Boomtown Brat – Personal Reflections on Sudbury’s Made in China Economic Recovery – by Mick Lowe

 This article orginally appeared in the Christmas 2004 edition of Highgrader Magazine – a Northern Ontario publication that brings the issues, concerns and culture of Ontario’s vast forestry and mineral rich north to the world.

In the latter half of 2003, in the wake of yet another failed marriage, I was forced to indulge in one of the most dreaded of all male pastimes, an activity ranking somewhere between visiting the dentist and plumbing: I had to go shopping.  In the act of replacing the myriad of consumer goods that are forfeited when a household is split asunder, I made several discoveries.  Ever the nosy parker, (and hoping to support Canadian industry) I made a point of determining the country of origin of almost every purchase: from patio furniture to kitchen utensils, from an inexpensive stereo to a weed-whacker. 

The results were astonishing: virtually everything had come from, or at least been assembled in, the People’s Republic of China.  Also amazing was how cheap most things were, and that the quality nevertheless appeared relatively high.  The world was awash in cheap electronics.  It appeared that, at a conservative estimate, 90 per cent of the merchandise in the local Dollarama store was from China.  Multiplying the inventory in all the dollar stores in Sudbury times all the dollar stores in Canada conjured up a mental image of a chain of container ships crossing the Pacific from west to east, disgorging an unending stream of consumer goods produced by a nearly infinite supply of cheap labour in a nation of 1.3 billion souls.

Shades of the 1950s, when Japanese goods began to penetrate the North American market.  At the outset they were considered shoddy but cheap, though China’s current exports seems of far higher quality.  More interesting, perhaps, was what happened a few decades later, when Japanese electronics and automotive brands began to compete, with sometimes devastating success, against well established North American producers.  Would the same thing happen with China in the years to come?  And, more to the point for Canada, perhaps: did those cargo ships make the return voyage with hulls empty, or full? 

A year later I began to glimpse the answer.  In mid-August, 2004 I went for lunch with Paul Reid, an official with the City of Greater Sudbury’s Economic Development Corporation.  Almost every aspect of his current business activity, Paul told me, involved China, in one way or another.  Fuelled by nearly double-digit annual growth compounding over two decades, the country’s demand for raw materials of all kinds had become insatiable.  So great was the need for commodities like structural steel and cement, not to mention nickel and copper, that, in some cases, these materials were being rationed, not only in China, but throughout the world.  The bad news: this could conceivably slow construction projects in Canada, due to a shortage of materials.  The good news: China’s consumption of both nickel and copper had warped the supply-demand curve for two of Sudbury’s principal products right out of shape, driving prices to their highest levels in 15 years, and ushering in an era of super-profits for the city’s two nickel mining giants, Inco Ltd. and Falconbridge.

One of the local spin-offs, Reid continued, was the development of the Nickel Rim Property by Falconbridge.  I knew something about the project because, following the departure of my soon-to-be ex, along with my daughters who had decamped for university, I had begun to rent rooms in my house, which now seemed both too large and too empty.  My first tenant was an old friend, Eugene, a union carpenter who, after surviving a long winter of unemployment, had begun working on the Nickel Rim project in early July.  Only days before my lunch with Reid I had driven Eugene to work.  It was an eye-opening experience, trucking past the Sudbury airport, turning left on an unprepossessing gravel road which ran within a few feet of the east end of the runway, being stopped by a security guard parked in a truck, seemingly in the middle of nowhere, and then into a parking lot populated by hundreds of Eugene’s fellow workers, awaiting bus transport to the job site proper in the pre-dawn gloom.

As I retreated back down the road, I was passed by a steady stream of dusty cars and half-tons, a veritable rush-hour deep in the bush.  I’d covered enough staking rushes, exploration booms and mine developments in my 30 years as a reporter in Northern Ontario to know the drill.  The raw earth, showing like exposed ribs, of freshly-cut roadways, the stumps of uprooted trees, the smell of bruised vegetation.  It wasn’t pretty, but this was the stuff of a gold rush, of sorts, Northern Ontario-style, and it was hard not to catch the excitement.  Suddenly I began to notice the unmistakeable signs around me: trucks were everywhere on the streets, hauling fill, backfill, asphalt, gravel, waste rock, and heavy equipment.  It seemed there wasn’t a roadworthy tandem dump truck sitting idle within a hundred miles.  Eugene said the same was true at the carpenter’s hall.  After decades of chronic unemployment “the hall was empty,” meaning that every union carpenter in Sudbury was, at long last, gainfully employed.  The vehicular traffic seemed thicker, the streets busier, there was an urgency I hadn’t noticed before.   The pulse of the place appeared to have quickened and finally, the truth sank in: I was living in a boomtown.
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It was, as they say, a long time coming.  Without knowing it at the time, I had moved to Sudbury near the end of the last boom, in May of 1974.  It was a banner year for Inco, which earned over $300 million, in U.S. dollars and promptly paid a similar amount, in cash, to buy a major American battery producer.  But that was the apogee of the long boom that had characterized the nickel industry since the early 60s (see sidebar).  Profits, though still healthy, dwindled in 1975 and 1976 and then, in the fall of 1977, Inco stunned the community, and the nation, by announcing mass layoffs in its Canadian workforce, even though the company was still profitable.  I was with CBC Radio News at the time, and I remember predicting in one report that it was hard to ever see the jobs returning, adding that the impact on the city’s downtown retail sector would soon become visible, with vacant storefronts beginning to appear like the toothless sockets “in a rummie’s gap-toothed grin.”

My words were, alas, all too prophetic.  The jobs never did come back, and Inco’s workforce these 27 years later is now less than a third of what it was.  The bust reached its nadir in 1982, when, in a move reminiscent of the early 20s, Inco announced a 10-month long shutdown.  That work stoppage had actually begun with a strike, with Inco’s workforce absurdly withholding labour that turned out to be unwanted.  Reason soon set in, however, and the strikers abandoned the picket line for the pogey queue.  The unemployment rate hovered at 30 per cent that terrible winter.  Eventually nickel prices recovered and even soared, briefly, to $11 a pound in 1988, but the city’s nickel workforce never returned to the halcyon levels of the 1940s, 50s and 60s.  Instead, a kind of jobless recovery occurred: nickel prices rose, and with them production and productivity in Sudbury’s nickel industry, but technological innovation reduced the need for labour. 

The shock of layoff after layoff was cushioned somewhat by a policy of workforce reduction through attrition.  Unionized Inco and Falconbridge workers with 30 years’ service, many barely 50 years old, were allowed, even encouraged, to take advantage of pension provisions that paid, during most of the 1990s, $3,000 a month, or even more.  By the mid-90s a tipping point of sorts had been reached; there were now more retired Inco and Falconbridge workers living in Sudbury than there were active employees.  While the attrition arrangement absorbed some of the immediate shock, it did little to alleviate the long term trend: because few new jobs were being created in the Sudbury economy young people began a mass exodus to find work elsewhere; the population declined; property values fell; and Sudbury fell into a chronic, low intensity depression.  The 2000 Census confirmed in stark terms what those of living here already knew: not only was Sudbury the fastest shrinking Census Metropolitan Area in Canada, but we were shrinking twice as fast as the next fastest- shrinking community, Thunder Bay.

For me, visits to buoyant economies like those in Vancouver and Toronto or even to southern Ontario communities like Guelph and Kitchener-Waterloo became like journeys to another country, another culture.  How to explain to people there the malaise of living in a no-growth or even negative-growth economy?  Very little seemed to change, because there was so little new construction.  Those of us who chose to stick it out in Sudbury felt old and tired, mainly because we were old and tired.  It was like a dull, persistent hangover, but one that lasted years, even decades.  We weren’t unique, exactly.  What we were going through, even as global population soared and Canada’s population increased quite handsomely, was a familiar malady to hinterlanders everywhere, especially those residing in resource-based economies. 

Either the resources, like the buffalo, cod, trees and ore had been depleted by unsustainable rates of exploitation, or the costs of production had been lowered through the reduction of the variable capital (read: labour) required to operate competitively.  Fewer jobs resulted in net out-migration of population which resulted in reduced local aggregate demand for goods and services of all kinds, which resulted in economic contraction which produced more layoffs and business closures which resulted in more out-migration, especially of the young. . .It was a protracted death spiral.  Would the last person out of the community please turn off the lights?
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And then, like a brilliant sunrise bursting over the eastern horizon so quickly that it catches the observer unawares, Sudbury has become, once again, a boomtown.  By mid-September my rooms for rent, which had languished with no takers for most of the previous year, were full – and then some.  Due to a breakdown in communication, Eugene and I had contrived to rent one too many, and so I found myself, for one week, sleeping in the back of my truck, rather than default on a commitment to someone from out-of-town to whom we had promised lodging.  Two of our new tenants were labourers from the Nickel Rim Project, two were from the Sudbury Theatre Centre.  The former two were boarders, as well as roomers, who, like Eugene departed at the crack of dawn, and who worked at least ten hours a day, six days a week.  The latter duo worked a good part of the night, and slept part of the day, seven days a week.  At almost every hour of the night, it seemed, someone was arriving.  It was the sound, the feel, of hard work, and of money being made. 

In my new incarnation as the keeper of a boarding house, I knew, I was engaged in a time-honoured mining camp pastime.  My studies of the 1900 Census in Copper Cliff, just east of Sudbury, had revealed an inordinate number of households with a dozen or more men, and a single woman, usually clustered along ethnic lines (Italians and Finlanders predominately).  The woman, often the widow of a worker killed on the job, I presumed, rented out rooms and served meals to make ends meet.  As recently as the early 70s Sudbury’s penultimate boom resulted in a housing shortage so acute that even furnace rooms were rented out to youthful nickel and construction workers by enterprising home owners, and the practice of “hot-sheeting” – renting out one bed to two tenants who were cross-shifts, was not unheard of.

But, in several ways, Sudbury’s current boom is a departure from our history.  This time, it’s not only the nickel industry that is fuelling the upturn.  Growth in the retail, health and educational sectors are also helping to produce construction jobs, an influx of workers and a boost in economic activity.  And nor does the resurgence appear to be the result of war, or the threat of war, for a change.  Chinese nickel demand has been sparked by domestic growth in the Chinese economy, and, while stainless steel is principally the end use, the equipment fashioned with it seems destined to produce consumer goods, like those I needed for my home, rather than implements of war.

At Inco, the imminence of long-awaited nickel production from the Voisey’s Bay property in northern Labrador is creating a flurry of activity here, because the nickel concentrate will be smelted and refined in Sudbury, at least for the foreseeable future.  The most immediate impact is the construction of a new, $120 million oxygen plant, which will help fuel the Copper Cliff smelter.

Part of the reason for the sense of urgency in the nickel industry hereabouts, I believe, is the hope on the part of management that it can rush new, low-cost production capacity onstream in time to take advantage of the current peak in the nickel price cycle.  That, of course, begs the question of how long the commodity price boom will last.  Inco CEO Scott Hand told the National Post in September that he believes it will continue into 2007, at the very least.  Paul Reid opined in late October that he’s keeping a close eye on India, which is, he reckons, about five years behind China as an emerging economic colossus.  Once the Chinese boom starts to level off after the 2008 Beijing Olympics, he predicts, India will pick up the slack, and high nickel and copper prices could continue indefinitely. Yoo hoo!

Or maybe not.  A good friend of mine who lives in Marathon, Ontario, considers mineral booms and the discovery of new orebodies to be the “crack cocaine of economic development, the very worst thing that can happen to a community.”  His home town is on the downside of just such a boom – the Hemlo gold rush of the early 80s – and already most of the gold mines in the Marathon camp are slated for permanent closure, the orebodies being nearly mined out.  My friend’s house is a depreciating asset,  though still worth more than he owes on it – maybe – a syndrome we in Sudbury know all too well.

But I don’t know, having paid my dues for more than a generation, I’m quite happy to enjoy the sweet resurgence of the Sudbury economy.  It may be politically incorrect, it is certainly unsustainable in the long run, but we’ve earned it.  I’m not sure if it’s the Western, Euro-centric Man in me, the restless, hungry spirit that forever needed to climb the next hill to learn what was on the other side, or the excitement I feel in the pit of my stomach when I contemplate the next romance which, long experience has shown, will emerge from the shambles of the last one, but it feels damned good to have come through the economic slaughter that this old mining camp has experienced for the last generation, and to be born again.  Sure, you know that, like love, like life itself, it can’t last forever.  But then that’s one of the great existential lessons of living in a mining town: all good things must end.

But until it does, this is one codger who intends to heartily enjoy whatever’s left of the ride.  Let ‘er rip!

Boomtown Sidebar

There may be no other place on the planet that has enjoyed more booms, or suffered more busts, than the Sudbury Mining District.  Because of the tremendous extent and complexity of its orebody, and its century-plus dependence on the cyclical vagaries of the nickel industry, Sudbury’s current boom is but the latest upsurge in the yin and yang of resource dependency. Herewith, a brief compendium of Sudbury’s ups and downs, a pattern that began in. . .

1885-86 – Boom
Sudbury, a CPR town newly carved out of the wilderness, enters its first great boom period, with the discovery of nickel and the opening of the first mines and smelting operation.

Early 1890s – Bust
The fledgling nickel industry endures its first downturn following the Depression of 1893.

Late 1890s-1919 – Boom
Nickel prices and production enjoy a prolonged surge as the metal establishes itself as “the most militarily strategic of all minerals.”  The run-up to the Spanish-American and Boer Wars at the turn of the century and the First World War from 1914-1918 do wonders for Sudbury’s economy.

1920-1922 – Bust
Sudbury’s nickel industry suffers its most severe bust to date in the commodity price collapse that followed the First World War.  Demand falls precipitously, and Inco imposes a 15 per cent wage cut in 1920 followed by a wholesale closing of its Canadian operations in 1921.  The shutdown lasts a year.

1922-1958 – Boom
Boom times return in 1922 as the Roaring Twenties get under way, followed by pre- Second World War re-armament, the war itself, and then the Cold War.  For 36 years nickel production increases and the workforce grows apace.

1958-1960 – Bust
The Recession of 1958 produces the first bust in the lifetime of many Sudburians, and the first in the working lives of many nickel miners and smeltermen.  The downturn is a partial cause of the first-ever strike at Inco in the fall of 1958.

1960-1977 – Boom
The Cold War with the Soviet Union and the shooting war in Vietnam fuel another great expansion in Sudbury’s nickel industry.  New mines and surface plants are opened.

1977-2004 – Bust
Inco announces layoffs in the fall of 1977, beginning a steady reduction in its Sudbury workforce that will last for more than a generation.  Falconbridge soon follows suit.

2004-? Boom
The emergence of mainland China as a global economic powerhouse propels a surge in demand for base metals, especially nickel and copper, of which Sudbury is still a major producer.  Prices for both metals spike sharply, new mines are under development, and Sudbury is a boomtown once again – for the fifth time in its 120-year history.

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