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The quest for diversification; single-industry communities respond to economic changes.

A majority of the communities in Northern Ontario share more than snow, cold weather and good fishing.

Many of our towns and cities have economies based on a single industry. And when the industry is in trouble, so is the community in which it is located.

One by one, communities such as Atikokan, Ignace, Temagami, Elliot Lake, Kapuskasing and Wawa are facing the devastating effects of layoffs and closures in the mining and forestry sectors.

In each case local officials must scramble to shore up the local economy through economic diversification. The initiatives they undertake may vary, but the approaches that they take are often similar.


When Dofasco Ltd. announced in 1990 that it was writing off its investment in Algoma Steel Ltd., it put in doubt the future of the company's Wawa sinter plant, the foundation of the local economy.

The facility has been granted a short-term lease on life as part of Algoma's restructuring plan. However, there is no guarantee that the plant will be in operation after five years.

"We know that Algoma cannot continue as a 50-year-old facility," admits Bryan Brown, the manager of the Wawa Economic Development Corporation. "We want to take it in new directions and get involved in finding an alternative use for it."

Brown says the plant could continue to produce sinter for the open market, or it could be transformed into a facility for recycling.

"There is marketable sinter for any steel company, not just for Algoma," he says, noting that the local deposit has an estimated 15-year life. "It would open up the entire marketplace for us, but it would take a restructuring of the entire operation.

"It's a whole different way of thinking for the global marketplace."


Brown admits that the uncertainty of Algoma's future has forced Wawa to re-evaluate its approach to economic development.

"Historically, in Wawa people would just sit back and wait for something to come into town. We cannot do that any more," he admits.

However, the community is responding to the challenge.

For example, potential uses for the Algoma plant were among 50 to 60 recommendations generated by eight meetings of about 120 local residents.

Other potential initiatives include attracting research and development ventures and joint-venture projects in the mining and forestry sectors. One such joint-venture operation has already begun setting up shop in the area.

Aqua-North Forest Nurseries, a partnership between Swedish and Ontario companies, is expected to become the largest tree nursery in the province, producing up to 7.5 million black spruce and jack pine seedlings for reforestation.

Brown indicates that Wawa's reputation for cold, snow-filled winters could be utilized to the community's advantage. Winter tourism operations and cold-weather testing facilities are two areas of potential.

Efforts to attract foreign investment are aimed at companies in countries with similarly cold winters. Some success has been realized to date with Russian officials who may tour the area later this year.

Local businesses and residents are also being asked to make a capital investment in the community's future.

Brown says the community is attempting to form a private-venture company which would provide start-up expansion capital for local firms.

In return for their investment, stakeholders in the company would receive a 30-per-cent tax refund and dividends on their investment.

A total of $25,000 must be raised before the community can apply for matching funds from the Ministry of Revenue.


In Dryden a community meeting/workshop attracted 90 residents from the town and the neighboring townships. Those in attendance were asked to identify their concerns, as well as immediate and long-term opportunities for the local economy.

"Basically we asked them, 'Where would you like to be in 10 years, and how do you think we can get there?'" explains Jim Dayman, Dryden's economic development officer.

Dayman admits that many of the ideas generated by the meeting were not new. "But it gave us a feeling about what the community wanted."

Dryden believes its future is more secure than other forestry-dependent communities because of the amount of capital Canadian Pacific Forest Products Ltd. has invested in the local mill.

"The mill is state-of-the-art, and locally there is a belief that it is the flagship for Canadian Pacific," Dayman says.

Dayman concedes that the restructuring of the forestry industry will affect the local economy - especially with regard to woodlands operations - but there is no feeling of crisis in the town that boasts of being "carved from the wilderness."

"We've never had to stare devastation in the face," he says.

The lack of urgency and the stability of the mill have allowed Dryden's economic development officials to pursue several ventures in the tourism and retail sectors.

"We take a scatter-gun approach so that we can hit all other sectors that have been identified as being viable for Dryden," Dayman explains.


In Kapuskasing there is renewed optimism concerning the community's future since Spruce Falls Power and Paper Company Ltd. was taken over by its employees, the community and joint-venture partner Tembec Inc.

Frank Albani, Kapuskasing's economic development officer, says Spruce Falls will be the "foundation that we have to build off of."

However, Albani admits that the town is not out of the woods yet.

"We have to keep in mind that if something happens to the mill, we're in trouble," he says, referring to the general state of the pulp and paper industry. "That is why we need to diversify, so that if something happens to the mill, the economy continues on."

Kapuskasing is exploring several areas of potential, including cold-weather testing, silica mining, harvesting under-utilized species of trees and electrical cogeneration.

Albani admits that the restructuring of the Spruce Falls mill caught many people in the community off guard despite warnings from the mill's previous owners.

"There was a feeling for about five years that Spruce Falls wouldn't be the same, but nobody thought it would be as serious as it was," he recalls.


While Kapuskasing and Wawa are rebuilding with the benefit of each community's original industry, Elliot Lake does not have that luxury.

"In Kapuskasing they're taking the same industry and restructuring. Here, once you take the ore out of the ground it never grows back," says Alex Berthelot, the chairman of the Elliot Lake Economic Development Commission.

Elliot Lake's uranium mining industry will cease to exist by the middle of this decade. It is a reality which has forced local officials to look elsewhere for a foundation for the city's economy.

Blessed with an abundance of available housing, the community has instituted a senior citizens retirement program which aims to attract 4,000 retirees and create many new business opportunities in the areas of health care and recreation.

In addition, Elliot Lake has taken a page from the economic development plans of Sudbury and North Bay by pursuing the province to establish offices in the city. It is now waiting to hear from the government on whether it will follow through on a promise made by the former Liberal government to establish the Ministry of Transportation training centre in the city.

Berthelot says the project is being reviewed after being opposed by the trucking industry in southern Ontario.

Elliot Lake has also made bids to become the site for a new French language community college and a Northern Ontario campus of the Ontario College of Art.

However, Berthelot says little effort is being directed towards the latter two initiatives.

"Once you've presented your case, the rest is beyond your control," he explains. "We try to concentrate our efforts on things we have control over."

Most of the effort is presently being directed at attracting private-sector firms from other parts of the province.

"We try to build a prototype of the type of business that would do well in Elliot Lake, and then we look across the province and see where they are," explains Berthelot.

However, he admits that Elliot Lake's "rough and tumble mining town" image is difficult to overcome. Between $120,000 and $150,000 has been spent on marketing to "educate people about Elliot Lake.

"There is also a perception in business and industry that we have a high-priced workforce because of the high number of unionized workers, but we're getting the word out that we realize these are hard times and we're being realistic about the future," Berthelot says.


Berthelot believes that the experience in Elliot Lake would be invaluable to towns facing a similar dilemma in the future. He thinks the province should compile case studies detailing the experiences of Elliot Lake and similar municipalities to provide a framework for diversification.

"It would provide basic references and a starting point for the communities," he explains. "It would save a lot of the heartache of the initial start-up process.

"Right now, single-industry towns are starting from a crisis situation."

Berthelot believes the lack of guidelines leads to unnecessary duress as well as a great deal of lost time.

"There is a learning curve in getting a strategy developed and getting an economic development office focused and working effectively," he says.
COPYRIGHT 1992 Laurentian Business Publishing, Inc.
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Article Details
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Author:Krejlgaard, Chris
Publication:Northern Ontario Business
Date:Feb 1, 1992
Previous Article:Northern Ontario Business directory '92.
Next Article:Prospectors voice concern over handling of tailings spill.

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