YEGBiz interviewed Edmonton Global’s CEO, Malcolm Bruce, to get his insights on the challenges and opportunities the Edmonton region faces as we head into 2021.
YEGBiz: So, Malcolm, it hasn’t been a year yet, since COVID descended on us. And it certainly wasn’t what I was expecting in its duration and impact, especially on an economic basis or health system strain, let alone individually. So, it has taken us for a loop. My generation has not seen anything like this. And if you go back, maybe the most comparable version of this epidemic was the 1918 Spanish flu. But, we still have to plan our way out. There has to be some clear vision to pursue. As Edmonton Global’s CEO, what do you see as the Edmonton region’s immediate and midterm future as we come out of this pandemic?
Malcolm Bruce: So I’m going to be honest with you, I’m very bullish on it. And I think partially because the fundamentals of what made us a strong region before COVID continue to exist today. So if you think about the youthfulness, you think about the educational rates amongst our folks, you think about the inputs, these are some real competitive advantages for this region vis-a-vis global competitors in agriculture and food, energy, including cleantech, manufacturing, advanced manufacturing, health and life science, all underpinned by advanced technology and the innovation eco-space. Those advantages continue to be valid today, regardless of COVID.
YEGBiz: What do you see as potential new economic engines for the region?
Malcolm Bruce: So there are three that I want to highlight. One is advanced technology and our strength in artificial intelligence. For example, there was a recent announcement from Jobber about how they’ve raised over $60 million for expansion funding; they have over 100,000 customers. Jobber is a classic example of the opportunity in the innovation ecosystem that can come out of the region, because of assets like our research university, Alberta Machine Intelligence Institute, because of our entrepreneurs. When you talk about technology but AI specifically, there are some real opportunities. The other one is in health and life sciences. Dr. Shapiro at the University of Alberta has indicated that he’s cured diabetes in mice and believes that he will crack the code for diabetes in human beings in the next three to five years; that will be groundbreaking. There are three or four others that are like that coming out of our research capacity being commercialized. And what we need to do is make sure that we’re the place within the supply chain that creates the commercialization outcomes from these incredible discoveries. Finally, I think two plays are coming on stream that have transformational opportunities. One is in hydrogen, which we’ll see more of as we move to a low carbon economy. Hydrogen is vital in our region as we are one of the best producers of blue hydrogen in the country.
And as you know, there is a movement afoot to establish what we call the Edmonton metropolitan region node. That node is starting to figure out how to move hydrogen around the ecosystem and build out the stations that will be necessary to meet demand, whether it be transportation, heat, power, or whatever, and then how to grow the supply. But ultimately, we’re looking at the export market, which, you know, is the real prize. I mean, that is magnitudes of scale. And what’s nice about hydrogen is it’s employing the skillsets, technologies, and other assets from the energy sector to deliver for a low carbon economy and this transitional move to a different type of fuel stock. Those are the big ones, health and life science, hydrogen, and AI. And to be clear on the health and life science piece, there are many other things that are coming out of the University of Alberta in some of the other research institutes like oncology. Like Entos’ research and development on vaccines, some of the virus work done here is truly world-class.
YEGBiz: The first couple of the economic engines you mentioned are regionally based; the resources or the apparatus is here. Alberta Health Services serves a population of 4 million people that allows the testing of various medical innovations, therapies or devices, and various other things. So, we have a strong jurisdictional advantage in that area. Let’s talk about blue hydrogen; I haven’t heard of that term before. What is it?
Malcolm Bruce: Essentially, blue hydrogen means that we are carbon neutral. We produce 1000s of grey tons for use in commercial operations. But that means the CO2 is released into the air; blue hydrogen means that we carbon capture. And so we have, we have several carbon capture lines, the new one through the Red Water refinery, as well as the Shell facility. So we can capture the CO2 when we produce hydrogen and therefore make it blue or a lower carbon footprint. And then green is being produced mainly out of water, processing water, but it can be produced in other forms, like solar power.
YEGBiz: Is it hydrogen that you get as the output, or is it some hydrocarbon?
Malcolm Bruce: No, it’s the hydrogen, the H2.
YEGBiz: So those first two are regionally based; you have to be here to do that. Technology, though, is very mobile, and one of the great things that happened, maybe in the last 30 years, have been decisions by companies like Bioware, the gaming firm; their founders made a conscious choice to remain in Edmonton. They didn’t get up and leave and go to Toronto or San Francisco or Vancouver or anything like that. They made a conscious choice to stay right here. And that business remains here. What are some of the things that we can do to grow technology companies here in the region and keep them?
Malcolm Bruce: So I think that’s an excellent question. In Canada, 90% of businesses are deemed to be small and medium-sized. Only 10% are considered to be large. In the US, that number is 50/50. But when you think about where decisions get made, and where activities occur, a lot of that occurs in head offices. Stantec built the tallest Canadian office tower outside of Toronto right here in Edmonton, because they’re headquartered here. PCL is headquartered here, but they do most of their business outside of the province. TELUS has a significant footprint here because of the advantages of what this region provides in terms of affordability. So, in the top six economies in Canada, we are ranked number five. We are the fifth-largest economy in Canada, but only the Edmonton region falls under that affordability marker where less than 30% of your salary goes to housing. When you talk about affordability, you speak about liveability and connectedness with the community. Edmonton has a particular draw to it.
I’m a classic example. I was born in Montreal, and I spent 30 years in the Army. And then, when it came time for me to retire, I could have retired anywhere in the country. But I chose this region because of just all the things that it offers, both for my family and for me. The festivals, the river valley, the proximity to a series of outdoor activities, and I just like the people. And so I think guys like Sam Pillar of Jobber or Corey Janssen of AltaML, and Bob Gomes, the former CEO of Stantec, they’re here because of what this region offers. And I think we need to continue to promote that within our networks. And when we’re outside of our area, when a tech company goes down to silicon valley, why don’t they look at establishing a footprint here? The talent is here, the affordability is here, and the lifestyle is here. So I think that’s a significant advantage. Of course, the other one is we do need to make sure that we’re being competitive. And I mean competitive in terms of our offering to bring a potential investor in from when they arrive at the airport to when they’ve made their final investment decision to the aftercare that we provide to them. How do we help facilitate their process through to establishing a business here? You know, how do we connect them to the network, so they feel like they’re part of a greater community? These are the kinds of things that we can all collectively do together.
YEGBiz: So when we come out of this pandemic, and who knows what that’s going be, it’s January right now. And you know, as we start to make our way out of this, what are some of the things that we could perhaps do from an investment perspective? Like, is there a role for government to kick start some of these engines? And if so, how would they do it? Jonathan Schaefer (former Dean of Science, UoA) said this is one reason we’ve got such a boisterous artificial intelligence community because of the research being done at the university; world-class research. And so if we’re going to make those kind of investments from a public fund, where would those kinds of investments be made to get these three engines off to a good start?
Malcolm Bruce: So let’s use a historical example. The oil sands are a classic one. In the 1970s, there was a conscious effort to invest public dollars to get the technology into private businesses’ hands. And what happened? We had 40 years of incredible private sector growth in that particular industry because of a small investment from public dollars. So I think there’s a place for public dollars to be invested upfront. Alberta innovates an excellent example of how government can help small companies, maybe a $10,000 investment, perhaps a $50,000 investment. But if you look at the number of companies that Alberta Innovates have touched, it’s pretty significant. So I think the initial touchpoints are essential and understanding what an initial investment will do. But there’s also how we create the conditions so companies can access capital, so Alberta Enterprise Corporation is responsible for generating partnerships with venture capital. Well, the renewal and the recapitalization of AEC’s initial $175 million, we all want more, is still going to help us continue to see venture capital available in our ecosystem. Those are all monetary pieces, but it is also the nonmonetary pieces, like how do we align regulations? How do we look at things that will create efficiencies in the system? I’ll give you one example: the provincial government is looking at economic development zones, where you align industry geographically in an area. So think of the Edmonton metropolitan region, and then you try and create alignment of a series of policies and incentives and everything. So that it’s a nice package, you put a circle around that geography, you take it to an international market and say, hey, look at the Edmonton metropolitan region’s special economic zone. And we have things like the free trade component, and we’ve got incentives, we’ve got the heavy industrial heartland. These are all conversations we are engaged in right now. And we’re working as a collective. All the municipalities, all our partners like EIA, AIHA, and every acronym in the book, are all sitting at the table, figuring out how we create this energy and momentum around something that international markets understand and want to participate in.
YEGBiz: So there’s a lot of potential that is waiting to be tapped. And, and we see a lot of activity in each of these things. And I think what you’re saying is that it just needs to be brought together and given some structure and given some extra energy, love and care from the government, and perhaps some private entities. So if that potential is here, what are some of the challenges that the region faces in realizing that potential in the next five years?
Malcolm Bruce: Patience, and I say that with no tongue in cheek. As you know, investment decisions are not something that are made quickly. For example, Polykar decided in 2019 to build a $40 million facility that will create 40 jobs. They will start construction on that facility this year. So the investment decision was in 2019, but construction starts in 2021. So, I think people need to understand that some of these processes take a long time to unfold. The hydrogen play will be over a decade; it won’t be immediate. Logistics plays will be longer. And these things take time to generate and get going. But, growth opportunities are also there with small companies. These are some of the best ways because the organic growth that occurs like a Jobber or an AltaML or Stantec or a PCL. These are great opportunities because they’re local, and they’re expanding because they see the demand. When it comes to Edmonton Global, I think people don’t recognize the incredible leadership that it took to create the entity. It’s 15 municipalities who said we can’t compete as local brands anymore because we’re getting crushed globally. Nobody cares about Beaumont as an entity on a global market stage. But there’s a recognition that when you bring the region’s power together as a unified package containing all the regional assets. So, the incubators that would do the industrial heartland in the northeast, the massive manufacturing parks in the south into the West, and the core city with an excellent airport that’s got international flights, and that is what resonates with global investment. So the fact that you had 15 mayor’s stand up and say, We want to do this, and by the way, we don’t know how to do it. So we want you to go and get a professional board of business leaders to drive these outcomes. So, we’ll be a shareholder group, but the strategic direction and outcomes is the responsibility of the board. Our board is very strong. It has academics on it, several business leaders from the innovation ecosystem right through to large commercial. So the board is what’s driving the outcome. And we want to make sure that we’re driving at the speed of business.
YEGBiz: Final question. We have explored some of our hidden assets, some of the burgeoning industries that we can grow in the region. What would be a question that we are not asking right now that we should be asking? What would you think is not getting as much attention as it deserves but could be a game-changer for the region economically?
Malcolm Bruce: So I’m going to answer in two parts. And the first one is from an international lens; we need to recognize the fact that our competition is not Beaumont or Calgary. Our competition is Metro Denver, Kuala Lampur, and Los Angeles. We are competing globally for dollars and we get so mired down, and we often lose sight of who our true competition is. So I would say to you, that’s an important piece that needs to be remembered is that we’re not competing against local competition. We’re competing against these other countries. An example I could use is agriculture. 35% of the best agricultural land in Alberta’s province is in the Edmonton metropolitan region, but we only represent 3.5% of the land area. 95% of everything we produce on the agricultural front, we ship out unrefined. The opportunity is incredible. We have 1.7 million acres under agriculture. The Dutch have 4.4 million. They make about $150 billion a year on their 4.4 million acres. We are making, conservatively, about $8 billion a year on our land. So the opportunity to take what we have now, like agriculture and food production, and grow it is tremendous. We need to create the value-add conditions, so we need to think bigger. We need to think at scale. We have to think as global players.
YEGBiz: Malcolm Bruce, thank you very much.
