This our first post since launching our new website this summer. The industry has been picking up and we have been busy with clients and corporate growth. At Reliable Welding, we have a vested interest in our industry and it’s growth. As part of this, we are starting our blog to keep you up-to-date with current projects and to share our perspective on Alberta industry – spanning oil & gas, mining and manufacturing.
The Experience of a Steel Fabricator in Alberta’s International Region
As steel fabricators, like many of our peers, we experienced the 2014 recession head-on. It has now been just over a month since the Alberta Treasury Board and Finance released its Alberta Economic Outlook in which they declared that we are ‘officially’ out of the recession. There is no doubt that there have been some positive indicators including full-time job-growth, a rise in GDP, increased exports and manufacturing sales, a stronger housing marketing among other factors.
For the steel manufacturing industry, the biggest news is that recovery is underway in the oil-and-gas sector. We are still a far cry away from the $107 (US) per barrel that we were doing before the recession, but we are now seeing prices in the range of $45 and $50 per barrel consistently for the past 5-months. After almost three years of devastating layoffs, cuts and closures, the industry now appears to be getting it’s footing again. We need to be cautious, however, as the industry-as-a-whole faces challenges including regulatory stringency, accessibility to new markets for production along with managing supply costs. The industry is doing its best to adapt and become more efficient.
A resurgence of steel fabrication projects in Alberta
We can discuss numbers all day long, but what matters most is the activity we are seeing come right through our own doors. For our business along with others we have spoken with, not only have we noticed a slight increase in drilling projects, we are also seeing a strong demand for Alberta infrastructure projects.
Brand-new complete drilling rig packages are being awarded, which is a clear signal that some stability and strength is coming back. In speaking with contractors, the industry is adapting around the current price of oil with the new price at $50USD per barrel being workable.
However, with everything coming back on-stream, a number of companies that weathered the storm are running into cash flow shortages – especially given the tightness of the banks at this time. For these companies, larger deposits and progress payments from clients could certainly help get more workers on the production line and foster quicker completion. In turn, this could reduce local economic stresses, and help quicken the economic recovery. Additionally, timely and quality job-completion is essential in giving clients the confidence to continue to invest in Alberta’s market.
We may not be the same industry we were before 2014, but we are proving that we can adapt and succeed in the face of incredible challenges.