Calgary becoming the next Detroit: A look 10 years later.

[Surrealplaces]

Not sure if anybody remembers this article from 2013. It talks about Calgary becoming the next Detroit. Some of it is typical Globe and Mail stuff, trying to put Calgary in a bad light in any way possible, but some of it was legitimate concerns at that time. Interesting to see how the last 10 years have gone. We went through a harsh couple of years with massive layoffs in O&G, things stabilized and have been on a tear since.

This Canadian city could be the next Detroit

Like the U.S. poster city for decline, much of Calgary’s current growth is built on an industrial base that is at the mercy of fickle consumers

www.theglobeandmail.com

 

[CalgaryTiger]

Not sure if anybody remembers this article from 2013. It talks about Calgary becoming the next Detroit. Some of it is typical Globe and Mail stuff, trying to put Calgary in a bad light in any way possible. Some of it was legitimate concerns at that time. Interesting to see how the last 10 years have gone. We went through a harsh couple of years with massive layoffs in O&G, things stabilized and have been on a tear since.

This Canadian city could be the next Detroit

Like the U.S. poster city for decline, much of Calgary’s current growth is built on an industrial base that is at the mercy of fickle consumers

www.theglobeandmail.com

Credit to Canadian Oil and Gas, they've become leaner personnel wise and thus more agile when it comes to the ups and downs. TMX also seems to be a bit of an equalizer for the price difference, so they should bring more price stability to WCS.

Calgary was just ahead of every other major North American city when it came to office vacancy, and I do think the conversion incentive has done some positive things. The one on 9th and 1St SE is full steam ahead.

 

[Mountain Man]

I'd say both Calgary and Detroit are doing quite well these days!

 

[NWUrbanism]

At the time I remember thinking how silly the comparisons to Detroit were; they largely ignored several of the main reasons the city of Detroit deteriorated (white flight being a big one. It was hard to believe that would ever happen in Calgary). They also ignored that the greater Detroit region was growing/stable and prospering the whole time the city of Detroit was loosing population, which suggested Calgary would likely be just fine since it's much more of a uni-city. The thought that the oil and gas industry would never have a comeback was also quite naive as the same cycle has happened several times before. It was just a question of how long commodity prices would stay low.

 

[Mountain Man]

At the time I remember thinking how silly the comparisons to Detroit were; they largely ignored several of the main reasons the city of Detroit deteriorated (white flight being a big one. It was hard to believe that would ever happen in Calgary). They also ignored that the greater Detroit region was growing/stable and prospering the whole time the city of Detroit was loosing population, which suggested Calgary would likely be just fine since it's much more of a uni-city. The thought that the oil and gas industry would never have a comeback was also quite naive as the same cycle has happened several times before. It was just a question of how long commodity prices would stay low.

There has also been an insane amount of corruption in Detroit government over the years. Calgary is squeaky clean in comparison.

 

[Surrealplaces]

Yeah, I mean a simple comparison would have people draw the conclusion that Calgary being reliant on O&G would end up the same as Detroit which was reliant on auto, but outside of the simple comparison the two have nothing at all in common.

Here are some employment numbers from 2016 to 2024 that shows the changing landscape. We still have a ways to go to get away from reliance on O&G, but it's happening.

Calgary's employed workforce grew by 100K from 2016 -> 2024 going from 699K -> 799K, while oil and gas has shrunk from 56K -> 42K in that same period.

Oil/Gas/Mining 56K -> 42K
Manufacturing from 41K -> 46K
Trade 92K -> 108K
Transportation and Warehousing 45K -> 58K
Finance Insurance Real Estate 42K -> 53K
Technical and Professional scientific 84K -> 100K
Accommodation and food services 34K -> 47K
Educational service 40K -> 54K
Health Care / social assistance 72K -> 89K
Construction 82K -> 60K

There are some other categories that don't match up from 2016, but overall the growth of 100K in the workforce, but the drop of 14K in O&G kind of tells the story. Trending in the right direction.

 

[Surrealplaces]

At the time I remember thinking how silly the comparisons to Detroit were; they largely ignored several of the main reasons the city of Detroit deteriorated (white flight being a big one. It was hard to believe that would ever happen in Calgary). They also ignored that the greater Detroit region was growing/stable and prospering the whole time the city of Detroit was loosing population, which suggested Calgary would likely be just fine since it's much more of a uni-city. The thought that the oil and gas industry would never have a comeback was also quite naive as the same cycle has happened several times before. It was just a question of how long commodity prices would stay low.

There were two main factors for Detroit's drop, and neither really have much, if anything to do with Calgary.
- The auto companies all moved out to the burbs taking the tax dollars and workers with them. They needed to expand manufacturing and Detroit proper didn't have space, plus the taxes were cheaper.
- White flight was a big part of it also, but the catalyst for white flight was the auto makers moving to the burbs. As white people left to live and work in the burbs it fueled more white people leaving. The race riots increased white flight rates, with 173,000 whites leaving in a two year period after the riots.

 

[CalgaryTiger]

Construction 82K -> 60K

Is that a typo? If not, it is remarkable we're building as much as we are.

 

[Surrealplaces]

Is that a typo? If not, it is remarkable we're building as much as we are.

Weirdly enough it doesn't seem to be. Odd considering how many home starts we've seen, but it may be related to bigger projects like airport expansion, ring road, etc..

 

[CalgaryTiger]

Weirdly enough it doesn't seem to be. Odd considering how many home starts we've seen, but it may be related to bigger projects like airport expansion, ring road, etc..

Hmm wondering about our next big projects and if that number will rebound? Green Line, Events Centre, and Arts Commons are what I can think of, the latter two not really being huge employment pulls.

 

[CBBarnett]

At the time I remember thinking how silly the comparisons to Detroit were; they largely ignored several of the main reasons the city of Detroit deteriorated (white flight being a big one. It was hard to believe that would ever happen in Calgary).

The extent in which "white flight" happened is often under-estimated. It's a huge issue when a large portion of a City's population abruptly decides to leave the city in massive numbers (by going only a few kilometres away to a different tax jurisdiction).

They also ignored that the greater Detroit region was growing/stable and prospering the whole time the city of Detroit was loosing population, which suggested Calgary would likely be just fine since it's much more of a uni-city.

This is always a huge missed part in the storyline.

Calgary's model (and more broadly most Canadian cities model) doesn't have anywhere near the fragmentation and inter-jurisdictional competition that exists in the American metro regions, like Detroit. As a result of less fragmentation, you don't ever see areas completely get obliterated by competition, as our urban areas all somewhat cross-subsidize each other as a basic function. This function looks different in different provinces, but is consistent in all parts of Canada - there's very few examples where a single area can decline to the degree Detroit did in isolation of the whole region as a result of lack of resources.

Along these lines, current trends in Calgary are two-fold:

• Increasingly it's the older 1970s - 2000s burbs that are at risk of declining in Calgary, the inner city/older burbs/brand new burbs are seeing substantial investment and growth.
  • This 1970s - 2000s outer burbs areas have become awkward and less competitive - expensive to maintain as properties are now old and outdated, but also never built at the density and with the services and access in mind.
  • Brand new burbs further out have more modern designs, better mixes of amenities/densities, while the inner city offers more options, amenities and access. The 1970s-2000s outer burbs are finding some areas a bit stuck in no-mans-land, for now.
• Related but different is the greenfield v. existing city dynamic. New infrastructure costs in the burbs are starving and distracting resources from being used to maintain and update existing infrastructure, to a degree.

There is tons of problems and different perspectives of the pros/cons with our system, but to the point of the "Detroit = Calgary", Calgary's system won't let whole swathes of the city just drop into terminal decline through starvation of resources, even if some areas attract more investment than others.

 

[darwink]

Is that a typo? If not, it is remarkable we're building as much as we are.

The Statscan sector numbers are less accurate than I think they should be. Look at concerns over Statscan reporting more and more government employment but if you add up all public sector employment it just hasn’t grown nearly as fast as Statscan says.

So grain of salt, etc.

 

[MichaelS]

There were two main factors for Detroit's drop, and neither really have much, if anything to do with Calgary.
- The auto companies all moved out to the burbs taking the tax dollars and workers with them. They needed to expand manufacturing and Detroit proper didn't have space, plus the taxes were cheaper.
- White flight was a big part of it also, but the catalyst for white flight was the auto makers moving to the burbs. As white people left to live and work in the burbs it fueled more white people leaving. The race riots increased white flight rates, with 173,000 whites leaving in a two year period after the riots.

While not building autos, this isn't THAT different from what is happening with industrial developent in our region. The County is booming, Calgary is starting to catch up a bit (just due to sheer demand I think) but there were many years where we barely had any sort of industrial development, compared to what is happening in the much lower cost jurisdiction in the County.

 

[darwink]

Calgary has hollowed out on heavy manufacturing too. Not being able to support water intensive industries is a challenge.

 

[Surrealplaces]

While not building autos, this isn't THAT different from what is happening with industrial developent in our region. The County is booming, Calgary is starting to catch up a bit (just due to sheer demand I think) but there were many years where we barely had any sort of industrial development, compared to what is happening in the much lower cost jurisdiction in the County.

It's not much different here, but also it's something we have been seeing with most cities. Industry moves out to areas with cheaper land, etc.. In Detroit's case the moves were big and over a fairly short period, and also triggered white flight in a big way. Much worse white flight than other cities. I think you could probably make Detroit the dictionary example of white flight, and it was quite severe.