Newspaper article The Christian Science Monitor

Quebec Economy Sputters as Political Question Persists

Newspaper article The Christian Science Monitor

Quebec Economy Sputters as Political Question Persists

Article excerpt

THE biggest employer in this small town in Quebec has announced it is closing its plant; locals are blaming the departure of Clairol Canada Inc. on everything from free trade with the United States to Canada's constitutional crisis.

Whatever the case, this and other plant closings in Quebec reinforce the underlying weaknesses in the economy of the province, where unemployment is almost double that of neighboring Ontario.

Layoffs and plant closings across Quebec have meant the loss of 51,000 of the province's 537,000 jobs in manufacturing in the past year. Unemployment in Quebec was at 9.3 percent of the work force in May, compared to 5.5 percent in Ontario.

"You don't have an overall recession in Quebec, but there is one in the manufacturing sector for sure," says Clement Gignac, an economist with the Montreal-based National Bank. He blames the weak manufacturing sector on high interest rates in Canada (the prime rate banks offer their best customers is 14.5 per cent) and the high value of the Canadian dollar (US$0.86) which makes exports expensive.

Clairol, a division of Bristol-Myers Squibb Company, will close its plant in Knowlton, about 60 miles southeast of Montreal, by the end of 1991, and move the equipment for making hair-coloring and other products to Stamford, Conn.

There was shock here at the news. The Knowlton plant had just undergone a major expansion and facelift. Locals, including Mayor Gilles Decelles, say the free-trade deal between Canada and the US meant there was no protection for the Canadian operation.

"Free trade had nothing to do with it," says Francine Gingras, an official of Bristol-Myers in Montreal. "It's an international review of manufacturing capacity." The company is also closing a plant in Saddlebrook, N.J., to concentrate production in Stamford.

The Knowlton operation of Clairol wasn't just an ordinary branch plant. The Thornton's, a local family, had originally been owners of the Clairol plant and had worked on the research which produced Clairol's major product, hair coloring. The company was taken over in the late 1960s by Bristol-Myers, which in turn merged with Squibb last July. …

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