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The way we work: Part II: The challenges
we face
EDITOR'S NOTE: Manitoulin Island evokes
visions of a pristine, unhurried and restful haven, an Island
both literally and figuratively separate from the hurly burly
and stress of life in the big leagues of commerce and industry.
But the residents of Manitoulin must also live, raise their
families and provide the necessities of life and the hope of a
bright future for their children.
Recent events have highlighted the
constant struggle between the pristine 'unspoiled' Manitoulin
and the need for commerce and economic development to provide
jobs and the tax base so necessary to maintaining services.
This article, the second in a three-part
series, will look at some of the challenges that face
Manitoulin's traditional sources of employment and economic
growth. The first article profiled the economy of the Manitoulin
District and where our jobs currently lie and the final article
in the series will examine what development experts think will
be needed to stop the 'so-called' economic death spiral facing
many Northern communities.
by Michael Erskine
MANITOULIN---If the past couple of years
for Manitoulin Island's traditional economy were a prize fight,
Manitoulin would probably be on its way out of the ring on a
stretcher by now.
The punches have been coming, fast and
furious, and they are coming from a global Goliath of challenges
against which our David-like resources appear to need a miracle
of biblical proportions to keep the Philistines of economic
decay at bay.
Let's start with the tourist and
recreation industry, that key industry around which much of the
debate surrounding the economic development of Manitoulin Island
seems to centre.
A slow and steady decline over the past
two decades has been noted in the accommodation and food service
sectors (that sector which most reflects the health of 'tourism'
in our economy) across the Island, with the immediate area of
Northeastern Manitoulin and the Islands (NEMI) appearing to have
bucked that trend.
The word 'appearing' is used because, as
suggested by NEMI Community Development Corporation Economic
consultant Peggy Young, the statistics supporting the claim that
tourism rose in the NEMI area are at least in part artifacts
stemming from the amalgamation of Howland, Little Current and
the Islands into a single municipality during the study period
from which the statistics were drawn.
Added to the overall downward trend that
has been going on locally, the global tourism industry was
hammered by the impact of 9-11. The terrorist attacks that
destroyed the World Trade Centre also took down much of the
global tourism trade, as people began to amend plans for
vacations and travel to keep them closer to home. This is an
effect felt from Bangkok to Iqaluit, as attested to by Robert
Tookoome and Eric Idault, business services officers from
Nunavut who were in town visiting Waubetek Business Services
last week.
Even in Canada's farthest Northern
reaches, the global tourist market has all but dried up. The
jury is still out as to whether this is the beginning of a
long-term trend or just a semi-temporary blip that will
normalize as memories of the terrorist attacks fade from the
collective memory. What is clear is that the dampening effects
are still with us and look to remain so while our American
cousins are physically engaged in the Middle East.
Closer to home Ontario tourism has been
reeling from the impact of SARS, a respiratory illness that
spread to a couple of health facilities in Toronto. Even though
the illness was limited to a handful of deaths in Toronto,
compared to the hundreds in China, people across the world, and
particularly the US now know us primarily for the disease. The
worst blow came with the announcement that a second wave had
been detected after Toronto had been declared clear of the
disease.
The mantra from Tourism Ontario may be
that: 'Next year will be a normal year,' but tourism operators
across the province admit they are anxious that 'normal year'
may be mean a 'new normal' with lower expectations and bringing
along with it a new baseline for the bottom line.
The provincial government has released
millions of dollars in 'SARS' relief for the tourism industry
and budgeted millions more for advertising campaigns geared to
undoing the damage a brief focus by CNN has wrought, but as a
massive provincial deficit looms on the horizon, hope for
further relief from that quarter seems forlorn at best.
Even Mother Nature seems set against us,
as historically low water levels seem to be destined to set
their own 'new normal.' Thankfully water levels have not dropped
to an all-time low yet, but the small amount of winter snowfall
is hampering more than just the nascent snowmobile tourism
market. Without significant run-off from spring melts and if
global warming continues to bring us warmer than normal springs,
summers and falls, evaporation will make a record only a matter
of time.
Manitoulin has also often been cited as
a transition destination, a place people tend to travel to and
from in order to either get to their cottages in the North or to
return home and work after their vacation.
"Getting people to stop here on their
way through has been an issue for as long as I can remember,"
said Ms. Young. "We were discussing that 10 years ago while I
was working for the Manitoulin Economic Development Association,
and while I was at the ministry it was an ongoing debate. How do
you get people to treat Manitoulin as a destination."
Finally, government regulation has
sounded the death knell for a number of resort operations across
Ontario, with many deciding that trying to meet the added costs
of new water treatment and testing regulations have taken them
beyond their tolerance point.
In the words of one local operator who
closed his doors for good this year: "It just isn't worth it
anymore."
In an industry that is often described
as marginal at best, any further interference by well-meaning
government regulation may deliver the final knock-out blow to
even more businesses.
Agriculture has always been a Manitoulin
staple, but with the advent of the huge agri-corp dominance of
the food market and a steady decline in the family farm, farming
has been playing a smaller role with each successive year.
Although the Island's number of
frost-free days places it more in the south-western Ontario
growing climate than that of Northern Ontario (witness
frost-free days numbering in the 90s for new Liskeard), much of
the Island is not well suited to heavy agriculture. Manitoulin
does share the thin soil-covering left to the area by a glacial
past. It just rests over flat dolomite and alvar rather than the
ground-round mountains of the pre-Cambrian shield in the rest of
the North.
Manitoulin depends largely on cattle
farming of some sort for its agricultural economy, at least
178-odd farms did in 1996, and contented lumbering bovines
continue to strongly dominate across our farms and fields. It
seems as if the non-acidic properties of that same dolomite
foundation that lies beneath our fields lends a special quality
of taste to meat from Manitoulin. Whatever the reason,
Manitoulin beef remains in high demand.
But all things are relative, and a new
study estimates Canada has lost $3.3 billion since the first
case of BSE (a.k.a. mad cow disease) was discovered six months
or so ago.
The impact "represents the greatest
threat and shock the Canadian agricultural industry has ever
experienced," according to the report by Serecon Management
Consultants Inc., of Edmonton, prepared for a beef industry
coalition. Those impacts, said the report may mean cattle culls,
farmers moving out of the sector and the downsizing of rural
communities.
Over 60 percent of Canada's beef is
shipped to the United States, a market that still remains
largely closed to Canadian meat and cattle.
Prices for cull cattle have dropped 75
percent since May, a factor that impacts on dairy farm costs as
well as beef cattle operations.
The loss of equity value for farms,
estimated at another $3 billion, places a further strain on
lines of credit and capital expenditure plans, threatening a
farmer's ability to spring back should the market miraculously
recover.
In the case of Manitoulin Island, the
base economic hit has been pegged at some $12 million so far. A
comparable hit to the equity and ancillary services can be
assumed to hold largely true here as well.
Opportunities to move into other areas
within the agricultural sector, with crop diversification and
different herd animals are limited here. Manitoulin remains far
from markets for bulk grain shipments and the topography is best
suited to what is already raised here. That's one of the main
reasons why farmers do it in the first place.
In the final sector of the big three
resource-based industries, the mining and quarrying sector is
holding its own on Manitoulin, from all accounts, but it is a
small sector in the overall mix and it is in just these kinds of
labour-intensive jobs that mechanization has been making a large
impact in recent years. Any new operation would likely meet with
strong opposition from people living near the proposed site, and
the environmental regulations and restrictions placed on such
operations generally mean the product of an operation of any
scale must have a very high value to make it worth the effort.
Few economic consultants suggest that this is likely to be an
area of high job growth for Manitoulin.
The issues facing the forestry sector on
Manitoulin present their own unique challenges. Sawmills face
stiff competition from log buyers who are paying in American
dollars. That means, oddly enough, the history of a low Canadian
dollar makes it harder for local mills to compete.
"I know people who are hauling cedar
logs off the Island by the truckload right now," said Gail
Taylor, who operates a specialty lumber sawmill near M'Chigeeng.
The challenge, notes Mr. Taylor, is that
while Canadian lumber faces a 30 percent tarriff entering the
United States, raw logs can be imported into that country by a
US company and processed there duty-free.
Mr. Taylor and his Canadian compatriots
in the timber industry face stiff competition for logs by
companies that can pay in American greenbacks. His business,
milling custom siding and moulding is a high-value added
operation that employs people for much of the year.
"Our rule of thumb is as long as the
mercury stays above 15 below we can operate," he said. When the
temperaturs dip below that, it is too hard on the equipment to
continue. Luckily for the 14 people he usually employs those
days don't add up to too many in a season. "We operate pretty
much spring, summer and fall right up to almost Christmas.
With a strong Canadian dollar, and if
the softwood dispute between the United States and Canada is
finally resolved, forestry may be a bright spot.
Unfortunately the World Court dealt
Canada a significant setback by overturning a previous ruling in
its favour, so it is not time to get out the sunshades yet.
Many of Manitoulin's service industries
rely on the farm sector for a significant slice of their
business model, of course, nothing here exists in a vacuum, and
the added economic losses to those businesses paint an even
bleaker picture of the future.
In terms of the largest employment
sector, Health and Social services, Manitoulin may still be in
good shape. These sectors depend on government transfers and are
at least somewhat insulated from short term economic illness in
other sectors of the economy. The challenge here however stems
back to the whole concept of economy as a system. If people are
moving out of the area because they can't make a living here, if
population trends continue to drop at the precipitous rates they
have been, then the argument in support of continuing the
current level of health and social services, and the highly paid
professionals they employ, also declines.
This is a key part of the 'death spiral'
identified by KPMG LLP's Oscar Poloni in his final report to the
NEMI Waterfront Development Steering Committee this past fall.
The spiraling decline of Manitoulin's once thriving rural
communities into a band of ghost towns, with a handful of small
shops and seasonal stores opened only during the still-waning
peak of a reduced tourist season, could only too easily become a
reality.
The education sector depends on children
to fuel any growth and to even maintain its current levels some
significant population growth is required. Fewer students mean
fewer teachers and fewer administrators and support staff.
Even the municipal service sector is not
immune. As population numbers and the income of those who remain
in an area continue to decline, the ability of the tax base to
support the current level of services will continue to decline.
The local politician's lament of "We just can't afford it
anymore," will become an even louder dirge to an increasingly
moribund economy.
The First Nations are not immune to the
spin-off effects of a general economic decline either, as many
band residents are employed in jobs outside the boundaries of
the reserve. The Island's economy is not a closed system, nor is
the fabric of its social services. Fewer services at local
hospitals mean fewer services for both communities, and fewer
economic opportunities mean both a greater out-migration of
youth seeking employment and hope, and an increase in the social
problems that accompany despair. An all too familiar cycle in
Northern communities.
The insurance and real estate sectors
will also be hit by the decline of the other sectors. Fewer
people buying fewer cars, houses, boats, motors, tractors,
cattle and barns will translate in to a shrinking bottom line
for those companies as well.
If the picture painted of Manitoulin's
economy by this report seems a melange of different shades of
dismal grey, it might help to explain the desperation in the
voices of local business leaders. While many try to put a brave
face on the situation, the future does appear bleak.
Before everyone throws their homes on
the market, packs their belongings into a handcart and begins an
economic stampede off the Island, it might be best to wait for
the final installment of this series.
In that final installment, we will
examine what initiatives are being explored by local economic
development officers, and politicians, to deal with what has
been painted here as an economic crisis of biblical proportions.
By definition, economic development officers have to be both
optimists and long range planners, a trait that may not always
play well to the political side of their jobs, but it is what is
called for by the vocation.
"It can take decades for plans to come
to fruition in this business," said NEMI CDC economic consultant
Peggy Young. "But results are often expected annually, or at
least from election to election."
Not everything on the horizon is
completely gloomy, however, although the challenges facing our
economy remain to be met. Next week we will explore what is
needed from all of us to meet those challenges.
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