Olds College board members don't see the plunging price of oil as a catastrophe.
In fact, many see it as an opportunity to strengthen the college, the province, and encourage diversification for both.
And although board chair Bob Clark worries the province may cut back on money to post-secondary institutions to cope with falling oil revenues, other board members aren't so concerned.
They say the college has been hit with cutbacks before and managed – using those cutbacks as incentive to create new sources of income.
Those comments were made during an Olds College (OC) board meeting this past week.
Clark noted the amount of money the college gets from the provincial government is significant: 54 per cent of the OC budget. And he pointed out that last year, the province's contribution to post-secondary education declined by about 11 per cent.
Clark noted OC not only weathered that storm, it's on track to record a small surplus this year – in the one to four per cent range.
“That was during a period time when virtually every post-secondary educational institution across the province was hacking programs, was cutting staff, and most of all, complaining tremendously,” Clark said.
“We didn't have to – pardon the expression – axe staff. We were able to add some programs. And our student enrolment went up something like nine per cent.
“That's a great success story itself and people around this table.”
Board member Jim Courtney said although the drop is significant, the college and province have been through that before.
“The economics of $100 a barrel and $65 a barrel is a tragedy in today's economic environment. But the reality is that 15 years ago, 10 years ago, the ratio of costs to revenue was much greater. A barrel of oil was $12. We would have done anything to get $20 a barrel 15 years ago. So it also gives us an opportunity,” he said.
Courtney, Jerry Bouma and others said the oil price plunge is an opening, not a disaster.
“It gives us an opportunity to excel in this environment, not to be downtrodden,” Courtney said.
“I'm not really that concerned about it. It will happen and we will have to change; just like in farming,” said Earl Kinsella. “We get ups and downs all the time, and when you get a down, you have to adapt to it and do something different or whatever and move on. It's not going to be the end of the world.”
Bouma agreed, although he's fairly confident oil prices will rebound.
“Quite frankly, I think there's an over-reaction taking place,” he said. It's not going to stay – it'll be here for a while, but it's not going to stay here.”
Bouma said this might be an opportunity to help Alberta diversify its economy by retraining people for other jobs, like manufacturing agricultural equipment.
“I think there's an opportunity to strike when the need is hot,” he said. “I think we shouldn't be shy or reticent about ‘oh, what's going to happen?' We should say ‘we are part of the future that needs to be built and we've got these assets and this capability' and come out really strong.”
He's confident provincial officials will be looking for ways to diversify the economy too.
Courtney agreed the sliding price of oil may provide an opportunity for the college to increase enrolment, but he's skeptical that it will result in a boom in agricultural manufacturing in Alberta.
“That's a short-term opportunity,” he said.
He noted that wages in Alberta for some manufacturing jobs are far higher than in Saskatchewan or Manitoba, two places where several farm machinery manufacturers have set up and done well.
“Look at their cost of manufacturing; it's going to be awfully tough economically to get them to come here. Because in 24 months, they can build a plant, get it up to speed, instead of paying $25 an hour for a welder they're going to have to pay $45. We've got a very tough environment to attract that,” Courtney said.
He said likely the only way to succeed that way is to innovate and come up with more efficient ways to manufacture.
“If we can expand through innovation, where we can do it more efficiently than anybody else in the world through automation or through a path that doesn't just consume labour (that might work),” Courtney said. “Because anybody in manufacturing over the last 15 years that has looked at Alberta, went, ‘no thanks, I can't do it. I can't compete globally in that environment.'
“(In the oilpatch) they'll pay anything for a heavy duty mechanic. They'll pay anything for any tradesman, for an engineer, for whatever.”
Courtney agreed that while sliding oil prices have hit the oil industry hard, it's not decimated.
“It's knocked down right now. It may be on one knee, but it's not out. It's going to come back,” he said. “So we can't invest billions of dollars into something to retrain somebody when we know that we can't compete on that same scale once it comes back.
“We can do it politically and we can do it for short-term gain and we can do it and pat ourselves on the back but the reality is that if we want to make meaningful change, we have to think of a totally new way of doing it,” he added.
President Tom Thompson says Olds College needs the Alberta government but the government needs the college as well – especially when times are tough, to turn out students the economy needs.
Thompson described Olds College as “a glowing example – of thinking differently.”
“Look at the variation of business models on this campus,” he said.
“You have joint venture agreements going here. You have public/private partnerships going over here. You have design it-finance it-build it over here. You're unique, not only in the provincial context, you're unique in Canada. That's why, over the course of the last five years, 40 countries, countless provinces, countless jurisdictions, have visited here.
“We're blessed with governance of the highest level in the world. That's why you won the world award – because you think at the generative level.
“So I say to you – this province needs Olds College – especially at this time, as they go towards budget 15/16. And the more that they look to Olds College for the types of things that are going on here and the types of things that you have approved, the better off we're going to be in Alberta – agriculture included,” he said.
Bouma agreed the college – and the province – need to be innovative to cope with the slide in oil prices.
“Let's be very clear. Alberta cannot compete as just being another processor in a conventional way,” he said.
“Our competitive edge would be coming built on what we can do in terms of our unique products, our unique agreements, our unique processes. That's where we have to focus our innovation.
“And there's a lot of innovation in the crossover between the energy sector and the health sector. Delivering on population health – both in terms of what we can offer in terms of nutrition ingredients, food products and expertise.”
