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Faith placed in small business: lean, flexible firms expected to lead the way to economic recovery.

While few economists agree on whether or not our economy will grow this year, most agree that any recovery will be led by the small-business sector.

Lakehead University economics professor Witold Jankowski, for example, predicts that small- and medium-sized export-oriented companies will lead the way in an economic recovery.

Benoit Durocher, the Northern Ontario economist with the Royal Bank of Canada in Sudbury, shares this view.

"Exports have been pulling the economy out of the recession," says Durocher. "We have to look further than our own boundaries. We are also seeing shifting (to global markets) through NAFTA, and we see this shift is to more value-added products."

However, Durocher warns that domestic consumption should not be overlooked. He believes that the removal of inter-provincial trade barriers could help stimulate growth in small business through enhanced trade opportunities and competition.

Durocher suggests that the companies positioned to do well in the coming year will be the ones which have already restructured during the recession and in response to change.

"Most job-creation has been from small- and medium-sized businesses while big companies were shedding labor," he adds.

"Small businesses have always been lean and flexible. They always take over when the giants are faltering," comments Ted Mallet, a senior economist with the Canadian Federation of Independent Business.

However, because the economy is changing so rapidly. Mallet advises small businesses to stick with products, services and markets that they are familiar with.

He also recommends that they get their bankers on side in order to respond to new business opportunities that require investment.

Barbara Bekooy, a staff economist with Employment and Immigration Canada in Sudbury, believes that new business opportunities will continue to result from the cost-cutting efforts of Northern Ontario's mining and forestry industries.

Bekooy also suggests that government cost-cutting will create new contracting opportunities.

However, Susan Clark, vice-president with Richardson Greenshields in Toronto, points out that there is also a negative side to government and industry cost-cutting.

"Businesses and governments are trying to cut back on consulting dollars, and that will have a negative impact on business," says Clark.

According to Nuala Beck, the Toronto author of Shifting Gears: Thriving in the New Economy, the four engines that will drive Ontario's future economy are computers and semi-conductors, telecommunications, instrumentation and process controls, and health care.

"Computers and telecommunications can provide a whole new life for Northern Ontario. It helps in bringing northern communities to the world so that it doesn't matter where you are located any more," explains Beck.

Northern Survey Supply of North Bay provides an example of one company which is capitalizing on the application of computer technology. In addition to employing computerized survey equipment, Northern Survey Supply has developed industry-specific software and introduced a new division called Canrespond Computer and Consulting Inc.

Canrespond has landed a contract with the Nipissing Industrial Trade Commission in North Bay to set up a computer training course and lab.

Company co-owner Marty Warkentin admits that he and partner Tom Day gambled by diversifying into the lucrative software market, which Day estimates is worth $4 billion per year in the U.S. alone.

"We are looking at capitalizing on this. If you're not willing to risk anything then why get into business?" he asks.

Beck, meanwhile, believes that demand for instrumentation and process controls will be driven by environmental awareness and by industry's need to cut costs with improved production efficiencies.

Thompson Technology of Sudbury is one company that is taking advantage of the latter opportunity.

Thompson designs and builds dashboard panels for automated equipment used by the construction, mining and pulp and paper industries.

"Our business is definitely expanding and blossoming. Currently we are doing well, and I expect this will be a good year," says president Dan Thompson.

In addition to a planned market expansion across Canada, the company has identified a market need for exhaust purifiers. It produces emission-control purifiers for diesel, liquid propane, gasoline and unleaded gasoline engines.

In the health-care sector, Beck sees emerging opportunities in the supply of pharmaceuticals and diagnostic equipment, as wells as surgical and medical instruments and supplies.

"This is a potentially enormous niche market. The demographics that are driving this is the same as the housing boom," she notes.

Robert Reiter, an audiologist with Thunder Bay Audiology, believes that his business is very well cushioned to withstand any economic downturn.

"We're doing well actually. I would like to think we are almost recession-proof," says Reiter. "We have an aging population that requires rehabilitation, and because there is a recession, that doesn't keep people from losing their hearing."

However, Reiter admits that the company is not doing as well as it would like in the areas of hearing-loss prevention and public education. Thunder Bay Audiology offers seminars and monitoring sessions for the private sector to inform employees about hearing loss.

"On that side we are not doing as well as we would like. We like to think the employers are looking after employees, but it takes a back-burner position during bad times," Reiter suggests.
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Title Annotation:economic development forecasts for Ontario
Author:Brown, Stewart
Publication:Northern Ontario Business
Date:Jan 1, 1993
Words:840
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