When it began nearly 40 years ago, Alps Welding focused its business on the local chemical companies around its home base near Toronto. But, as Canadian refineries and chemical plants have shut their doors and moved overseas, the company has had to look far beyond its home territory. It now manufactures custom equipment such as pressure vessels and heat exchangers for the petrochemical industry across Canada and the U.S. These days, roughly a quarter of the company’s business comes from the Alberta oil sands. Unlike many manufacturers in Ontario, which have been forced to lay off thousands of workers as business has dried up, Alps has been on a hiring spree, with much of that growth thanks to Western Canada’s booming oil industry.
“It’s a big opportunity and it’s a growing opportunity,” says Alps president Dennis Dussin. “There’s more activity and more work in the oil sands than what the manufacturing industry in Alberta can handle.”
That must sound like welcome news to Ontario’s manufacturing sector, which has lost more than 300,000 jobs in the past decade. Meanwhile, booming Alberta has a seemingly insatiable appetite for new goods and skilled workers. But so far, firms like Alps are proving to be the exception, rather than the rule, when it comes to the ability of Ontario manufacturers to expand their business into the oil sands. Thanks to the steady bleed of manufacturing jobs overseas and the boom-bust nature of the Alberta economy, some doubt that Canada’s energy sector will ever become the silver bullet that will save Ontario manufacturing.
The vast majority of what Ontario exports to other provinces are its services, particularly its financial, business and computer expertise. Meanwhile, between 2000 and 2010, the amount of manufactured goods Ontario exported to other provinces actually dropped—from 8.7 per cent of GDP to 7.7 per cent. As of 2009, the last year for which numbers exist, Ontario exported just $600 million in manufactured goods to the oil sands. That’s a huge figure, but it represents a tiny sliver of the more than $10 billion in goods that Alberta oil companies imported that year, according to a report last year by Canadian Manufacturers and Exporters.
In fact, it’s Alberta manufacturers who have been the greatest beneficiaries of the oil sands boom. The Conference Board of Canada estimates Alberta is home to 70 per cent of all Canadian manufacturing for the oil sands, compared to 14 per cent for Ontario. Alberta companies sold more than $3 billion in goods to the oil sands in 2009. Over the past decade, Alberta’s manufacturing sector has grown by $27.6 billion, while Ontario’s industry has shrunk by roughly as much.
For a time, the biggest hurdles to greater trade between the two provinces appeared to be political. Leaders from Ontario and Alberta seemed to go together like oil and water; interprovincial relations consisted of former Ontario premier Dalton McGuinty deriding Alberta’s “petro dollar” and former Alberta premier Alison Redford demanding an apology. Today, both premiers are history, and the two provinces appear ready to turn over a new leaf. Last fall, Ontario Premier Kathleen Wynne gave a sold-out talk to the Calgary Chamber of Commerce touting the benefits of a partnership between the two provinces, a speech sponsored by several major oil companies. This summer, Ontario opened a trade office in Alberta, the first such office it has opened in another province. Where once Ontario cast itself as the country’s champion of renewable energy, today, the government’s environmental messaging is being tempered by talk of what partnering with Alberta can do for the province’s ailing economy. “It’s a challenging fine line, no question,” Brad Duguid, Ontario’s economic development minister, says. “All of us, obviously, are interested in ensuring that, whatever projects go forward anywhere in the country, all environmental considerations are given. But, at the same time, we know that the Alberta oil sands has a national impact in economic growth opportunities. In particular, Ontario is one of the parts of the country that has billions of dollars at stake in our economy moving forward.”
TO READ MORE: http://www.macleans.ca/economy/business/can-the-oil-sands-really-be-the-saviour-of-ontario-manufacturing/Bonne Chance! Paola
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