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Clayoquot Green Economic Opportunities Project
SECTOR ANALYSIS
TECHNOLOGY-BASED ENTERPRISE
Source: Smartdrawphoto
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Overall assessment of potential
Technology-based industry opportunities do exist for the region. Niche markets such as web design appear unfilled. However significant development in this area would require investment in technology and upgrading of skills and education. Interest may exist in e-business among local youth. Call centres also offer some promise based on experiences on other provinces and in other First Nations communities in BC. Most importantly, however, the development of a more technologically advanced economy is key to maintaining existing jobs and businesses and integrating with the larger provincial, national and global economy.
Overview: Current status and trends in the industry
With the advent of the "knowledge economy" and age of computer technology rural development agencies have been searching for ways these trends can help alleviate pressure on natural resources and provide diversification alternatives while also helping to overcome the age-old problem of distance from markets faced by remote settlements. While in theory these ideas hold promise practice has been more difficult. Nevertheless some successes have been achieved in:
- Internet marketing of rural products and services
- Establishment of call centres
- Encouraging new businesses and attracting existing ones capable of serving far away markets over the Internet
- Technology-based manufacturing or technology service (electronics, aeronautics, business machines, telecommunications, scientific equipment)
In BC overall these sectors have been experiencing significant growth. According to British Columbia Statistics, there are over 400 high-technology firms in the Okanagan Valley alone, employing 2,500 - 3,200 people. The major high-technology sectors represented in the Okanagan region are: information technology, engineering services, aerospace, biotechnology, and technology support services. In addition there is an established R&D community. The sector is relatively young with most firms less than seven years old, and predominantly smaller companies.
A major advantage for the technology industry is the availability of the infrastructure and resources to assist in the start-up and growth of businesses. The British Columbia government is assisting the advanced technology industry sector by providing:
- BC Scientific Research and Experimental Tax Credit
- a $100 million Knowledge Development Fund
- a $3 million regional High-Tech Development Program
- a 35% reduction in the small business income tax rate.
E-Business:
Today communications technology today is essential for businesses large and small. The importance of the Internet is emphasized by a business owner formerly located in the Clayoquot region:
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You don't need the population base if you have the infrastructure - cable internet, fibreoptics ... We left three years ago and now 13 people are employed in Port Alberni. We do over $100,000 in business over the Internet, and it could have been done from Tofino.
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The loss of this office supplies business has had a negative impact on all small businesses in the region, which now have to import supplies used on a daily basis. A review of operators in the tourism, arts and value-added sectors also demonstrates significant reliance on the Internet for marketing and sales. The emerging Clayoquot research sector routinely utilizes Internet technology. Finally, organizations in the region responsible for development rely on these services to conduct their business effectively and communicate with one another.
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High-speed Internet access has only recently (2003) been made available in the region, only in Tofino and Ucluelet and at a high cost. Clayoquot Biosphere Trust is spearheading the new Clayoquot Sound - Ma-Mook Broadband Project, which will provide a coordinated community approach to developing and implementing high-speed Internet access in the region. The Project has received finding from The Broadband for Rural and Northern Development Pilot Program to conduct a feasibility study for providing Broadband access to all communities in the region.
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The provincial government of Newfoundland uses the Crafts of Character program (www.craftsofcharacter.com) to promote local products at trade shows and through other marketing tools. This program promotes the distinctive quality of local products to national and international markets, and supports companies in the development of export capability. The program is supported by an online database for wholesale buyers of craft product.
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Research on the opportunities provided to rural areas by e-business points out that proximity to urban markets remains a business advantage. Graphic designers, for example, can email back and forth with their clients but face-to-face contact is still preferred at some points in the transaction. Trust and personal relationships are important success factors. Further, while the Internet allows urban buyers to access rural services it also allows rural residents to access services from outside their communities.
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Nevertheless, the Internet does provide market opportunities for business and, increasingly, customers expect an Internet presence. Further, provided communication infrastructure makes operation possible, some entrepreneurs are likely to be willing to accept the market "disadvantage" and travel requirements/costs in exchange for high quality of life in the region. In some cases the Clayoquot reputation may even provide an unique image and thus a market advantage (e.g. hip surfer designs in the graphics example above).
"In the knowledge-driven, computer-networked economy of the future, what matters most is being a place where people want to live."
- Gov. Locke, State of Washington, 1998
BC has the highest percentage of its population using the Internet of any province in Canada (61% reported use in 2002, 53% in rural areas), this figure rises substantially for the 15-24 age group (91%) and for those with a university degree (88%). The figure falls off to 28% for those 55 and over. Of these users 76% use the Internet for purchasing. Books, music, software and travel are the items purchased most often on-line. In Canada 76% of small and medium-sized businesses are using the Internet, 40% for purchasing. Again BC has the highest use rates, with 44% having their own websites[1].
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- During the Christmas retail season of 2001, there was a 73% increase in goods bought over the Internet from the previous year. By the year 2018 it is expected that 50% of all goods and services will be bought over the Internet.
- In 2002, 90% of all bed and breakfast reservations are made over the Internet.
- It is expected that 50% of all income earned in 2025 will be from networks of "netpreneurs" who create and break project teams around new income opportunities on a continuous basis.
- International Data Corp's "1999 Small Business Survey" found that online businesses grow faster than those without a presence on the Web.
- By 2020, telemedicine will be the norm, allowing the shortage of nurses and other health professionals to be moderated
- Ubiquitous computing (small micro computers and sensors embedded in materials and humans) will be the norm by middle of the next decade.
- VIVO - voice-in, voice-out direct language capabilities will be eliminate the need for typing and multi-language capacities while communicating with people all over the world.
- Rick Smyre, President, Communities of the Future
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Despite this boom in Internet use it is worth noting that the days of "get rich quick" in the IT/e-commerce world appear to be over. The technology has become a way of life for many, Dot-Com companies have laid off employees and the PC market has become competitive, even saturated. But the industry, while levelled off, is here to stay.
There is little available in terms of web design or computer services in the Clayoquot region. With one known web designer in Ucluelet and an increasing need for e-business services additional opportunities exist in this field (others may exist but are not well-publicized).
Call Centres:
Research shows that despite the growth of the Internet, the phone remains a popular method of making inquiries. Answering the phone has become a business of its own, not just for telemarketing but for booking tickets, answering taxpayers' questions and many other functions.
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A 1998 report on the industry in Ontario declared the call centre industry to be "booming", jumping 27% from 1997. There are currently over 3,100 centres in Ontario employing 10 or more staff each, with about 150,000 people working in the industry overall[2]. The report adds that a young, educated workforce is an asset. As the callers first point of contact with a company and its product, customer service is extremely important in this industry. Service quality had been a concern. A study of call systems used by local governments |
Customer Contact
Centre Employment Growing
Source: Network Newfoundland and Labrador
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in England reports that 25% of calls or more are lost! Due to demand for skilled help Centennial College in Scarborough, Ont. recently opened a 48-week program for call centre operators-to-be.
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Companies operating customer contact centres are increasingly attracted to the province of Newfoundland for several reasons, including a skilled labour supply, advanced telecommunications capacity, competitive real estate and operating costs, and, for U.S. firms, a favourable currency exchange rate. Through Network Newfoundland and Labrador, a joint industry-government partnership that offers a one-stop shopping approach for investors, the province continues to pursue opportunities for expansion and diversification in this industry. Labour constitutes up to 70% of a centre's total operating costs and is, therefore, a key decision making factor in establishing operations at a particular location. The province has a good supply of workers with skills suited for customer contact operations. Recent experience has shown that businesses operating in this area experience low labour turnover ratios relative to those elsewhere. Local wage rates are also competitive with most other locations. There are opportunities for training partnerships with local post secondary colleges.
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Technology-based enterprise has been a major push in efforts to rescue struggling east coast fishing communities. The customer contact centre industry in Newfoundland continues to expand rapidly. At peak periods in 2001, over 3,500 people were employed in this industry, up from less than 1,000 in 1997. About 28 centres (minimum 15 seats) currently operate in the province. Of these, 25 are operated by the private sector (accounting for almost 90% of employment). The annual payroll of this industry is estimated at $75 million. The expansion is due to investments by U.S. and Canadian companies as well as the expansion of Newfoundland companies (such as utilities, insurance companies and market research firms) into this industry.
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Tla-o-qui-aht First Nation has expressed an interest in the call centre concept. Other First Nations in BC have also benefited, assisted by a market advantage in the form of a federal purchasing program that gives priority to First Nations businesses. After a 1999 Supreme Court decision (R. vs. Corbiere), for example, mandated that off-reserve or "away-from-home" First Nations residents had rights such as voting in Band elections like those living at home,
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"Corbiere Call Centre": Nationally, DIAND needed to respond to First Nations inquiries concerning the Corbiere case. The Heiltsuk First Nation wished to start a call centre. The two ideas were brought together, technologies harnessed, partnerships forged and the image enhanced of First Nations economic development, partnerships and involvement in this industry.
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a call centre was established to answer questions about the decision and to handle services such as off-reserve voting. The centre contract was awarded to the Heiltsuk First Nation in the remote Central Coast. Sto:lo First Nation and others have also benefited from federal call centre contracts, including those for travel arrangements. The challenge is both finding the market and the appropriate labour force.
High Technology Manufacturing:
The third element of the high tech sector is high tech manufacturing. The success of such an endeavor in the region would be entirely dependent on an individual with the knowledge and desire to establish such an enterprise. Given the workforce characteristics, however, even the presence of such an individual or firm would be unlikely to make such a business viable without a concerted training and labour force development program (dependent on the product and production process). This segment is not considered an appropriate opportunity for this region at this time.
Other:
Research and development (R&D) is often grouped in this category as well. We have included Research and Education as its own sector. Research can lead to innovation and, ultimately, new economic opportunities. Biotechnology R&D, an emerging activity has a range of marine applications that may be appropriate for the region over time. Again, a
period of capacity building would first be required.
Keys to Success:
Nova Scotia's "Knowledge Economy Report Card" identified three key ingredients for success: post-secondary education, access to information technology equipment and services, and telecommunications infrastructure.
The core capacities of economic development in the Knowledge Economy:
- Forward thinking
- The capacity to innovate continuously
- The capacity to identify and utilize cutting-edge technology
- The capacity to become a learning community
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Telecommunications in the Clayoquot region is improving and with the help of the Broadband project should be significantly enhanced. The availability of access to broadband, however, needs to a) ensure it meets the needs of all communities, including the more remote Nuu-chah-nulth settlements, and b) be combined with technical assistance to help small businesses and entrepreneurs become familiar with e-business tools and expedite the rate in which they adapt themselves.
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Education is likely to prove the biggest stumbling block for pursuit of the knowledge-based economy in Clayoquot Sound. In other rural areas the same situation has been found. Labour force issues are the number one barrier[3]. Education levels in the Sound are below provincial average, particularly among the Nuu-chah-nulth population. While this situation appears to be improving a significant amount of labour force training and education will be needed to make the high-tech sector a good fit for this region. The exception is select individuals with these skills and interests. These people should be supported and encouraged as they are instrumental in assisting with raising the "technological literacy" of the region that will be needed for long-term viability.
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We have the best-educated generation of First Nations people ever...They are well trained and equipped to make their way in the new global, knowledge-based economy. The rest of the country, especially the business sector, is starting to wake up to this reality. - Robert Nault
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Despite much promise in technological change the reality is that not only education levels but also being located far from major markets remains a barrier to development that planning must take into account. Recent research suggests that the information economy has increased not decreased the economic gap between urban and rural communities. Nevertheless rural regions must make a concerted effort to keep pace with technological change or get left further behind.
In closing, local economic developers face several key questions related to technology:
- What new technology is emerging?
- How is any new technology important to the future of my region?
- What electronic infrastructure is needed for the community?
- How can we assure universal access?
- How is competence provided for technical knowledge that all citizens need (i.e. email and access to the Internet)?
- How can processes of innovations be created which take advantage of discoveries and innovations in different business arenas?
- What pilot efforts can be created which help cross-fertilize new knowledge that can lead to new income opportunities?
- How is the wealth creation from such efforts tailored to help utilize the marketplace to share wealth instead of increasing the gaps between more wealthy and less wealthy citizens?[4]
Assessment of the sector by SCED Criteria
Environmental criteria: E-business is generally thought to be environmentally benign (situation specific).
Economic criteria: There are a limited number of jobs available in niche services unless a call centre or high-tech manufacturing operation is set up. A call centre may be a possibility on-reserve if there is interest and an associated capacity building strategy. Most importantly technological upgrading is important to the viability of many existing business and the protection of existing jobs. Revenue potential is situation-dependent but generally moderate for small business enterprises with relatively low investment. Investment is high if requirements for telecommunications infrastructure is taken into account (e.g. broadband).
Social criteria: Opportunities for employment for marginalized groups is dependent on interest and training. Technological development can exacerbate inequity if efforts are not made to ensure accessibility for all to telecommunications technology.
First Nations opportunities: Low levels of education in Nuu-chah-nulth communities represent a barrier in this sector. However, given Tla-o-qui-aht interest and successes in other First Nations communities, particularly among Aboriginal youth, the sector offers promise for the future. Telecommunications infrastructure initiatives must include Nuu-chah-nulth communities.
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[1] BC Stats 2001
[2] Saunders, 1998
[3] Polese and Shearmur, 2002
[4] Adapted from the US Knowledge Economy Project
List of key resources and contacts
Contacts:
- Clayoquot Biosphere Trust. Clayoquot Sound - Ma-Mook Broadband Project
- Telus Communications Inc.
- Island Net Inc.
- Ucluelet Video Services Ltd.
- Seaview Communications Inc.
Publications:
- Polese and Shearmur. 2002. The Periphery in the Knowledge Economy
- Saunders, J. 1998. Ontario's Call Centre Industry is Growing up Fast
Internet:
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