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    London, Ontario: The Canary In The Coal Mine?

 

 

By Susanna Kelley

London, Ontario has lost a third of its manufacturing jobs in just the last eight years, says an expert on the economy of Southwestern Ontario.

"We've looked at the last ten years worth of job data in London and it does not paint a pretty picture," says Mike Moffatt, an economist with the Ivey Business School at the University of Western Ontario.

Preliminary data shows the city and surrounding area, for decades one of the province's symbols of wealth and prosperity, is down about 6500 jobs in total from 2004, says Professor Moffatt, one of the authors of a study called "The Future Of Southwestern Ontario." 

What's more, says the report, 5,700 of those jobs were full-time, despite the fact the working age population of the London Census Metropolitan Area (CMA) increased by almost 42,000 in the last decade.

Less than half of the working age population in the London CMA - 45.9 per cent - now has a full-time job.  That's down by 6.5 per cent since 2004, according to statistics in the report. 

As this graph from the study shows, London's employment rate is well below the average for both Canada and the rest of Ontario:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By far the hardest hit is the manufacturing sector.  The graph below shows that while London has been badly hit, manufacturing has also declined sharply in the rest of Ontario and Canada overall.




 

 

 

 

 

 

 

 

 

 

 

Professor Moffatt says the manufacturing collapse is really hurting the city:

 


In fact, in the London CMA, just over half of men between 25 and 54 how have full-time jobs, down from 61.7 per cent ten years ago. 

London and surrounding areas have suffered from closures of major employers such as the Sterling, Ford and Timken plants in St. Thomas, as well as Kellogg’s and Caterpillar in the city of London itself.

Even Kingsmills, London's oldest department store, is shutting its doors after 148 years as people have less and less to spend.

"We're seeing more openings of dollar stores and things like that... A lot of these families are seeing income declines because their income is drying up, so they're spending less money at middle and higher end stores, and we're seeing a decline in middle and high end retail because of it," says Professor Moffatt.

As for where new jobs will come from, Mr. Moffatt believes the area will have to make a difficult transition away from relying on auto jobs that are increasingly leaving the area and indeed, leaving Canada, for places such as Mexico where labour rates are much lower.

Trying to lure manufacturing companies back to the area with tens of millions of dollars in government funding isn't a wise idea, because they will likely go elsewhere once the money runs out, the economist says.

"There's no silver bullet here. I think the temptation is to try and recapture as many of these manufacturing jobs as we can. We're already starting to see this. But we really need to go where the puck's going, not where it's been."

Ontario PC leader Tim Hudak recently called for an end to "corporate extortion" and "corporate welfare" in Ontario, particularly decrying a plan to give Chrysler $700 million in provincial and federal money to re-tool plants in Windsor and Brampton.

Chrysler withdrew its request for the money after Mr. Hudak's comments, saying it did not want to be used as a political football.

However, the company's CEO, Sergio Marchionne, said he regretted that he was unable to sufficiently convey the extent of the subsidies being offered to it elsewhere.

One such example is just across the border from Windsor, where the company is being given tax credits from both the state of Michigan and the city of Sterling Heights, prompting it to invest $1 billion and to announce last week it is adding 800 more jobs.





 
Posted date : March 20, 2014
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