The State of Canada’s Economic Affairs

By Martin Rumack

April 6, 2015

Canadian Economy, Ford, General Motors, Ontario Economy

Canada Unemployment Rates

The Canadian economy has improved in the past several years.  Primarily due to the gradual recovery of the American home-building industry, and to continued strength in the Canadian new home construction, the forestry area has started to improve.   On the other hand, the newspaper, radio, television, communications industry continues to contract, causing significant negative impact on the Canadian pulp and paper industry.  The economies of Saskatchewan, Alberta and Newfoundland appear to be continuing on a positive note although Alberta’s and Newfoundland’s economies will be negatively impacted if oil prices continue to drop.  The decline in prices for gold and other natural resources is having a negative effect on the mining and resource industries – notice the drop in prices of the shares of these publicly-traded companies.  If this trend continues, there could be a negative impact on the economies of British Columbia, Saskatchewan, Northern Ontario, the Northwest Territories, and the Yukon.

In Ontario we are continuing to see manufacturing plant closures, factory consolidations, and buyouts and mergers of businesses, all of which result in losses of well-paying manufacturing jobs.  While the drop in the value of the Canadian dollar compared to the American dollar has helped manufacturers to some extent, our cost of wages, benefits, cost of hydro power, lack of all levels of government assistance in tax incentives, grants, tax breaks, assistance in providing subsidies for infrastructure for new manufacturing plants, etc., still continues to be a hindrance to our competitiveness in the global economy.  Recently, Ford announced that the opening of an upgraded paint plant in Windsor was not proceeding, and the new plant would open in Mexico instead.  The United States Steel Corp., which several years ago purchased Stelco in Hamilton, Ontario with the promise to improve and upgrade the plant and maintain jobs in return for certain subsidies, tax breaks, and other concessions, has recently declared bankruptcy and will now be closing the plant permanently.  Heinz Foods, which had operated a plant in Leamington, Ontario for approximately 100 years, closed their operation last year resulting in the loss of approximately 700 jobs; these were subsequently replaced by approximately 300 jobs at a significantly lower pay scale when the plant was sold to a group of former employees.  The uncertainty of General Motors’ future plans for their plants in Oshawa is not a positive indicator.

What does all this bad news foretell?  It suggests, unfortunately,  that we cannot seem to compete on an economic cost basis on the world-wide stage.

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