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Reducing the dependence on natural resources: not everyone believes that efforts to diversify Northern Ontario's economy are working.

Reducing the dependence on natural resources

Not everyone believes that efforts to diversify Northern Ontario's economy are working

If there is a dominant buzzword for economic growth in Northern Ontario it is diversification.

It has almost become a matter of faith among politicians, businessmen and the general public that economic diversity is the key to escaping the hazards of a resource-based economy.

Northern Development Minister Rene Fontaine believes diversification is working, especially in larger communities. "In the big centres, there is no problem."

The minister also believes that in smaller communities, especially along the main highway corridors, diversification is having an effect. "Good ideas are coming out."

However, his optimism is not shared by everyone. Other officials, such as Judy Skidmore, executive vice-president of Northern Community Advocates for Resource Equity (Northcare), and Don Allan, manager of the Northeastern Ontario Chambers of Commerce, believe efforts to diversify the north's economy are failing and that the area's resource dependence will continue.


Fontaine said the successful diversification of any community depends on the efforts of its residents.

Diversification can be successful if a town and its people go after it aggressively, Fontaine explained. "Where there's successes, that's what they did."

For example, he noted that Timmins is preparing to invest in diversification and is determined to "go after it."

The minister advised neighboring communities not to fight with each other. "They should try to work as a region."

As an example of this co-operation, he pointed to the Tri-Towns of New Liskeard, Haileybury and Cobalt.

As for tourism, which is the most widely referred to aspect of diversification, Fontaine said, "I believe in tourism, but it should be balanced with other industries."

Fontaine predicted that environmental research will become a growth industry in the coming years. "There will be big bucks there."

In Northern Ontario, the main industries will always be resource-based, but diversification will add to the economy, Fontaine explained.

However, he admitted diversification is not so easy in one-industry towns such as Elliot Lake, which has seen a dramatic downturn in uranium mining.

"Resource industries are hurting like hell," he said.

Elliot Lake Mayor George Farkouh prefers to use the word restructuring, rather than diversification.

"I think diversification is a word that is over-used and misunderstood," he said.

Farkouh explained the difference in terminology by noting that Elliot Lake has a resource-based economy which has certain structures built into it, such as highly paid workers. With uranium mining at a standstill and the local economy suffering trauma, restructuring will be a long, drawnout process.

"You must begin the restructuring process, first of all, by accepting the downturn in the main industry," Farkouh said.

Of a workforce of 3,600 in mining, the town will be left with between 1,500 and 1,600 after layoffs between August and next May.

Elliot Lake has targeted retirement living, tourism, light industry and government relocations as potential areas of growth.

However, Farkouh said it will not be possible to match the wages paid by the mining sector, noting that an average miner makes $50,000 per year.

Instead, the goal is to replace the town's economic activity, even if that means more people must be employed. To replace the 3,600 jobs lost in the mining industry would require about 6,000 secondary manufacturing jobs, the mayor estimated.

"You must set your sights high, be realistic and evaluate as you go along."

The one thing the town has going for it is tremendous optimism and tremendous support from the province, Farkouh said.

The town had been preparing for the day mining took its downturn, but the mayor said it happened sooner than expected. "In retrospect, the planning should begin the day the mine shaft is put in."

Farkouh said restructuring is not a logical option for every town when its main resource industry declines, listing potential problems such as insufficient population, poor location or a weak infrastructure.

Restructuring could only be providing false hope for people remaining in a community when there is no future, he said.

The mayor believes a town needs the human resources of leadership and co-operation in all segments of the economy to successfully restructure.

Judy Skidmore, executive vice-president of Northern Community Advocates for Resource Equity (Northcare), believes that Northern Ontario has nothing without its resource-based economy.

"There can be diversity within the resource community, but not away from it," Skidmore said.

The alternative is low-paying service jobs, she warned.

In particular, Skidmore said a resource-based economy cannot be replaced by tourism. "It's impossible."

In fact, the best tourism sector -- angling and hunting -- is largely based on people who make their money in the high-paying resource sector, she noted.

She believes Northern Ontario cannot compete for tourists from Toronto and Montreal with equidistant destinations to the south which are more easily accessible and less expensive to visit.

Skidmore said the prospects for Canadian tourism are not that bright, referring to an American survey of 450 travel agencies which showed that Canada is not even on the list of top travel destinations for the next decade.

"People like us, and people are going to come here, but we can't build our economy on it," she said.

"Realistically, the object of diversifying single-industry towns has been largely ineffective," said Don Allan, manager of the Northeastern Ontario Chambers of Commerce.

The larger centres have remained stable, but smaller ones have suffered lost population and down-sized industries, he said.

However, Allan does think tourism is a viable area for diversification.

The population is moving to increased leisure time, earlier retirement and increased incomes, he explained. "There is a lot of income and employment potential in those areas."

However, he admitted it is difficult to compete with areas outside of Canada, listing more expensive gas prices, a poor exchange rate on the U.S. dollar and the upcoming Goods and Services Tax as discouraging factors to American tourists.

Allan believes Northern Ontario must still depend on natural resources. He said the end of flow-through share financing for exploration has hurt the overall economy.

Government grant programs for small business and tourism operations do not have as great an economic effect as exploration incentives, he said.

"It takes capital to diversify."

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Author:Bickford, Paul
Publication:Northern Ontario Business
Date:Jun 1, 1990
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