Canada: The Pieces of the Puzzle
Brown, Donna, Management Review
Canada: The Pieces of the Puzzle
In Quebec, the Conseil du Patronat, one of the largest business associations there, is urging the province's business leaders to reconsider sovereignty. In the Atlantic provinces, according to a Decima/McLeans poll, more than 90 percent of the population is pessimistic about Canada's economic future. Out west, oil-rich Alberta has taken the recession on the chin and barely flinched. In what follows, Management Review assesses the business climate - as well as the attitude toward Canada's future - in each of Canada's regions.
The Atlantic (or Maritime) provinces of Nova Scotia, Newfoundland, New Brunswick and Prince Edward Island have long been frustrated with their relationship with the rest of Canada. Because of high unemployment and low wages, the Atlantics are seen by other Canadians as "poor cousins," says Benjamin Weiner, president of Probe, a U.S. consulting firm that specializes in political analysis. Many Canadians in the Atlantic provinces resent this stereotype, and feel that the federal government has done little to help the region overcome its economic difficulties.
Despite the Atlantics' alienation from the rest of Canada, the provinces are unlikely to seriously consider sovereignty, even if Quebec separates. This is due, in part, to the Atlantics' receiving hefty "equalization" payments - money doled out by Ottawa to Canada's poorer areas, that has been collected from the more well-to-do provinces. "There has been lots of talk about strengthening the bond between New England and the Maritimes," says Charles McMillan, professor of international business at York University in Ontario, and author of a report for the Atlantic premiers on how to revitalize the region's economy. "The idea of the Atlantics seceding is a non-starter," he says, pointing out that the provinces probably couldn't make it alone.
Why are the Atlantics struggling? Part of the blame lies with fishing, long the linchpin of much of the region's economy. "The fish stock is not adequate to maintain the number of fish plants that are currently established, resulting in horrendous unemployment," says Judith Maxwell, chairperson of the Economic Council of Canada. On the bright side, Newfoundland, which has been particularly hard hit by the depressed fishing industry, should soon start reaping the benefits of the new Hibernia offshore oil project, established by the province and Ottawa in 1988.
If McMillan has his way, Hibernia will be just the beginning. To revitalize the Atlantic region's economy, McMillan has proposed a Maritimes savings fund to invest in growth industries, as well as more cooperation between the Atlantic provinces on science and technology, and energy development. Those in the Atlantic provinces "have to find new ways of doing things," says McMillan. "Ottawa is broke, and public sector bailouts and subsidies haven't worked. The region must develop more self reliance."
Ontario, home of both Toronto (Canada's financial capital and largest city) and Ottawa, has "taken a worse beating on the recession than the rest of the country," says Pearce Bunting, head of the Toronto stock exchange. The reason? Canada's manufacturing slump. Many of the nation's factories and plants are located in southern Ontario. Another reason is because the province is close to the U.S. border. Ontario also must contend with the recent southern migration of businesses to western New York state, where two factory workers cost just a little more per hour than one worker in Ontario.
"Southern Ontario is going through some rough times," says Maxwell. Since "the manufacturing sector is heavily dominated by auto assembly and parts," the problems of U.S. auto manufacturers also are affecting Canada, according to Maxwell.
"Ontario has a very big car industry that is dependent on the U.S. market," adds Bunting. …