Engineering economic development (or not). A lament for New Brunswick’s waning engineering cluster

When talking about long term successful economic development in New Brunswick I used to turn to the engineering sector. For me it was an important story. UNB chronically overgraduates too many engineers relative to the demand in the province to the point I was told there are more UNB engineering graduates outside New Brunswick than working here.

But a small number of those engineers decided they didn’t want to leave and set up companies that (at least eventually) did engineering work around the world (ADI, Neil & Gunter, etc.) from New Brunswick, mostly Fredericton.

Now, don’t get me wrong. Most of them had a significant base of work in New Brunswick (think about how upset they were when the Graham government proposed selling NB Power). But this only proves the economic development theory. Firms get really good at what they do in their home market and they take that expertise to the world.

Eventually they all sold out to national and international firms and we now have Stantec, EXP, etc.

The concern voiced by myself and many others at the time was that these firms based elsewhere will have no reason to continue doing export work from New Brunswick unless there is a compelling reason to do it from here.

The data suggests this could be happening. Between 1997 and 2006, the real GDP in New Brunswick from the architectural, engineering and related services sector rose by 77% and from 2006 to 2017 by only 1.5%. Now, there are two challenges with the data: 1) it includes architectural services and 2) most of that GDP is related to what is going on in New Brunswick and not export markets so the 77% run up could have been mostly based on growth in the local market.

However, Statistics Canada does publish data on interprovincial and international trade. It is lagged by a couple of years due to the collection of interprovincial data. As shown in the following chart the level of exports peaked in 2013 at around $155 million and has been slowly declining since. Interestingly, however; the amount of imports has risen significantly leading to a large trade deficit in this area. Most of this increase is due to interprovincial imports and so it certainly looks like the national/international firms are doing work elsewhere (e.g. Calgary) for projects in New Brunswick. We certainly don’t have enough data to say one way or the other. It could just be all the back office, administrative and management functions have moved elsewhere. Regardless of what is going on, we went from a modest trade deficit in this sector in 2013 of -$25 million to -$213 million in 2017.

The silver lining is that GDP from the architectural, engineering and related services sector increased again in 2018 and 2019. That is likely due to the expansion of construction and infrastructure development and we won’t know for some time the impact of imports and exports.

The question I have for UNB and the engineering sector in New Brunswick now is a simple. Where is the next generation of ADIs, Neil & Gunters, etc. and is there anything that can be done from a policy, training/education or infrastructure perspective to make Fredericton/NB an attractive place to stage global engineering activities?