The world’s leading potash exporter, Canpotex, has closed its Vancouver office in an ongoing withdrawal from British Columbia.
This decision comes nine months after the company announced that it was abandoning plans to build a $775 million potash export terminal at the Port of Prince Rupert.
“Basically, they’re both tied to the same general phenomenon that demand isn’t booming as it was hoped to,” said Trevor Heaver, professor emeritus at the University of British Columbia’s Sauder School of Business.
While the two events are not directly related, Heaver said they are symptoms of the same market conditions. A predicted lack of demand in global potash markets is likely the reason for cost-saving measures like cancelling planned spending increases or consolidating offices.
“Quite simply, when looking at the markets Canpotex serves, we no longer have a need for this office,” said Natashia Stinka, public relations manager for Canpotex, in an email to Business in Vancouver.
The Vancouver office was one of five Canpotex corporate offices and one of two in Canada. Stinka said the Vancouver office was primarily used for marketing and that its offices closer to its overseas customers will now perform that function.
The closure of the Vancouver office leaves Saskatoon, Saskatchewan, as the only North American location of Canpotex’s remaining four corporate offices. The company’s other international offices are in Shanghai, Tokyo and Singapore.
Canpotex is a private company owned by three potash producers in Saskatchewan: PotashCorp (TSX:POT), Mosaic (NYSE:MOS) and Agrium (TSX:AGU). The largest potash producer, PotashCorp, suffered a 49% drop in sales from 2011 to 2016. Its annual income fell 73% during the same time period.
Heaver said consolidating functions like marketing into the existing corporate structure is a common cost-saving technique. PotashCorp’s performance, however, doesn’t necessarily reflect the state of Canadian potash export markets. Total volumes of potash through the Port of Vancouver have increased 11% since 2011. Growth increased after 2012, but the six-year trend remains low because of large year-over-year losses from 2011 to 2012. Although there have been moderate increases in potash exports being handled through the Vancouver port over the past six years, Heaver said cost-cutting measures have likely been instituted because the company expects decreasing demand.
While this move will affect marketing jobs in the province, Heaver said it is unlikely to spread to other branches of the business, like logistics, where a physical presence in British Columbia is more necessary.
