Surge in business investment will strengthen economic growth and productivity, CCCE says
(Updated June 8, 2011)
Canada’s business leaders welcome Finance Minister Jim Flaherty’s call for strong private-sector investment to ensure that the Canadian economy continues to grow and create jobs.
“Business investment in new machinery and equipment is the fuel that powers economic growth and boosts productivity,” said The Honourable John Manley, President and Chief Executive Officer of the Canadian Council of Chief Executives (CCCE).
The CCCE is Canada’s premier business association, representing 150 chief executive officers and leading entrepreneurs in all sectors and regions of the country.
Speaking in Toronto on May 31, Minister Flaherty emphasized the importance of increased private-sector capital spending at a time when governments are winding down the stimulus programs they launched during the recent recession. “We need [Canadian companies] to invest – invest in machinery and invest in hiring – to help the economy grow,” the Minister said.
In fact, several recent surveys show an impressive upswing in capital expenditures by Canadian-based businesses.
“For the first time since 2007, all of the three heavy hitters of capital investment are moving in tandem,” said Avery Shenfeld, chief economist of CIBC World Markets Inc., in a March 30 report. “The oil sands, utilities and the manufacturing sector are expected to add significantly to capacity, ensuring that business investment remains a consistent source of support for the domestic economy, not just this year but also in coming years.”
Bill Morris, Managing Director for Canada of Accenture, said he has never seen such high levels of investment by Canadian companies in operations, processes, information technology (IT) and people. “The number of $100-million-plus programs has grown dramatically in all sectors, excluding government. This translates directly into productivity.”
Examples of current and pending capital investments by CCCE member companies include:
- Agrium Inc. is planning a $1.5 billion expansion, with most of the money due to be invested in 2012 and 2013.
- Air Canada is planning in excess of $5.6 billion worth of capital expenditures by the end of the decade, including the purchase of 37 Boeing 787 aircraft. These new planes will enable the airline to lower its carbon emissions while transporting Canadians to an increasing number of international destinations. Air Canada also has purchase options for an additional 23 Boeing 787 aircraft for a further commitment of more than $3 billion.
- ArcelorMittal Dofasco is investing between $700 million and $1 billion in its facilities to increase productivity, product innovation, market reach and global competitiveness. In addition, ArcelorMittal Mines Canada is investing $2.1 billion in a three-year expansion of iron ore operations in Quebec. The expansion will increase production by 70 percent, creating 8,000 jobs during construction and 900 permanent jobs once completed.
- ATCO Group plans $6 billion in investments in the next 36 to 48 months, primarily for infrastructure projects. This is more than in the past five years combined.
- BCE Inc. has stepped up with $9 billion worth of capital expenditures between 2009 and 2011. This includes building a new wireless network, ongoing and significant investments in modern fibre Internet networks and the purchase of 2,000 new vehicles, built in Ontario.
- Bentall Kennedy Group is investing close to $700 million in Canadian real-estate assets this year, on top of $300 million invested in the second half of 2010.
- Best Buy Canada is investing more than $50 million this fiscal year in new and remodeled stores, part of a robust Canadian development agenda for 2011/2012.
- Brookfield Asset Management Inc. is currently investing more than $1.5 billion in projects across Canada, including over $700 million in new hydroelectric and wind power plants as well as upgrades and expansions to electrical transmission lines. The company is also investing $500 million in property developments, including $150 million to upgrade and “green” the iconic First Canadian Place office tower in downtown Toronto. Other projects include natural gas drilling and aggregate quarry expansions in Alberta, and residential developments across the country. In addition, Brookfield has medium-term investment plans of up to a further $5 billion in its various businesses.
- Canfor Corporation is investing $300 million over three years in sawmill improvement projects to increase efficiency and cost-effectiveness. Of that, $145 million will be spent in 2011.
- Canadian Pacific Railway is ramping up capital spending from $700 million in 2010 to more than $1 billion in 2011. The bulk of this money is being spent in Canada on new track, sidings, locomotives, IT and terminals.
- Cenovus Energy Inc. is planning to invest between $925 million and $1.05 billion in oil sands project development, infrastructure and technology enhancements in Alberta in 2011. The company will also invest an equal amount in other oil and gas development projects in Canada this year.
- Clearwater Fine Foods Inc. is close to announcing a significant investment in new production capacity in Atlantic Canada.
- Ganong Bros. Limited, Canada’s oldest candy company, is investing $10 million to expand manufacturing space and install new automated packaging equipment. These improvements will increase efficient capacity and allow the company to meet new demand for contract chocolates that currently are being supplied by a U.S. manufacturer.
- Giant Tiger Stores Limited plans to invest more than $100 million in the next five years adding an additional 50 new locations as well as renovating and expanding many existing locations. This includes a significant investment in technology that will allow Giant Tiger to maintain its low cost of operations and further strengthen its Everyday Low Price positioning.
- GlaxoSmithKline Inc. has announced a new development fund in partnership with MaRS to fast-track the commercialization of research coming from 16 leading academic health sciences centres, hospitals and universities.
- Groupe Aeroplan Inc. is investing more than $20 million a year in technology development in Canada to ensure its continued international success.
- Loblaw Companies Limited will invest approximately $1 billion in capital expenditures in 2011, with approximately 50% going towards IT and supply-chain infrastructure. The other 50% will go towards retail with half of that amount being dedicated to renovations. Beyond 2011, the company expects to continue capital expenditures in the $800-$900 million range per year.
- 3M Canada Company is investing $55 million in infrastructure renewal and improved technology over the next 24 months, an 80% increase over the previous 24-month period.
- Manulife Financial Corporation is a long-term investor in Canada. In 2010 and 2011, the company is investing a combined $617 million in new Canadian oil and gas well developments and related infrastructure plus commitments for the construction of new hydro power plants, all owned by Manulife. In addition, in 2010 Manulife provided new loan commitments of $605 million, private placement commitments totaling $670 million plus equity and mezzanine debt financing of $202 million to a wide variety of businesses in a diverse range of industry sectors.
- Maple Leaf Foods Inc. is investing more than $750 million in strategic capital over the next three years to drive scale and efficiency in its manufacturing and distribution network and establish long-term competitiveness with leading global food companies.
- McCain Foods Limited will invest $200 million over the next four years, much of it in New Brunswick, to upgrade and streamline its IT systems and infrastructure. Over the next five years, the company also plans to spend approximately $200 million to enhance the global competitiveness of its Canadian factories in the face of a strong Canadian dollar.
- Open Text Corporation is in the middle of a $500 million expansion of research and facilities.
- Pfizer Canada Inc. will have invested close to $54 million in capital expenditure projects by the end of 2011. This includes modernizing its headquarters and purchasing new manufacturing equipment.
- PotashCorp is implementing a $7.3 billion, multi-year expansion in Saskatchewan and New Brunswick. Of that amount, $1.6 billion is being spent in 2011.
- Rio Tinto Alcan has approved the first phase of a $1 billion smelter project in Saguenay-Lac-Saint-Jean, Quebec, and an additional $300 million in preparation for the $2.5 billion modernization of the Kitimat smelter in British Columbia. The company is also spending $37 million to modernize its Laterrière smelter in Quebec and is investing more than $200 million in electricity generation. Other Rio Tinto capital projects in Canada include $400 million in Labrador (Iron Ore Company of Canada), $800 million in Quebec (Rio Tinto Iron and Titanium), and further investments in the Diavik Diamond Mine in the Northwest Territories.
- Rogers Communications Inc. intends to invest approximately $2 billion per year over the next few years to upgrade wireless and cable infrastructure, including next-generation LTE wireless technology.
- Suncor Energy Inc. is investing more than $10 billion in its Voyageur Upgrader project to add value in Canada to oil sands production, with a target completion date of 2016. In addition, by 2012 Suncor expects to spend approximately $1.2 billion on full-scale deployment of a made-in-Canada technology to significantly speed oil sands tailings reclamation and the return of mine sites to natural habitat. Overall, Suncor expects capital spending of $6.7 billion this year and between $8 and $9.5 billion per year during the 2013-15 timeframe, mostly in Canada.
- TELUS is investing $1.7 billion in 2011, building on $5.7 billion over the previous three years, to enhance its broadband networks and services. This includes: building Canada’s fastest coast-to-coast HSPA+ wireless network reaching more than 95 per cent of the population; the launch in 2011 of faster dual-cell HSPA+ 4G technology; and the launch in 2012 of a new Long Term Evolution (LTE) 4G+ urban network and service. In addition, TELUS continues to deploy fibre to new home and condominium developments and by the end of 2011 will deploy VDSL2 technology to 2.1 million homes in British Columbia, Alberta and Eastern Quebec that enhances the rollout of innovative high-definition Optik TV and Internet services.
- Tenaris plans to invest more than $125 million in Canada over three years on new manufacturing machinery, technologies, and plant infrastructure to increase productivity and product range.
- TransCanada Corporation has announced plans to invest approximately $22 billion in energy infrastructure projects across North America. Most of these projects are now under construction and are expected to be completed over the next three years.
- Vale Canada Limited is investing $10 billion between now and 2015. This includes $2.8 billion in the Long Harbour Project in Newfoundland and Labrador, generating 2,500 construction jobs and 500 permanent jobs, and $3.4 billion in Vale’s Ontario facilities to make them more efficient and significantly reduce atmospheric emissions.
Founded in 1976, the CCCE is a non-partisan organization that engages in public policy research, consultation and advocacy. Its members lead companies that collectively administer $4.5 trillion in assets, employ more than 1.4 million men and women and are responsible for most of Canada’s private-sector exports, investment and training.