Analysis

Winnipeg Free Press - PRINT EDITION

Thunder Bay shows its resilience

By: Livio Di Matteo

Posted: 07/27/2011 7:02 AM | Comments: 0

THUNDER BAY -- Northwestern Ontario's forest sector crisis was a regional economic shock that resulted in massive employment losses and yet its major centre -- Thunder Bay -- has shown remarkable resilience.

Thunder Bay itself saw three out of four paper mills close and numerous sawmill job losses over the last decade, resulting in an employment decline of about 10 per cent from its 2003 peak.

Thunder Bay has yet to recover the employment losses of the last decade but there is evidence of a transitioning economy and growing economic activity. Despite its past dependence on the forest sector for much of its employment, Thunder Bay is adjusting and positive economic change is underway.

Building permits in Thunder Bay are showing an upward trend and the total value of building permits in 2010 increased 44 per cent over 2009.

Housing prices in Thunder Bay are also healthy and are on a pronounced upswing despite the forest-sector crisis. Since 2003, the average MLS housing price in Thunder Bay has risen from $111,927 to $153,800 in 2010 -- an increase of 37 per cent but still very affordable by Canadian standards. Another indicator is the passenger volume of the Thunder Bay International Airport, which, as the regional airport, services all of Northwestern Ontario. Since 1998, passenger volumes have increased by 30 per cent and indicate that despite the forest sector downturn there is still growing demand for air travel to and from the region.

Another positive indicator is population growth. According to recently released Statistics Canada data, as of July 1, 2010, Thunder Bay's CMA population was 126,683, which represents a 3.1 per cent increase from the 2006 census figure of 122,907.

The resilient economy in Thunder Bay is being driven by three forces: the transition toward a knowledge-based economy, expenditure on public-sector infrastructure and the growth and development of the mining sector in the region.

The new knowledge economy is focused on the Thunder Bay Regional Health Sciences Centre, the Northwestern Ontario School of Medicine, and the research work of the Thunder Bay Regional Research Institute.

The recent acquisition of a new law school by Lakehead University represents a further deepening of the city's knowledge sector.

With respect to public-sector infrastructure, the region has seen millions of dollars in provincial road construction and improvements as part of a planned $273-million investment in regional highways, including a major highway upgrade project just east of Thunder Bay.

As well, there is a new courthouse under construction, a waterfront development project, substantial recent investments in city roads and bridges, a new library and recreation trail development.

This public-sector construction is being complemented by retail expansion in the Intercity area as well as some proposed new hotel projects.

While retail expansion in Intercity was traditionally seen as detrimental to the former core areas of Port Arthur and Fort William -- what Thunder Bay was before amalgamation in 1970 -- that, too, is changing.

Port Arthur's core is now being promoted as a tourism-entertainment core with a theatre, casino, waterfront development and a possible location for a new events centre arena complex.

Fort William is now the location for government services with city hall, a new regional services board headquarters and the new courthouse. After decades of rivalry, it would appear the former twin cities are finally learning to share and build on their strengths.

Finally, there is Thunder Bay's growing role as a mining service centre as well as the projected developments in the Ring of Fire, an area in the James Bay lowlands that is the subject of intense mining exploration.

Mining in Northwestern Ontario currently employs several thousand people and much of the equipment and supply needs are being met out of Thunder Bay.

Moreover, the long-term potential of the Ring of Fire is enormous given its potential supplies of nickel, copper, zinc, gold, chromite and palladium. While the full potential of the Ring of Fire is still a decade away and hinges on competitive electricity prices and infrastructure investment, it is nevertheless a source of hope.

Thunder Bay's economy is not out of the woods yet and its recent performance does present a paradox.

On the one hand, population is growing, there is a plethora of new construction activity, and housing prices are rising. Yet total employment remains flat.

Given the economic trauma of the last decade and the slow process of recovery and transition, new employment creation has yet to overcome the losses of the forest-resource sector. However, with a sustained economic recovery underway in the city and region, one can expect to eventually see employment levels pick up.

Livio Di Matteo is professor of

economics at Lakehead University.

Republished from the Winnipeg Free Press print edition July 27, 2011 A10

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