Economic potential of future growth at the halifax shipyard

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The Province of Nova Scotia has commited up to $304-million in loans for jobs, training and infrastructure renewal related to the $25B Irving Shipbuilding contract.

This presentation outlines the economic potential of future growth at the Halifax Shipyard.

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Economic potential of future growth at the halifax shipyard

  1. 1. Economic Potential of Future Growth at the Halifax Shipyard March 2012 Fred Morley Executive VP and Chief Economist Greater Halifax Partnership http://www.greaterhalifax.com
  2. 2. NATIONAL SHIPBUILDING PROCUREMENT STRATEGY –QUICK FACTS• Ottawa issued a call for bids for the two packages in 2010• $25 Billion in combat vessel construction• $8 Billion of non-combat ships• 5 short-listed shipyards, 3 including Halifax Shipyard submitted bids 2
  3. 3. ECONOMIC IMPACT ANALYSIS• The Greater Halifax Partnership proposed the project early 2011• Why? – To understand the benefits to Nova Scotia and Canada of a winning Halifax bid – Communicate those benefits• Funding – Nova Scotia Economic and Rural Development and Tourism, and GHP 3
  4. 4. ECONOMIC IMPACT ANALYSIS• Three scenarios – winning the combat bid – winning the non-combat bid – not winning either bid• Study timeline …first 19 years of the shipbuilding contract• Consultants – Conference Board of Canada – Jupia Consultants• Project began in late March; final reports in late May 4
  5. 5. DIRECT, INDIRECT AND INDUCED ECONOMIC IMPACTS FOR NOVA SCOTIA, 2012-30 Summary Economic Impact in Nova Scotia by NSPS Project Dollar values shown in $Millions Combat Non-Combat No Contract Annual Average Scenario Scenario Scenario*** Employment* 8,453 3,744 -1,169 Real GDP (basic prices) $661 $278 -$171 Federal Income Taxes $66 $25 -$17.1 Provincial Income Taxes $51 $19 -$13 Corporate Income Taxes $34 $13 -$9.6 HST $115 $44 -$27.3 Personal Income $447 $183 -$118*Direct, indirect and induced in Nova Scotia.**All dollar values except real GDP are shown in current (non-inflation adjusted) dollars. Real GDP is shown in basic prices 2002 dollars).Source: Conference Board of Canada (May 2011)*** No contract scenario covers 2018-30 period where shock occurs at Halifax Shipyard after current contracts end. 5
  6. 6. JOBS – WE WIN CONTRACTS Change in Employment, Combat and Non-Combat Scenarios, Nova Scotia Source: Conference Board of Canada14,00012,00010,000 8,000 6,000 4,000 2,000 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Combat Non-Combat 6
  7. 7. JOBS – WE DON’T WIN A CONTRACT Change in Employment, No Contract Scenario, Nova Scotia Source: Conference Board of Canada 0 -200 -400 -600 -800-1,000-1,200-1,400 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 7
  8. 8. Increase in Total Personal Income in Nova Scotia - Combat Vessel Scenario Source: Conference Board of Canada, Statistics Canada 700 600$ Millions of Current Dollars 500 400 300 200 100 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 8
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  10. 10. HOW BIG IS BIG?Figure 1: Employment by Industry Comparison Universities 11,030 Combat Vessel Project* 8,453 Arts, entertainment and recreation 6,138 Accomodation services 5,217 Plastics and rubber products manufacturing 4,645 Non-Combat Vessel Project* 3,744 Transportation equipment manufacturing 3,262Architectural, engineering and related services 3,021Computer systems design and related services 2,311 Wood product manufacturing 2,031 0 5,000 10,000 15,000* Average annual employment. Source: Conference Board of Canada.Other industry employment: Statistics Canada CANSIM table 281-0024.This table shows only the direct employment in each industry compared to the full employment impact of either of the twoshipbuilding projects. 10
  11. 11. WHERE WILL PEOPLE SPEND 11
  12. 12. POTENTIAL MUNICIPAL TAX BENEFITS• $13 million in local property taxes each year• $250 million in local property taxes over the first 19 years 12
  13. 13. SO WE WON, WHAT’S NEXT?• Build on the marine industry clusterWHAT IS A CLUSTER?“A geographic concentration offirms, suppliers, supportservices, specializedinfrastructure, producers of related Suppliersproducts and specialized institutions thatarise in particular fields in particularlocations.” Firms -Michael Porter SpecificHOW? Industry• Invest in the cluster 13
  14. 14. OTHER GOVERNMENTS ARE INVESTING IN CLUSTERING • Montreal aerospace cluster support through numerous tax incentives and strategic investments helped to build an industry cluster of 40,000 employees • Waterloo - $214 million invested by federal/provincial/municipal governments in Research & Technology Park to provide a supportive base for radical, high- impact research • Alberta ; the government of Alberta has spent over $1 billion on oil sands research and held over nearly $1 billion in bonds for the industry • Auto industry in Ontario – on average, nearly $500 million of public and private money is invested annually in research and development, infrastructure. 14
  15. 15. Total Change in Tax Revenue; Combat, Non-Combat and No Contract Scenarios; Nova Scotia, 2012-2030 Source: Conference Board of Canada$5,063,000,000 $1,903,000,000 -$871,000,000 Combat Non-Combat No Contract 15

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