Are we really stuck with economic decline?

Recent reports on the continuing plant closure and layoffs in the forestry industry and its impact on related business sectors would seem to indicate that the economy and population of northwestern Ontario will continue to decline unless this trend is reversed.

While 2003-04 population statistics for the City of Thunder Bay and region actually show a small net increase, the trend since 1996 has been one of slow but steady decline. Statistics Canada projections for the city and region over the next 10 to 20 years also indicate a continuation of this trend. Given some successes on the economic front, especially in health and education, why do these agencies continue to predict a decline? In this article I will attempt to place these predictions in context and therefore hope to shed some light on what seem to be some murky waters ahead for this region.

Let us first start with trends. A trend by itself does not predict the future, but it is a strong indicator of what would happen if things continue the way they are or have been in the past. They indicate direction and movement that may be difficult to stop or reverse. The recent net growth in population (there were more people actually moving into than leaving Thunder Bay) was a positive sign. However, since then new economic policies in hydro rates and US countervailing duties on lumber, as well as the strong appreciation of the Canadian dollar vis-a-vis the US, have had a substantial negative impact that does not bode well for the future.

The last two points are very important since they place our region's economy and future wellbeing into perspective. In fact, when we look at the potential of this region for job creation, economic growth and therefore the municipalities' ability to maintain services with a steady tax base, we need to look where these jobs are coming from. I believe it is a common understanding that northwestern Ontario is still largely reliant on resource industries (about 40 per cent of jobs are created in the forest-pulp and paper industry, and related support services such as supplies and transportation). Mining provides a much smaller base for jobs, but offers a lot of potential (especially in exploration and related services), given the increasing demands of a resource-hungry world market.

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The rest of the jobs can be lumped together in what one may call service industries (government, management, financial, health care, education, tourism, etc.) with some manufacturing. Intuitively, most people sense that there is a need to diversify our economy and broaden our tax base. One area that naturally comes to mind for further expansion is manufacturing and tourism. Events such as Sept. 11, 2001, the SARS outbreak in Toronto, our historically high Canadian dollar and high fuel costs, have had a negative impact on the tourism industry that has just recently started to turn the corner. Recent announcements for investments in this area show that all levels of government are taking this important part of our economy seriously and continuous support of worthwhile projects will further strengthen our region.

Recent closure and layoff announcements by mills and woodland operations in the region facing untenable wood and electricity costs are symptoms of larger problems that require a concerted effort by all levels of government. The ripple effects of even 100 good paying jobs disappearing are substantial, and over 1,000 have been lost in the last year alone. I believe most of the pessimism from the business community comes from their direct knowledge of such economic forces hitting their bottom lines.

Given the above scenarios, it is reasonable to assume that growth in the health and education sectors, along with that in Information Technology, service and tourism sectors, cannot compensate for the past and future foreseeable losses in the natural resource industries. Unless, that is, some aggressive steps are taken by the various levels of government to address what economists call "structural weaknesses" in the local regional economy. Several organizations are taking up the challenge and doing in-depth research in the critical factors that will allow this region to face up to the new realities of a changing economy, and look for opportunities to renew itself. They include the North Superior Training Board, the Northwestern Ontario Associated Chamber of Commerce, and the Northwestern Ontario Technology Centre.

The current trends may not bode well for us, but I believe in our region's great potential and pioneering spirit. That spirit has brought us the new Regional Hospital, the Northern Ontario School of Medicine, the Aviation Centre of Excellence at Conferderation College, the Advanced Technology Centre at Lakehead University, and many more small but still very important successes.

It is true that many are and will continue to leave our region to pursue their personal goals and seek new opportunities. I also know that many more are willing to come back and enjoy the spectacular way of life that makes our region unique, if only given the chance. Let us then focus on new and innovative ways to create such opportunities by remaining committed and firm in our resolve to make Northwestern Ontario the place to be at.

Frank Pullia is the Principal of Pullia Accounting & Consulting and a former City Councillor in Thunder Bay. He can be reached at [phone] or via e-mail at [e-mail].