As crude oil drops below $28 US per barrel, B.C. suppliers with direct ties to the Alberta oilsands are feeling the pinch.
Martin Moore is the president of Burnaby-based glove manufacturer Watson Gloves, and says around 20 people have been laid off at the factory in the past three months.
He blames a slump in oil prices combined with the low Canadian dollar.
“Oh, it’s a two-headed dragon. That has also been devastating because we contract out six to eight months in advance with our pricing and we land the product at that day’s dollar, so that has also been pretty punishing.”
And he says smaller local businesses are sometimes being cut out as energy giants look to find savings.
“Some of the major oil companies are actually going to the orient themselves to buy commodity goods and bypassing all of the importers and distributors. There is one incident in which a large refinery, which will be unnamed in Fort McMurrary, bought a container of flashlights from China direct.”
Stewart Muir with the resource focused think tank Resourcewokrs says there are more than 200 companies in Metro Vancouver doing business with oil sands companies, from protective clothing like Watson gloves to high tech.
And he says those downstream effects are hitting hard, forcing businesses to diversify as business dries up.
According to the Canadian Association of Petroleum Producers, more than 600 companies B.C. wide are directly in the Alberta oil industry’s supply chain.
Alberta’s decline is also making waves in B.C.’s labour market.
Ken Peacock with the Business Council of B.C. sees it as good news, with the potential to help fill BC’s labour shortage.
He says the latest data shows BC is gaining a net inflow of more than 6,300 people per quarter from other provinces, while Alberta is seeing a sharp decrease to just 1,000 people moving there.
“A lot of that reason is due to Alberta. Fewer British Columbians moving to Alberta and more Albertans moving to British Columbia and that is further underscored by Alberta seeing a sizeable drop in the number of people coming into its province on a net basis.”
He says that means more skilled labour for big B.C. projects like Site C.
But Muir says the shift comes with a downside for resource workers already on the job in B.C.
He says in oil and gas dependent regions like the Northeast drilling is already slowing down, while job hungry workers are pouring across the border.
“Now we have contractors in the Northeast complaining of an “Alberta invasion” as out of work competitors flood into BC where locals believe the Albertans will underbid to get work.”
Muir says local workers are worried they’re being undercut by Albertans who have business advantages like their province’s no-sales tax.