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Growth despite job losses in manufacturing

By
Real Estate Agent with RE/MAX Twin City Realty Inc., Brokerage

WATERLOO REGION

Growth, despite job losses in manufacturing...

It may be hard to believe for thousands of laid-off workers, but Waterloo Region's economy is growing.  Despite recent plant closings that have fallen on the region's manufacturing sector, particularly the auto parts industry.  BMO, the Conference Board of Canada and the Royal Bank have all predicted the region will be one of Canada's fastest growing economies beginning in 2009.

"It's definitely not a comfortable situation for these workers, but the region still has a low unemployment rate and a healthy housing industry, which is one of the most up-to-the-minute measures of the health of an economy," says Doug Porter, deputy chief economist for BMO Economics..

That's a small consolation to thousands of workers who have lost their jobs or face the prospect of losing their jobs.

Kitchener Frame's parent company has gone back to their original plans to close the automobile frame manufacturing plant in April 2009, due to slow sales of sport utility vehicles. It already has laid off 400 of its 1,200 workers..

The list of companies that have closed local operations or downsized has grown dramatically since the beginning of the year:

ClosetMaid's Cambridge Stack-A-Shelf plant laid off 45 workers;

Ledco Ltd. declared bankruptcy, putting its remaining 65 employees out of work;.

Cambridge Stampings will shut down in April, ending employment for its 80 remaining workers; and International Automotive Components will close the historic former Collins & Aikman plant near Kitchener's core this summer, forcing 80 people to find new jobs.

The string of troubling news comes after two years of major layoffs and closings.

Last year, NCR Corp. closed its bank machine production operations in Waterloo, putting 450 out of work.

MTD Canada Inc., which makes lawn mowers and snowblowers, closed some of its operations, resulting in 200 job losses.

Lear Corp. laid off hundreds of workers in its Kitchener seating parts plant due to dwindling work from the struggling U.S. Big Three automakers. .

In 2006, B.F. Goodrich closed its Kitchener tire plant, putting 1,100 out of work.

It adds up to 3,500 job losses. The numbers are likely much higher because a number of companies have quietly closed or downsized.

Rick Moffitt, president of the Waterloo Regional Labour Council, equates the turmoil in the auto industry to other historic shifts in the local economy, such as when the textile and rubber industries virtually disappeared.

But while other cities that depend on the auto industry, such as Windsor and Oshawa, are mired in economic turmoil, Waterloo Region's economy seems to be holding its own.

Labour force numbers from Statistics Canada bear that out.

The unemployment rate in the Kitchener census metropolitan area was 5.3 per cent in January, half a percentage point lower than it was a year ago. There were 256,100 people working in the area in January, - 3,200 more than a year earlier. Statistics Canada says 14,300 people were unemployed, down from 15,400 a year earlier.

The percentage of workers who are employed in the region has remained stable at 67 per cent in the last two years. That number is four percentage points higher than the national average, which is itself at an all-time high.

That employment rate is "spectacular," says Larry Smith, an economics professor at the University of Waterloo.

So, why aren't we facing the same struggles as a city like Windsor, which has a jobless rate of 8.9 per cent?

There are a number of reasons, including the diversity of the region's economy and the strength of some of our manufacturers.

Toyota Motor Manufacturing Canada is hiring 2,000 people, many from this region, for its new auto assembly plant in Woodstock. It is transferring 1,000 workers from its Cambridge plant to Woodstock, which means a number of new workers are needed here.

The company already has 300 workers preparing production lines in Woodstock, says Toyota spokesperson Pat Clement. There were nearly 50,000 applications processed for the 2,000 available jobs.

A number of other companies are expanding, although on a smaller basis.

Elmira Poultry is investing millions in its Waterloo poultry processing plant and hiring 35 people;

Grand River Foods is in the midst of a major expansion; and

Kuntz Electroplating is hiring again, thanks to new work from growing markets.

Technology leaders such as Research In Motion, Open Text Corp. and Christie Digital Systems, the high-tech sector also has enjoyed steady growth. A host of smaller startups also have been expanding.

There also are a number of other small-scale success stories that have not been made public, those who follow the local economy say.

Porter, who was in Kitchener recently to deliver BMO's economic outlook for the region, says there is evidence to suggest people are landing jobs in the services industry. And they are jobs that pay well, he says.

"The kind of job growth we've seen in the service sector is not in the trade sector, which includes retail trade."  In other words, it not just McDonald's and Tim Hortons that are hiring. "It's also been in the technical and professional jobs," Porter says. "The construction industry has been huge. A lot of infrastructure projects are being constrained, as I understand it, by a lack of available labour."

Porter also says there's also been steady job growth in the financial services industry.

That doesn't mean laid-off production workers are finding work.

Porter says the labour force statistics don't take into account people who settle for an inferior job outside their field. They also don't reflect those in their 50s who are no longer in the workforce because they accepted buyouts and early retirement packages. "That's one situation where the statistics do not tell the whole story," Porter says.

According to Statistics Canada, the percentage of the population that is working or looking for work has declined. Two years ago, the so-called participation rate stood at 72 per cent. It was 71 per cent in January, which suggests some people have given up searching for work.

Smith, the UW economics professor, says there is a solid argument to be made that a segment of the population is not benefiting from the region's economic growth.

Because the region has such a large manufacturing base, there is a much higher proportion of people here who didn't need to pursue post-secondary education to find work. These people, Smith says, are the ones most likely to be left out by the job growth.

"I would not challenge that point," he says. "But it's not the same as saying the system is in systemic failure."

Smith says it's human nature to focus on the large-scale deaths in the economy and gloss over the hundreds of small success stories.

"It may sound cold-blooded, but industries rise and industries fall," he says. "Death is a larger event than hundreds of small births."

History is on the region's side, Smith says. The economy has reinvented itself dozens of times over the last century and likely will again.

Connie Rice
Keller Williams Greenville Central - Simpsonville, SC
Connie Rice & Partners - Greenville, SC Real Estat

Welocme to Active Rain. This is a great site with a wealth of knowledge available. Hope to see you around! Happy blogging~

Jun 22, 2008 08:15 AM
Bill Kennedy
Keller Williams Greenville Upstate - Greenville, SC
Homes For Sale Greenville SC

Welcome to Active Rain!  This is a great community for learning as well as sharing.  Check out some blogs, join some groups, and enjoy! Just watch out - it's VERY addictive!  I look forward to reading some of your future posts.

Jun 22, 2008 08:41 AM
P G
Charlottesville Solutions - Charlottesville, VA

I see that you are new to Active Rain and I just wanted to welcome you. I hope that you enjoy it as much as I do and that you find it a great resource.

Jun 27, 2008 01:42 PM
Charles (Chuck) Crooker
CROOKERHANCOX HOME INSPECTIONS INC. - Brantford, ON

Good post, hope it helps some that do not think the area is doing well, we have not seen too much if any slow down in the inpsection of your area. Chuck.

Jul 25, 2008 03:17 PM