Ontario’s High Utility Costs Kill Jobs Again

[It is Time to Hold Liberals in Ontario Responsible]

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The ruling Liberal party’s energy policy may soon wipe out your family pay check.

The policy wonks inside the Ontario Liberal inner circle have for many years dealt with the energy file by way of good public relations (PR) rather than good policy.  The problem being that the PR has been so successful that it has covered up an escalating spiral of loss of good paying jobs as industry has begun a full scale exodus from the Province of Ontario.

Back in the heady days of the Kennedy Round Tariff and The General Agreement on Tariffs and Trade (GATT) changes in the late 1960’s, the gateway to the (then) thriving North American automobile production market was thrown open. Restrictive tariffs that had previously added customs duties to non-USA made vehicles were relaxed and often removed.

Ontario was in an ideal position to capitalize.  In no particular order of importance, Ontario’s economic advantage was enhanced by progressive government policies in the late 1960’s and into the early 1970’s.  The education system had gained worldwide prominence and was supplying highly trained workers.  Coincidentally, Ontario’s government of the day had ushered in the nuclear age creating competitively priced electricity for residential consumers and for manufacturers considering construction of new state-of-the-art factories.  Added to this, careful government investment in infrastructure had fostered near-ideal transportation network enabling ease of movement of goods.

By the early to mid 1960’s Ontario began opening Community Colleges which were intended to provide highly trained skilled trades workers.  Emphasis was placed on training mechanics, carpenters, electricians and similar skilled trades.  The availability of a ready-trained work force is (was) a major economic advantage for Ontario.

Similarly, the same period saw major tax paid investments in energy bringing world-class nuclear facilities on line. The first CANDU prototype began functioning at Douglas Point in 1960.  Within a scant 15 year period, the main Douglas Point generator and 3 new generators at Pickering came on-line.  Strategic planners in the automotive industry recognized that future manufacturing would become heavily energy dependent and that long term economically competitive energy prices were critically important.

Ease of movement of people and product were keeping pace.  By the late 1960’s, Ontario opened up vast stretches of a state-of-the-art east/west traffic system designated the “King’s Highway 401” (later, simply called the 401)

There you have it.  The perfect storm: a ready supply of highly trained workers, constant and efficient energy costs and a transportation system that worked very well.  By the late 1960’s Ontario’s annual unemployment rate stayed below 6%.  By 2007, that number had almost doubled and showed unemployment rates as high as 13.7%[1]

The manufacturing sector in Ontario shed 56,600 jobs in 2007, bringing total losses since 2002 to nearly 146,700 positions[2].  The PR experts within the Ontario Liberal party will be quick to insist that it is a mere coincidence that those years of the worst annual decline in Ontario happen to coincide with a lengthy and scandal plagued period in which the Liberal party formed government in Ontario. Uninterrupted, since 2003 (when Dalton McGuinty took office) until the present regime of Liberal Kathleen Wynne, the Liberals have held power in Ontario.

There may be others who attempt to defend the performance of the Liberal regime by claiming that Ontario unemployment numbers coincided with national or international events. I regret to dash that fantasy.  Statistics Canada results show that by 2005, the Ontario unemployment rate began increasing at an alarmingly higher rate than the national averages.   By 2009, Ontario (at 9.1%) had Canada’s second highest unemployment rate[3].

What gets lost in the numbers?  Those are jobs that are vanishing. Those are families that are falling onto hard times.  The simple truth is that 146,700 are without good paying jobs today. Those are the lost jobs in the manufacturing sector.  Any economist worth his/her salt will tell you that lost primary jobs in the manufacturing sector have a ripple effect across other sectors as well.

A glimpse into what has happened and continues happening can be had by listening to folks like Mark A. Nantais, President of the Canadian Vehicle Manufacturers’ Association.  Nantais points out that, “things like the regulatory burden, the cost of utilities” are huge obstacles to regaining Ontario’s prominence in the manufacturing sector.  Note, Mr. Nantais wisely did not include labor costs.  In modern day, highly automated, robotic driven automotive assembly, the labor cost component is of lesser significance than energy costs.  News[4] that Toyota is moving production of its popular Corolla vehicle from Cambridge, Ont., to Mexico is nothing new.  GM is moving production of the Camaro to Lansing, Mich., from Oshawa, Ont., and in 2016 will shut down one of two production lines at its Oshawa facility. Chrysler Windsor will close the doors on its Windsor Ontario operation that has been the long time producer of the Dodge Caravan.

Nantais points out that “regulatory burdens” and escalating electricity costs are the leading contributors to disappearing manufacturing jobs in Ontario.  He made special note of Ontario’s recently announced “cap and trade” carbon tax scheme as hugely problematic.

However, as much as ill-advised policy such as cap-and-trade carbon tax schemes are probable causes of future job losses, the state of Ontario’s erratic energy schemes has seen Ontario move from a position of having surplus electricity capacity to a series of near-comedy schemes such as a the Samsung (wind turbine) scandal and the much talked about “gas plant” scandals that were intended to produce affordable electricity by way of natural gas.

It is a given in economics that things don’t “just happen” and that there is an underlying cause behind everything – good or bad.  As much as Ontario benefitted and thrived during times of competent, forward thinking and progressive governments in the 1960’s, the province has floundered as a result of the bumbling and often corrupt regime of the Liberals in Ontario.

Thos e community colleges that were once hotbeds for the supply of skilled trades have nuanced into quasi-universities.  In the process, of that shift in focus, they have abandoned their intended purpose and leave Ontario in a position whereby within ten years a full 60% of the province’s present skilled trades workers will retire without viable replacements.     The Ontario Chamber of Commerce has been speaking about this shortage for some time. “Over two of every three job openings will be the result of retirements. “ [5]  The shift in Community College Focus is entirely one of poorly thought out policy emanating from Queen’s park.

Infrastructure is similarly a critical component needed to pave the way for future economic prosperity and for jobs. The last major highway built in Ontario is the highly controversial Highway 407 that was quickly bundled up and sold to European investors by Ontario’s only (and let’s hope final) NDP regime.

If there is a “root cause” to Ontario’s economic demise; it seems to me that you and I are at the heart of the cause.  Ontario voters need to take a more mature approach to their choices at the election polls. For too long it seems that we have voted based on emotion rather than logic. Too many times we vote people into office simply because “we like them” and show repeated disregard for their ability and character.

These difficult times in Ontario are likely to see many more plant closings and many more families losing a regular pay check. When will we learn that our own careless choices at the ballot box invariably cause irreparable harm?

[1] Statistics Canada’s Labour Force Survey, 2008

[2] Ibid

[3] Statistics Canada, Annual Average Unemployment Rate Canada and Provinces 1976-2014 Canada (January 28, 2015)

[4] Kazi Stastna, CBC News Posted: Apr 17, 2015

[5] Ontario Chamber of Commerce. Taking Action on Skilled Trades: Establishing the Business Case for Investing in Apprenticeship. September 2005.

Copyright   Thunderbird Rising 2015

 The above article is copyrighted.  You may use, copy or distribute this article conditional on attributing your source (Thunderbird Rising) and the author (Lloyd Fournier)


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