Comment
Industrial heartland taking a hit
by Bruce Haire

The rise of the Canadians dollar to almost 96 cents is having tremendous ramifications on this province's manufacturing sector.

While the more resourced based economies out West are red hot, Ontario and Quebec are getting hammered by both the rising dollar and rising energy costs.

The result is that Ontario has lost 148,000 manufacturing jobs in the last two years.

It was only just over five years ago that the dollar was at a low of 61.76 U.S. and at the same time oil was $18 a barrel.

Today the dollar is flirting with 96 cents and our biggest export in Ontario is not products but manufacturing jobs. The cost of a barrel of oil is over four times what it was in 2002.

The problem is that while Bank of Canada governor David Dodge tries to curb inflation and the hot provincial economies out West, every rate hike strikes another blow at Ontario.

Asked about the industrial sector, Dodge replied that "it wasn't in his mandate" to save the sector. Dodge was speaking like a true bureaucrat who is assured his pay cheque.

The meteoric rise of the dollar could also be hammering away at the provincial budget.

Finance Minister Sorbara brought down his budget in March when the dollar was 85 cents U.S. He based his budget on a 86 cent dollar but now the dollar is another dime higher.

One economist predicts each cent rise is costing the provincial treasury between $25 and 125 million.

Last time the economy was taking a hit like this it was SARS and it was just into the run up of the last provincial election four years ago.

Even though a SARS like hit to the economy is not expected, the dollar's rise could be eating away at a supposed balanced budget.

Statistics Canada reported that in April we were down to zero growth in the economy.

The higher interest rates that Dodge loves to impose on us hits manufacturers again by pushing up borrowing costs.

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People often make statistics say what they want them to say. Recent statistics showed that electricity usage actually saw a drop which certain lobby groups jumped on as the success of conservation. A more detailed look at the figures showed they dropped because of lower industrial demand. Fewer industrial jobs - less industrial use - it's simple really. Residential usage actually grew.