Yukon scratches its phantom recession

Northern Vision development is pressing the pause button. The bulldozers have been halted, undeveloped land holdings will lie fallow and the company will manage its existing holdings until the economy comes back. In recent

Northern Vision development is pressing the pause button.

The bulldozers have been halted, undeveloped land holdings will lie fallow and the company will manage its existing holdings until the economy comes back.

In recent months, economic fears has sent lease rates plummeting across the city.

“We can’t close our eyes to it; if there’s a slowing down in demand for leasing, you’ve got to react to that by trimming the development capabilities of your company,” said newly appointed CEO Rich Thompson.

Since October, Canadians have lost 213,000 jobs. In the United States, 3.6 million jobs have been lost over the past 13 months.

Whitehorse – with almost half of its workers employed directly by the government – has remained relatively insulated from private sectors woes hitting the rest of Canada.

“We’re pretty busy up here,” said Darrell Stone, president of the Yukon Contractor’s Association.

The Yukon is well-prepped to weather the economic storm, said Yukon Premier Dennis Fentie when launching the Yukon’s largest-ever territorial budget.

Yet, lease rates are plummeting.

Yukoners have not lost any money, but they’ve lost confidence. Fears of an oncoming economic downturn will soon stretch into the Yukon. Workers have already begun to tighten their belts.

“(Stimulus) money is not filtering down to the small business community – the ones on Main Street and the moms-and-pops,” said Rick Karp, president of the Whitehorse Chamber of Commerce.

“Government workers are holding onto their pocketbooks,” said Karp.

In the past six months 15 “established” Yukon businesses have shut their doors.

While Main Street businesses languish, chequing accounts are going up “exponentially,” said bank representatives at the Whitehorse Chamber of Commerce economic summit held over the weekend.

The Yukon is being hit by an economic downturn based on the perception that the Yukon is going to be hit by an economic downturn, said Karp.

“Relax, take a deep breath, and if you want to go out to dinner, go out to dinner,” he said.

Of course, increased consumer spending is an cited as the antidote to economic woes.

Most recently, when global markets plunged in the wake of the September 11 attacks, Prime Minister Jean Chretien called on Canadians to think about buying a new house or car.

In southern centres such as Fort McMurray, Alberta, the recession has placed construction on hold. As developers scale back operations, competition has become fierce to snatch up remaining contracts.

“It’s going to be a very competitive environment based on how good a company is. It’s no longer based on just having capacity,” said Richard Campbell with Calgary-based Vista Projects, to the March issue of Alberta Construction magazine.

“A lot of the contracts down south, they’re getting 12 or 13 bidders, where a year ago they got four,” said Stone.

The still-chugging pace of Yukon construction has not been ignored by work-strapped southern contractors – who may soon pose a very real threat to Yukon-based contractors.

Already, the Erik Nielsen Airport terminal expansion has seen bids flow in from non-Yukon contractors.

When Whitehorse opens its tendering process for the $10.7-million public safety building, competitively-priced bids are openly expected from outside companies, said Robert Fendrick, the city’s director of administrative services.

“Is there a fear from local contractors? Of course,” said Stone.

“We definitely want to keep the work completed, as much as possible, by Yukon contracting companies,” he said.

“If we throw (stimulus) money at a big construction company from down south, then that money is leaving Yukon and it’s not really doing anything for us,” said Karp.

Of course, favouring local contractors for government projects is outlawed under the Agreement for Internal Trade, a document ensuring “labour mobility” throughout Canada.

“We can’t really call for protectionism,” said Karp.

But, the government can pay attention to the “wording” of contracts to give Yukon businesses a leg up.

“Things like, ‘this is a northern development, this is northern construction, so show us that you have expertise in northern construction,’” said Karp.

There is “some merit” to asking for companies with northern experience, but “that does not limit it to Yukon companies,” said Fendrick.

Labour mobility is give and take, he said.

Whitehorse contractors have benefited from labour mobility in past projects that have seen travel to projects as far away as Antarctica.

Geography may ultimately be the Yukon’s most potent protectionist measure.

Most Yukon construction contracts are so small that Vancouver- and Calgary-based firms cannot justify the logistics of moving north.

Tourism, another major Yukon industry, may also stand to take a hit.

Just as the Yukon River yields fewer salmon, the Alaska Highway may yield fewer RVs.

Stripped of disposable incomes and RRSPs, the highway’s American summer travellers may opt not to take their Alaska road trip in 2009.

In 2008, visitor numbers were already lagging behind the 2007 season, said Colin MacDonald, a research officer with the Yukon department of tourism.

Lower gas prices and a depreciated Canadian dollar may still offset whatever economic effects are plaguing would-be Yukon travelers.

“We’re cautiously optimistic,” said Karp.

Contact Tristin Hopper at