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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
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.
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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.
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Background and Notes (continued)
#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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Background and Notes (continued)
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
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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
Oil and gas extraction
Support for mining, oil/gas
Agriculture
Arts, entertainment, recreation
Accommodation and food
Finance and insurance
Manufacturing
Retail trade
Health care and social services
Transportation
Wholesale trade
Personal and household services
Business support
Educational services
Construction
Professional, scientific, technical services
Electricity, water, natural gas utility
Public administration
Information and culture
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.
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0.0 0.5 1.0 1.5 2.0
Arts, entertainment, recreation
Accommodation and food
Finance and insurance
Manufacturing
Retail trade
Health care and social services
Transportation
Wholesale trade
Personal and household services
Business support
Educational services
Construction
Professional, scientific, technical…
Electricity, water, natural gas utility
Public administration
Information and culture
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
Arts, entertainment, recreation
Finance and insurance
Accommodation and food
Oil and gas extraction
Health care and social services
Business support
Educational services
Information and culture
Transportation
Electricity, water, natural gas utility
Manufacturing
Public administration
Real estate
Professional, scientific, technical services
Personal and household services
Wholesale trade
Support for mining, oil/gas
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%
Oil and gas extraction
Arts, entertainment, recreation
Finance and insurance
Agriculture
Business support
Accommodation and food
Information and culture
Health care and social services
Educational services
Transportation
Manufacturing
Public administration
Personal and household services
Professional, scientific, technical services
Electricity, water, natural gas utility
Retail trade
Wholesale trade
Real estate
Support for mining, oil/gas
Construction
average annual change from 2001 to 2011
Shift Share Analysis, Swift Current CA
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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
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Leading/Lagging Analysis, Swift Current CA (2 of 2)
agriculture
utilities
manufacturing
wholesale trade
retail trade
transportation
information& culture
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.
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Industry Classification: Swift Current CA (1 of 2)
agriculture
oil & gas
mining, oil & gas support
utilities
construction
manufacturting
wholesale traderetail trade
transportation
information& culture
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
information& culture
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
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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
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