Jobless - Where are we heading?
Jobless - Where are we heading?
As bad as London’s jobless rate is, don’t hold your breath waiting for it to get better.
A strong Canadian dollar, combined with weak demand in the all-important U.S. market, is squeezing all Ontario manufacturers — leaving them less likely to add new hires, observers warn. Nowhere in Canada may that be more crucial than in London, one of the country’s southernmost manufacturing cities.
Typically, London’s close proximity to U.S. markets is a huge advantage. But that’s now been sharply reduced. The unemployment rate could even rise more, said Jayson Myers, chief economist and chief executive of the Canadian Manufacturer and Exporters Association.
“I think we’re in for at least two very, very challenging years here going ahead,” he said. “I think a lot of employers right now, frankly, are just very — very cautious in terms of their hiring.”
A high-flying loonie — it closed above $1.02 US Friday — makes Canadian exports more costly to buy, and wipes out the advantage a lower Canadian dollar gives companies in London competing in the huge U.S. market and beyond. And with the U.S. mired in massive debt, and still struggling to shake off recessionary cobwebs, it’s not in the strong financial position a trading economy like Southwestern Ontario needs.
“I am very worried right now when I look at the condition of smaller manufacturing companies right across Ontario,” said Myers. “We’ve got a lot of companies that are operating on extremely thin margins, they’re working on fairly large lines of credit and it wouldn’t take too much to push those companies over the edge.”
London’s high jobless rate reflects a slow economic recovery, said Peter White, the city’s point man in attracting new employers, as president of the London Economic Development Corp.
Orders and business traditionally slow down in economic downturns, but rebound as things pick up.
But while Canada is now out of the 2008-2009 recession, the economic fallout of London-area plant closings — they hit the auto and heavy truck industries especially hard — still persists.
The impact has been “very, very significant,” White said.
“These aren’t things you can change or recover from in a six-month, 12-month time period. It’s going to require bringing out new employment sectors and new areas for people to work in.”
London isn’t the only one suffering: Many cities still have higher jobless rates than they’re used to, he said.
London’s 9.1% jobless rate is still lower than its 11% peak two years ago, although that was during the recession.
But with another 900 workers soon to lose their jobs at Ford’s St. Thomas plant, due to be closed next month, and another 400 at the plant’s largest area parts supplier, Lear Seating, things look to get worse before getting better.
It’s not all bad news though, said White, pointing out many auto parts makers are running at capacity. “They’ve hired extra help, so that’s been a really positive story that 12 months ago was not looking very positive,” he said.
Most digital and gaming companies in the city have also added staff. One, hrdownloads.com, an Internet-based company, began with five people in 2005 and is now up to 65, said White.
“We’ve got so many great things from a business standpoint, we’ve got a diverse economy with the variety of sectors that we have, it’s just getting through these next few months as the economic situation continues to shift, then I think we’ll see things start to improve,” said White.