Atlantic Canada’s economy is in dire need of a boost. Is the Ocean Supercluster just what the doctor ordered?
Stephen Dempsey thinks the ocean represents a great opportunity for Atlantic Canada and the businesses that reside here. But they’ve got to step up their game if the opportunity is going to be seized.
“We have everything we need. It’s all around us,” says Dempsey, executive director of Halifax-based Offshore Energy Research Association of Nova Scotia. “But we need to do more in our little region.”
On Feb. 15, the federal government provided a catalyst for Atlantic Canada to do the ‘more’ Dempsey speaks of. That day it announced the five winners of its multi-million-dollar ‘supercluster’ competition. One of the winners was Atlantic Canada’s Ocean Supercluster proposal. Dempsey, and many others working in marine-focused sectors in the region, think the initiative is the spark Atlantic Canada needs to transform its economy. Ottawa has said it will invest up to $950 million in the five superclusters, with the private sector matching the federal contribution dollar-for-dollar for each one.
So, what exactly is a business supercluster? In simple terms it’s a dense area of business activity where related companies, organizations and talent are located close to one another, both competing against, and collaborating with, one another. This drives innovation and economic growth. Hollywood is an example of a supercluster, only entertainment, not the ocean, is the focus in Tinseltown.
Atlantic Canada’s Ocean Supercluster has a huge goal. It wants to build Canada’s ocean economy into “one of the country’s most significant and sustainable value-creating segments,” reads the opening paragraph of its strategy document. It boasts some of the biggest players in the region’s marine sectors as participating partners, companies like Emera Inc., Clearwater Seafoods, Cooke Aquaculture and the Crosbie Group, to name just a few.
What is the economic prize these companies are chasing? The Organization of Economic Development and Co-operation says the global ocean economy is worth at least US$1.5 trillion and makes up 2.5 per cent of the global economy. It forecasts the ocean economy will more than double in size by 2030 as the world, businesses and other organizations tackle global trends such as population growth, increased life expectancy, rising incomes and increased global trade.
The federal government―and the companies partnering on the Ocean Supercluster―are hoping it will increase the size of the ocean economy in Canada. Even though Canada has the world’s longest coastline and fourth largest ocean territory, the ocean economy accounts for a mere one per cent of the national total. The Ocean Supercluster wants to grow Canada’s ocean economy to over $30 billion from $20 billion by 2050.
To achieve that goal, the organization appears to be honing in on developing digital solutions to some of the ocean sector’s major challenges. Its strategy document mentions tackling the digitalization of ocean ecosystem data, autonomous systems to enhance operational performance, digitalization of maritime operations and the integration of ocean data for enhanced prediction and risk characterization.
That verbiage makes it difficult for the average Atlantic Canadian to understand what all the fuss is about. But the initiatives’ players get it. “It’s a big deal for us, the province and the region,” says Blair Wheaton, vice-president of St. John’s-based Rutter Inc.
The company sells radar technology that can detect oil spills, icebergs, unidentified vessels and monitors waves and sea conditions. It has 33 full-time employees and its products are used not only in Canada but Brazil, the Gulf of Mexico, China, Russia, the North Sea and Southeast Asia.
Rutter is also a partner in the Ocean Supercluster, and Wheaton sounds genuinely excited about what it could mean for his company and others like it in the oil and gas services business. With millions of dollars of federal funding on the line, Wheaton says it will encourage more collaboration among companies involved in the ocean economy. Wheaton says the federal cash infusion could allow Rutter to hire more people in research and development (it currently has a 16-person R&D team) and that could help it quicken the pace of developing products and getting them to market. “Instead of companies working on something for five to 10 years to commercialize it, it could take two or three years,” Wheaton says.
This will change the pace of development and shorten up the development cycle.
Dempsey, whose non-profit organization leads research in petroleum exploration, development and production and renewable energy technologies on the marine environment, agrees with Wheaton that the combination of federal dollars that de-risk costly research in unproven technologies and encouraging collaboration will speed up development of those technologies and foster innovation. “This will change the pace of development and shorten up the development cycle,” Dempsey says.
How will the region benefit if the Ocean Supercluster results in game changing technologies being developed? Consider tidal energy as one example. Dempsey says if Nova Scotia could develop 300 megawatts of tidal energy, it would result in $1.7 billion in gross domestic product and create 22,000 full-time jobs in Atlantic Canada. The problem is there are three huge roadblocks standing in the way of commercializing this enormous renewable resource: understanding the environmental impacts of tidal energy; developing specialized marine equipment that can withstand the wear and tear of the ferocious Bay of Fundy tides; and reducing the cost of tidal energy, which is currently very expensive to produce. But if the Ocean Supercluster could develop solutions to those challenges, it will have an enormous impact on the region and economy and make it a world leader in tidal energy development and technology.
How this will all work is still unclear. The Ocean Supercluster interim management team, led by Dalhousie University’s Matt Hebb, was only announced in April. An interim steering group of investors will provide oversight of start-up activity. The five-member steering group has some impressive names on its roster―retired Emera CEO Chris Huskilson, ExxonMobil Canada president Carman Mullins and Clearwater Seafoods co-founder John Risley.
Robert Orr is also on the steering group. Orr lives in Bedford, Nova Scotia and is the CEO and managing partner of one of the Ocean Supercluster’s four main partners, Cuna del Mar. The private equity fund specializes in making investments in environmentally sustainable aquaculture. Orr says the team still must negotiate how much money it will get from the federal government, as Ottawa likely won’t split the $950 million equally among the five superclusters.
It’s a big deal for us, the province and the region
By the fall he expects the supercluster will be accepting applications for projects. “We have more questions than answers right now,” Orr says. “But I’m very excited about what we might be able to accomplish.”
Not everybody is in love with the supercluster concept. Some critics say the initiative is following a model destined for colossal failure, one where research and ideas will be commercialized into winning products and services customers all over the world will want. “Success in the knowledge-based economy is driven by identifying customer needs and finding solutions that meet those needs better than competitors can do,” Jeffrey Crelinsten, president of the Impact Group and senior research fellow at the University of Toronto’s Munk School of Global Affairs, wrote in his op ed ‘Why superclusters may be doomed to failure’ that appeared in the Globe and Mail in Sept. 2017.
Dempsey doesn’t share those concerns. He says commercial activity tends to happen where research is present and prevalent, like what has happened in Waterloo, Ontario where Research in Motion and other companies have made it a high-tech hotbed. If an Ocean Supercluster is going to succeed, Atlantic Canada is the logical place for it to do so. It says more than 75 per cent of Canada’s ocean economy is in Atlantic Canada, ocean-related activities make up 15-20 per cent of the regional economy and ocean industries in the four Atlantic provinces account for more than half of all ocean-related jobs in Canada.
Some of the nation’s leading ocean economy companies are from Atlantic Canada. Some of the world’s best ocean-related research organizations are here, and so are some of its brightest minds. With both the federal and private sectors putting their money where their mouths are to try to turn the region into an Ocean economy superpower, Dempsey doesn’t think it can fail. “[Superclusters] create microcosms for commercial activity. We can do things here that can be real world beaters.”