City of Swift Current BRE Competitive Analysis

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Competitive Advantage Analysis for Swift Current

Research prepared for:

Onagon International and The City of Swift Current

November 2013Doug Elliott

Sask Trends Monitor444 19th Avenue

Regina, SaskatchewanS4N 1H1

[email protected]

www.sasktrends.ca

Background and Notes

This material summarizes research conducted by Sask Trends Monitor for Onagon International and the City of Swift Current.

A Competitive Advantage Analysis (CAA) is a particular kind of statistical analysis that looks at economic trends in a community or region by industry group1. The CAA is an examination of past trends with a view to identifying industry sectors that have under-performed or over-performed relative to other industries and other cities or regions.

The CAA is not a forecast of future opportunities. Although it may help inform future growth, it is only one of the tools that can be used to identify the strengths and weaknesses of a city’s economy.

The CAA compares a region’s economic performance by industry group over a period of time compared with those same industries in another economy over the same period. So there are five choices that the analyst must make.

Choice #1: Choosing the Region• The city of Swift Current and the surrounding RM (called the Swift Current Census Agglomeration or CA

by Statistics Canada) is the region chosen for analysis. The census data used for the analysis is based on where you live, not where you work, so these figures measure employment trends among those who live in or near the city of Swift Current (see map on page 5). It excludes those who live outside the RM and work in the city and it includes those who live in the city and work outside the RM.

1 The methodology used in a competitive advantage analysis (CAA) was developed by economist Dr. Emanuel Carvalho from the University of Waterloo. It is based on work he did for the Ontario Ministry of Municipal Affairs.

November 11, 2013 DRAFT 2

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Background and Notes (continued)

Choice #2: Choosing the Time Frame• A longer (2001 to 2011) period was chosen over a shorter one because the CAA analysis is better at

examining long term trends than short term ones.

#3: Choosing the Economic Measure• Employment was used as the economic measure because it is the only statistic available. This has both

advantages and disadvantages.• Employment has the advantage of being easy to understand – a job is a readily identifiable measure of

economic success for an individual if not an economy. • Relatively detailed data from Statistics Canada’s decennial census provides employment by industry

group at city level.• Changes in productivity can affect changes in employment; a firm or industry may be more successful by

every other measure except employment. • Changes in hours of work, multiple job holdings, and commuting can cause problems in the employment

data.

#4: Choosing the Comparison Economy• Urban economies are different than rural ones so the comparison was made to the aggregate of the

eight largest urban centres in the province, namely Saskatoon, Regina, Prince Albert, Moose Jaw, Yorkton, Swift Current, North Battleford, and Estevan.

• The urban areas included the surrounding “bedroom communities” as well as the city proper. • These 8 urban centres contain 60% of the province’s population, 63% of employment, and 56% of GDP.



#5: Choosing the Industry Groups• A more detailed industry breakdown is preferred but the data quality deteriorates as the level of detail

increases. As a compromise, we chose 22 industry groupings for the analysis.

The 2011 data are based on the voluntary part of the Statistics Canada Census (called the National Household Survey or NHS). Because the NHS is a voluntary survey, the 2011 data will be of poorer quality than the data from the 2001 and 2006 mandatory censuses. The response rate for the Swift Current CA in 2011 was 77% which is relatively high compared with other Saskatchewan cities.


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When we refer to Swift Current and the other seven urban centres, we are including the surrounding “bedroom communities” as well as the city proper.

For the Swift Current CA, this means that we are counting the number of people living in the city and the RM of Swift Current, regardless of where they work.

In 2011, the population of the city was 15,503 and the population of the surrounding RM was 2,032. In 2011:

• 525 reported living in the RM and working in Swift Current; and

• 590 reported living in the city and working in the RM.

Waldeck

Swift Current

Swift Current No. 137


Employment by Industry Group, 2011

In 2011, employment among Swift Current CA residents was 9,585 compared with 8,805 in 2001.

Health care and retail trade are the largest groups among the 22 chosen for the analysis.

Although the analysis included mining and the forestry sector, these industry groups are not shown in any of the graphs because the numbers are too small to be meaningful.

Public sector industry groups (e.g. health care and public administration) are included for completeness but are not normally considered as economic drivers.

0 200 400 600 800 1,000 1,200 1,400

Health care and social services

Retail trade

Accommodation and food

Educational services

Agriculture

Public administration

Construction

Manufacturing

Finance and insurance

Personal and household services

Professional, scientific, technical services

Transportation

Wholesale trade

Support for mining, oil/gas

Arts, entertainment, recreation

Business support

Oil and gas extraction

Information and culture

Electricity, water, natural gas utility

Real estate

Mining

Forestry, fishing, hunting, trapping

Employment by Industry Group, 2011, Swift Current CA


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Components of the Competitive Advantage Analysis

There are four components to the CAA that are applied to each industry sector. All are interesting and useful in their own right.

• Location Quotients – a measure of industry concentration• Shift/Share Analysis – a measure of growth adjusted for “normal” patterns• Leading/Lagging Analysis – measures relative growth rates• Industry Classification – a summary of the three measures

Location Quotients

The location quotient measures the size of the industry in the region relative to the other urban centres in Saskatchewan. Industries with a location quotient in excess of 1.25 are classified as “high”; those less than 0.75 are classified as “low”.

This doesn’t mean the industries are small or large, just that they are relatively smaller or larger than in the other urban areas in Saskatchewan.

Industries with a ‘high” location quotient tend to export goods/services from the region. Goods and services probably need to be imported for those with a “low” location quotient.

Swift Current has three industry groups with very high location quotients – oil/gas, support for oil/gas, and agriculture.

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0



Agriculture




Manufacturing

Retail trade


Transportation

Wholesale trade


Business support


Construction





Real estate

Location Quotients, 2001 and 2011, Swift Current CA

2001

2011

high

medium

low


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Low and Medium Location Quotients

This figure is the same as the one on the previous page but focusses on the industry groups with lower location quotients.

From 2001 to 2011, the location quotient declined significantly for:

• construction;• retail trade;• wholesale trade;• real estate; and• utilities.

The location quotient increased significantly for:

• arts, entertainment, recreation;

• accommodation and food services;

• finance and insurance; and• business support.


0.0 0.5 1.0 1.5 2.0




Manufacturing

Retail trade


Transportation

Wholesale trade


Business support


Construction

Professional, scientific, technical…




Real estate

Location Quotients, 2001 and 2011, Swift Current CA

2001

2011

highmediumlow

Shift/Share Analysis , 2001 to 2011, Absolute Terms

The shift/share analysis breaks down employment change into three components:

• a provincial effect;• an industry effect; and • a regional effect.

The regional effect is the most interesting because it measures what part of the employment change is attributable to factors unique to the city. These are changes that cannot be explained by the performance of the sector in other cities.

Measured in terms of the absolute change in employment, Swift Current has a large positive regional effect in agriculture, the arts/entertainment/recreation group, finance, oil/gas, and the accommodation/food group.

There are even larger negative regional effects in construction and retail trade.

-350 -300 -250 -200 -150 -100 -50 0 50 100 150

Agriculture






Business support



Transportation


Manufacturing


Real estate



Wholesale trade


Retail trade

Construction

Shift Share Analysis, Swift Current CA


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Shift/Share Analysis, 2001 to 2011, Percentage Terms

This is the same as the previous graph but the regional effect is expressed in terms of percentage change rather than in absolute employment.

This calculation shows that the decline in retail trade was not as dramatic as it looks because it is a very large sector.

The top and bottom four industry groups are the same in percentage terms as in absolute terms but the order is different.

-10% -5% 0% 5% 10% 15%




Agriculture

Business support





Transportation

Manufacturing





Retail trade

Wholesale trade

Real estate


Construction

average annual change from 2001 to 2011

Shift Share Analysis, Swift Current CA


Leading/Lagging Analysis

The leading/lagging analysis compares, for each industry group:• employment growth in Swift Current relative to other urban centres in the same industry; and• employment growth in other urban centres relative to total employment growth.

The graphs on the next two pages map the industry groups in other urban areas on the horizontal axis with the city’s performance on the vertical axis.

Industry groups in the upper right quadrant are leading growth both in the city and in other urban centres. They are classified as “drivers”. The oil/gas sector is in this quadrant.

Those in the lower left are lagging in both cases and are classified as vulnerable or challenging. The utilities group and real estate are in this sector.

Those in the upper left quadrant are typically in a state of evolution. The art/entertainment/recreation group and the accommodation/food services group are in this quadrant.

Those in the lower right are classified as either modest, yielding, or promising, depending on their size. • The mining/oil and gas support group is classified as promising.• Construction is classified as yielding.• The professional services group is classified as yielding.


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Leading/Lagging Analysis, Swift Current CA (1 of 2)

agriculture

oil & gas

mining, oil & gas support

utilities

construction

manufacturing

wholesale traderetail trade

transportation

information& culture

finance &insurance

real estate

professional, scientific, technical services

business support

education serviceshealth care &

social services

arts, entertainment, recreation

accommodation& food

personal &household services

public administration

-100%

-50%

0%

50%

100%

150%

200%

-40% -20% 0% 20% 40% 60% 80% 100%

urban sector relative growth

SwiftCurrentrelative growth

DRIVERS

VULNERABLECHALLENGING

MODEST YIELDINGOR PROMISING

EVOLVING


Leading/Lagging Analysis, Swift Current CA (2 of 2)

agriculture

utilities

manufacturing

wholesale trade

retail trade

transportation


finance &insurance

real estate

professional, scientific, technical services

business support

education services

health care & social services

accommodation& food

personal &household services

public administration

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

-40% -30% -20% -10% 0% 10% 20% 30% 40%

urban sector relative growth

SwiftCurrentrelative growth

DRIVERS

VULNERABLECHALLENGING

MODEST YIELDINGOR PROMISING

EVOLVING


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Industry Classification Scheme

The Competitive Advantage Analysis is future oriented in the sense that it classifies the industries in the city into categories using forward-looking terminology. Some terms used, for example, are:

• Emerging strength• High priority retention target• Prospects limited by external trends

Besides the data quality issues and the use of employment data as a measure of economic success, there are some problems with the classification scheme.

• The methodology implicitly assumes that employment growth in other urban areas in Saskatchewan is a measure of success. If the industry group is not growing in other cities but is doing so in Swift Current, for example, then it is assumed that the sector has limited prospects.

• There is a bias toward large sectors; relatively small industry groups can be classified as an emerging strength but most are dismissed as having a “weak base”. The concept of a “niche market” doesn’t enter into the equations.

In spite of the limitations, the classification does seem to generate the needed debate about which sectors have limited prospects and which do not. The analysis, to be useful, has to be tempered with a realistic assessment by the city’s economic players.

The graphs on the following two pages show the classifications for the Swift Current CA.


Industry Classification: Swift Current CA (1 of 2)

agriculture

oil & gas

mining, oil & gas support

utilities

construction

manufacturting

wholesale traderetail trade

transportation


finance & insurance

real estate

professional, scientifictechnical support

business support

education

health care& social assistance

arts, entertainmentrecreation

accommodation &food services

personal & household services

public adminstration

-100%

-50%

0%

50%

100%

150%

200%

250%

-40% -20% 0% 20% 40% 60% 80% 100% 120%

urban growth

prospects limitedRetention targets

(unless small)

current and emerging strengthsprospects limited

Swift Current relative growth


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Industry Classification: Swift Current CA (2 of 2)

agriculture

utilities

manufacturting

wholesale trade

retail trade

transportation


finance & insurance

real estate

business support

education

health care& social assistance

accommodation &food services

personal & household services

public adminstration

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

-25% -15% -5% 5% 15% 25% 35%

urban growth

prospects limitedRetention targets

(unless small)

current and emerging strengthsprospects limited

Swift Current relative growth


Industry Classification, Swift Current CA

Industry Group Classification

Agriculture Prospects limited by external trends

Forestry, fishing, trapping Prospects limited by external trends

Oil and gas extraction Current strength

Mining Prospects limited by weak base and declining competitiveness

Support for mining, oil/gas High priority retention target

Electricity, water, natural gas utility High priority retention target

Construction High priority retention target

Manufacturing Prospects limited by external trends and declining competitiveness

Wholesale trade High priority retention target

Retail trade High priority retention target

Transportation Prospects limited by external trends and declining competitiveness

Information and culture Prospects limited by external trends and small base

Finance and insurance Current strength

Real estate Prospects limited by weak base and declining competitiveness

Professional, scientific, technical services High priority retention target

Business support Prospects limited by external trends

Educational services Current strength

Health care and social services Current strength

Arts, entertainment, recreation Prospects limited by external trends

Accommodation and food Prospects limited by external trends

Personal and household services High priority retention target

Public administration Prospects limited by weak base and declining competitiveness


City of Swift Current BRE Competitive Analysis

Government & Nonprofit

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