Low Oil Price Effects

I have been watching the price of oil for years and have never understood the underlying dynamics to adequately predict prices.  But, I have witnessed the effect around me on other businesses and of course our own bottom line here at e-MCi.

Over the last year, the Fort area has seen closures and bankruptcies in our local area with everything from restaurants to large manufacturing businesses and now that we are hitting new lows for Western Canadian Select (WCS) I expect the trend to continue.

But not all news is bad for the Industrial Heartland as we have also seen companies move into the area from other high cost of operating area’s such as Edmonton, as well as companies centralizing from many locations into a larger centralized facility.  e-MCi has also taken this step by centralizing three of our locations into one office located in Lamont which offers reduced capital expenses and thus lower taxes and operating costs.

For us at e-MCi work comes at times of industry growth in the form of construction, at times of recession in the form of retooling facilities due to relocation or downsizing, and during public sector budget growth.  When times present the status quo we also get work through breakdowns, shutdowns, and maintenance.  Therefore e-MCi is a great bell weather for the economy in general as we see first hand how companies and institutions spend their money.

How are they spending their money now?  Construction is almost zero, shutdowns are short and far between, breakdowns are minimal, and maintenance is deferred.  Although this paints a bleary picture for e-MCi we are doing fine as our client base is diverse and as an example: WCS may be low, but oil-rail transloading is increasing proportionately to the reduced pipeline activity.  Another example is in the agriculture sector as the farmer were hurt substantially due to foul harvest weather, but service and maintenance on grain dryers increased including lighting in area’s not used during good fall weather.

So in conclusion we are making less money, but our operating expenses have been reduced, just as we are doing less projects, but reduced our manpower as required.  This means we are a financially healthy organization and bull on the future of Alberta as we have a diverse economy that is not solely dependant on oil.

Gerry Lamarche