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.