Cenovus-Husky merger takes job cuts to over 23,000

Cenovus-Husky merger takes job cuts to over 23,000

/ News & Interviews / Wednesday, 28 October 2020 14:06

In struggling Calgary, the merger of Cenovus Energy Inc. and Husky Energy Inc. will have a spillover effect into the downtown core of the city, which has been witnessing an escalating number of empty office space for months and years as the economic downturn and the COVID-19 pandemic have battered the oil and gas industry, clearing out commuter traffic and having a devastating effect on business and culture in the city’s core.

The two companies recognized that the merger would result in roughly 2,100 layoffs as Husky joins Cenovus, a $3.8-billion deal that will make Cenovus the third-largest energy company in Canada. However, it’s not clear what jobs, specifically, might be lost.

“The downtown of Calgary is the goose that lays the golden eggs in terms of the operation of our city and these job losses will hurt in a number of different ways,” said Coun. Evan Woolley, whose ward encompasses half of downtown Calgary.

Downtown Calgary, unlike many other large cities, is heavily commercial, with few residential properties. This means, simply, the businesses and organizations downtown rely, in large part, on commuter traffic to put bums in barstools and cash on counters. And with such a large number of people being laid off, it means fewer downtown workers frequenting small businesses such as restaurants and dry cleaners in the city centre.

The vacancy’s effects are clear enough, even just looking around. The Plus 15s, the nearly 16 kilometres of pedestrian walkways with 83 bridges that connect buildings in downtown Calgary, are practically deserted.

“To suggest that the oil and gas industry will fill up that vacancy any time soon, or ever, is a faulty assumption. If this isn’t the wakeup call in the sense of the oil and gas industry is not going to save Calgary, then I don’t know what is,” said Dan Harmsen, partner and senior vice-president at Barclay Street Real Estate.

Harmsen said there’s an excess amount of office space in the city that will take years to absorb, but added the situation has led to an attractive rental market, where premium office space can be had for 20 per cent to 40 per cent cheaper than any other city in North America.

Rachel Notley, the leader of the New Democrats, said that this is a trend that isn’t going to stop, even with COVID recovery or as oil prices rebound.

“As it relates to the downtown of Calgary, just generally, what we need to be doing is looking at ways to diversify the economy and attract other businesses back to Alberta and of course to Calgary,” Notley said. “In terms of job creation, what we need to be understanding then is that we have to look for other eggs to put in our baskets — in fact, we need more baskets, is a better way to put it.”

Nevertheless, the layoffs at Cenovus-Husky aren’t even the first in recent weeks. In fact, TC Energy, the company behind the Coastal GasLink pipeline through northern British Columbia, announced an unspecified number of layoffs some weeks ago, followed by Suncor, which said it would shed 2,000 jobs over the next 18 months.

In total, the energy industry dropped 23,600 Canadian jobs in just three months this spring.

This downsizing in the energy industry has caused the city to lose undreds of millions of dollars because of downtown vacancies affecting property tax return. The lack of commuter traffic affects revenues from parking, or bus tickets and passes, for example. And, obviously, having fewer people in office spaces affects other businesses downtown, whether that’s cultural groups and non-profits or bars and restaurants.

According to Adam Legge, president and CEO of the Business Council of Alberta, the downtown vacancy rate in Calgary is close to 30 per cent.

Still, in the midst of the negativity we see a spark of hope: Suncor announced it would be relocating employees at its branch offices in the Toronto area to Calgary, essentially bringing 700 positions to Calgary.

“Yesterday, Suncor’s leadership spoke with our Downstream employees and let them know that over the course of 2021, we’d be moving our Downstream head office from Mississauga and Oakville to Calgary,” Suncor spokesperson Sneh Seetal said in an email.


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