The Toronto Star, has the largest circulation in Canada. The paper has an enormous impact on federal and Ontario politics as well as shaping public opinion.
David Crane is a commentator on economic affairs. crane@interlog.com.
Blame it on Alberta’s oilsands. Last month, Ontario’s premier pickle company, Bick’s Pickles, closed its production facilities in southern Ontario and moved its operations to the U.S. The high value of the Canadian dollar was an important factor in a corporate decision that cost 150 regular jobs here. Bick’s is not alone feeling the impact of what some are calling the “Alberta dollar.”
Over the past five to six years, many manufacturing companies have closed shop in Ontario as the province lost competitiveness due to a dollar trading at approximate parity with the U.S. — companies like Collins & Aikman in Guelph (500 jobs), Interforest in Durham (120 jobs), Crane Valves in Brantford (88 jobs), Sonoco Products in Cambridge (100 jobs), Siemens in Hamilton (550 jobs), FRAM in Stratford (300 jobs) and many more across the province. As companies consolidate operations in North America, Ontario has a tough time making the case to keep operations here.
In other instances Ontario has lost out to the U.S. or Mexico when investment decisions were being made. The tourist industry has suffered as well. A U.S. visitor to Toronto, Stratford, Niagara-on-the-Lake or Muskoka would have paid $127.40 (U.S.) in 2002 for a hotel room that cost 200 Canadian dollars. Last year the American visitor would have paid $202 (U.S.), or almost 60 per cent more.
The high dollar, by hitting manufacturing hard, is eroding Ontario’s tax base and contributing to the deficit and to Ontario’s high unemployment rate.
Why blame the oilsands? The reality is that the Canadian dollar is seen internationally as a resource currency, and rising commodity prices along with increasing export volumes have helped push up the its value — and could send it well above the greenback if the Keystone and Northern Gateway oilsands pipelines go ahead. Oilsands output could roughly double by 2020, according to industry estimates, and most would be exported.
In 2002, the Canadian dollar averaged 63.7 U.S. cents and Ontario manufacturing companies, according to Statistics Canada, had 1,095,400 employees, or 18.2 per cent of all Ontario jobs. In 2011, the Canadian dollar averaged 101.1 U.S. cents and Ontario manufacturers employed 794,000 workers, or 11.8 per cent of all Ontario jobs. Between 2002 and 2011, the Canadian dollar increased 59 per cent in value, while manufacturing employment fell by 300,500 jobs or by almost 30 per cent.
For the rest of this column, please go to the Toronto Star website: http://www.thestar.com/opinion/editorialopinion/article/1133571–ontario-has-to-learn-to-live-with-high-dollar