From its origins as a fur trade company headquartered at Fort William, to the development of the grain and forest sectors, Thunder Bay’s economy has seen ebbs and flows over the course its history. Key to its modern economic development was the federal government decision to route the Canadian Pacific Railway through the Lakehead and the arrival of the transcontinental railway in the 1880s. Indeed, without this explicit government intervention it is unlikely Thunder Bay would have developed into a city as large as it is today. Government action in assorted forms has been one of the pillars of Thunder Bay’s economy.
Transportation is another pillar of Thunder Bay’s economy. During the first decade of the twentieth century, there was a massive boom rooted in infrastructure building for the transport needs of the western Canadian grain economy that saw the twin Lakehead cities of Port Arthur and Fort William become the largest grain port in the world. At its peak, over 30 grain terminals lined the waterfront. Indeed, growth was so rapid that many believed the Lakehead would become the Chicago of the North. Population quadrupled between 1901 and 1911 and the real per capita value of new construction was never higher than during this period.
Yet, as the twentieth century wore on, there was growing realization that as well as Thunder Bay was doing, it was not going to be the Chicago of the North. The remainder of the twentieth century saw continued but slower growth and Thunder Bay’s ultimate evolution was more akin to Duluth Minnesota – the American Lakehead – rather than Chicago. Thunder Bay’s economic growth slowed in the wake of World War I and the Great Depression and resumed during the resource boom of the 1950s and 1960s. Indeed, natural resource extraction and processing whether forestry or mining have always been another pillar of Thunder Bay’s economy.
Port Arthur and Fort William amalgamated to form Thunder Bay in 1970 ending the urban competition that in retrospect appears correlated with better economic performance given the economic slowdown that ensured. After 1970, labor saving technological change, aging capital stock, a shift in world grain markets and increasing international competition also eroded the competitiveness of Thunder Bay’s grain transport and forestry sectors culminating in the forest sector crisis, which saw substantial job losses in Thunder Bay and the surrounding region. These job losses were aggravated by high energy costs with respect to electricity which were especially damaging to the energy intensive pulp and paper sector. Total employment in Thunder Bay has never recovered from the peaks reached in the first years of the twenty first century.
In the wake of the forest sector crisis, recent years have seen a stabilization of the Thunder Bay economy and a shift in its composition towards employment in research, regional health and social services, and higher education. This base continues to support a growing range of retail and service activities particularly in hospitality and accommodation oriented around a growing tourism scene that has drawn some international attention. Nevertheless, economic growth has been slower compared to the rest of Canada and Ontario. While the unemployment rate in Thunder Bay is low, it is because the labor force has shrunk faster than employment as a result of an aging population and youth out-migration. Population in Thunder Bay peaked in the 1990s and has declined slightly since. While the First Nation’s population has been expanding, its future economic engagement hinges on the long-term success of initiatives to expand human capital via education and training.
As for the future, tomorrow is yesterday as Thunder Bay’s economic future will still rely on its traditional three pillars – government, transportation and natural resources. These pillars will of course make use of new knowledge and technology and will require innovative entrepreneurial vision to recognize and implement new opportunities. Thunder Bay’s transportation infrastructure and its pivotal location on the east west transport corridor, the role of regional government services and the ongoing potential of the mining sector combined with information technology and the knowledge economy will be the economic forces propelling its future.
A version of this article was originally composed for Lake Superior News appearing there October 16th in advance of the October 20th Lakehead University In Conversation Talk at Brodie Library titled Going from Chicago to Duluth of the North: Thunder Bay’s Economy in the Past, Present, and Future.