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Close-Up: Economic Rebound

Gales of laughter broke the calm of what could otherwise have been just another stodgy economic update.

“Have you been drinking over there?” asked the Central Okanagan Economic Commission’s Robert Fine, of the cluster who broke up the quiet by merrily clucking about one of the key elements of his presentation.

“They’re already breaking a sweat and it’s only nine in the morning.”

Fine, who moonlights as a crooner, is a seasoned performer and easily squeezes a couple laughs out of an audience between offering up reams of statistics—even during occasions like the Kelowna Chamber of Commerce’s annual economic update.

In this case, however, he wasn’t looking for giggles, and the cause of mirth wasn’t a joke, although it’s clear where chamber members saw humour.

Wine-fed beef—the three words behind the hubbub—is a concept that may conjure comical images, but there’s more to it than imbibing bovines, Fine was trying to explain.

Using Janice Ravndahl and Darrel Timm of Kelowna’s Sezmu Meats as an example, Fine explained that they came up with a juicy new way to market their cattle. Foodies across Canada took note of the product’s unique taste and quality. And, through their innovation, a new pathway to marketing the Valley to the world was born.

“We’re going to be bringing a few geographic indicators forward, and (wine-fed beef) is a logical starting point for the Okanagan,” he said.

“Geographical indicators” may sound like something your car’s GPS would be more familiar with, but imagine what makes champagne different than your average bottle of bubbly, and you’re almost an expert.

Sparkling wine is popular the world over, but only products produced in the Champagne region of France are allowed to use the coveted moniker, making it the cash cow of the industry.

Closer to home, Salt Spring Island has become synonymous with its lamb and, he explained, wine-fed beef could have a certain cachet that’s Okanagan unique.

“At the core of the program, which runs through all of this is globalizing the business community,” he explained. “We need to get more people into export markets. As the years progress, we will have to connect ourselves outside the Valley, the province and Canada.”

And the most obvious products to shill are the Valley’s agricultural offerings. Historically, farming was a regional mainstay, and even today it’s said to bring in $200 million of annual revenues.

Current conditions, however, are far from robust.

The simple fact the average Washington fruit grower works a 200-acre orchard, compared to the average Okanagan farmer’s 20-acre plot sets the stage for disparity in the global market.

“That doesn’t even account for what’s happening in China,” Fine pointed out. “We’re not going to compete on volume, so we have to grow different things that have value, and need to link that to the culinary industry.”

This new way of value-added farming could be the ingredient to strengthen a flagging industry, in addition to a raft of measures that have slowly, and relatively quietly, been rolled out since 2007 when agriculture officer Keith Duhaime started with the commission.

While it may seem like food and farming is all any Okanaganite talks about these days, it’s not the only trick up Fine’s sleeve and ensuring the Valley carves out a niche in an ever-changing global economy is key to its survival.

Another area commission members have worked tirelessly at is technology innovation, and slowly but surely they’ve made waves.

While businesses like Club Penguin have set the stage, there’s a need for growth and among the most highly lauded tech initiatives the commission has gotten behind, is Metabridge.

It’s the brainchild of Steve Wandler, a successful technology entrepreneur who returned to Kelowna, after having his company acquired by support.com in the Silicon Valley.

The Metabridge initiative was designed to provide direct connection and access to key technology players in California’s Bay Area.

Company leaders from Hewlett Packard, AVG Antivirus and RIM, among others, have attended previous Metabridge events seeking opportunities and connecting with B.C. tech startup companies

It lures key executives to B.C. to a relaxing setting with some of the best startups in the province, allowing them the comport and confidence to make a pitch.

Executives are ready to mentor, coach, advise and introduce these startups to opportunities and since it started in 2008, it’s been a success.

Where are we now

All sorts of plans are in the works to make this city economically vibrant, but the fact of the matter is that it sustained a significant hit in the last couple of years.

Everyone from the foodbank to government agencies have shared statistics that tell the sterile version of how local families have suffered since 2008, when the world went into an economic tailspin.

It was hoped that 2010 would reflect successes and the economic development commission is indeed reporting two per cent economic growth—but most didn’t witness an uptick materialize.

Building permits flattened out and the construction industry continued to atrophy. At its peak, 24 per cent of the local job market was construction. By last year, the number had dwindled to 17 per cent, and now it’s expected to fall further, perhaps meeting the provincial average of 14 per cent.

“The risk of further job losses is related to the end of stimulus funding,” said Fine.

While many were leery of governments digging into their pockets to turn around the economy, there’s no denying it softened the blow to the construction industry. As millions were poured into various infrastructure projects, shovels kept moving and jobs kept safe.

Most the projects that were approved last year, however, should be done by spring which could put upward pressure on the regional unemployment figure, which currently sits at 7.9 per cent.

After all, the new housing market won’t likely arise from the mire as a saviour.

To date, Kelowna has 611 completed unoccupied new homes, 341 of which are condos, which have seen significant price losses in the last couple of years.

Of course, the lack of building isn’t just tough for realtors, developers and construction workers.

Revenues from building line the pockets of local governments, allowing them to functional at an optimum, and across the board they’ve suffered from the recession.

In some U.S. cities, they’ve gone so far as to shut out streetlights to save energy, in Penticton, there have been massive lay-offs.

Kelowna conditions have been tight, said city manager Ron Mattiussi, but not untenable.

“Last year when we did this economic update, the (newspaper) headline said ‘economic hangover’,” said Mattiussi. “This year I think it’s more like dinner time, and we’re getting ready for that first glass of wine, and we’re just not sure if we want it.”

That kind of tentative optimism can be attributed to series of stable local governments.

“Last year was the worst year of revenues that we have had for 10 years,” he said. “But the Kelowna advantage is we don’t rely on growth to pay for opportunities.”

Each year there was a surplus, the city diverted those funds to reserves, so they’d be ready if there was an opportunity to expand on the city’s infrastructure.

It’s also something they’ve been able to do with more ease than other cities as their overhead is lower.

Most cities dedicate close to 70 per cent of their revenues to internal wages, while it’s only 34 per cent locally.

“In the ’80s we decided to contract our work out, so when we need the lawn cut, it’s contracted out to the lowest bidder,” Mattiussi said. “We also just signed a four year deal with our employees, and it’s not outrageous.”

In terms of reducing other expenditures, he explained that Kelowna’s policing costs, although high, are offset by a heavy complement of bylaw officers who do tasks like traffic control.

While the way a bylaw officer helps reduce policing costs may not seem like the key to the economy’s success, Mattiussi explained that it really is.

“The city builds the chassis for business to expand on,” he said.

That activity, he said, is bound to come back soon.

“I always say, as long as there’s someone in Calgary with a dollar in their pocket, there’s someone who wants to live in Kelowna,” he said.

Where we have to go

Albertans, it appears, are the not-so-secret ingredient for economic stability in the Valley.

At a recent Urban Development Institute meeting, president Randy Shire pointed out that their cautious spending habits are the reason why the local housing market hasn’t bounced back in the same way Vancouver’s has.

“They’re our Chinese,” he quipped, referring to the fact that Asian investors have been viewed as the that real estate market’s saviour. Of note, a recent report by Central 1, projected Vancouver’s median real estate value is expected to rise by seven per cent, while the Okanagan’s will atrophy another six per cent this year.

But, there are a few things that could change things around. Somewhat morbidly, Fine said global strife may actually help. Libya’s struggles have already pushed up prices at the pump, and as the value of oil continues to climb, so will profits for our most valuable asset.

“The outlook for later this year is positive, even through there’s a lull at the moment,” he said. “But there is one key word to recovery, and that’s Alberta.”

kmichaels@kelownacapnews.com

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