Surviving the Upturn

I recently attended a lunch meeting with some fellow Alberta tech company CEOs and we were discussing the economy and the diversification in the province.  For those people who do not know much about Alberta (where we are located), it is the home of the Oil sands, the Calgary stampede and the Edmonton Oilers. When the price of oil is high the local economy is booming, with many local companies scaling up and hiring at a fevered pace.  Our discussion naturally wandered to “how to survive a downturn”, which given the current low price of oil, is a natural topic. It seems every time there is a crash in the price of Oil the cries for diversification in the economy go out and there is much hubbub around our companies doing something that isn’t directly related to Oil and Natural gas.

With the price of Oil and gas low it is a great time to diversify our local economy and I mean really diversify not, “we do computer software, for oil and gas”, but companies that are in completely independent fields. I think as a province we have a few historic successes outside of oil and gas, my former company Bioware comes to mind as one.  I think we really need to look at global markets for our companies to have the opportunities to succeed.

But, the big challenge in Alberta, which I think is true of any region which is dominated by a single industry is the survival of the diversified companies in the eventual oil upturn.  When Oil is booming, the profits can be large and the risk can be low, drawing investment at a fevered pace.  That whooshing sound you hear when Oil starts booming is the capital fleeing all those diversified companies and new opportunities and rushing back into the Oil and Gas sector.

So, how do you, a diversified company, survive the upturn, when you start losing investment to the Oil and gas sector and they start raising salaries in the mad race for growth. The cost of living increases as salaries rise and the housing market takes off again, driving down the affordability of housing. I don’t want to propose an answer as I feel this is a fundamental issue we face as a province and I think it needs a very real discussion as opposed to five minutes of conjecture from a video game guy.