TPT January 2008

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From the AmericaS
January 2008 110 ›
Manufacturing
Largely unnoticed, manufacturers in Ontario
are struggling
The Canadian province of Ontario, with a $500 billion economy
heavily reliant on manufacturing, reported the loss of 44,000 jobs
in that sector through September of last year. The surging value of
a Canadian dollar, which eclipsed the US dollar for the first time in
31 years – together with the projected impact on Canada of slowing
economic growth in the United States – further dims the outlook for
Ontario manufacturing.
Writing in the Toronto Star, business reporter Michael Babad drew
a comparison between Ontario and its sister province Alberta,
citing information supplied by the Conference Board of Canada.
In Ontario, the jobless rate stands at 6.2 per cent and the outlook for
growth in real after-tax household income is 2.5 per cent. In Alberta,
the unemployment rate is 3.6 per cent and real after-tax household
income is forecast to rise about 8 per cent for 2007.
Mr Babad found it curious that – personal tax cuts and their impact
aside – the economy does not attract more attention in Ontario.
Manufacturers said they did not get the debate they had looked for
during the abortive election campaign that would end on October
17 with the main opposition party abandoning its effort to topple
Prime Minister Stephen Harper. “[The economy] wasn’t ignored,”
Mr Babad observed. “It just didn’t have the drawing power of,
say, faith-based schools.” (“Economy Simmers on back burner as
election looms,” October 5).
The Conference Board of Canada projected economic growth in
Ontario of about 2.3 per cent for 2007 and about 2.5 per cent in
2008. Its jobless-rate projection is 6.4 per cent and 6.3 per cent,
respectively. Some Ontarians, at least, are taking alarm. Michael
Gregory, senior economist with BMO Capital Markets, told the Star,
“There’s a steamroller coming down the highway, and it’s going to
roll over some businesses. It’s going to roll over some jobs.”
Ian Howcroft, vice president of the Ontario division of Canadian
Manufacturers & Exporters, sees the problem in terms of stemming
the attrition. “There are still almost one million people directly
employed in manufacturing [in the province],” he told Mr Babad.
“These are well-paid jobs that pay higher than the national or
provincial average, and we have to take actions that would hopefully
protect those and grow those.”
• Unfortunately, with the parliamentary election now a dead letter,
those actions may not be taken. Among the remedies suggested
are: tax relief through lower corporate rates; a better regulatory
system, to cut red tape; and, given the long planning cycle for
the purchase of capital equipment, extension of the accelerated
depreciation program now in place.
Marie-Christine Bernard, associate director of the Conference
Board’s provincial forecast service, agreed that the Ontario economy
would likely remain weak, at least for the time being. Ms Bernard
told the Star, “We’ll have to wait until the Canadian dollar stabilizes
and the US economy experiences stronger growth to maybe see
the Ontario economy improve and have an economic performance
closer to the national average.”
Dorothy Fabian, Features Editor (USA)