NORTHERN ECONOMIST 2.0

Tuesday, 24 October 2017

Economic News Around the North, October 24th Edition

It is quite the blustery day here in Thunder Bay today so what better way to hunker down and enjoy the day than taking a look at the major economic news items over the last little while.

Ontario's GDP boosted billions per year by Lakehead University Thunder Bay, Orillia campuses. CBC Thunder Bay, October 24th, 2017.

Well, it turns out that according to a study authored by faculty at Lakehead's business school that Lakehead University's economic impact on Ontario is 1.4 billion dollars. To my way of thinking, the faculty are the core of the university - indeed all the expenditures a university makes are to allow faculty to generate research, teaching outcomes and human capital value added for graduates so given that there are about 300 full-time faculty at Lakehead, I would estimate my personal economic impact on Ontario's economy at 4.7 million dollars (1.4 billion dollars divided by 300). Based on my current salary, I am obviously grossly undervalued. That is a pretty good return to any investment. Come to think of it, hiring more full time university faculty is obviously a cheap and effective way to boost Ontario GDP. Let the hiring boom begin.

Business ties with India explored. Chronicle Journal, October 24, 2017.

Well, a few weeks ago it was a delegation from China. This week a delegation from India is passing through Thunder Bay. Given the precarious state of our NAFTA negotiations, I would imagine it is a good idea to try and build as many ties as possible with the Asia Pacific region.

Northern business owners in 'defensive mode' about proposed tax changes. CBC Sudbury, October 24th, 2017.

This is the northern Ontario take on the tax changes being shepherded by Bill Morneau. However, as we know there are going to be revisions. Moreover, there may be other goodies coming down the pipeline in the wake of today's fiscal and economic update in Ottawa.

And in other Sudbury economic and business news....

2 former chairs quit Sudbury Chamber of Commerce over casino, arena position. CBC Sudbury, October 19th, 2017.

No comment there. Sounds like a pretty strong difference of opinions.

While Thunder Bay is focusing on India and China for its economic enhancement efforts, it would appear that Timmins Economic Development Corporation has targeted Bolivia.

Exchange will see Bolivian delegates visit Timmins. TimminsPress.com. October 4th, 2017.

If you are interested in the Elliot Lake model of economic development, there is this...

Sault's becoming a popular retirement destination, credit analyst says. SOOTODAY.com, October 6th, 2017.

On the other hand, what if Amazon builds its new headquarters in the Sault? The Sault is sending in a proposal. Check here. Quite frankly, I have not come across other northern Ontario cities doing the same.

As well, there is television production activity underway in the Sault.

Producer returns with big projects for Northern Ontario. SaultOnline. October 15th, 2017.

And all the way in North Bay, there is this item referring to a recent Fraser Institute Report by Ross McKitrick and Elmira Aliakbari:

Ontario's green energy policies killed jobs.Nugget.ca, October 19th, 2017.

Even North Bay is apparently getting into the film business...

Film industry applauds local cinematography program. BAYTODAY.com, October 14th,017.

Have a great week!

Wednesday, 18 October 2017

Will It Be a Wynne Win Situation in June?

The consensus seems to be that Ontario’s current Liberal government and Premier Kathleen Wynne are headed for defeat come the June 2018 election. Recent polls have seen the government trailing third behind the Conservatives and the New Democrats. An IPSOs poll in mid-September also suggested that most Ontario voters –- 76 percent -- want a change in government.

Two cabinet ministers (Treasury Board President Liz Sandals and Deputy Premier Deb Matthews) recently announced that they will not be seeking re-election which some may interpret as a signal that there is not a lot of confidence in the government’s future past June. This is on top of Economic Development Minister Brad Duguid who announced last month he won’t run for re-election and Environment Minister Glen Murray in the summer.

As well, the Premier’s personal approval rating is low. There is the baggage of nearly 15 years of Liberal government rule including the demise of the manufacturing sector, high electricity prices, the high debt and deficit, and the gas plants scandal to which can be added the current trial underway in Sudbury. And the electricity sector seems to be a problem that never seems to diminish in scope given the recent Auditor General’s report that the Wynne government’s plan to reduce electricity prices will eventually be higher cost in the long run.

Yet, one should not count Kathleen Wynne and the Liberals out yet. Recent polls have suggested there has been a bit of a rebound in Liberal support with a September 30^th Forum poll suggesting the Liberals and PCs are tied for support in the vote rich Toronto area. Given the recent rebound in Ontario’s economy, the electorate may be less keen to turf the governing party in favor of gambling the PCs might do a better job with the economy. As well, there have been a range of initiatives –the minimum wage hike, changes to real estate rules, the basic income pilot that are likely to sway NDP supporters. And most Ontarians will not understand that a lower electricity bill today will eventually mean much higher bills tomorrow under the current Liberal plan. As for the departing cabinet ministers, another interpretation is that after 15 years one can expect to see the departure of veterans and renewal of candidates.

It all comes down to the campaign. The Liberals in Canada, whether at the provincial level or the federal level tend to campaign from the left and then govern from the right. They are usually quite successful in running campaigns with policies that take enough votes from the NDP to gain office. They are somewhat less successful in governing like PCs when it comes to economic matters given that seems to be a congenital Liberal predisposition to grand social, economic and industrial interventionist strategies. However, demonstrating this to the public requires a strong, inspiring and methodical policy campaign by the PCs and to date PC leader Patrick Brown despite any lead in the polls has yet to capture the imagination of Ontario voters.

In the end, one can imagine that Liberal support bottomed early enough this summer to allow the Liberals to position themselves as “the underdog” and come back from behind. Indeed, one wonders if this was not the strategy all along to allow the opposition parties to capture the lead in the polls and peak early. Of course, such a strategy can still backfire despite the recent policy stage being set by the Liberals if events deal them economic or political shocks. And there is always the strong possibility that the opposition leaders might finally get their act together and campaign more effectively.

It is going to be an entertaining next few months in the lead up to the election.

Sunday, 8 October 2017

Porter Airlines Says it's Sorry But Is it Enough?

Well, we had quite the flight delay with Porter Airlines yesterday. Our flight to Billy Bishop from Thunder Bay was supposed to depart at 11:10 am and when all was said and done it did not leave until nearly 6:00 pm meaning that from start to finish our trip to Hamilton in the end took twelve hours. We have traveled to Europe in less. Indeed, you can drive to Hamilton from Thunder Bay in about 14 hours straight if you put your mind to it. Still, compared to others on the packed flight with small children or who were traveling on tighter schedules to attend weddings or were unable to go back to their house and spend some time for the extended wait – we were fortunate. And Porter has demonstrated its concern and sympathy and very quickly emailed us with a 100-dollar voucher each (it came in at 4:52am this morning) to be used on future bookings with Porter. Based on the length of the delay and the amount of the compensation, it seems that Porter already complies with the new proposed Ontario minimum wage at least when it comes to the value of passenger time.

In the end the delay was for a “mechanical issue” and as one of the flight attendants who took the elevator with us at the end of the flight remarked it is better to be safe than sorry. I agree. Still, this is not the first mechanical delay with Porter on a flight to or from Thunder Bay that I or other members of my family have encountered. Indeed, over the last year there have now been about four such issues involving us with the most recent delay the longest. In each case, the weather was excellent and the plane on the tarmac and then suddenly…the dreaded delay due to a mechanical issue. However, if you are in Thunder Bay it is even more ominous because Porter Airlines must fly in the mechanic from Toronto on its next available flight.

Why Porter airlines and the other two airlines in Thunder Bay (Air Canada and Westjet) who also fly nothing but Q400s there could not get together to chip in and maintain one mechanic on a standby contract to service their planes is beyond me. Perhaps the recent announcement from Porter that they are making Thunder Bay a crew base will also mean they are going to keep a mechanic and parts on hand. I hope that is the case because I like flying Porter and the convenient access to downtown Toronto.

At the same time, I think Porter has had an awful lot of “mechanical issues” and having so many really is ultimately their fault. I think they have an aging stock of aircraft given that the planned beefing up with the C-Series fell through and they now need to renew their aircraft stock in a very competitive airline world. It's tough I know. Still, here is the thing. You can’t keep telling people they have a delay due to mechanical issues. It has happened often enough to me and my family now that inevitably I am starting to wonder if an airline with so many mechanical issues is the one I should keep selecting for my travel. I am already booked on a few more flights with Porter for the next couple of months but after that maybe I should shop around more. After all, better to be safe than sorry.

Thursday, 5 October 2017

The State of the North

The State of the North conference hosted by the Northern Policy Institute was held in Timmins from September 27-28 with much of the discussion focusing on reversing the north's economic decline. Charles Cirtwill, President of the Northern Policy Institute sent out the slides of his presentation with an invitation to share and today's post reproduces a few of those slides. Figures 1-2 present some GDP estimates by sector for the Northwest and the Northeast of Ontario while Figures 3-5 present non-residential building permits for assorted northern Ontario districts.

Economic News Around the North: October 3rd Edition

Here are some of the items of economic interest with respect to northern Ontario that have caught my interest over the last little while. There truly is never a dull moment when it comes to the economy of northern Ontario.

White River Benefits from new Harte Gold mine. CBCNews Thunder Bay, October 3rd, 2017.

While being a small resource based community means dire times when the main industry shuts down, the converse is that when a new industry starts up, there can be a boom. White River is getting good economic news.

Porter Airlines sets up a Thunder Bay crew base. TBNewswatch. September 19th, 2017.

This is definitely good news and raises the prospect that Porter may be looking at expanding its service west and south. I would expect to see more flights through Thunder Bay to Winnipeg and perhaps through Chicago Midway to connect with the current Chicago-Toronto run.

Liquid natural gas coming to communities on Lake Superior's north shore. CBCNews Thunder Bay, September 25th, 2017.

And here are two interesting and related items:

Delegates discuss keys to reversing decline. TimminsPress.com, September 28th, 2017.

The State of the North - A New Vision is Emerging. TBNewswatch, September 28th, 2017.

I suppose you can start to smell the prospects of elections coming soon. A provincial election is expected by spring while municipalities will be going to the polls next October. Needless to say, the shopping lists are being put together in the form of strategies and plans designed to reverse the northern Ontario economic decline and to get candidates elected. Such regional studies and strategies have a long history in the north - think back to the 1970s (Design for Development) or the 1980s (Royal Commission on the Northern Environment) or the 2000s (Regional Adjustment Strategy, The Northern Growth Plan, the Rosehart Report). Given the lack of success to date in reversing northern decline, one must admire everyone's faith in grand economic studies and development strategies but then I suppose there is no serious expectation they will reverse anything. Their purpose is simply to put together the wish list for new government spending initiatives designed to continue northern Ontario's palliative economic care. This is not really a new vision at all but rather business as usual.

And in terms of some of the more entertaining economic development strategies being touted:

City signs friendship agreement with Nanning, China. TbNewswatch, Septembner 22nd, 2017.

City makes friends with Nanning, China. The Chronicle Journal, September 23rd, 2017.

Apparently one of the visions discussed was shiploads of vegetables and beef and other agricultural produce from Thunder Bay's port to Nanning. According to one Thunder Bay City Councillor: "There is that kind of potential for our agricultural sector." I assume this meant western Canada's agricultural sector (but then why ship to China through Thunder Bay rather than Vancouver or Prince Rupert) given that Thunder Bay's agricultural sector would be hard pressed to feed 100,000 people locally never mind 7.5 million in Nanning.

Still, its nice to be friends with other cities even if the expectations are a little off kilter.

In other news:

Could more autonomy hurt the North? One expert says yes. Northern Ontario Business. October 2nd, 2017.

Cambrian student population reaches highest total in 10 years. Northern Ontario Business. October 2nd, 2017.

Give First Nations priority access to marijuana industry. Nugget.ca. October 2nd, 2017.

Developing a Smart City important for the economy. Saultstar.com. September 29th, 2017.

And in terms of negative economic impact when a major broader public sector employer shuts down....

Laurentian University strike enters second week, administration says new offer on table. CBCNews Sudbury. October 2nd, 2017.

NORTHERN ECONOMIST 2.0