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Suppliers sourcing from U.S. coming out on top (03/04)

By IAN ROSS With a surging Canadian dollar, mounting losses in the Canadian softwood lumber industry and uncertainty in the price-sensitive automotive sector, the Canadian manufacturing scene is anything but stable.


With a surging Canadian dollar, mounting losses in the Canadian softwood lumber industry and uncertainty in the price-sensitive automotive sector, the Canadian manufacturing scene is anything but stable.

Some of the few industries to emerge unscathed are those with high U.S. componentry in their product.

Mining equipment suppliers who source engines, axles, transmissions and other high-end parts from the States to take advantage of a lower American dollar have “really come out on top,” says North Bay’s Rick Evans, manager of the Mayor’s Office of Economic Development.

North Bay’s emerging mining supply cluster provides a number of future growth opportunities, says Evans, beginning with the consolidation of Canadian mine builders Cementation Skanska’s offices in North Bay.

The local mining supply sector directly employs about 1,300 people and generates $82 million in earnings annually with the largest mining firms

generally deriving 100 per cent of their revenues from delivering goods and services to mining companies around the world.

The city is partnering with Sudbury and Timmins to market the region as a mine-manufacturing triangle.

“We can do it in a complementary manner even though we’re competing cities. Each of us have our strengths and we all have room for growth when we work together.”

North Bay and Sudbury are preparing to receive a Chilean mining delegation in early March with nine mine manufacturing companies in tow who will be attending the annual Prospectors and Development Association of Canada Conference in Toronto.

Another related growth area is civil engineering work with mining structural companies that have historically focussed on headframes, now doing bridge work and other civil projects.

Evans says that has led to North Bay companies doing work in the oil and gas sector. In 2000, representatives from Timmins, Sudbury and North Bay went to the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) trade show in Alberta to cultivate relationships and scout for opportunities for northern companies to get involved in some oil sands sub-contracting opportunities.

Together with Sudbury, the city is attempting to establish a sales presence with about three companies from the region in a joint-venture project during their May 2004 trip to the CIM conference in Edmonton.

“In mining, everything is based on relationships. Be prepared to put in three or four years before it bears fruit.”

In following up on Mayor Vic Fedeli’s pronouncement of bringing six new industries to North Bay’s industrial park over the next five years, Evans says North Bay is well-positioned for light industry with the ongoing four-laning project of Highway 11 to southern Ontario.

Municipal industrial taxes were lowered 66 per cent over the last three years and council will likely follow Fedeli’s lead in reducing the sale of city industrial land to $1 per acre.

A fair amount of manufacturing expansion will come from existing North Bay companies, which are “bursting at the seams,” says Evans, as indicated by firms like Plastitech, a recreational boat and kayak company, opening a 70,000-square-foot expansion a year ago.

“There’s strong investor confidence in that sector.”

New expansion is also being charted in the telecom industry. In late January, TeleSpectrum Inc. announced the addition of 250 new jobs to its 480 North Bay workforce this April.

North Bay is home to 19 call centres, employing 1,850 employees working in facilities ranging from outbound telemarketing to highly sophisticated telehealth and police dispatch operations.

Evans expects the city will likely add 300 to 400 more jobs before backing off to allow the local market to adjust.

The city is angling for more “back office” opportunities and more higher-paying telecom jobs by encouraging multi-national media companies to do their office functions, such as accounting, in cost-effective centres with “phenomenal” fibre-optics like North Bay.

“To be successful in that area, we need good post-secondary support and that’s where Canadore College and Nipissing University come into play.”

The health-care sector poses tremendous opportunities for local growth with major capital projects in the works including North Bay’s new regional hospital and Sudbury’s Northern Medical School.

A city task force is examining current and future health-care needs among the 23 recognized career fields “from janitors to specialists.” They expect to be doing an April public relations blitz during Health Care Appreciation Week with professionals giving talks at local schools to encourage young

people to consider careers in medical-related fields.

“The idea is to help with youth retention and look after immediate and future needs in the health-care sector.”

Though the city remains understaffed in family doctors, Evans says North Bay is fortunate to have many specialists either in town or within an hour and a half drive in Sudbury.

Quality of life increasingly plays a part in his economic development pitch in luring prospects to North Bay. Fifteen years ago, labour and incentives were the main talking points with companies, “now one of the first things companies ask terms of re-location, is can I get a doctor?”

The Northern Tax Incentive Zones proposed by the former Eves Tory government and currently being re-examined by the McGuinty Liberals, would likely not have contributed much to the North’s stagnant economy.

“All it would have done was put us on the radar screen. They wound up with a political solution to an economic problem,” says Evans. “They just watered it down to where it wouldn’t have made a lot of sense.”

If seniors levels of government are serious about assisting in sustained growth for the North, Evans says they should familiarize themselves with the old federal DREE program (the Department of Regional Economic Expansion), which lasted until the early 1980s and eventually evolved into FedNor.

“These were phenomenal for industrial projects,” says Evans of the federal bonusing program, which worked in concert with provincial programs to encourage large companies to set up shop in the North.

Building and manufacturing equipment were considered eligible capital costs in the program and a good viable project could count on 25 cents each from Ottawa and Queen’s Park for every project dollar.

The general rule of thumb of that era was one good manufacturing job was worth equivalent of $30,000 in public investment.

“Did it work? Yeah,” says Evans. “If you look around in North Bay, Sudbury and Timmins, and see the real anchors we have in industrial complex, the lion’s share we got or expanded during that era was through those types of programs.

“They were really great wealth generating programs.”

Both levels of government moved away from directly bonusing private sector development over concerns about U.S. countervailing action.

“Since then the for-profits that create wealth weren’t eligible for public support and we’re competing with Quebec, which has all kinds of phenomenal programs, and most jurisdictions in the U.S...with programs..

“The tax incentive zone wouldn’t have done it. Too convoluted. We need access to direct public investment.”