Report: Economic future “looking good” for Oshawa

By Graeme McNaughton/The Oshawa Express

Things are looking good for the future of Oshawa’s economy, according to a new report from the Conference Board of Canada.

In its latest report – Metropolitan Outlook 2, Summer 2016 – the political and economics think tank concludes that the Oshawa area will continue to grow.

“Things are looking good right now, we have a pretty strong outlook for 2016. We’re anticipating that the economy will grow by 2.7 per cent this year, which is similar to the rates of expansion in the city the last couple of years. Continuing a trend of pretty solid growth,” Alan Arcand, the associate director for the board’s Centre for Municipal Studies, tells The Oshawa Express.

“We do expect a similar growth next year, but there are definitely some question marks.”

The largest question mark, according to Arcand, is the future of the Oshawa Assembly. The future of the plant is currently up in the air, with General Motors of Canada and Unifor, the union representing the plant’s workers, currently in negotiations for a new contract between the two. Currently, there is no product scheduled at the plant beyond 2018, with the union saying it will not sign a new deal unless that timeline is extended. The automaker has previously said it will not announce any future commitments to the plant until after negotiations have concluded.

“There’s (question marks), especially in terms of the manufacturing sector. There’s question marks over the sector’s outlook over the next three to five years, given we don’t know what’s going to happen with negotiations,” Arcand says.

“There are other sources of growth for Oshawa though, it’s not all doom and gloom.”

However, looking ahead, Arcand says that the board’s economic outlook for the area is based on the assumption that things will continue as normal over at the Oshawa Assembly.

“Next year, we’re assuming growth would come in at 2.5 per cent, but we are assuming that the consolidated line does stay open,” he says.

“We made that assumption based on the fact that it’s been slated to close several times, but it keeps seeming to get a new lease on life, and we’re expecting that to happen again. If we’re wrong, we would definitely downgrade our outlook in the next report.”

The next economic forecast report from the Conference Board of Canada is expected in the fall.

Building towards a stronger economy

Outside of manufacturing, Arcand says one of the bright spots that should keep things rolling in Oshawa is the population growth, brought on by lower housing prices compared to the west.

“One of the factors that drives economic growth is its proximity to Toronto and its relative housing affordability. Oshawa benefits from pretty strong population growth,” he says.

“People that come to the GTA end up settling in Oshawa. It’s cheaper to own a home in Oshawa, particularly a single-family home because there’s more of those available there. Even though they may commute outside of Oshawa for work day-to-day, they do a lot of economic activity in Oshawa. They spend their money in Oshawa, they send their kids to school in Oshawa, get other services in Oshawa.”

With the housing demand in Oshawa tied to Toronto’s housing market, some might argue that a downturn in Toronto could result in a downturn in Oshawa. Arcand disagrees, saying that people moving out to the east end of the GTA are looking for something different compared to those moving to Toronto.

“There would be some risk to that. You could argue that the Oshawa housing market is integrated and pretty correlated with the overall GTA market, but…the numbers so far in Toronto are not that worrying,” he says.

“If there was any kind of downturn in Toronto, it would be more concentrated in multi-family units, I think. One of the reasons housing price growth and the single-family unit market is so strong is because they aren’t really making them anymore. The demand is there, but the supply really isn’t growing.”