Pondering the fate of the region.

Recent reports on the economy and population of Thunder Bay and indirectly Northwestern Ontario (CIBC Research on Canada's Cities over 100,000; Thunder Bay Ventures Annual Business Confidence Report) and subsequent commentaries in the media, indicate a trend that if continues unabated, would bring the city's population below 100,000 within 10 years.

While 2003-04 population statistics for the city of Thunder Bay 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 and 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 Thunder Bay and 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 in than leaving Thunder Bay) was a positive sign. But since then, new economic policies in hydro rates and American countervailing duties on lumber, as well as the appreciation of the Canadian dollar vis-a-vis the United States greenback, 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 well-being 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 (approx. 40 percent 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, SARS, a 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.

In conclusion, the important forestry, mining and manufacturing sectors are being hurt by high hydro rates, fuel prices, and the Canadian dollar. The ripple effects of even 100 good paying jobs disappearing are substantial. 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 present economic growth cannot compensate for the past and future foreseeable losses in the still very important natural resource sector. 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.

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]