Category Archives: Ontario

The Ontario Employment Picture: December, 2014 – Deteriorating

December’s job losses in the Canadian labour market of 89,800 exceeded the 58,400 jobs lost in November. Of this number, 36% were in Ontario which has 39% of Canada’s population. Analysis of the data shows that the public sector is responsible for 56% of the job growth in the province.

The Ontario Employment Picture: November, 2014

Overall, the Canadian labour market lost 58,400 jobs in November, more than half in Ontario. The only growth was in Alberta and Saskatchewan.

In this report we present our analysis of the Ontario labour market component of the total Canadian market using two sources of data from Statistics Canada: CANSIM Table 282-0087, Labour force survey estimates (LFS), by sex and age group, seasonally adjusted and unadjusted monthly, and CANSIM Table 282-0088, Labour force survey estimates (LFS), employment by North American Industry Classification System (NAICS), seasonally adjusted and unadjusted. Data selection methodology is in the Appendix. The data we use is not seasonally adjusted. Presentation and discussion of the data follows.

So How Much Do We Owe?

The Ontario Government recently released its annual mid-term economic report 2014 Ontario Economic Outlook and Fiscal Review. We review the provincial debt situation in light of this report.

Blowin’ In The Wind

Yes, how many times can a man turn his head
Pretending he just doesn’t see?
The answer my friend is blowin’ in the wind
The answer is blowin’ in the wind.

— Bob Dylan, Blowin’ in the Wind

Yesterday Ontario ‘s Energy Minister, Bob Chiarelli was blowing in the wind again when he said:

“Businesses will come and go in Ontario … The reality is that there are more coming in than are leaving — very significant.”

— Bob Chiarelli (Toronto SUN: ‘Businesses will come and go in Ontario’: Energy minister)

Although an apparently simple claim at face value, it bears some careful examination. The phrase are more coming in than are leaving would focus on number of companies whereas the real issue is the number of jobs and the relative value of those jobs. To examine Chiarelli’s claim we will look at overall employment numbers and average wages in two industry sectors, goods-producing industries that include manufacturing, construction and natural resource extraction, and service-producing industries.

The Ontario Employment Picture: October, 2014

We have decided to do a monthly analysis of the Ontario labour market using two sources of data from Statistics Canada, CANSIM Table 282-0087, Labour force survey estimates (LFS), by sex and age group, seasonally adjusted and unadjusted monthly, and CANSIM Table 282-0088, Labour force survey estimates (LFS), employment by North American Industry Classification System (NAICS), seasonally adjusted and unadjusted. Data selection methodology is in the Appendix. Presentation and discussion of the data follows.

Ruminations of a Raptor

It’s 4:19 am and the mind is on a steady simmer. Warning: this is a ramble whose threads of coherence may be difficult to discern. It’s not dark yet But it’s gettin’ there.

Beauty and the Beast: Mom’s Latest Child

The Ontario Government released a statement on August 8th titled Ontario Gains 15,100 Jobs in July. In The Real Job Situation in Ontario: Ugly we analyzed the employment numbers for Ontario for June, 2014. Overall we noted:

First we look at the last year’s worth of data in CANSIM Table 282-0087, Labour force survey estimates (LFS), by sex and age group, seasonally adjusted and unadjusted monthly. From June 2013 to June 2014, the number of people employed increased by 22,000. This is composed of an increase of 31,200 full-time jobs and a loss of 9,200 part-time jobs. This reflects a modest improvement, year over year, in the job situation with a net increase and a likely conversion of part-time into full-time jobs.

Now we get a look at Kathleen Wynne’s latest child, the July numbers. Turns out that June was Beauty and July is … well read on.

Jobs in Ontario

added emphasis ours

Three Case Studies

The H.J. Heinz Company built its first factory located outside the US in Leamington Ontario in 1909. It became their second largest factory. They closed the plant in Feb. 2014 and sold it to an investor’s group (Investor group to acquire Ontario Heinz plant) in May 2014. This followed Warren Buffet’s acquisition of Heintz, taking it private through his company Berkshire Hathaway. Such privatizations are generally followed by pruning or consolidating marginal and unprofitable operations. As Global News notes in Buffett keeps word, Heinz strikes ‘fair’ deal with Ont. ketchup workers:

A soaring loonie in recent years has made plants across the country ripe for cutbacks or closures by multinational firms who can easily shift production to cheaper regions. More than 30,000 factory jobs were lost in Ontario alone in 2013.

We would note that during the plant’s 104 year history, the Canadian dollar has been as high or higher on several occasions and the plant was not shut down then. The key issue is the second point – there are many regions in the US where labour, taxes, energy and regulatory costs are lower than in Ontario. Further to this, Blackburn  News reports in Heinz Plant In Leamington Closing that:

The letter says the decision is not a reflection of the commitment of employees or quality of product, but primarily based on excess capacity in its North American manufacturing system. Leamington Mayor John Paterson says consolidation and efficiency are the reasons he’s been given from Heinz for the closure.

The second case is that of the 89-year old Kellogg Co. plant in London Ontario. The company announced its closure in Dec. 2013 as noted in Canadian Business (The province is partly to blame for Kellogg’s plant closure in London, Ont.: Mike Moffatt). The article points out several reasons for the plant closure:

On the surface it would appear that at least some of the lost London production went to Belleville, Ont., thanks to a $9.7-million interest-free loan in 2008 from the province and $4.5 million in additional provincial funding in 2011 … from higher wage employees in London to lower wage employees in Belleville

With the U.S. population gradually moving south and west, Ontario lacks a geographic advantage when it comes to mass consumer manufacturing. … Ontario’s transport-cost competitive advantage over areas such as the U.S. southeast and Asia diminishes, making those areas more attractive due to their lower labour costs.

It would appear that in the Kellogg case, economics favoured moving production from an old London facility to a new Belleville plant. London may be marginally closer to markets in the south and west but both have good rail and road links to the US. That leaves labour costs as the other Belleville advantage. The Winsor Star summarized the reasons (Kellogg, Heinz plant closures part of a trend) for the closure of Kellogg and other agribusinesses as:

the fallout of corporate consolidation, changing consumer tastes, labour costs and government regulations that have conspired to create a $6.5 billion trade deficit in the Canadian food processing industry.

“When the Heinz owners, for example, see a plant operating at 30 per cent of capacity, it’s an easy decision to absorb that production elsewhere, shutter a plant and save millions of dollars,” said Boecker. “There’s a great deal of global competition in every marketplace and anytime there are dollars to be saved, those are relatively easy decisions.” Economies of scale also play a role in production decisions, he said.

integration of the North American economy left Canada with little more than branch plant status and a decline in capital investment made some Canadian plants less competitive.

The final case is the closure of the Unilever Brampton plant

under construction

Fix, Build or Burn

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The Real Job Situation in Ontario: Ugly

Since the governing Liberals have proven to be inveterate liars as we have documented many times, we thought we would review the latest job statistics for Ontario. As background, particularly for understanding what seasonal adjustment means, read The Lies My Mommy Told Me, Part II.

The June Statistics Canada Numbers

First we look at the last year’s worth of data in CANSIM Table 282-0087, Labour force survey estimates (LFS), by sex and age group, seasonally adjusted and unadjusted monthly. From June 2013 to June 2014, the number of people employed increased by 22,000. This is composed of an increase of 31,200 full-time jobs and a loss of 9,200 part-time jobs. This reflects a modest improvement, year over year, in the job situation with a net increase and a likely conversion of part-time into full-time jobs.

Now let’s look at the job numbers in various sectors of the economy for the same period in CANSIM Table 282-0088, Labour force survey estimates (LFS), employment by North American Industry Classification System (NAICS), seasonally adjusted and unadjusted. Table 1 shows the two sectors, goods producing and service producing, along with a few sub-sectors that had the greatest effect on month-to-month changes.

The Ontario 2014-2015 Fudgit

In Ontar-I-Owe we updated the actual or total debt figure projections for 2013-14. Based on the numbers available from the Ministry of Finance, the figure was $292.8 billion (B). Looking at the 2014-15 budget released today we turn to Chapter 6 where the numbers reside. Table 3 contains the Total Debt figures which are the key ones for analyzing Ontario’s debt position. Consider Table 1 below taken from Table 6.3 of the Budget paper. The current number for the last fiscal year stands at $295.8 B.

Table 1. Total debt by fiscal year with year over year change, all in billions of dollars.

Year 2012–13 Interim 2013–14 Plan 2014–15
Total Debt 281.065 295.770 310.549
YOY Difference 23.787 14.705 14.779

The composition of this debt is shown in Chart 6.9, Total Debt Composition, which is consistent with picture of the Province’s Consolidated Debt Portfolio shown by the Ontario Financing Authority. As we have noted in past writing, the total debt or simply debt in common terms, is the amount of money that is owed third parties and the amount of money on which interest is paid. The government however will never use this figure. They prefer the lesser Net Debt which is optically better. For 2014-15, the net debt is estimated to be $289.251 B. The media will only use this number.

In Table 6.1, the government states that the 2013-14 deficit will be $11.3 B. We would be more inclined to view the year over year increase in the total debt of $14.7 B as the real deficit. It is certainly the extra borrowing the province incurred. In any case, in Table 6.2, they show a $12.5 B deficit for this fiscal year.

The Finance Minister is quoted in theStar.com: We are committed to balancing the budget in 2017. Someone needs to tell him that he has to reduce deficits to achieve this goal and not increase them, even for the purpose of buying an election.

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