Northern Economist 2.0

Sunday, 12 March 2017

Economic News Around the North: March 12th Edition


Here are some of the items that caught my interest this week in terms of some economic significance for northern Ontario as well as more general interest.  A fair number of stories having to do with mining and the growing feeling that there is finally a resurgence in the mining sector.  A story in this morning's Thunder Bay Chronicle Journal also mentioned that the Hemlo mine may have more life in it.   However, it is important to separate this from the hype regarding the Ring of Fire which faces a number of other obstacles (see my previous post).  As The Economist story referenced below noted: "The potential of “green” metals and minerals, which along with copper and cobalt include nickel, lithium and graphite, is adding to renewed excitement about investing in mining firms as they emerge from the wreckage of a $1trn splurge of over-investment during the China-led commodities supercycle, which began in the early 2000s. The most bullish argue that clean energy could be an even bigger source of demand than China has been in the past 15 years or so."


In other news, like Thunder Bay, Sudbury is also going through debate and discussion on a new arena and like iterations of the debate in Thunder Bay, location is an issue.  One view sees a new arena in the downtown area on the site of the current arena whereas another view wants it further afield.  Interesting point is the proposed price tag which comes in at $80 million dollars (plus another $20 million for land) which is  below what estimates ($114 million) for a new facility in Thunder Bay come in at. Sudbury is apparently also getting a new casino.

Casino Operator will focus on Sudbury in May. Sudbury.com. March 11th, 2017.

It also turns out there is a bit of contention over OPG jobs which have been moved out of North Bay and partly to Timmins and Cornwall, Ontario.  Jobs are a scarce commodity in the north and the broader public sector has become a pillar of most communities.  When it comes to employment, I suppose the public sector giveth and the public sector taketh away.  
20 OPG jobs coming to Timmins. TimminsToday. March 6th, 2017.
While North Bay is unhappy with the OPG development, it can take consolation in new dealings with Russia.  I would imagine this will provide opportunities for travel.

Invest North Bay signs agreement with Russian investment group. Northern Ontario Business. March 8th, 2017.

And for those of you waiting for what will happen to redevelop HMV properties being vacated in the north, this item.


Thunder Bay is apparently not getting one yet.  However, residents of Thunder Bay can take some solace in its new transit development courtesy of The Beaverton and more seriously the proposed infrastructure spending on its recreational facilities at local schools.  Regarding the proposed infrastructure spending on track and field facilities, a student is quoted as saying: "It's an opportunity to play on a field like to play on a field like the people down in southern Ontario get to play (on)." I suppose we can all regard this development as helping to level the playing field with respect to southern Ontario at least with respect to sports, if not the use of the English language. However, it may be a long-term investment in health via exercise as other stories suggest the North may still not be a very healthy place relative to southern Ontario. See for example: Grim Data Emerging. The Chronicle Journal. March 12th, 2017. This story did not provide a regional breakdown on snowmobile deaths but the gender breakdown shows males are more likely to die in snowmobile accidents.  On a per capita basis, there are probably more deaths in the north.  In the week of February 22nd, there were five fatalities - one in Oro-Medonte, one in Thorton, two in Nipigon and one in Lindsay, Ontario.

Have a great week.
 

Friday, 10 March 2017

The Wall


Thunder Bay is a relatively young city by historical standards and springing into life on the resource frontier and yearning for acceptance into the big leagues, it has always had a conflicted relationship with its architectural past.  Thunder Bay seems to equate growth and development with being new and something new is always assumed to be better except of course when it comes to its politicians as the longevity of its political representation often illustrates.  A great deal of Thunder Bay’s architectural heritage has been lost over the decades and invariably the arguments for tearing it down involve bringing in something new and supposedly cheaper. 

The latest case involves the controversy over “The Wall”.  Whereas Donald Trump’s “Wall” and the “The Wall” from Game of Thrones are both designed to keep people out, in Thunder Bay’s case, the wall along High Street was designed to keep things in place – it is a retaining wall.  Looking at it, one might think it is a remnant built in medieval times and anchored a fortress of the Knights Templar but it was built in the 1940s along a section of High Street –once one of Port Arthur’s most exclusive neighborhoods.  

 

Now, the wall is in need of repair and the majority of Thunder Bay city council has opted to replace it with a pre-cast concrete wall at a proposed cost of $2.4 million.  My guess is that members of City council probably think this is a reasonable compromise.  After all, it will still resemble an old wall and it will be new! Apparently, the members of the local Brick and Allied Craft Union who might be deemed to have some expertise with respect to bricks, stones and walls have suggested that the wall can be repaired and more cheaply than the $2.4 million earmarked for the replacement.

The attitude of City Council is probably best summarized by Mayor Hobbs, who stated in a letter to the editor that: “Historic Hadrian’s Wall is just a pile of crumbled stones now.  What is modern today and not satisfactory to some will one day be historic.  Roll with it folks.”  Needless to say, the remark succinctly reflects the attitude that has been responsible for the razing of large sections of our history.  And to be fair, it is an attitude that exists in  other parts of urban Canada.  Downtown Toronto has seen large swaths of its past similarly demolished because despite its size and self perceived sense of grandeur and sophistication, Toronto is really just a large version of Thunder Bay.

We are a young city and simply disposing of everything after 50 or 100 years means that in the end our city will always look like it has just been put together.  Perhaps this is what the vast majority of people in Thunder Bay prefer because they do not feel that their past is as glamorous as that of Athens, Rome, Paris or London.  Always having something new and shiny may give you something to boast about in the short run but it is short sighted and reflects a people who are fundamentally insecure about who and what they are.  True, we cannot keep everything but we should at least make more of an effort to give the past a fighting chance.

Tuesday, 7 March 2017

The Ring of Fire: Waiting for Ignition


There was an exchange in Ontario’s Legislature yesterday between MPP Norm Miller and Minister of Northern Development & Mines Bill Mauro regarding whether or not the government would “finally take a leadership role that will make the Ring of Fire a reality in Ontario?”  The minister responded that mineral exploration activity in Ontario was climbing and progress was being made and more specifically asserted that: “there are three other mines under construction in the province. But they want to spend their time focusing on one. There’s one not too far from my home community of Thunder Bay called the New Gold project. Speaker, right now it’s under construction and 600 people are working on a construction site. When that mine is open for the next 10, 20 or 30 years of its life, there are going to be 450 people working in that mine.”

My belief is that any full-blown development of the Ring of Fire is many years away given the ongoing negotiations with First Nations, the immense cost of transportation infrastructure to access the Ring of Fire as well as the state of resource and commodity markets.  However, it is worth examining whether there has been some progress in northern Ontario’s resource sector particularly when it comes to employment generation.  Figures 1 and 2 present employment in northern Ontario’s resource extraction sector as measured by Statistics Canada series  v91415810 (Northeast) and v91415829 (Northwest) on employment in Forestry, Fishing, Mining, Quarrying, Oil and Gas presented monthly from 3rd month 2001 to 1st month 2017.  

 

The results in Figure 1 show that while there is some substantial fluctuation in resource extraction over time with some large upswings, when a linear trend is fitted to the data the long-term performance is quite flat.  Indeed, average monthly employment was 21,500 in 2001 and 21,867 in 2016 – actually a 1.7 percent increase.   

 

Figure 2 is more interesting because it separates the employment data up into northeast and northwest Ontario.  While the northeast has trended up over time, the northwest has trended down.  Average monthly resource extraction employment in the northeast was 12,470 in 2001 and 17,892 in 2016 – an increase of average monthly employment over time of about 44 percent.  Meanwhile, the northwest has seen average monthly employment in resource extraction fall from 9,030 in 2001 to 3,975 in 2016 – a decline of 56 percent. 

This is a remarkable difference in performance and likely represents the long-term impact of the forest sector crisis on the northwest – which was much more forestry intensive than the northeast – as well as the relative success of mining in the northeast relative to the northwest.  While the northwest is seeing mining activity, it has not yet been on a sufficiently large enough scale to be the employment generator it is touted to be.  I suppose we are still waiting for the Ring of Fire to be ignited.