By LIVIO DI MATTEO
The 1990s were unkind to Thunder Bay, but the early 21st century has witnessed a stabilization of its economy and there are now prospects for solid future growth and development.
The traditional engines of Thunder Bay’s economy are natural resources, transportation and public services. During the 1990s, globalization, shifting markets and technological change reduced employment in the resources and transport sector while government fiscal problems cut public sector jobs.
Between 1995 and 2000, employment levels dropped by four per cent - approximately 2,800 jobs. In the case of federal employment, over the period 1990 to 2002, Thunder Bay saw the third-largest decline in federal employment across CMAs- a 26 per cent drop. It was no surprise then that the 2001 Census revealed a drop in population of 4,600 people as out-migration reared its ugly head in response to the job loss. The worst appears to be over and recovery is underway driven by a number of engines. Thunder Bay’s economy has traditionally been the most diversified in Northern Ontario, and that diversity continues to serve as a stabilizer, as well as a source of new opportunity.
First, the completion of the new regional hospital and medical school, combined with the continued growth in research at the university, has fueled construction projects as well as potential new businesses in bio-medical research and technology.
Second, the traditional core of forest product and transportation industries is stable, though the impact of the softwood lumber dispute will slow employment creation in the short run.
There may also be some further uncertainty at the Bombardier plant until the company’s restructuring
is complete.
Third, the city’s role as a regional centre for entertainment, personal, medical and financial services and retail has grown over the last five years, especially with the arrival of big box stores in the inter-city shopping area, as well as a number of call centres. The service sector now accounts for nearly 80 percent of employment in the Thunder Bay area.
Indeed, Thunder Bay and its surrounding region, which is goods-producing intensive, complement each other quite nicely in terms of their economic strengths.
Finally, Thunder Bay has quietly acquired an arts and culture sector that now forms the core of a regional destination tourism market of 250,000 people. Along with Old Fort William, the Thunder Bay Historical Museum Society and the Art Gallery, there is now a Military Museum and a pioneer village Founders Museum. There is a successful Symphony Orchestra anchoring the auditorium, and Magnus Theatre is in a new performance facility in a heritage area close by the new casino, which has helped spur new dining establishments in the waterfront area.
As well, new golf course projects are under development that will also serve as important tourism destinations to a city already abounding in natural scenery. Added to these facilities are a series of special events that make Thunder Bay in the summer a festival city.
July 2002 saw a Blues Festival, a Fringe Festival, Riverfest, Dragonboat Races and two Italian cultural festivals. The economic impact can be substantial.
For example, the Blues Festival had 350 volunteers participate and saw attendance of 14,000 over three days.
One sore point on the tourism front has been the failure to bring about a substantial waterfront development project by the current city council, but it is an election year and some new blood and vision may finally help that project take off also.
These changes are starting to pay off with some solid economic performance statistics. The value of non-residential building construction in the fourth quarter of 2002 was up 194 per cent from the fourth quarter of 2001 - from $36 million to $106 million. The total value of building permits was up 87 percent in January to November 2002 compared to the same period in 2001 - an increase of nearly $80 million.
The unemployment rate in the first quarter of 2003 averaged 5.4 per cent - down substantially from the average 8.2 per cent rate in the first quarter of 2002. Jobs have been created in the local economy with total employment in 2002 about 1.5 per cent higher (approximately 900 more jobs) than 2000.
The improved economy is spilling over into the housing market. There were 1,599 MLS total residential sales in 2002 - up from 1,279 in 2000. Single-detached housing starts were up and reached 193 in 2002 compared to 163 in 2001 and 141 in 2000.
While it is going to take substantial effort to return to the levels of activity and employment of the early 1990s, these indicators suggest that after years of economic pain, the Thunder Bay economy has begun to turn around.
Livio Di Matteo is with the Economics Department at Lakehead University.
