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Economist: City’s future still bright

Oshawa's economy will continue to grow even if GM plant closes

By Graeme McNaughton/The Oshawa Express

With negotiations set to begin later this year, a possible deal between General Motors and Unifor Local 222 will spell out the future of not only Oshawa Assembly, but also the future of the city’s economy.

One researcher, however, says the city will fare just fine if the car plant closes.

Alan Arcand, associate director for the Centre for Municipal Studies at the Conference Board of Canada as well as one of its chief economists, says that there are enough other industries and moneymakers in the city that would largely offset the losses the local economy would face should the auto manufacturer move out of the city.

“(Manufacturing is) obviously a big industry there, but given Oshawa’s proximity to Toronto, one of its…big drivers in growth is strong population gains because you’ve got a lot of people that work around the GTA that move to Oshawa because affordability is better than other parts of Toronto,” Arcand tells The Oshawa Express.

“That drives a lot of activity in the services industry. People that buy homes in Oshawa, send their kids to school in Oshawa, they shop in Oshawa and buy their groceries there and buy a lot of other goods and services. Even though manufacturing did have difficulties last year and could again in the future, there is other things that help offset that.”

Arcand adds that the potential closure of the Oshawa Assembly would not have the same impact as it would have in decades past, when manufacturing represented a much larger share of the area’s economy.

“Manufacturing’s share of total employment (in the Oshawa area) in 1987 was 30 per cent, which is really high, actually. In 1987, about one in every three workers worked in manufacturing. Now, it’s down to about 10 per cent,” Arcand says.

“So the share of the overall economy has been falling, so it doesn’t play as big a role as it used to in Oshawa as it did before, so its overall impact would be smaller.”

Arcand does say, however, that should the plant close, that doesn’t mean the city would get off totally scot-free – while the economy would still grow without the Oshawa Assembly, it would not be growing as fast as it would be with it.

“There would be a hit to growth. The outlook would be weaker than what we’re looking at right now.”

Ron Svajlenko, the president of Unifor Local 222, says he disagrees with the notion Oshawa would be fine following a potential GM withdrawal.

“It’s a massive hit on the economy,” Svajlenko says, referring to a report released last year by The Centre for Spatial Economics and paid for by Unifor that looked at what would happen should the auto manufacturer leave the city, and the widespread effects from it.

“Ontario takes a hit of about $5.2 billion two years after the actual closure. That’s a huge amount of money.”

Svajlenko also says the economic activity created by a local employer is not the same as the economic activity made by those who work in other areas but live here.

“I think he’s basing his comments on the fact that there would still be people coming from Toronto and buying houses here to escape the costs of the Toronto market, but that’s not the same type of economic activity,” he says.

“If you live in Oshawa, you buy gas here, you go out for lunch here. It’s not the same as the person jumping on the GO train and trying to be back for 8 o’clock at night.”

In the years ahead

The Oshawa census metropolitan area (CMA) – which also includes Whitby and Clarington – was one of the locales featured in the conference board’s report, Metropolitan Outlook, which details the economic futures of several areas across the country.

According to the report, the Oshawa CMA’s gross domestic product is forecasted to grow two per cent this year to approximately $12.1 billion, as well as see the local employment rise 3.9 per cent to approximately 202,000, meaning the area will gain back the jobs it lost in 2015, when that number fell to 194,000 from 201,000 the year prior.

“Really, what we’re seeing in 2016 is the recovery from the big drop in 2015, partly the result of 1,000 jobs lost in manufacturing,” Arcand says, adding that in 2017 and beyond, employment gains will not be as high.

“I would expect it to bounce back this year. The 1.6-per-cent growth in 2017 and similar rates of growth beyond that are more in line with average job growth in the city.”