Canada needs a national industrial policy that works

AACI | Vice President, The Regional Group of Companies Inc.
  • Mar. 25, 2015

Industrial policy.

John ClarkIt’s a phrase that has had a mixed reception in recent decades. “Industrial policy” has often meant government programs in which bureaucrats, with little experience in how free market forces work, have tried to bolster some industries over others. It often smacked of trade protectionism, with all the negatives that implies.

But seven years after the financial crisis, the sentiment against a national industrial policy has shifted, and with good reason. Canada’s one-time manufacturing powerhouse, Ontario, is still struggling to avoid becoming a “have-not” province. Western provinces are on shaky ground with the plunge in oil prices because they haven’t had the foresight to diversify their economies, and have spent all their royalties from these valuable but non-renewal resources.

It all comes down to manufacturing.

Hundreds of thousands of manufacturing jobs have been lost across the country, particularly in Ontario. Resource-rich provinces like Alberta have never bothered to take advantage of their cheap domestic fuel supplies to build a strong manufacturing sector.

A lot of talk from our political and government leaders often focuses on Canada’s  “innovation economy” – with manufacturing jobs vanishing overseas, we have to compete with our ability to innovate and bring to market disruptive new technologies with the intellectual property rooted deeply in Canada. We’ve got a capable population and like some countries which seem to be succeeding in a competitive industrial marketplace, we need to focus on quality of innovation and production.

Tell that to all those folks who used to work for the likes of Nortel Networks.

Take a look at Asia, or China. They crank out engineers and developers at a pace we can never hope to match. Critics suggest the calibre of our people is better, pound for pound. Maybe they are. They’re still dreadfully outnumbered. And we don’t exactly have a reputation in this country for having the chutzpah to turn our bright ideas into powerhouse multinationals.

We can’t all be rocket scientists

Here’s another thought – not all of us have the stuff between our ears to become engineers and developers.

I know it’s scandalous to say, but let’s be honest: Some people are suited for rocket science, but many are not.

Which is just fine. It takes a mix of skills and aptitudes to have a well-functioning society and a healthy economy. While some folks need to be developing software and ways to solve the world’s social ills, other people need to be stocking grocery store shelves, cleaning buildings or serving you your double-double.

Most importantly, people who are suited for it need to be taking semi-skilled manufacturing jobs.

Instead, Canada has focused far too much on its financial services and resource sectors, while manufacturing has withered. And I don’t mean just advanced manufacturing for high-end technology products. I mean ALL manufacturing.

Small-town Canada is dying

Smaller communities across Ontario, and Canada, are dying. Their young people have no opportunity. It helps to explain why Canada’s big six urban population centres have such a large percentage of the country’s population.

Why has this happened? Small and mid-sized manufacturing businesses that for decades have been the lifeblood of smaller communities are fading away or are simply gone. These communities are losing their economic base.

What’s tragic about this is that there could be a job for everyone in Canada, if skill and aptitude were matched with opportunity.

As the recent story about the Ottawa-Carleton Association for Persons with Developmental Disabilities (OCAPDD) contract with the Library and Archives Canada attests, just about everyone in our society can contribute in some positive way, if they are given the chance. It’s important that they do.

We need to repatriate small-town manufacturing

Canada doesn’t need industrial policies that attempt to pick winners and bolster losers in specific industry verticals. What it needs is a concerted effort to repatriate all those various tiers of manufacturing jobs in any number of industries that have been lost overseas.

You might argue some of these are relatively lower-paying jobs. But a small wage is better than no wage at all. And raising a family in a small community where there is local employment is going to cost far less than in a large urban centre, where a claustrophobic condo can cost far more than single-family home in a small town.

We need action to prevent the continuing death of small-town Canada, which is happening right before our eyes due to the loss of local manufacturing. Otherwise, we run the risk of becoming a poor country, regardless of the best efforts of our engineers and software developers.

The real estate industry has a role to play

By don’t assume I am laying this challenge at the feet of our political leaders alone because I’m labeling the solution a “national industrial policy.”

The commercial real estate industry has a lot vested in this, too. When local economies falter, real estate values plummet. When economies are strong, everyone benefits. Owners and investors are the ones with the holdings that can be turned back into productive places of employment.

In recent years, there has been some really inexpensive industrial real estate come on the market. In Eastern Ontario, these include the large Hershey and Black & Decker plants in Smith Falls and Brockville. These facilities were bought for a fraction of their replacement cost and the only thing that’s missing is the innovation to make use of this space.

Government can help by creating a regulatory regime that is very responsive to changing needs. Approval processes that have taken years in the past simply drive business away. Regulation is essential, but if the current endless process of regulation had been in place in the 19th Century, this country still would look like it did 500 years ago.

To discuss this or any other valuation topic in the context of your property, please contact me at [email protected]. I am also interested in your feedback and suggestions for future articles.

John Clark is Vice President with The Regional Group of Companies Inc. He has more than 33 years of experience in the real estate appraisal field, is a fully accredited…

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John Clark is Vice President with The Regional Group of Companies Inc. He has more than 33 years of experience in the real estate appraisal field, is a fully accredited…

Read more

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