The Opportunity

As a the one of the three largest publicly traded construction and industrial services companies in Canada, and the only one focused exclusively on Western Canada, Churchill is particularly well positioned for growth.

The context for Churchill’s strong positioning in a growth market has to do with accelerating industrial development and an increasing need to address aging infrastructure in Western Canada.

Commercial and Institutional Construction

Through its subsidiaries Stuart Olson Dominion and Canem Systems, Churchill is particularly well positioned to participate in growth of private commercial and public institutional buildings construction in Western Canada.

Commercial

Most commercial construction in Western Canada takes place in the region’s major metropolitan areas. Population growth, resource prices, and industry and government capital spending are the main economic drivers.

• Despite the recent recession, Western Canada’s 10.6 million population has shown a compound annual growth rate of 1.7% since 2006, concentrated in metropolitan areas.
• Crude oil prices are expected to remain in excess of $100 per barrel W.T.I in 2011 and 2012, which is favourable for economic growth in Western Canada..

Institutional

Institutional construction in Western Canada is mainly of schools, hospitals, recreation centres, detention centres, government offices and other public buildings.

• The majority of Western Canada public institutional investments were made in the 1950’s, 1960’s and early 1970’s, with the sector being largely neglected during the 1980’s and 1990’s.
• Private and public investment is required to support the construction of new and expanded infrastructure to meet market demands created by an aging and growing population and infrastructure which is nearing the end of its useful life.

Industrial Construction

Through its Industrial Services subsidiaries — Churchill Services Group (consisting of Laird Electric, Laird Constructors, Fuller Austin and Northern Industrial) and Broda Construction — Churchill participates directly in industrial development of oil and gas, mining, and power and utilities infrastructure in Western Canada.

Oil and Gas

Oil sands activity, the largest component of Western Canada’s oil and gas industry, takes place in northern Alberta.

• Alberta ranks second only to Saudi Arabia in global proved oil reserves, with 170 billion barrels (bbls) in the oil sands alone.
• Oil sands produce a form of heavy oil called bitumen. In 2009, Alberta’s bitumen production averaged 1.5 million bbls per day and was continuing to grow, with 2019 production forecast at 3.2 million bbls per day.

Mining

Western Canada has a large and diversified mining sector.

• Saskatchewan produces one-third of the world’s potash and uranium.
• B.C. is home to over 800 mining companies with gross annual revenues in excess of $8 billion.
• Alberta has large deposits of thermal coal used for power production and is Western Canada’s cement manufacturing hub.
• Manitoba mines produce about $1.3 billion of metals and industrial minerals per year.

Power and Utilities

Industrial and population growth are the main drivers of growth in Western Canada’s power and utilities infrastructure.

• Over the next 20 years, the Alberta Electric System Operator (AESO) forecasts an average annual growth rate of 3.3% in Alberta electricity demand, nearly double the Canadian average. AESO has stated that Alberta’s transmission and distribution infrastructure is congested, aging and inefficient, and will not be able to meet the future needs of the province. Major upgrades are planned..
• In B.C., the provincial utility company, BC Hydro, plans to invest about $6 billion to upgrade and expand capital infrastructure by 2014.

Sources: Statistics Canada, United States Energy Information Administration, Saskatchewan Mining Association, Mining Association of B.C., Government of Alberta, Government of Manitoba, AESO, BC Hydro