Why Mexicans Don't Drink Molson. Andrea Mandel-Campbell
manufacturing jobs were lost as the forestry, furniture and automotive industries hemorrhaged jobs. The number could reach 400,000 by 2007, as close to seven hundred manufacturers went bankrupt in 2005 alone, squeezed by a high dollar, skyrocketing energy prices and shrinking shipments to the United States. The sudden decline had economists busy slashing optimistic growth forecasts for 2007 as Ontario, hit with the bulk of the job losses, flirted with a recession.
With the sector teetering dangerously on the brink, many manufacturers see little choice but to move south of the border to remain competitive. Celestica, Gildan Activewear, Distinctive Designs Furniture, Grant Forest Products, Exco Technologies and E.H. Price, among others, are shifting production south of the border. “If we don’t get the productivity, then we’ll just switch our production to the U.S.,” warns Jim Pattison, whose vast holdings include timber, fisheries and food packaging.48 As Gerry Price, CEO of Winnipeg-based E.H. Price, explains: “All our plants are highly productive. However, the reality is that all of the niche products we build in Winnipeg could be made even more profitably in Phoenix.
There’s no economic reason to continue operating in Winnipeg, other than it’s my home.”49 This is not to say that jobs aren’t being created. In 2006, new jobs, particularly in the higher-paying professional and managerial ranks, were springing up like weeds on the back of the Alberta oil boom. But for the most part, Canada has largely been churning out temporary McJobs while relying on self-employment and government to pick up the slack. Between 2000 and 2004, job growth was driven by restaurant work and new security personnel, clerical and retail sales jobs, which both grew by 15 per cent.50
One of the big winners has been the telemarketing industry. According to Site Selection Canada, a company that helps American outsourcers set up in Canada, six thousand call centres have been established here over the past decade, creating 400,000 jobs. The jobs pay on average $12.45 an hour and have been portrayed as the magic bullet for towns from Sault Ste. Marie to Red Deer, all struggling with shuttered industries and declining populations. And it’s not just small towns that are jumping on the call centre bandwagon. In Ottawa, considered to be Canada’s high-tech hub, research-intensive jobs at companies like Corel and jds Uniphase have quietly migrated south, replaced by the call centre operations of the likes of U.S. computer giant, Dell.51
In one magazine article, an American telemarketing company sang the praises of a cheap workforce in which 67 per cent of employees have a post-secondary degree. “You could still pay a Canadian less money [than an American] and have a college graduate, for God’s sake, doing the work for you,” enthused the company’s general manager. “You’re dealing with a far more intelligent person here in Canada that will do the job, versus the type of people that they will attract in the States.”52
Wayne Marston, the Hamilton labour activist, just shakes his head in wonder when he thinks of the country’s newest answer to foreign investment —a combination of cheap labour and low capital expenditure reminiscent of Mexico’s low-wage, assembly-for-export sector: “It’s minimum-wage jobs, transient workers and high turnover. To say call centres are a symbol of the future is idiotic.”
Add that to the tens of thousands of skilled immigrants forced to work as cleaners and cab drivers, the software engineer who makes $57,000 compared with an American making $125,000,53 while the Canadian cities with the highest family income— Oshawa, Ottawa and Windsor — are propped up either by American car makers or the government. Sweeten the pot with a number of important industries teetering on the brink, and the concept of an economy operating at full capacity becomes, well, relative.
Canada’s performance is even more questionable when one considers all the Canadians who have been forced to leave the country because the high-quality jobs they seek simply don’t exist. The lack of globally oriented firms means that the career path for many is confined to the domestic market while foreign multinationals are increasingly relocating their higher-end jobs abroad, limiting their Canadian presence to sales positions. Schulich Business School launched its international mba program in 1988 with the aim of supplying Canadian companies with internationally minded graduates, but as Dean Horváth quickly learned, there were no jobs waiting for them when they got out. “So many ended up going abroad and they are still abroad, and it’s not getting any better,” he says. David Pecaut, senior partner with the Boston Consulting Group in Toronto, can attest to the problem. “I can’t tell you the number of people I can think of right now who say they would come back to Canada if they could work in a company that’s truly global,” he says. “They can’t find the opportunities.”
Which is why Eamon Hoey, a Toronto businessman, is making sure his daughter doesn’t hit her head on the Canadian glass ceiling. “My recommendation to my daughter is to find another country. She’ll go to grad school in the U.S. or the U.K., and hopefully that’s where she’ll end up,” he says. “You can’t be proud of a country that truncates its youth, prevents it from accomplishing and sets up barriers and systems that create winners and losers.”
Glen Hodgson, chief economist with the Conference Board of Canada, admits he’s also concerned about his kids’ future: “The realist in me is worried. Are we going to go down as a country? Because if you look at the data and use China as a litmus test, we’re not succeeding; we’re actually seeing our presence in the world shrinking.” Canada’s long-term economic potential, he says, is “clearly fading.” According to a study by Global Insight released in 2006, Canada’s growth is forecast to lag behind almost every other major economy within the next twenty years, slipping to below 2 per cent and a far cry from the 3.25 per cent of the 1980s.54
So, will Canadians be spurred to action? Husky’s Robert Schad doesn’t think so. “The Romans didn’t wake up until Hannibal was right at the front gates, and the reports came in every day. He was getting closer and closer, and nothing changed until he was there.” Schad figures Canada’s embarrassment of riches can keep a Hannibal-like incursion by global markets at bay for some time to come. “If things get tough, we will just sell everything off to keep the status quo — just like when you sell your last jewels for a piece of bread,” he shrugs. “We can sell off the future for a long time. We can sit on the sidelines for quite a while.”
Maybe. Who knew that diamonds were buried beneath the Canadian tundra, or that Alberta’s tar-laden oil sands would pump out so many millionaires almost overnight? But while some have hit pay dirt, others are watching as their wells run dry. Just ask the residents of Kitimat, B.C. Founded more than fifty years ago, the picturesque town of ten thousand was supposed to be a model for the province’s industrial future. Neat housing subdivisions were carved out of the forest and rock along the northern coast, and industry was lured with the promise of government subsidies. Alcan built a massive aluminum smelter as well as a hydro plant. It was followed by a pulp and paper mill and a petrochemical complex operated by Methanex, the world’s largest producer of methanol.
Yet there is growing unease in Kitimat as the population continues to decline and property values plummet. The town is slated to become the port terminus for an ambitious pipeline project that would transport crude oil from Alberta’s oil sands to the B.C. coast before being shipped to Asia. But a lack of Chinese buyers for the oil has forced pipeline builder Enbridge to put the project on hold until 2014.* In the meantime, the community has been locked in a decade-long struggle with Alcan to upgrade its aging smelter. In 2006, Alcan finally agreed to go ahead with a us$1.8 billion modernization project on the condition that it be allowed to sell excess electricity from its nearby hydro dam — to the tune of $97 million a year — to B.C. Hydro. It’s a bitter pill for Kitimat, which argues that the aluminum maker was given privileged access to cheap electricity in return for providing smelter jobs. Instead, new efficiencies at the upgraded smelter would cut the workforce by 30 per cent.* But according to the company, Kitimat, with its high labour and construction costs compared with places like Cameroon and Brazil, is lucky to be getting any new investment at all. As Michel Jacques, head of Alcan’s primary metal group, noted, without a deal to sell its surplus electricity, “[i]t makes no economic sense for us to build a new smelter in B.C.”55
Methanex, the community’s other economic anchor, has already cut town. Too fed up to fight with municipal officials