Transportation: A Weak Link In NB`s Economic Development?

Report
Transportation:
a weak link in NB's economic development?
Yves Bourgeois, Ph.D.
Director, Urban and community studies institute, UNB
Assistant professor, economics, UNBSJ
1.
2.
What is regional economic development ?
Transportation and RED
1.
2.
3.
…as an economic sector
…as enabling infrastructure
Questions
1
20
1. What is regional development ?
20
20
1.
20
20
Growing the economic pie or
better sharing it ?
2.
60
30

50
Intellectual discipline studying how varying
spatial configurations produce regionally
differentiated outcomes (GDP/income,
jobs/unemployment)
PRAXIS
Belief that by changing these spatial
configurations (labour, capital, formal/informal
institutions) regions can proactively enhance
growth or mitigate negatives (unemployment,
poverty etc)
20
40
THEORY
In economics, we can focus on questions of
production (growth, factor endowments, +) or
distribution (equity, unemployment, poverty, +)
2
Regional economic development (RED) is an intersection between
economics (production is grounded), planning (decisions/history matter)
and geography (all activity is inherently spatial)
Economics
Industr org
Public finance
Trade
Spatial
Planning
RED
Geography
Regional Economic
Community
Physical
Transportation
Political
3
1.1 RED sample of debates
1.
2.
3.
Convergence vs divergence

World flat (Friedman) or spiky (Florida) ?

ex. Geppert et al (2005)  convergence
between EU countries but divergence within
Local buzz vs global pipelines

Locally clustered firms > globally connected?
Why growth concentrating despite ICT

Some cities do better job @ attracting talent

Amenities (Flordia, Glaeser)

Some …better “institutions” (Scott, Storper)

Some have better infrastructure
4
1.2 Sources of economic growth
1.


2.
Labour
More workers increase output (GDP)…
 Natural increases (incentives, subsidized daycare)
 Immigration (laws, int’l gateways, accredit.)
 ** Integration (skills match, transpo, daycare)
…but do not increase general standard of living ($/cap)
Capital



Equipping worker with machine increases output/hr
 productivity gain = growth of GDP and $/capita
Transpo costs moving capital inputs  competitive
Financial capital mediated by space / transpo (VC)
5
3.
Technological change


4.
Trade



relative differences in factor productivity impels
regions to specialize, increasing output/hr, and
offering the opportunity to trade surpluses
…provided transpo costs > gains from D.o.L.
In sum, transportation is the keyhole through which
we move people, goods, services and ideas.
In some case, production factors are substituted…
Fishworkers instead of robots in electronics
 Robots instead of tradespeople in plastics
...with varying impacts on employment and productivity
In other cases transpo costs (time as well as accounting
6
costs) and our competitiveness is undermined.


Better mousetraps/tractors/computers
 productivity (GDP/hr), GDP + per capita income
Proximity to labs (R&D) and especially customers,
suppliers, competitors and consultants
2. Transportation and RED
1.
Transpo and distribution outcomes

Spatial mismatch
 Are jobs accessible to low-income workers?
 Ex. increased disposable income disparities if
commuting costs to job sites are higher
 Unemployment / Underemployment among
low income, immigrants, women

Sprawl



Are road users footing true cost of building
and maintaining hwy/street infrastructure?
If taxpayers subsidize (social > private costs)
 too high pollution for all, residential
segregation etc
Mass, shared transit to improve access
7
2.


Transpo and production outcomes
Transportation as an economic driver
 Moncton as the “Hub City,” SJ “becoming”
Transpo Hub according to TG 2.0 strategy
 Rotterdam port, Amsterdam airport, Denver
Transportation as enabling infrastructure
 Moving resources,
both physical (natural, parts/equipment, semi/finished manufactured goods) and people
(labour, financiers, service providers)
 Moving them according to economic activity
streets, bike lanes, sidewalks for commuters,
streets for bankers, airports for VCs
 Moving them competitively
airport for time-sensitive KIBS, mfg, perishable
trains/ports for long haul, bulk
highways and streets for
 Moving ideas (embedded knowledge)
8
 Intermodality and economies of scope
Air flight patterns,
Aaron Koblin, Google Labs,
Published by BusinessWeek
9
2.1 Transportation as an economic driver


Employment in Transportation industries has decline slightly
over past 20 years across Canada
Transportation-related jobs have been more concentrated in
NB than average, particularly in resource-dependent regions,
but have also been declining faster
National Occupational Classification for Statistics (NOC-S)
1991
1996
2001
2006
2011
Transport and equipment operators [H6-H7]
3.9%
3.9%
3.8%
3.7%
3.7%
New Brunswick
Transport and equipment operators [H6-H7]
CampbelltonMiramichi, New
Brunswick [1310] Transport and equipment operators [H6-H7]
MonctonRichibucto, New
Brunswick [1320] Transport and equipment operators [H6-H7]
4.6%
4.6%
4.8%
4.5%
4.3%
5.1%
5.4%
5.5%
4.3%
4.9%
4.4%
4.3%
4.6%
4.6%
4.0%
3.8%
3.7%
4.1%
4.0%
3.9%
4.1%
4.1%
4.6%
3.1%
3.8%
6.9%
6.5%
5.3%
7.7%
5.9%
Canada
Saint John-St.
Stephen, New
Brunswick [1330] Transport and equipment operators [H6-H7]
FrederictonOromocto, New
Brunswick [1340] Transport and equipment operators [H6-H7]
EdmundstonWoodstock, New
Brunswick [1350] Transport and equipment operators [H6-H7]
10
Shift-share analysis,
NB economic regions, 2006-2011
StatCan LFS and SEPH
Total employed, all industries
Agriculture
NB
Δ
empl NS
0.0 -17.4
6.4 -1.3
Mon-Ric
SJ-SS
Fre-Oro
Woo-Edm
Δ
Δ
Δ
Δ
Δ
empl NS IM RS empl NS IM RS empl NS IM RS empl NS IM RS empl NS IM RS
IM RS
1.7 369.4
-1
Cam-Mir
-6.6 71.2 0.0 -10.3
0.1
101.
9 0.0 1.1
0.1 86.6 0.0 0.4
0.0 67.3 0.0 -1.4
-0.3
0
0.5 -0.1 0.1
0.0
0.9 -0.2 0.1
0.1 1.6 -0.3 0.3
-0.3
2.1 -0.1 -0.5
1.1 1.6 -0.1 1.6
-0.3 1.2 0.0 -0.3
1.1 0.9 0.1 0.9
0.1 1.3 0.1 -0.1
-0.1 42.5 0.0 -7.2
-0.3
2.4 -0.4 -0.3
0.0
0.9 0.0 0.0
Forestry, fishing, mining, quarrying, oil and
gas
0.7
10.1
0.2
0.6
-0.1
4.3 -0.2 -0.1
Utilities
1.1
3.4
0.9
0.6
-0.1
0.7 0.1 -0.2
Construction
7.4
21.8
6.3
3.6
1.3
3.8 0.5 0.6
0.5
5.9 0.7 1.9
0.5 5.6 0.7 1.5
0.2 3.9 0.5 -0.1
0.0
2.6 0.3 -0.5
-1.7
7.1 -1.5 -0.6
0.1
9.3 -1.9 2.2
0.0 9.8 -2.0 1.4
-0.1 3.6 -0.7 0.2
-0.4
8.6 -1.8 -1.7
0.0 13.3 -0.4 0.3
0.0 9.7 -0.3 -0.5
-0.1
6.0 -0.2 -0.8
Manufacturing
-4.5
38.4 -6.5
1.5
Trade
-2.6
59.5 -5.7
-3.8
-0.6 11.1 -0.4 -0.8
-0.1 19.3 -0.6 -1.8
Transportation and warehousing
-2.3
20.9 -3.4
-3.5
-0.2
2.4 0.0 -0.3
-0.1
7.6 0.0 -1.0
-0.1 4.5 0.0 -0.6
-0.1 2.8 0.0 -0.4
-0.3
3.5 0.0 -1.2
17.0 -0.3
-2.8
Transportation and warehousing
Truck transportation
6.6
0.6
-1.5
General freight trucking
3.9 -0.3
-0.2
Specialized freight trucking
2.7 -0.5
0.1
Support activities for road transportation
1.7 -0.2
0.0
Couriers
0.7
0.0
0.1
Warehousing and storage
1.4
0.0
-0.6
Finance, insurance, real estate and leasing
1.2
16.8
0.3
0.4
-0.8
2.8 0.0 -0.9
0.1
5.8 0.0 0.3
0.2 3.8 0.0 0.5
0.3 2.7 0.0 0.6
-0.1
1.7 0.0 -0.2
Professional, scientific and technical
services
1.7
15.0
0.9
-1.3
0.3
1.7 0.2 0.0
0.3
3.8 0.6 0.3
0.1 4.1 0.6 -0.4
0.0 4.4 0.7 -1.0
0.1
0.8 0.1 -0.1
Business, building and other support
services
-4.3
22.5 -5.5
-4.1
-1.2
3.4 -0.2 -1.2
-0.1
7.3 -0.4 -0.7
-0.2 6.6 -0.4 -1.3
-0.2 4.1 -0.2 -0.9
-0.1
1.1 -0.1 -0.1
Educational services
-1.5
28.3 -3.0
-3.0
0.1
4.9 0.0 -0.2
0.0
6.6 0.0 -0.4
-0.3 6.5 0.0 -1.9
0.2 6.7 0.0 0.7
-0.3
3.5 0.0 -1.3
47.7
2.7
-2.7
0.2 11.5 1.3 0.5
0.1 10.9 1.2 -1.1
0.2 7.6 0.9 -0.2
0.2
5.2 0.6 0.2
0.5 0.0 0.6
2.1 0.0 -0.4
Health care and social assistance
5.2
0 12.4 1.4 -2.1
Information, culture and recreation
Accommodation and food services
0.9
-3.1
11.9 0.3
25.9 -4.4
0.3
-5.0
-0.3
-1.1
1.7 0.0 -0.4
5.2 0.1 -1.5
0.0
0.0
4.6 0.0 -0.1
7.3 0.2 -0.8
0.0 3.4 0.0 -0.3
0.0 5.9 0.1 -0.5
0.3 1.8 0.0 0.4
-0.3 5.6 0.1 -1.9
1.2
-0.1
Other services
-1.8
18.1 -2.7
-3.2
-1.5
4.3 0.1 -1.8
-0.1
4.4 0.1 -0.8
0.0 4.0 0.1 -0.2
0.0 3.7 0.1 -0.4
0.1
110.0 0.0
1.7
1.2
-0.8
4.9 0.5 -1.6
0.4
5.4 0.6 1.3
0.3 3.8 0.4 0.3
0.4 7.0 0.7 1.4
0.0
1.7 0.2 -0.3
Public administration
4.7
22.7
3.5

Shift-share analysis is a regional economics tool
to break down what explains employment growth
or decline in a sector




National share: how many jobs would be
created/lost if the industry followed the overall
national employment trend
Industry mix: jobs owing to national industry trend
Regional share: jobs owing to region’s competitive
advantages
Shift-share analysis on previous slide reveals


Transportation jobs contracted in all economic
regions of the province (2006-2011), and this
despite jobs growing within transportation
industries across Canada
The most sizeable job loss was in Greater
Moncton (“Hub City”) followed by SJ
12

There is considerable spread in average hourly
wages between transportation subsectors
(StatCan, SEPH, 2008)









Air traffic support services ($43/hr)
Sea and rail ($36/hr)
Urban mass transit ($33/hr)
Air transportation ($32/hr)
Road transportation support ($25/hr)
Trucking ($23/hr)
Interurbain bus service ($23/hr)
Courrier ($22/hr)
Warehousing ($22/hr).
13
Summary



Not much evidence for emerging SJ “transportation
cluster” and “Hub City” shedding jobs even faster
Silver lining = If NB is shedding jobs in transpo sector,
it is mainly in low-wage trucking and warehousing
Unanswered question is whether job losses owe to
implementing more efficient technologies, which may
help sustain industry,…
…changes in distribution networks (ex box stores,
online sales, etc)
… or declining regional competitive advantages

With 3.7% of Canadian workers (4.3% in NB)
employed in transportation, it is important but can only
do so much as an individual sector to drive growth.
 Opportunities to leverage higher-paying port, rail

However, the bigger task at hand is
understanding how transportation is the critical
infrastructure sustaining the other 96.3% jobs
14
2.2 Transportation as enabling infrastructure


Transportation infrastructure can enable or hinder
the flow of workers, goods, services and ideas
Transportation costs, whether “out-of-pocket” or
opportunity (time) costs, increases total costs to
businesses and undermines competitiveness
15
2.2.1 Moving workers




New Brunswick is inefficient at moving people.
In Moncton, Fredericton and Saint John, 85-90% of
workers go to work by car, compared to Halifax (76%),
Toronto (71%) and Montreal (56%).
NBers have the third highest car ownership rate in
Canada with HH owning 1.55 vehicles on average,
compared to the Canadian average of 1.47, and
following only Alberta (1.87) and Saskatchewan (1.79).
Cost of car ownership not typically factored in CoL
indices. Common front for social justice argued the
motor fuel tax should fall to help low-income earners
afford commuting, especially from rural communities.
16




New Brunswickers put on average 16,118km per vehicle
compared to 15,366km for Canada (Natural Resources Canada,
Canadian vehicle survey 2009).
NBers produce 9.4% more CO2 from private vehicle operation
than the Canadian average (StatCan, Env Accounts & Statistics
Division, 2009). Transpo = 27% GHG, 2/3 road.
40% of Moncton’s downtown surface is parking (Downtown
Moncton inc)
2.8% of Greater Monctonians use public transit, compared to
Canadian average of 11%, Halifax (11.9%), Toronto (22.2%) or
Montreal (32.6%).

Not paying true social costs  skewing
investments towards individual rides

Making shared transportation unattractive
to middle income earners, limiting access
to work (and play) and increasing
commuting costs  participation
17
2.2.2 Moving goods
Exports

of NB’s top 25 exports, top 12 are resources or mfg goods with minimal transform

In Que, 5 of top 9 are high VA (ex. aerospace, electronics, optics, biopharm)
Top 25 exports by HS2 codes (2011)
NB
27 - Mineral Fuels, Mineral Oils, Bituminous Substances and Mineral Waxes
03 - Fish, Crustaceans, Molluscs and Other Aquatic Invertebrates
47 - Pulp of Wood and The Like; Waste and Scrap of Paper or Paperboard
48 - Paper, Paperboard and Articles Made From These Materials
44 - Wood and Articles of Wood (Incl. Wood Charcoal)
31 - Fertilizers
20 - Preparations of Vegetables, Fruit, Nuts or Other Parts of Plants
16 - Meat, Fish and Seafood Preparations
78 - Lead and Articles Thereof
26 - Ores, Slag and Ash
72 - Iron and Steel
07 - Edible Vegetables and Certain Roots and Tubers
95 - Toys, Games, Sporting Goods and Other Goods for Amusement
87 - Motor Vehicles, Trailers, Bicycles, Motorcycles and Other Similar Vehicles
84 - Nuclear Reactors, Boilers, Machinery and Mechanical Appliances
22 - Beverages, Spirits and Vinegar
28 - Inorganic Chemicals and Compounds of Precious Metals and Radioactive Elements
39 - Plastics and Articles Thereof
06 - Live Trees and Other Plants (Incl. Cut Flowers and Ornamental Foliage)
94 - Furniture, and Stuffed Furnishings; Lamps and Illuminated
Signs; Prefabricated Buildings
92 - Musical Instruments
68 - Articles of Stone, Plaster, Cement, Asbestos, Mica or Similar Materials
23 - Residues and Waste from the Food Industries, and Prepared Animal Fodder
85 - Electrical or Electronic Machinery and Equipment
73 - Articles of Iron or Steel
Sub-total
Others
($1000 Cdn)
($1000 Cdn)
Que
10688996.80
648674.80
587780.52
558080.27
367314.44
319912.27
304569.09
171773.61
169829.43
157451.69
101170.14
67710.17
66158.92
64843.54
61688.94
51139.65
47688.53
42560.26
29535.08
23907.19
22611.12
22444.69
21923.69
20133.91
16943.45
14634842.20
182542.34
76 - Aluminum and Articles Thereof
88 - Aircrafts and Spacecrafts
84 - Nuclear Reactors, Boilers, Machinery and Mechanical Appliances
48 - Paper, Paperboard and Articles Made From These Materials
27 - Mineral Fuels, Mineral Oils, Bituminous Substances and Mineral Waxes
85 - Electrical or Electronic Machinery and Equipment
26 - Ores, Slag and Ash
74 - Copper and Articles Thereof
87 - Motor Vehicles, Trailers, Bicycles, Motorcycles and Other Similar Vehicles
39 - Plastics and Articles Thereof
72 - Iron and Steel
02 - Meat and Edible Meat Offal
44 - Wood and Articles of Wood (Incl. Wood Charcoal)
71 - Pearls, Precious Stones or Metals, Coins and Jewellery
90 - Optical, Medical , Photographic, Scientific and Technical Instrumentation
30 - Pharmaceutical Products
47 - Pulp of Wood and The Like; Waste and Scrap of Paper or Paperboard
40 - Rubber and Articles Thereof
94 - Furniture, and Stuffed Furnishings; Lamps and Illuminated
Signs; Prefabricated Buildings
7172960.53
6445340.38
5696133.23
4808008.75
3530309.52
2873929.40
2447381.73
2422253.51
2250096.14
1793827.33
1684099.06
1567309.63
1559449.47
1366686.38
1122658.35
933567.13
907254.99
888524.57
873558.68
28 - Inorganic Chemicals and Compounds of Precious Metals and Radioactive Elements
795438.14
73 - Articles of Iron or Steel
788020.85
12 - Oil Seeds, Oleaginous Fruits, Industrial or Medicinal Plants, Straw and Fodder
617806.76
18 - Cocoa and Cocoa Preparations
535381.44
95 - Toys, Games, Sporting Goods and Other Goods for Amusement
500874.21
38 - Miscellaneous Chemical Products
490137.25
Sub-total
54071007.42
Others
9529084.24
18
On trucks and trains

“You can’t unload a train at a grocery store” -- NB
trucking company owner protesting proposed carbon tax

Perhaps, but do we need trucks for long haul, and
what about intermodality to optimize ?

Trucks have lower terminal costs (loading), more
flexibility in scheduling and routes
Trains are more efficient for large tonnage, using
less fuel (scale, friction, deceleration, idling) and
fewer workers
Trains also cost less in non-market costs
accidents, spills, congestion





Optimal shipping strategy? Varies by industry, by
company, even “on day of the week”
Intermodality
Difficult to ascertain substitutability of modes 19
Example of cost
differentials between
truck and rail
http://www.columbiarivercrossing.org/FileLibrary/Memorandums/FeasibilityofDivertingTruckFreighttoRail.pdf
Rail more efficient if
large tonnage, even
over shorter
distances, although
20
2.2.3 Moving services





We often assume exports are limited to tangible
goods, but increasingly services
Ex. Professional, scientific and technical
services, including engineering in Fredericton
Financial services, such as VC for IT (1hr rule) 
Some NB IT companies have exit strategies
when they ready to scale up to NA/global or need
$1M+ VC
Other polycentric regions (ex. Northern Egland)
have been able to develop external VC networks,
but depend on cheap, well-connected air travel
…serious impediments in NB



$ YYZ-LAX < $ YYZ-YFC
> 1hr
Limited connectivity
21
Global trends
Global Business Strategy and Innovation: A Canadian
Logistics Perspective Highlights and Key Findings

leverage global value chains.

continental logistics strategies

long-term initiatives with dedicated facilities, personnel,
processes and technologies.

Investment in DCs in Canada has increased by
106 percent over the past five years (mainly in Ontario,
Alberta, Quebec and British Columbia).

Small and medium-sized firms are investing in DCs to
better respond to customer mandates and to integrate
further into global value chains.

to invest in logistics network strategies — such as
capability to electronically collaborate with networks of
key suppliers and customers — and supply chain
modelling applications.

Bourgeois (2013) Many NB transpo firms aware but
unable to capture IT and logistics expertise
22
Ten questions/topics for exploration
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
How are transportation companies become logistic co. ?
How are changing trade patterns and technologies altering
distribution activities across key NB sectors ?
Measuring impact of transportation costs on NB industries’
competitiveness
Mode substitutability and intermodality in NB
Not knowing what you don’t know. Light rail vs highway
expansion difficult to debate because outside NB policy realm.
Feasibility of pooling infrastructure (regional airport) or services
(local airport specialization)
Impact of transportation on workforce integration.
Assessing impact of structural, regulatory changes (EI reforms,
land use planning) and energy prices on employment and
commuting patterns
Energy projects (shale gas, oil pipeline) impact on road
building, maintenance, safety
Full social accounting on current transportation investments
and usage (links with air quality, obesity)  transit SROI
23

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