aquatic center (community pool) in
various communities, there may be a willingness to provide some level of public funding
towards the construction of a water park/aquatic center. This type of public sector
funding would help to alleviate the considerable debt service costs required for such a
project.
217
5.0 REFERENCES








Aquatics International
City of Raymond, Alberta
City of Temple, Temple, Texas
Leisure, Travel & Tourism, Alberta, Canada
Portage Regional Recreation Authority, Portage La Prairie, Manitoba
Western Recreation & Development, Inc., Winnipeg, Manitoba
Wild Rapids Waterslide Park, Sylvan, Alberta
World Waterpark Association
218
APPENDIX 10: Prefeasibility Study into the Viability
By:
Date:
June 30, 2010
219
1.0 OVERVIEW OF THE TRUCK DRIVING TRAINING INDUSTRY IN THE HUB
REGION OF ALBERTA
Truck driving training in the AlbertaHUB Region is driven mainly by the petroleum
energy industry. This includes both the drilling and service sectors. This seems to the
result of the continuing demand for exploration and production of heavy and
conventional oil.
Heavy oil is found in abundance in the Lloydminster area of both Alberta and
Saskatchewan and it is likely that an additional upgrader will be constructed in the area.
Conventional oil plays are taking place in both east central Alberta and the mature field
in west central Alberta south of Leduc. Both of these areas, especially east central
Alberta could draw driver students to a school in the Lloydminster area.
It is anticipated that these plays will continue for some time and support the derived
demand for heavy transport services and schools that supply qualified drivers. The
demand is such that general trucking freight rates are projected to increase by a much
as eight percent over 2009 in 2010.
While this opportunity may not be a massive direct investment in the region, it should
play a valuable role in supporting other regional sectors such as energy and
transportation. Most important, it would keep workers seeking to train as class 1 drivers
from leaving the region.
2.0 ENERGY INDUSTRY TARGET MARKETS
Two significant target markets in the energy industry in the AlbertaHUB Region are
potential consumers of truck driving school services.
2.1.
Primary Drilling and Secondary Service Enterprises
Enterprises in these sectors are continually upgrading the quality of services that they
provide due to the recession and ongoing shake out of non-competitive firms.
Part of the strategy to maintain competiveness is to retain valuable operating
employees by offering them additional lateral and vertical training. Therefore some
companies are subsidizing the training costs of employee movement from class five and
class three driver licenses to class one. Schlumberger is an example.
220
It has also been found that driver schools are beginning to offer courses in oilfield
safety, dangerous goods hauling and the like.
In addition to building employee loyalty there can be a significant savings to the
proponent company in terms of fewer accidents, lower insurance costs and the like.
1.2
Individuals Wishing to Become Heavy Hauling Drivers
Typically a beginning oil field worker will begin as a labourer. If there are aspirations to
become a professional heavy haul driver the next step on this progression would be to
obtain a job as a swamper.
All of the above experience is almost a mandatory prerequisite to becoming a driver.
The final step is formal driver education. In order to qualify for class one driver training
the applicant must be minimum of eighteen years of age and pass a required medical
examination.
Although it is not specifically stated, a driver job applicant with a class one license must
be insurable by the hiring company.
In addition to required training that will give the student a high probability of passing
the class one driver examination those with oilfield aspirations are advised to take
additional courses in terrain driving, transportation of dangerous goods, WHMIS, first
aid, h2s alive and confined spaces.
These are certificate courses and offered by an increasing number of truck driving
training schools in Alberta.
Notwithstanding the above, a new hire in the energy sector may still be required to
serve a company apprenticeship as a swamper and assistant driver before being
entrusted with the sole responsibility of delivering a critical load.
3.0 THE MARKETING MIX
3.1
Price
The cost of basic class one driver training is approximately $2,150. This fee covers 20
hours of in - truck training and 12 hours of air brake theory and application. The course
covers general operation, coupling and uncoupling of trailers and pre / post trip
inspections.
221
Advanced courses devote more time to each section as well as additional engine
management courses, WHMIS and dangerous goods hauling.
Taking a reasonable amount of courses could bring the total cost to approximately
$5,500. However, the extra cost will result in a higher probability of being hired as a
professional driver in training.
It is interesting to note that student loans are available for training at a provincially
certified school.
3.2
Promotion
Advertising is part of the promotion that the owner of a truck driver training school
must develop.
However personal selling is perhaps more important. Sales calls to employers and
school guidance counsellors are necessary. Presentations to high school classes and
attendance at job fairs are vital.
This is an undertaking that may take up to 25% of owner time in the initial stages of
establishing the enterprise. But forming these partnerships with the Energy and
Transportation Sectors is what will allow the business to grow.
3.3
Location
In the AlbertaHUB region truck driving schools are located in Lloydminster and
Bonnyville. However, it appears that both of these schools do not offer advanced
training that a full service school will find it necessary to offer.
Since it is projected that the school will draw students mainly from the H AlbertaHUB
region with some from east central Alberta, Lloydminster would seem to be the ideal
location for the facility.
3.4
Product
Courses offered should include basic and advanced truck driver training. Additional
courses appropriate for the oilfield as indicated previously should be available.
Driver improvement courses for existing drivers as those developed by the Canadian
Petroleum Products Institute and the Professional Driver Improvement Course should
be offered as options.
222
The school should be certified and licensed under the private vocational schools act.
Courses should be approved by the Alberta Motor Transport Association. Finally, school
driver instructors must qualify under the regulations set forth by Alberta Transportation.
4.0 OPERATIONS
Operations could be conducted from a rental building in a light industrial section of
Lloydminster. The building should be of sufficient size that it can be used for equipment
storage and classrooms.
Sufficient loitering space should be available to accommodate low speed driving training
manoeuvres.
One highway tractor will be required. An equipment trailer and van trailer will complete
the inventory of rolling stock.
Complementary courses that may be required as first aid and WHMIS can be delivered
by contracting with companies that service the petroleum industry.
5.0 HUMAN RESOURCES
The enterprise will require three staff members. The owner and one other person will
instruct courses and perform advertising and personal selling functions.
An administrative employee will perform required office duties.
6.0 MANAGEMENT
The owner will perform all management functions. The $48,000 salary plus retained
earning and growth potential make it a potential attractive venture, especially to a
trucker with some capital who is looking to settle down in one location.
223
7.0 FINANCE
Projected source and application of start up funding and the year one income statement
are developed below.
7.1.
Application and Source of Start Up Costs
Truck Driver Training Enterprise – June, 2010
Used highway tractor
Used low boy equipment trailer
Used van trailer
Rent on Shop (DD and First Month)
First Month Wage (Administrative Employee)
First Month Wage (Trainer Employee)
Supplies and Parts (truck)
Classroom Construction/Equipment
Utilities / Communication / Office Equipment
Advertising
Owner Salary
Unforeseen / POL / shop Equipment
$
$
$
$
$
$
$
$
$
$
$
$
$
$
20,000.00
22,000.00
18,000.00
4,000.00
2,500.00
4,000.00
2,000.00
14,000.00
3,000.00
5,000.00
1,000.00
5,000.00
4,000.00
15,000.00
$
119,500.00
Operating Loan
Term Loan
Owner Equity
$
$
$
15,500.00
74,000.00
30,000.00
$
119,500.00
Source of Funds
224
7.2.
Truck Driver Training Enterprise - June 2010
Revenue
Tuition Fees (4 students per month-11 months @ $5,500)
$
242,000.00
Total Revenue
$
242,000.00
Wages and Benefits (one administrative person)
Wages and Benefits (one driver/optional courses instructor)
Repairs and Maintenance
Fuel
Utilities and Communication
Depreciation
Rent (shop)
Professional Fees
Advertising
Insurance / Licenses
Unforeseen
Owner Salary
$
$
$
$
$
$
$
$
$
$
$
$
$
30,000.00
48,000.00
6,600.00
22,000.00
18,000.00
15,100.00
24,000.00
5,000.00
3,000.00
2,000.00
10,000.00
2,000.00
48,000.00
Total Expense
$
233,700.00
$
8,300.00
Expense
225
8.0 REFERENCES











Capilano Truck Driving Institute
Heavy Equipment Driving in Canada’s Oil Sands
Alberta Occupational Profiles
Alberta Transport Training Academy
Alberta Transportation
WT Safety Truck Driving School
Genarro Transport Training
Employment Alberta
Statistics Canada
E/C Consulting
Service Alberta
(http://www.servicealberta.gov.ab.ca/Drivers_Licence.cfm#Class_1_Licence)
226
APPENDIX 11: Prefeasibility Study into the Expansion of
Maple Flag Exercise into Tourist Attraction
In the AlbertaHUB Region
Prefeasibility Study into the Expansion of
Maple Flag Exercise into Tourist Attraction
in the AlbertaHUB Region
By:
Date:
June 30, 2010
227
1.0
OVERVIEW OF EXERCISE MAPLE FLAG
1.1 Exercise MAPLE FLAG is normally a six-week international air combat exercise held
annually at 4 Wing Cold Lake, Alberta. In 2010, Maple Flag will be reduced to four
weeks. Maple Flag 43 provides Canadian and Allied aircrew with realistic training in a
modern simulated air combat environment, and emphasizes air operations involving
large package coalition forces. Hundreds of military personnel are expected to
participate in every year’s exercise.
Maple Flag 43 "Blue Air" Allied Forces
The following forces are participating in 2010’s air combat exercise as "Blue Air". They
will deploy and provide conventional ground attack, air superiority, SEAD (suppression
of enemy air defense), tactical resupply, reconnaissance, air-to-air refueling, and AWACS
(airborne early warning and control):
•
Canadian Forces;
• Danish Air Force;
• French Air Force;
• German Air Force (NATO Period 1);
• NATO AWACS (Airborne Warning and Control System);
• Royal Air Force (NATO Period 2);
• Royal Netherlands Air Force;
• Royal New Zealand Air Force;
• Republic of Singapore Air Force;
• Turkish Air Force;
• United States Marine Corps; and
• United States Air Force.
Maple Flag 43 "Red Air" Opposing Forces
The following forces are participating 2010’s coalition exercise as "Red Air". They will
deploy providing air and ground threats:
•
United States Air Force; and
• Top Aces.
Maple Flag 43 Observing Nations
The nations that are participating as International Observer Program (IOP) in the 2010
exercises:
•
•
Chile;
Oman;
228
•
Republic of Singapore;
• Colombia;
• India; and
• South Korea.
1.2 Mission
Exercise MAPLE FLAG provides important training for Canadian and allied fighter
aircrews, as well as transport, electronic warfare, air refueling, air defense, and airborne
early warning and control assets from many different nations.
During both of the exercise's two-week periods, international participants will engage in
a simulated, 10-day air campaign. Using the vast, unrestricted airspace and more than
640 targets of the Cold Lake Air Weapons Range (CLAWR), participants engage in daily
missions that involve confronting and dealing with air- and ground-based threats.
The exercise promotes initiative and self-discipline in the air, and provides the
opportunity for developing tactical and leadership skills. Working together to plan air
combat missions and flying these missions in concert with aircraft from other nations
fosters and strengthens the professional bonds forged between allied nations.
1.3 History
Exercise MAPLE FLAG is a Canadian variation of the United States Air Force RED FLAG
Exercise, held several times a year at Nellis Air Force Base, Nevada. Both exercises were
developed in response to a Vietnam War finding that 90 percent of aircraft losses took
place during the first ten combat missions. Aircrew who survived these critical first ten
missions were more likely to survive the remainder of their combat tour.
In order to enhance survivability and improve performance of aircrew, Exercise RED
FLAG was created in 1975. Canadians first participated in RED FLAG in 1977 and a year
later, the Canadian Commander of Air Command invited the United States Air Force to
hold a northern RED FLAG in Cold Lake. The four-week exercise, named MAPLE FLAG,
was a great success and was held by 4 Wing Cold Lake bi-annually thereafter until 1987.
Since 1987, the exercise has been held during one six-week period each spring. MAPLE
FLAG continues to be an internationally renowned exercise that provides training for
large coalition operations in a structured, academic environment.
1.4 The Cold Lake Air Weapons Range (CLAWR)
Exercise participants make use of the Cold Lake Air Weapons Range (CLAWR) during
MAPLE FLAG. The CLAWR covers 1.17 million hectares (11,600 square km), and is the
229
only tactical bombing range in Canada. Vast, unrestricted airspace with no civilian air
traffic and more than 640 targets make it an attractive training area for allied air forces.
Large varieties of target types are located throughout the CLAWR, making it a dynamic
and realistic training environment. These targets are built to resemble tanks, missile
launchers, radar sites, industrial sites, command and control centres, and various types of
vehicles and aircraft. Among the 100 target complexes within the CLAWR are the seven
mock airfields. These airfield targets simulate complete aerodromes, and include
runways, ramps, taxiways and dispersal areas. Buildings and ¾-scale airframes and
vehicles also add to the realism and training efficacy of these mock aerodromes.
1.5 Baseline Costing Methodology
Whenever private enterprise wishes to enter into a partnership with any branch of the
Canadian Armed Forces they must comply with a set system of rules and regulations set
down by the Canadian Government. Those basic guidelines can be found in Appendix 1
Business Case Analysis, Appendix 2 Cost Categories and Appendix 3 Data Sources.
230
2.0 POTENTIAL BUSINESS OPPORTUNITIES TO BE EXPLORED
IN CONJUNCTION WITH MAPLE FLAG DAYS
There are a number of potential business opportunities that could work in combination
with the Maple Flag Days conducted annually at the 4 Wing Cold Lake facility in the
AlbertaHUB region. The majority of these opportunities involve integration with the
Tourism Sector.
Throughout the process of this the 3rd Phase of the AlbertaHUB Investment Attraction
Project the research team has been witness to the developing relationship between many
of the organizations that inhabit the AlbertaHUB region. There has developed a growing
recognition that a partnership between the 4 Wing Cold Lake Air Force Base, the
AlbertaHUB, the Cold Lake Chamber of Commerce, Kalyna Country and the Alberta’s
Lakeland could facilitate the development of potential business opportunities. It has
become apparent that all the organizations involved see the potential of working together
and growing tourism products that could benefit the economic growth within the
AlbertaHUB region.
The opportunities would lie with the AlbertaHUB working as a facilitator between the
representatives at the 4 Wing Cold Lake and Tourism Industry promoters. Potential
business ideas to be partnered with the Maple Flag Days would include such
opportunities as:
•
•
•
Air Show Event
Real-Life Military Experience Tour
Pro-Am Style Golf Tournament
2.1 Air Show Event
One of the best-kept secrets is now out – in the last millennium, air shows were the
second most popular spectator sport in North America. Over 26 million people attend
more than 400 air shows annually. During the past decade, air shows drew nearly twice
the attendance figures of NFL football. Air shows deliver significant and measurable
results for everyone, from mature product marketers with broad customer bases, to new
product marketers to those with specialized or niche customer bases. Whatever your
marketing objective – moving product, building recognition, enhancing or positioning
brand image – air shows are potential successes for everyone involved and can help all
the partners accomplish their goals.
NOTE: While 4 Wing Cold Lake may not want to put on a full air show, there are a
number of elements in the delivery of an air show that are applicable to other
Defence/Tourism Sector opportunities. Section 2 outlines the characteristics and impact
231
of an air show, thereby providing baseline information for other opportunities that are
related to military aircraft demonstrations. It also provides marketing concepts for
sponsorship opportunities.
2.1.1 Event Demographics
The predominant group that attends Air Shows are 35-44 Males with incomes over
$75,000 with some college education. Basically they represent an extremely potential
profitable market due to their disposable income and spending trends. Here are some
demographics relating to the crowds that make up the potential fan base at an Air Show:
Male (18+)
Female (18+)
62%
32%
Under 24
25-34
35-44
45-54
55 or over
6%
18%
37%
21%
18%
Yes
40%
under $24,999
$25,000-$34,999
$35,000-$49,999
$50,000-$74,999
$75,000 or over
17%
10%
15%
28%
30%
Own Home
Own
Rent
Other
56%
33%
11%
Education
Some High School
High School Graduate
Some College
College Graduate
Post Graduate
1%
19%
41%
25%
14%
Gender
Age
Attending w/ Children
Household Income
2.1.2 Economic Impact
232
The economic impact of the tourism dollars that could be generated by the potential
inflow of the air show attendees would produce gains in many businesses based in the
region. Hotels, restaurants, travel agencies, camp grounds, museums, licensed
establishments and many other businesses would have access to those tourist dollars that
would be spent in the AlbertaHUB region should an Air Show event be developed in
conjunction with the 4 Wing Cold Lake Maple Flag Days.
Here are some economic impact figures taken from the MCAS Miramar Annual Air
Show:
Spending in the region by air show attendees
Visitors
$11,844,768
Locals
$2,063,305
Spending on-site at air show
Visitors
$3,183,479
Locals
$3,183,479
Yes
o
Attendee Sponsor Recognition
86%
14%
2.1.3 Interactive Display Space
In order to make an impact on the Air Show audience, without such added sponsorship
benefits as logo recognition and hospitality, a Preferred Exhibitor booth would meet the
needs of any potential exhibitor. Preferred Exhibitor booth spaces may be set up
throughout the Air Show venue. Designed as an alternative to the more traditional
Consumer Fair, the Preferred Exhibitor booth spaces are stand-alone opportunities for
interaction with the Air Show attendees.
These high-profile exhibition spaces afford an ideal opportunity for budget-conscious
product samplers and lead gatherers to capture product awareness and/or complete
surveys of the hundreds of thousands of event attendees.
Booth spaces may be located near venue entrances and exits, along the food and beverage
line or in key locations throughout the venue. Preferred Exhibitors are given space only
and must supply their own rental needs.
To recognize the potential of this market the MCAS Miramar Air Show leases their
Interactive Display Space at these prices:
233
Preferred Exhibitor Display Booth Space Pricing
Booth
Size
Space & Equipment
Rental Fee
1
10' x 10'
footprint only
$5,500
1
10' x 20'
footprint only
$8,000
1
20' x 20'
footprint only
$10,750
2.1.4 Air Show Expo
The Air Show Expo model provides an unparalleled opportunity for vendors to reach
their market by offering optimum exposure for their product or company. Ideally located
in a large hangar on the flight line, near a main entry gate, this venue is an excellent
vehicle for advertising, promoting, lead-gathering, recruiting, and the opportunity to sell.
Few marketing venues are available at such a minimal cost to the vendor while providing
them such a dynamic and exciting atmosphere in which to sell their products.
Advertising is effective, but the interaction that an Air Show Expo booth provides creates
an ideal way to offer what the consumer is truly looking for: dialogue. Vendors could
take advantage of this excellent fit to increase their sales and promote their company or
product at the 4 Wing Cold Lake Maple Flag Days Air Show and Expo.
From the MCAS Miramar Air Show here are some facts and statistics that provide an
example of what potential there is for the Tourism Industry and the 4 Wing Cold Lake in
the AlbertaHUB region to partner up and benefit from:
Benefits:
•
•
•
Exposure to over half a million Air Show spectators for three full days
Interaction with over 60,000 Air Show Expo attendees.
Opportunity for advertising, lead generation, couponing, selling and more.
Booth Category Selection
Standard Booth: $950
•
No specific placement. These booths are found throughout the venue.
Preferred Booth: $1,100
234
•
Specific corner booth placement. Limited availability.
Premium Booth: $1,300
•
High-profile (center aisle) booth placement. Limited availability.
Sales Opportunity: Additional $500
•
Sell your products or services. Items to be sold cannot be in competition with
existing Air Show sponsors or novelty vendors, and must be pre-approved by the
Air Show Expo Coordinator.
Sponsorship Opportunity: $30,000
•
Presenting sponsorship of the Air Show Expo
Booths include:
•
•
•
•
•
One (1) 10’ x 10’ booth with 8 ft. backdrop, pipe and drape
One (1) table and two (2) chairs
Option to post signage up to 4’ x 8’ per booth
Standard 110W voltage electrical hook-up available for an additional $25
All booths must be completely self-contained. Labor assistance is available under
special circumstances only.
2.1.5 Novelty Vendors
Here again opportunity lies with the organizers of an Air Show Event in conjunction with
the 4 Wing Cold Lake base to sell space to novelty vendors. The vendors receive an
assigned space with size and location determining a sliding scale of cost.
From the MCAS Miramar Air Show here is an example of what the air show organizers
charge to potential vendors at their annual air show:
The award-winning MCAS Miramar Air Show is one of the nation's largest air shows.
The MCAS Miramar Air Show provides a firsthand opportunity for the general public to
visit and enjoy a world-class air show and aviation trade expo.
Friends of the Military ($295-$6,475)
235
This program is an ideal way for patrons, small businesses, entrepreneurs and all patriots
to be involved in the MCAS Miramar Air Show and demonstrate support for the
defenders of freedom.
Bronze Level ($295)
•
•
•
•
•
•
•
Name listing on large signage at three entry gate locations
Company/name (text) to be included on Friends of the Military Program 15
second theatre slide. Slides are reviewed before each movie for one month at the
Bob Hope Theatre aboard MCAS Miramar.
Two (2) VIP passes to invitation only exclusive Chalet for Friday show
Two (2) MCAS Miramar Air Show 11” x 17” posters suitable for framing
Two (2) Official Air Show t-shirts
Two (2) Commemorative gifts
One (1) Preferred Parking pass
Silver Level ($495)
•
•
•
•
•
•
•
•
Two (2) VIP passes to invitation only exclusive Chalet for Saturday matinee
Two (2) Box Seat tickets for Twilight show
Two (2) Official Air Show t-shirts
Two (2) Preferred Parking passes
Gold Level ($695)
•
•
•
•
•
•
•
•
Two (2) VIP passes to invitation only exclusive Chalet for matinee performance
of choice
Two (2) VIP passes to Saturday Twilight Chalet party (includes Air Show gift)
Two (2) official Air Show t-shirts
Two (2) Preferred Parking passes
Platinum Level ($1,175)
236
•
•
•
•
•
•
•
•
•
•
Your company will receive a commemorative plaque to honour your participation
in the 2009 Miramar Air Show.
Four (4) VIP passes to invitation only exclusive Chalet for any one performance
Four (4) VIP passes to Saturday Twilight Chalet party (includes Air Show gift)
Four (4) Box Seat tickets for any one performance
Four (4) Air Show t-shirts
Four (4) Commemorative gifts
Four (4) Preferred Parking passes
One Star Platinum Level ($2,700)
•
•
•
•
•
•
•
•
•
•
•
Name listing on large signage at three entry gate locations.
Your company will receive a commemorative plaque to honor your participation
Eight (8) VIP passes to invitation only exclusive Chalet for any one performance
Eight (8) VIP passes for Saturday Twilight Party (includes Air Show gift)
Eight (8) Box Seat tickets for any one performance
Eight (8) Official Air Show t-shirts
Two (2) Entries into the MCAS Miramar Air Show Golf Classic with tee gift
Four (4) MCAS Air Show 11” x 17” posters suitable for framing
Eight (8) Commemorative gifts
Eight (8) Preferred Parking passes
Two Star Platinum Level ($4,125)
•
•
•
•
•
•
•
Twelve (12) VIP passes to invitation only exclusive Chalet for any one
performance
Twelve (12) VIP passes for Saturday Twilight Party (includes Air Show gift)
Twelve (12) Box Seat tickets for any one performance
Twelve (12) Official Air Show t-shirts
237
•
•
•
•
Four (4) Entries into the MCAS Miramar Air Show Golf Classic with tee gift
Eight (8) MCAS Air Show 11” x 17” posters suitable for framing
Twelve (12)Commemorative gifts
Twelve (12) Preferred Parking passes
Three Star Platinum Level ($5,300)
•
•
•
•
•
•
•
•
•
•
•
Your company will receive a commemorative plaque to honour your participation
Sixteen (16) VIP passes to invitation only exclusive Chalet for any one
performance
Sixteen (16) VIP passes for Saturday Twilight Party (includes Air Show gift)
Sixteen (16) Box Seat tickets for any one performance
Sixteen (16) Official Air Show t-shirts
Ten (10) MCAS Air Show 11” x 17” posters suitable for framing
Sixteen (16) Commemorative gifts
Sixteen (16) Preferred Parking passes
Four Star Platinum Level ($6,475)
•
•
•
•
•
•
•
•
•
•
•
Name listing on large signage at three entry gate locations.
Twenty (20) VIP passes to invitation only exclusive Chalet for any one
performance
Twenty (20) VIP passes for Saturday Twilight Party (includes Air Show gift)
Twenty (20) Box Seat tickets for any one performance
Twenty (20) Official Air Show t-shirts
Twelve (12) MCAS Air Show 11” x 17” posters suitable for framing
Twenty (20) Commemorative gifts
Twenty (20) Preferred Parking passes
2.1.6 Sponsorship Opportunities
238
Just as the present day trend in marketing is to sell the naming rights and sponsorship
rights to recreational facilities and events, there is great potential to sell the sponsorship
rights to an Air Show Event in conjunction with the 4 Wing Cold Lake Maple Flag Days.
There are many models in place that could serve as a guide as to how an organization
could structure sponsorship sales including how the MCAS Miramar Air Show does it.
They have a scaled system of determining what advantages a sponsor would receive for
the amount they invest in the event. For example:
Patriot level Sponsorship
$7,500 Investment
Advertising and Publicity
•
•
Permission to use MCAS Miramar Air Show logo and “MCCS Patriot Level
Sponsor” designation in advertising and promotion
Sponsor Logo in Air Show print advertisements and on the event website
o Approximately 2,000,000 exposures
o Active Link from Air Show Website
On Site Activation
•
•
•
Interaction with well over one half million Air Show attendees
Sponsor mentions over public address system
o Three (3) over event weekend
Signage displayed throughout Air Show ground
o Two (2) sponsor provided signs up to 4’ x 10’
Hospitality
•
•
•
•
•
•
Grandstand Seat Ticket
o Four (4) per day (12 total)
Box Seat Tickets
o Two (2) per show (8 total)
Preferred Parking Passes
Invitations to MCCS Sponsor Party
o Sponsor party held in VIP Chalet during Twilight Show, Saturday,
October 2, 2010.
Event includes unlimited food and beverages, party favours and entertainment.
o Two (2) invitations
Entry into Miramar Air Show Golf Classic
o Shotgun Start tournament to take place at Miramar Memorial Golf Course.
Event features include continental breakfast, green/cart fees and lunch.
o Two (2) entries
239
•
Invitations to VIP Hospitality Chalet
o Chalet located on flight line with indoor and outdoor seating, food and
beverages
o Two (2) invitations per three day shows (6 total)
Captain level Sponsorship
$12,000 Investment
•
•
Permission to use MCAS Miramar Air Show logo and “MCCS Captain Level
Logo in Air Show advertisements and appropriate digital media
o 6,700,000 exposures
On Site Activation
•
•
•
•
Signage displayed throughout Air Show grounds
o Four (4) sponsor provided signs up to 4’ x 10’
Product display space on the flight line
o One (1) 10’ x 10’ footprint
o Sponsor provided signage up to 4’ x 8’
o For sampling, couponing or mutually agreed upon marketing activity
Hospitality
•
•
•
•
•
•
Grandstand Seat Tickets
o Four (4) per day (12 total)
Box Seat Tickets
October 2, 2010.
o Four (4) invitations
Event Features include continental breakfast, green/cart fees and lunch.
240
•
o Two (2) entries
beverages
o Two (2) invitations per three day shows (6 total)
Major level Sponsorship
$22,000 Investment
•
•
Permission to use MCAS Miramar Air Show logo and “MCCS Major Level
On Site Activation
•
•
•
•
o Six (6) over event weekend
o Eight (8) sponsor provided signs up to 4’ x 10’
o Opportunity for one (1) inflatable (mutually agreed upon size)
Hospitality
•
•
•
•
•
o Ten (10) per day (30 total)
Box Seat Tickets
o Five (5) per show (20 total)
October 2, 2010. Event includes unlimited food and beverages, party
favours and entertainment.
o Six (6) invitations
o Four (4) entries
241
•
beverages
o Four (4) invitations per three day shows (12 total)
Colonel level Sponsorship
$35,000 Investment
•
•
•
Logo recognition on Air Show ticket brochure
On Site Activation
•
•
•
•
•
•
•
o Nine (9) over event weekend
o Twenty (20) sponsor provided signs up to 4’ x 10’
Product display spaces on the flight line
o Two (2) 10’ x 20’ footprints
Golf cart usage at event
o One (1) two-passenger golf cart
Product Sales Rights
Product Category Exclusivity
Hospitality
•
•
•
•
o Twenty (20) per day (60 total)
Box Seat Tickets
o Ten (10) per show (40 total)
242
•
•
•
•
•
October 2, 2010.
Event includes unlimited food and beverages, party favors and entertainment.
o Eight (8) invitations
o Six (6) entries
beverages
o Corporate Hospitality Chalet for one performance of choice to
accommodate
up to Fifty (50) people
o Eight (8) invitations for two days of choice (16 total)
Corporate Hospitality Chalet for Air Show weekend, one (1) performances to
accommodate fifty (50) people
General level Sponsorship
Investment
$60,000
•
•
•
Permission to use MCAS Miramar Air Show logo and “MCCS General Level
Sponsor Logo (or name) recognition indicated on map in Event Program
On Site Activation
•
•
•
•
o Fifteen (15) over event weekend
o Fifty (50) sponsor-provided signs up to 4’ x 10’
o Opportunity for two (2) inflatables (mutually agreed upon size)
o Four (4) 10’ x 20’ footprints
o Sponsor-provided signage up to 4’ x 8’
o Sampling, couponing or mutually agreed upon marketing activity
243
•
•
•
•
Product Sales Rights
Product Category Exclusivity
Right of first refusal for 2011 MCAS Miramar Air Show same product category
Hospitality
•
•
•
•
•
•
o Thirty (30) per day (90 total)
Box Seat Tickets
o Twenty (20) per show (80 total)
Invitations to MCCS Sponsor Party (See description on page 5)
o Ten (10) invitations
Entry into Miramar Air Show Golf Classic (See description on page 5)
o Eight (8) entries
Corporate Hospitality Chalet for Air Show weekend, four (4) performances to
accommodate fifty (50) people (50 each show = 200 total)
2.1.7 Ticket Presenter Sponsorship
could structure Ticket Presenter Sponsorship sales including how the MCAS Miramar
Air Show does it. They have a scaled system of determining what advantages a sponsor
would receive for the amount they invest in the event. For example:
Ticket Presenter Sponsorship - $18,000 Investment
Total Tickets Printed (100,000)
•
•
Box Seat Tickets/Reserved Seating = 8,000 tickets
Grandstand Seat Tickets/General Admission = 72,000 tickets
•
•
•
•
Sponsor logo printed on ticket brochure with a distribution of 5,000 total
Sponsor logo on website ticket order site
o Over 225,000 distinct visitors (September and October)
Sponsor’s name on electronic ticket page
Opportunity for promotion or coupon on ticket
244
On Site Activation
•
One (1) 10’ x 10’ footprint for sampling, lead generation and on-site ticket back
redemption
Hospitality
•
•
•
•
o Twelve (12) per day (36 total)
Box Seat Tickets
o Twelve (12) per show (48 total)
o Two (2) invitations per day
o Four (4) invitations
2.1.8 Information Booth Presenter Sponsorship
could structure Information Booth Presenter Sponsorship sales including how the MCAS
Miramar Air Show does it. They have a scaled system of determining what advantages a
sponsor would receive for the amount they invest in the event. For example:
Information Booth Presenter Sponsorship - $15,000 Investment
•
•
On Site Activation
•
•
•
•
•
•
Presenting sponsor name on program map
Presenting sponsor signage on marquee at four information booth locations
Opportunity for two (2) sponsor provided signs no larger than 4’ x 10’ for each of
the four information booths (8 total)
Opportunity for sponsor provided greeter at each information booth
245
•
Use of one (1) two-passenger golf cart
Hospitality
•
•
•
•
•
•
•
o Two (2) per day (6 total)
Box Seat Tickets
October 2, 2010.
o Two (2) entries
beverages
2.1.9 Entry Gates Presenter Sponsorship
could structure Entry Gates Presenter Sponsorship sales including how the MCAS
Entry Gates Presenter Sponsorship - $37,500 Investment
•
•
Permission to use MCAS Miramar Air Show logo and “MCCS Entry Gates
Sponsor designation in advertising and promotion
On Site Activation
•
•
Signage at Entry Gates #1 and #2 with sponsor logo and name for entry and exit
o Estimated impressions on-site 1,500,000
246
•
•
•
•
o Six (6) over event weekend
o Eight (8) sponsor provided signs up to 4’ x 10’
Hospitality
•
•
•
•
•
•
•
o Ten (10) per day (30 total)
Box Seat Tickets
o Ten (10) per show (40 total)
October 2, 2010.
Event includes unlimited food and beverages, party favors and entertainment.
o Six (6) invitations
o Four (4) entries
beverages
o Four (4) invitations per three day shows (12 total)
2.1.10 Event Seating Presenter Sponsorship
could structure Event Seating Presenter Sponsorship sales including how the MCAS
Event Seating Presenter Sponsorship - $38,000 Investment
247
•
•
•
•
•
Permission to use MCAS Miramar Air Show logo and “MCCS Event Seating
Logo in Air Show advertisements in print media publication
Logo recognition on Air Show direct mail ticket brochure
o Estimated impressions are 10,000
Sponsor’s name to appear in conjunction with General Admission and Box Seat
area
o Estimated reach is in excess of 160,000
Logo recognition on event website
On Site Activation
•
•
•
•
•
Presenting sponsor name on program map
Presenting sponsor signage between bleachers (4-5 total)
Presenting sponsor signage above General Admission entry and exit gate (5 total)
o Estimated impressions are 300,000
Hospitality
•
•
•
•
•
•
•
o Twenty (20) for each day of event (60 total)
Box Seat Tickets
o Ten (10) per show for each day of event (30 total)
October 2, 2010.
o Two (2) entries
beverages
248
2.2 Pro-Am Style Golf Tournament
•
•
•
•
•
The 4 Wing Cold Lake base could partner with a private promoter to establish a
Pro-Am Style Golf Tournament with a Canadian Air Force theme
Each 4-some would be led by a member of the Canadian Air Force which could
give the military enthusiast tourist access to the firsthand knowledge they crave
from actual Air Force members
Event could offer a breakfast before commencement of golf tournament, at which
the participants can meet and greet the Canadian Air Force representatives in an
informal friendly setting
Event could also host a luncheon during the tournament at which the participants
can meet and greet the Canadian Air Force representatives in an informal friendly
setting
Here is an example of the sponsorship packages that could be offered for the
different aspects of the tournament including such benefits to the sponsors as:
2.2.1 Presenting Sponsor
•
•
•
•
•
•
•
•
Sponsor-provided signage opportunities throughout the 4 Wing Cold Lake Air
Show Golf venue
Recognition on event golf carts
Tee signage recognition
Prominent recognition in luncheon program booklet
Opportunity for interactive display and verbal mention during event
4 Wing Cold Lake Air Show Golf Classic round of golf foursome with two carts
Website logo recognition with link to sponsor's website from event website
$5,000-$7,500 investment
2.2.2 Luncheon Sponsor
•
•
•
•
•
Prominent recognition in luncheon program booklet
Opportunity for interactive display and verbal mention during luncheon
4 Wing Cold Lake Air Show Golf Classic round of golf twosome with cart
2.2.3 Golf Cart Sponsor
•
•
•
•
•
Recognition on event golf carts
Recognition in luncheon program booklet
249
2.2.4 Golf Scorecard Sponsor
•
•
•
•
•
Recognition on event scorecard
2.2.5 Tee Sponsor
•
•
•
•
Signage recognition in the tee box
One hole for $300 or two holes for $500
2.3 Real Life Military Experience Tour
•
•
•
•
•
A Real Life Military Experience Tour is a formally mapped out and marketed
itinerary linking several tourism products marketed specifically to the military
enthusiasts who wish to take part in the military experience without the need to
join the Armed Forces. These products may or may not include:
o military historical sites
o military museums
o staying in military accommodations
o experiencing some of the military training drills
They could be long multi-day routes covering multiple Alberta Military
Establishments throughout the entire province so that military enthusiasts have
access to multiple divisions of the Canadian Military.
These tour routes would incorporate the AlbertaHUB region’s military history
and education as to what exactly the different branches of the Canadian Military
engages in. This clearly fits in with the Canadian Armed Forces mandate of
educating the Canadian public as to the history and role of the Canadian Military.
Usually, these routes are marked with a series of signs that provide users with
both direction and interpretation.
In some cases, users can purchase a CD (or cassette) at the start of the route.
The CD provides a narrative explaining the story/sights of the route as the user
drives the route. The narrative is timed to an average driving speed.
3.0 References
www.admfincs.forces.gc.ca
250
http://sage-geds.tpsgc-pwgsc.gc.ca
www.milavia.net/airshows
www.miramarairshow.com
www.wetaskiwinairshow.com
www.winairshow.com
www.flightworks.ca
www.cias.org/component/option,com frontpage/Itemid,1/
Alternative Service Delivery Costing Guidelines – Canadian Armed Forces
Cost Factors Manual - Canadian Armed Forces
Defence Services Program Information System - Canadian Armed Forces
251
APPENDIX 1: BUSINESS CASE ANALYSIS - BASELINE COSTING
METHODOLOGY
During the Analysis stage of the ASD methodology, a Business Case Analysis (BCA)
must be completed. Chapter 10 of the Costing Handbook details the general procedures
for conducting a BCA and the considerations in completing a baseline costing from a
costing perspective. The main reasons for completing a baseline costing are:
1. to understand the cost structure and scope of the targeted service;
2. to ensure the costs of all inputs are included; and
3. to determine a benchmark for identifying potential savings.
The BCA is a decision support document. It is completed by the ASD Review Team to
aid the Executive Authority in its decision whether to keep the current delivery method or
to adopt one of the ASD options. Consequently, the level of detail required in conducting
a baseline costing must be sufficient to make a reasonable decision as to the "way ahead"
but not as rigorous as required during the IHB development step or bid evaluation step.
The baseline costing involves:
1. defining the output; and
2. costing the inputs.
DEFINING THE OUTPUTS
During the Analysis stage of the ASDM, it is essential to describe the activity under
review in terms of outputs and then detail all those factors that contribute to this output.
This is part of the scoping process. This action must be carried out by the ASD Review
Team prior to any baseline costing. The importance of properly defining the scope of the
service cannot be overemphasized because it invariably impacts the cost. Without
properly defining the parameters from the beginning, the costing will be questionable. A
frequent oversight is not initially identifying whether personnel involved with the activity
are considered core operational personnel. Without this information, it will be very
difficult to estimate the cost structure and potential savings arising in converting from
internal to external delivery. Another frequent oversight is, if one is examining the
maintenance function on a specific type of equipment, the cost of all unique training
required for the maintenance staff, as well as the cost of supporting this maintenance
function.
COSTING THE INPUTS
Once the output has been defined, it is then possible to cost the inputs to determine how
much it is currently costing to provide the targeted service; this is the baseline cost. The
baseline cost of a targeted service is the sum of all the cost categories described in
Section I. The Resource Centre (RC) manager for the targeted service should have many
252
of the costs described in Section I available. The use of actual costs is always preferable;
while the use of standard costs is acceptable only when actual costs are not readily
available. Adjustments reflecting actual expenditures may be made to the standard costs
if a more realistic and reasonable baseline cost will be achieved. The calculation of
baseline costs is a difficult and tedious process. It is usually accomplished using a
combination of interviews, documentation reviews and data analysis. Occasionally, there
is discussion over the categorization of certain costs. There is no simple answer but an
important point to remember is that the categorization of costs is important but inclusion
of the cost is crucial.
A baseline costing is completed during the BCA phase, however, it may be necessary to
update the baseline costing following the development of the SOW because the original
scope of the targeted service changed or because the original baseline costing is outdated.
Updating a baseline costing is at the discretion of the ASD Review Team. Annex D
contains an ASD Baseline Costing Form which should be used by the ASD Review Team
in presenting their baseline costs of a targeted service. The baseline costing should
differentiate between the full cost and avoidable cost over the same period of comparison
to be used during the bid evaluation step.
Additional financial tasks the ASD Review Team should consider during the BCA phase
are to identify common costs, estimate the possible one-time conversion costs and
consider whether a Minimum Conversion Differential (MCD) should be recommended to
the Executive Authority. Refer to Section IV for more information on MCD.
Furthermore, the ASD Review Team should discuss with PWGSC personnel whether the
baseline costing should be included as additional information in the RFP. If so, a caveat
should accompany this costing indicating that this costing information is provided for
information purposes only and that re-engineering by DND may render the baseline
costing of minimal value.
One important aspect of the Baseline costing is the breakout of avoidable and nonavoidable costs. The degree of flexibility available to the ASD Review Team is directly
related to the level of avoidable costs; for example, if the percentage of avoidable costs is
high, the ASD Review Team should reasonably expect to impact these costs through
various decisions. Alternatively, if the level of non-avoidable costs is high compared to
avoidable costs, the potential level of expected savings would also have a low
expectancy.
The general costing principles form the foundation of how Department of National
Defense will compute and evaluate ASD proposals. They are designed to assist in
developing relevant cost estimates of In-House activities for comparison with private
sector offers for a targeted service. The following general costing principles should be
applied when conducting a financial analysis during the ASD process:
Fairness of Comparison: The objective of each financial evaluation is to provide
a firm and fair basis for comparing the costs to the Government of delivering a
253
targeted service in response to the specifications outlined in the SOW to the costs
of a contractor responding to the same SOW;
Budget Perspective: Costing data should acknowledge all relevant costs to the
Government budget, whether borne by DND or by another Department. When
relevant cost elements external to DND are critical to a decision on ASD, there
needs to be an arrangement developed to align the benefits to DND with those
accruing to the Government budget as a whole. This will avoid a situation where
overall net benefits to the Government are passed over because they do not accrue
directly to DND, examples are, personnel statutory benefits and Payment In Lieu
of Taxes (PILT);
Same level of service compared: Cost comparisons are heavily dependent upon
standards set in the SOW. Contracting out and In-House delivery options should
provide the same level and quality of the service as required by the SOW;
Avoidable Costs: Since DND operates under a cash-based accounting system, it
is necessary to make decisions, to a large extent, based on the predictions of cash
outflows and inflows in the budgetary context. The full cost of all resources
expended in support of a targeted service must be identified; however, only cash
outflows and inflows that are avoidable if DND undertakes an initiative are
relevant in the decision-making process. Full cost includes both avoidable and
non-avoidable costs. Avoidable costs are costs that would "go away" if the
targeted service ceased to exist and will be the source of funds used to pay the
external provider. Consequently, the allocation of costs must be done carefully to
identify all "avoidable" costs so they can be eventually removed from the
identified budgets if required. A necessary aspect of this process is having
respective budget OPIs agree to which costs are avoidable in providing a targeted
service. In accepting which costs are avoidable, the budget OPIs accept that these
funds may be removed from their budgets in the future if the targeted service is
provided by an external provider;
Common Costs: Only those costs that differ between the two options (In-House
delivery and contracting out) should be taken into consideration in the financial
analysis. Costs that are the same regardless of the option chosen are nonavoidable and should not be included in the financial analysis. The RFP should
identify all anticipated common costs. An example of a common cost would be
the core operational personnel identified with a targeted service. However, there
may be situations where previously identified common costs are no longer
common because of the chosen method of delivery of the proponent. Facility
costs may initially be considered common to all proponents but a proponent's
response to the RFP may render the facility costs avoidable in which case
adjustments would have to be made during the bid evaluation step in the "DND
Paid Costs" to reflect this;
254
Opportunity Cost: It is not reasonable to ignore the value of an existing asset
used by a targeted service when an appropriate value can be assigned to it for its
best alternative use. Best alternative uses may include being used elsewhere in
DND, in another Department or being sold to the private sector. The value of the
usage that is foregone should be considered. This value should be based on a
reasonable and achievable market value. However, in rare cases where there are
no market values and no reasonable alternate use, the asset may be excluded as a
"sunk" cost;
Period of comparison: The cost comparison should cover a minimum of five
years, even though the initial contract may cover only two or three years. This
five-year period of comparison will prevent the one-time conversion costs from
distorting the potential savings accruing to DND because of a short period of
consideration. The period of the individual contract, if less than five years, is not
particularly relevant as it would be reasonable to assume that it would be
succeeded by another contract. It is also not recommended to use periods of
comparison which are longer than five years (unless the contract is longer than
five years) because the level of uncertainty increases significantly; and
Basis of comparison: The financial analysis should use the present value of cost
estimates over the period of comparison. This will permit a proper evaluation of
the costs of competing proposals and provide decision makers with a clear
assessment of the financial implications of their decisions. The Department of
Finance's Crown Corporations borrowing rate is the discount rate to be used
unless another rate can be justified. Refer to Chapter 2 of the Costing Handbook
for an explanation on Discounted Cash Flow (DCF).
255
APPENDIX 2: COST CATEGORIES
During a financial analysis, it is necessary to have a consistent and logical approach to
categorizing costs. The following cost categories should be considered during the
baseline costing and IHB development steps:
Personnel Costs (Serial 1): All personnel costs, either directly or indirectly,
associated with the activity must be included in this cost category. Personnel costs
include salary, wages, severance pay, and allowances such as uniform or
environmental allowances. This cost category does not include the statutory
benefits or centrally funded miscellaneous costs as described in the Cost Factors
Manual (CFM). Annexes B and C contain a listing of possible applicable
allowances that should be included under this cost category. Personnel costs
should be based on the number of Full-Time Equivalents (FTE) and include
incremental staff required to perform the targeted service;
Operations and Maintenance (O&M) Costs (Serial 2): These are the recurring
non-personnel costs incurred in the provision of the targeted service. O&M costs
consist of the following subcategories:
Material and Supplies (Serial 2a): These are costs of all raw materials,
parts, subassemblies, and components required in providing the targeted
service;
Repair and Maintenance (Serial 2b): These are costs for repairing and
maintaining equipment in normal operating condition; and
Other Costs (Serial 2c): Any other O&M expenditures that have not been
specifically included above should be included here. At a minimum, all
capital assets with a current net realizable value of less than $5,000 are
considered minor items and should be lumped together in this costing
category.
Facility Costs (Serial 3): Facility costs include the cost of maintenance, rent,
electricity, heating, and utilities related to DND buildings. Generally, DND does
not pay rent because it owns most of its buildings. Although the opportunity cost
principle may indicate that an equivalent amount should be included to represent
the foregone rent DND would pay if it rented the facilities in the private sector.
However, some of DND's facilities are unique and have no alternative use in the
private sector. In these cases, rent should be excluded and treated as a "sunk" cost.
In the cases where rent is paid, if DND pays the rent it should be included under
facilities costs, but if PWGSC pays the rent it should be included as a Non-DND
cost. Adjustments must be made in the bid evaluation step to accommodate the
various options concerning facilities. Once again, care must be used to ensure that
costs included in this category are not included elsewhere;
256
Capital Costs (Serial 4): This component includes both new and existing capital
assets. In accordance with the opportunity cost principle, existing assets should
not immediately be considered a "sunk" cost. The RFP should contain a listing of
all existing capital assets that will be available to all proponents. It should also list
the capital assets current net realizable value and its estimated net realizable value
in five years. The proponents will identify which assets they will use and a capital
cost will be reflected during the bid evaluation step. Capital costs are grouped into
two categories: capital equipment and minor items. Minor items are capital assets
with less than $5,000 current net realizable value and should be included under
Other Costs in O&M. Capital equipment costs are the cost of assets with greater
than $5,000 current net realizable value and have a life cycle of more than one
year. Refer to Section V for more information on Valuation of Crown Assets.
Care must be applied to ensure capital equipment costs included in other costing
categories are not also included here;
Overhead Costs (Serial 5): Overhead includes all indirect non-personnel support
provided to a targeted service that has not been captured by the other costing
categories. This is a cost category where the determination of avoidable and nonavoidable costs in support of a targeted service may be difficult. Care must be
taken to ensure that the costs are not duplicated or excluded in this category.
There are three categories of overhead:
Service Overhead (Serial 5a): Service overhead costs include all the
O&M costs incurred in performing functions that are not directly involved
with the targeted service but which support delivery activities. In the
provision of a targeted service, examples of O&M costs may be cleaning
supplies, nails, and glue. Annex A contains a list of locally funded
miscellaneous costs associated with personnel that should be reviewed
during the analysis. For example, the amount of Temporary Duty from the
local budget incurred in support of a targeted service would be included in
this cost category;
Base Support Overhead (Serial 5b): These are the costs of other units on
the Base who provide support to the targeted service. Do not use the Base
Support standard cost included in the CFM for this cost. All units/
organizations on a Base should be reviewed to determine the extent of
their resources expended and avoidable in support of the targeted service.
Examples may be procurement support, financial support, and
administrative support provided to a targeted service; and
NDHQ/Command Overhead (Serial 5c): These are the costs that are
incurred at a higher level in support of a lower level organization. These
costs are frequently referred to as Corporate General and Administrative
overhead. For example, NDHQ expends resources in support of the
Command and the Command expends resources in support of the
257
Bases/Units. Annexes B and C detail the centrally funded miscellaneous
amounts that are specific to a military or civilian member respectively that
should be included in this cost category;
Non-DND costs (Serial 6): Other Departments incur costs in support of DND
targeted services. These costs must be identified and included in cost
comparisons. This cost category would include, at a minimum, the personnel
statutory benefits such as pension contributions, CPP, UI, etc, which are paid by
Treasury Board on behalf of military and civilian employees. The Personnel Cost
category would not include any statutory benefits. Another possible Non-DND
cost may be PILT paid by PWGSC for DND used facilities.
258
APPENDIX 3: DATA SOURCES
When conducting a baseline costing, an IHB, or an evaluation of bids, a reliable basis for
estimating costs should be used. Of those mentioned in Chapter 6 of the Costing
Handbook, three are valuable to the ASD costing process: Defence Services Program
Information System (DSPIS), Cost Factors Manual (CFM), and Financial Information
System (FIS) Mk III.
Defense Services Program Information System (DSPIS)
The DSPIS is a computerized system containing data on current and planned allocation of
DND resources, expressed in terms of personnel, equipment, facilities, and the respective
cost of their acquisition and utilization. DSPIS interfaces with the DND Economic
Model, the Resource Management Report (REMAR), and the Land Ordnance
Maintenance Management Information System (LOMMIS). DSPIS has some limitations
as outlined in the Costing Handbook but it can be used as a starting point for a baseline
costing and provides the ASD Review Team with a good indication of the cost structure
of the targeted service.
Cost Factors Manual (CFM)
The CFM is prepared by D Cost S. It is designed to provide a common basis for the
estimation for DND personnel, equipment and facility costs. It provides standard costs
that are expressed in current fiscal year (FY) dollars and are valid for the FY. It must be
emphasised that the costs used in the CFM are 5-year average costs and not actual
expenditures. Standard costs are sufficient when actual amounts are not readily available
for the baseline costing in the BCA and to a lessor degree to the IHB development step.
Financial Information System (FIS) Mk III
The FIS Mk III is the system that records all Departmental public fund expenditures and
revenues. The software applies all the accounting rules used by DND. While the CFM
provides standard costs, the FIS Mk III will provide budget managers a listing of all
actual expenditures by resource code. Estimates based on actual expenditures such as
provided by the FIS, are recommended during the IHB development step and bid
evaluation step of the ASD financial analysis.
259
RC
Manager
DISO
ADM
(Mat)
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
Description
Telephone
NHDQ
Applicable
Overhead Allowances
(Serial
(Serial 1)
5c)
$666
Clothing
683
Education and Tuition Fees
465
Medical and Dental Equipment
364
Contracted Medical and Dental
363
Medical for Dependants
224
Dental Plan for Dependants
Accommodation Assistance
Allowance
217
139
Separation Allowance
84
Recruiting
73
Entertainment
65
Grants
27
Dependants Education
21
Commuting Allowance
Sub-Total
Movement @ 6% of salary
7
$3,398
calculated
Posting Allowance @ one mth pay/4 calculated
Environmental Allowances
Paratroop Allowance
$2,076
1,168
260
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
RC
Manager
DISO
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
Rescue Spec Allowance
3,001
Submarine Allowance
191
Diving Allowance
2,048
Sea Duty Allowance
9
Casual Sea Duty Allowance
2,776
Aircrew Allowance
968
Casual Aircrew Allowance
12,117
Mil Foreign Svc Allowance
2,902
Foreign Duty Allowance
4,728
Isolation Allowance
332
Gratuities Short Svc Commission
Description
Telephone
NHDQ
Applicable
Overhead Allowances
(Serial
(Serial 1)
5c)
$666
Dental Care Plan
408
Public Service Health Care Plan
407
Education and Tuition
361
Movement
181
261
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
ADM
(Per)
Rank
Clothing
17
Education Leave
4
Bilingual Bonus
$128
Commuting Allowance
83
Foreign Duty Allowance
62
Isolation Allowance
Total
Pay
185
$2,044
CUA/SVR
Pay
SubTotal
Applicable
Allowances
Total
Statutory
NDHQ
Costs
Overhead
Officers - General Service
GENLGEN/ADMVADM
117,042
MGEN/RADM
96,602
BGEN/CMDRE 85,070
COL/CAPT(N)
76,297
LCOL/CDR
68,217
MAJ/LCDR
60,468
CAPT/LT(N)
47,972
LT/SLT
33,703
2LT/ASLT
29,886
OCDT
10,640
COL
LCOL
MAJ
CAPT
LT
2LT
OCDT
76,297
70,569
64,278
52,856
34,931
28,584
10,640
MGEN/RADM 135,912
BGEN/CMDRE 127,368
COL/CAPT(N) 111,129
4,304 121,346
3,589 100,191
3,185 88,255
2,878 79,175
2,596 70,813
2,324 62,792
1,887 49,859
1,388 35,091
1,046 30,932
372 11,012
Officers - Pilots
2,878 79,175
2,678 73,247
2,458 66,736
2,058 54,914
1,431 36,362
1,000 29,584
372 11,012
Officers - Medical
4,965 140,877
4,666 132,034
4,098 115,227
13,678
11,883
10,870
10,099
9,390
8,709
7,612
6,358
6,023
4,333
35,140
21,885
19,264
17,270
15,434
13,672
10,832
7,589
6,772
2,648
10,099
9,596
9,044
8,041
6,466
5,909
4,333
17,270
15,968
14,538
11,943
7,822
6,493
2,648
15,336
14,585
13,159
48,316
42,351
31,012
262
LCOL/CDR
MAJ/LCDR
CAPT/LT(N)
LT/SLT
2LT/ASLT
109,851
98,527
79,249
33,275
27,540
4,053 113,904
3,656 102,183
2,982 82,231
1,373 34,648
964 28,504
13,047
12,052
10,359
6,321
5,817
30,120
22,321
17,941
7,497
6,269
263
of an Employment Agency
Prefeasibility Study into the Viability of an Employment
Agency in the Alberta HUB Region
By:
264
Date:
1.0
June 30, 2010
OVERVIEW OF AN EMPLOYMENT AGENCY IN THE HUB REGION
The development of most businesses begins with the preparation of a market and
financial feasibility study. As a precursor to this, Outlook has prepared this prefeasibility study in order to determine if the development of an employment agency in
the Alberta HUB region is worthy of further investigation. At a later date, this may or
may not include the development of a full-scale feasibility analysis for the project.
A feasibility study would address two major issues: (1) the potential uses of an
employment agency; and (2) potential financial performance of the business. For the
purposes of this pre-feasibility report, certain aspects of a full feasibility study have
been assessed in order to determine the reasonableness of pursuing further study into
the development of an employment agency in the Alberta HUB region.
There appears to be potential for the development of an employment agency in the
Alberta HUB region. Based on feedback in Phases 1 through 3 of this report, there is a
lack of sufficient candidates for jobs in the Energy, Agriculture and Manufacturing
Sectors in the Region. In addition, many stakeholders identified not only a difficulty in
finding candidates but also in retaining their own staff. In addition to there being a lack
of manpower in the region, competitors pay comparatively high wages for any available
workers. Potential candidates in these sectors are attracted to companies within the
energy sector. In particular, oil and gas firms in other parts of the province are able to
offer higher rates of pay than other types of firms.
One enterprise that has the potential to somewhat improve the ability of employers in
the region to find and attract capable workers may be a regional employment agency. In
general terms, an employment agency or staffing firm finds qualified job candidates and
brings them together with potential employers for the purpose of establishing a
“permanent” employment relationship. Employment agencies do not charge the job
seeker for their services but charge fees to employers for filling vacant positions.
Typically, employment agencies specialize in one of the work categories such as health
care, industrial, information technology, office/clerical, professional, managerial or
technical. In order to streamline services. Given the apparent need for industrial
workers in the region, a good fit for an agency may be to have an industrial specialty
which may include employment services for manual labourers, food handlers, cleaners,
assemblers, drivers, tradesmen, machine operators, maintenance workers, etc.
Another important, yet secondary role for an employee agency will be to provide local
residents, seeking to continue employment in the region, with an additional source to
find and access regional jobs.
265
2.0
INDUSTRIAL SECTOR TARGET MARKETS
There are three major industrial sector within the region that may provide a clientele
base for an employment agency. These clients are likely to include companies in the
following three major sectors in which such an employment agency could specialize:
2.1
Energy Sector
The need for labour attraction and retention assistance was the most often mentioned
challenge that the Energy Sector would like to see addressed in the region.
The sector is eager to see the organization work on marketing the region as a “worker
destination”. The energy sector sees a need for an employment agency and for
AlbertaHUB to act as champion in labour attraction.
2.2
Agricultural Sector
Labour attraction and retention is the issue most often raised by those in the Agriculture
sector. This is partly due to competition for the same workers – namely trades people
and general labour workers among the industrial sectors in the region.
Companies and organizations in this sector see a role for an entity that can assist the
Agriculture Sector with its labour issues.
2.3
Manufacturing Sector
Similar to other sectors, there are issues in attracting and retaining workers in the
Manufacturing Sector. Specific needs addressed by this Sector include a lack of welders
and general laborers. One interviewee said, ‘The HUB region is perfect to find these type
of workers, because they have a lot of farm kids who grow up handy. They often just
need some formal training.”
In addition to the three sectors identified above, another area with similar needs in
terms of employee shortages is trucking within the region. All three of the above
mentioned sectors rely heavily on trucking and skilled drivers. Currently there is a
shortage of available drivers in the area and the employment agency should consider
this as another employee target market.
266
3.0
THE MARKETING MIX
3.1
Price - Placement Commissions/Fees
The primary revenue streams for employment agencies come from commissions or fees
paid by employers for employment positions that the agency assists in filling. Typically, a
firm will retain the agency to fill one or more positions and agree to pay a set fee once a
suitable applicant is found and hired by the employee. Most often, a fee or commission
is not paid until a position is filled with a candidate that the agency introduces to the
firm.
Depending on the industry and the level of the position to be filled, placement fees
typically range from 10 to 20 percent of the employee’s annual salary. Higher
percentage fees are charged for positions that are more difficult to fill or for which there
is a shortage of eligible candidates.
Occasionally, a firm will pay a retainer fee to an employment agency in advance of the
agency filling required positions. This can take place when an employer has several
positions to fill and requires the agency to perform a substantial amount of recruiting
prior to placement of employees. In these cases, the percentage fee based on annual
salary can be lowered to account for the retainer fee paid at the beginning of the
process. All commission/payment terms, however, are negotiable and are typically
differentiated based on client needs.
3.2
Promotion
One of the key factors in developing a successful employment agency will be ensuring
that the firm is known to both employers within the targeted sectors and to potential
placement candidates.
An initial marketing push will be required for the firm to gain notoriety among
stakeholders in the targeted sectors. For instance, the agency can work in concert with
public organizations such as AlbertaHUB to cross promote the region and the services
the firm offers. In addition, the firm can partner with local, regional and provincial
training organizations to identify potential employment candidates and promote the
firm.
It is likely that the firm’s marketing efforts will consume a considerable amount of staff
time during the start-up phase of the business. A full-scale marketing plan will be
required to outline the best steps and practices the agency can use to gain the greatest
exposure among stakeholders.
267
Personal selling and building personal relationships with stakeholders in the industry will
also be vitally important. Sales calls to employers, associations and government
agencies will be necessary to market the firm’s services and perhaps form partnerships
that will allow the firm to further expand its network.
3.3
Location
Based on preliminary research, the vast majority of employment agencies in Alberta are
located in either Calgary or Edmonton with very few located in the AlbertaHUB region
itself. There are some small agencies in the region that could pose some competition,
but there do not appear to be any large firms are located in the region.
A central physical location within the AlbertaHUB region for the offices of the
employment agency would be ideal. A location such as the St. Paul area would allow
the agency to be centrally located and lessen any travel required to/from the office by
employees, employers and agency personnel. Aside from alleviating travel distances
and times required for one-on-one meetings, the physical location of the office itself is
less important than other types of enterprises. This is due to the fact that the majority
of the firm’s day to day operations and core activities are carried out electronically with
physical location having little or no bearing.
3.4
Product
The primary service offered by the employment agency will be the recruitment and
placing of suitable employees.
Prospective employees are interviewed and screened to verify their level of competency
and gain insights into each candidate's motivation, skills and challenges. The agency may
also conduct formal background checks depending on the types of jobs filled and
individual employer requests. Key information regarding individuals’ technical skills,
areas of interest and experience and general availability are entered into a database for
use in making appropriate job placement.
The success of an agency is largely determined by its ability to match suitable workers to
clients’ requests for placement. This requires staff to fully understand client needs to
recruit qualified workers for an assignment. Employment agencies use computermatching software developed for the staffing industry to achieve high quality matches.
Clients often expect to receive several resumes from which to select staff.
268
4.0
COMPETITION
The most significant issues facing employment agencies, in general, include competition
between industry participants (other employment agencies) and competition by the
industry with other industries (industries competing for the same labour force).
Industry-wide, competition between competing employment firms and agencies is
considered to be high, and is expected to increase. This is particularly the case in regions
such as Alberta, where both skilled and unskilled labour in the trades is at a premium.
Attracting and retaining employees is one of the primary issues facing the industrial
sector province-wide.
The employee placement/recruiting industry is largely price competitive, with fees being
reduced to win contracts with clients, especially during periods of slow economic
growth. In addition, the use of preferred supplier contracts with larger and more
established firms may impact on the ability of smaller firms to break into the market
effectively. Furthermore, the industry in Alberta is forced to compete with
organisations, particularly in the oil and gas industries that have in-house human
resource departments .
Based on preliminary research conducted as part of the pre-feasibility study, it does not
appear that there is an employment agency in the AlbertaHUB region that specializes in
employee placement in the industrial sectors.
5.0
MANAGEMENT / HUMAN RESOURCES
A competitive staffing agency will require an entrepreneurial manager/owner who is
motivated to grow sales and deliver superior customer service to employers and
employees. Developing business leads, cultivating employer relationships and closing
sales are critical skills needed to successfully market the an employee agency’s services.
Understanding customer needs, making quality job matches and responding promptly to
customer concerns are likewise integral to building and sustaining the agency. As part of
the sales responsibility, managers negotiate pricing, develop budgets and monitor the
firm’s cash flow. Therefore, the owner/manager will require basic financial management
skills.
In addition to the manger/owner position, it is anticipated that an administrative
employee will be required to perform office duties that will free the manager‘s time to
focus on recruiting and placing employees. It is anticipated that the administrative
employee would also assist the manger with the core function of the agency.
269
6.0
FINANCE
The projected application and source of start-up funding for an employment agency and
the projected income statement in a stabilized year of operations have been developed
and are presented in the following sections.
6.1
Application and Source of Start-Up Costs
Since very little capital or capital construction is required to begin operating an
employment agency, the start up costs for the enterprise are relatively low when
compared to non-service enterprises. The two biggest start-up costs for an employment
agency are usually the marketing costs and the cost of office furnishings. Significant
marketing will be needed in the initial stages since the company will have to focus on
both obtaining clients (companies interested in hiring) and on making its services known
to potential placement candidates. In addition, tasteful office furnishings and décor will
be an important consideration when entertaining prospective clients and/or employees
interested in the firm’s services.
Employment Agency – June, 2010
Marketing - Radio, Print, Trade Publications
Marketing - Web Design/Creation
Office - First Month Rent)
Office - Furniture
Office - IT (computers, faxes, copiers)
Office - Supplies
Utilities
Payroll - Administrative Staff
Payroll - Owner Salary
Miscellaneous
$10,000
5,000
2,000
12,000
4,000
1,000
1,500
400
1,500
2,500
3,500
2,000
$45,400
Source of Funds
Operating Loan
Term Loan
Owner Equity
$6,800
15,900
22,700
$45,400
270
6.2
Projected Income Statement – Stabilized Year of Operations
The financial projections provided herein are based on an analysis of potential
parameters for a small scale agency and discussions with industry experts.
The operating scenario presented below is based on a stabilized year of operations for a
small-scale, owner-operated employment agency.
Employment Agency
Projected Income Statement - Stabiized Year of Operations
Revenue
Placement Fees (1)
$144,000
Total Revenue
$144,000
Expense
Payroll - Administrative Staff
Payroll - Owner Salary
Business Development - Travel, Entertainment, Meals
Facilities - Phone
Facilities - Rent
Facilities - Office Supplies
Facilities - Insurance
Facilities - Security
Facilities - Utilities
Facility - Other
Licenses
Web Services/IT Consulting
Depreciation
Professional Memberships/Dues
Vehicle Expenses
PR / Advertising
Total Expense
$30,000
42,000
2,000
5,000
4,200
24,000
1,500
2,400
1,200
4,800
1,000
500
3,600
1,000
3,000
1,500
1,500
3,000
$132,200
$11,800
(1) Based on an average of 20 placements per month of employees with a 15 percent
on an estimated average salary of $48,000 per placement.
271
As shown, based on a stabilized year of operations, agency revenues could approach
approximately $144,000 with operating expenses of $132,000 which would result in an
annual operating income (EBITDA) of approximately $12,000. The operating scenario
presented here is based primarily on estimated placement projections and commissions
for similar-scale agencies. Actual operating results will fluctuate and can vary greatly
depending various other factors including the average wage of employee placed and the
rate of commission received by the agency and the number of employees placed.
The operations of an employment agency seem to present an opportunity for
investment given the potential to produce positive annual operating income once
operations are stabilized. However, the biggest hurdle to successful business
development is that, in the initial year of operation, the agency gets sufficient exposure
to both potential clientele and employees likely to use the firm’s services. A thorough
marketing plan focusing on the energy, agriculture and manufacturing sectors in the
region and their specific needs will be imperative to succeeding at maximizing this
exposure.
7.0
REFERENCES






Association of Canadian Search, Employment and Staffing Services
Government of Alberta
Live and Work In Alberta
Alberta Occupational Health and Safety Act
IBISWorld 2010
Alternative Staffing Alliance
272

DEVELOPMENT OF INVESTMENT ATTRACTION

Transcription

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