For oil-dependent Lloydminster, worst of the slump may be over

More signs of optimism.



  • 20 Jun 2016
  • The StarPhoenix

Border City’s cautious optimism

For oil-dependent Lloydminster, worst of the slump may be over

When James Johnston and his brother launched an industrial insulation company in 2013, work was falling into their laps.

The local economy was booming. So many drilling companies were clamouring for his business that Johnston turned down small clients to make time for larger ones. He struggled to find enough workers to handle the constant stream of paid projects hurled his way.

When the price of oil plummeted in late 2014, Johnston didn’t panic. Like many in Western Canada, he didn’t realize how bad things were about to become; after all, the Swift Current native, who’d moved to the Border City in 2003 to work in the oilpatch, had lived through the economic downturn of 2008 and emerged unscathed.

As work dried up, Johnston and his brother took advantage of lower real estate prices to buy an office that would have been priced beyond their means two years earlier. With little other work available, his staff renovated it in January and February of this year.

When the renovations were done, the oil companies still weren’t calling.

“The first quarter of this year was very, very hard,” Johnston said. At times, he and his brother talked about closing shop. But they’d already taken a risk and bought the building. They’d committed to weathering the rough patch, so weather it they must.

At its peak, Pro-Clad Insulation had 21 employees. Today it has nine, but it’s still trucking along, picking up small projects it would once have turned down. When the price of oil touched $50 a barrel at the end of May, they felt cautious optimism.

“Things are looking on the up and up,” Johnston says. “It’s looking worthwhile, like we did wait it out.”

In Lloydminster, where the oil and gas sector has long been the biggest employer, the effects of the economic collapse are felt throughout the city. As Johnston put it, a community that is accustomed to powering along at 110 per cent capacity has now adopted a more subdued pace. “Lloydminster is not new to these types of cyclic events and we usually are very resilient and mature about how we handle it,” Mayor Rob Saunders said. “But it does put a strain, stress and pressure on every household, every family and every business.”

According to the 2015 Lloydminster municipal census, 31,377 people called the city home last year, a decrease of just 106 from 2013. This relative stability is a change for a hub that’s consistently seen its population climb year over year.

“There’s a general feel that there’s maybe not as many people in the store or it’s a little bit easier to be seated and served,” said Ward Read, CEO of the Lloydminster Economic Development Corporation. “There was just a high, high level of activity and it’s muted now compared to, say, three years back.”

At the height of the oil boom, between 2011 and 2014, many transient workers flocked to Lloydminster for work, finding shelter in hotels, RV parks and on friends’ couches. They were never captured in censuses and it’s impossible to say how many moved to the Border City or how many have now left.

The hotel rooms once full of workers are no longer bursting at the seams; when spectators and athletes flocked to the city last month for the Royal Bank Cup hockey tournament, no one had trouble finding places to stay.

“Before, you could hardly rent a hotel room for 10 days. Now you can get a furnished apartment for 10 days at a reasonable rate,” said Bryan Morrison, who organized the event.

Some homes are being rented because they can’t be sold; home sales in the city dropped 35 per cent last year compared to 2014 and prices dropped about one per cent a month in 2015.

Mike Dewing, president of the Realtors Association of Lloydminster, said things started stabilizing this spring as the price of oil began flirting with $50 a barrel.

“It’s maybe not the new normal just yet — we’d have to increase a little bit to call it the new normal — but I think we’re getting there,” he said. “We honestly feel that the worst is kind of behind us.”

Morrison, general manager of Border City Concrete, has lived in Lloydminster his whole life and watched oil booms and busts shape life in the city for 56 years. Whenever times are tough people say, “Give me one more oil boom, we won’t piss it away,” but people’s memories are short, Morrison said.

Some companies grow too big, too fast. Some people buy expensive trucks and toys with money they don’t have and suffer when they’re no longer paid for 60-hour work weeks.

Not Morrison. He prides himself on being financially responsible. When oil prices nosedived, he bought himself an ice fishing auger and went fishing.

There was nothing else he could do.

Since the downturn, Morrison’s Lloydminster office has shrunk to 10 employees from 25 and workers’ hours have been reduced. The first round of layoffs was relatively easy; during boom times, employers can’t be choosy, “But once it’s slow, you don’t need to put up with a bad attitude,” Morrison said.

It’s easy now for him to find help on projects he spearheads.

At the height of the oil boom, it would take him two to three weeks to get “a guy with a hammer and a tool belt” to come out to do plumbing or carpentry, he said.

Now he can get journeymen within hours.

Morrison said he’s confident the oil work and the transient workers it brings with it will return to the city — they always do — but he hopes the city avoids the same frenzied levels of activity it saw three years ago.

He likes being able to leave work after eight hours and join his wife for dinner.




About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on June 20, 2016, in oil. Bookmark the permalink. Leave a comment.

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