High Electrical Costs Drive Manufacturing Jobs Out of Ontario

electricity lines

October 19, 2017

Ontario’s soaring electricity bills have driven numerous factories out of the province according to a new report from the Fraser Institute, leading to a loss of nearly 75,000 manufacturing jobs since the end of the 2008 recession.

Electricity prices in Ontario are now among the highest in North America after years of costly upgrades were made by the province’s government to clean up the electrical system and rebuild an antiquated power grid. The resulting rate hikes have hit the manufacturing sector hard and led to significant job losses that are unlike anything seen in neighbouring jurisdictions as factories have relocated to areas with cheaper power, the right-of-centre think tank said in its report released on Tuesday.

While many of Ontario’s neighbours were able to slowly rebuild their manufacturing after the financial crisis, that didn’t happen in Canada’s most-populous province, where 116,435 manufacturing jobs were lost between 2008 and 2015. The slump has hit the heart of Canada’s economy, as Ontario’s manufacturing sector accounts for almost 40 per cent of the country’s exports.

“During the 2008 recession everybody took a hit, but the other regions were able to get their manufacturing back up. But in Ontario that didn’t happen. Ontario shows unique signs of stress and decline in manufacturing, so we had to look for something unique to Ontario and that’s electricity prices,” said Ross McKitrick, the report’s co-author and an economics professor at the University of Guelph. He said manufacturing has recovered to pre-recession levels in all of Canada’s provinces except for Ontario.

 

Using existing economic studies, Mr. McKitrick said the report estimated nearly two-thirds of the province’s decline in manufacturing jobs since 2008 was due to elevated electricity prices, equalling about 74,881 jobs. Much of the decline was in energy-intensive industries like the paper sector, iron and steel facilities, and automobile manufacturing.

Ontario’s Green Energy Act has created tens of thousands of jobs according to the provincial government, but the Fraser Institute report found that 1.8 manufacturing positions were lost for every job created in the renewable-energy industry.

While he admits the job-loss figure is large, Mr. McKitrick said it matched the overall size of the drop in manufacturing. “What’s very large is the large increase in electricity prices, that’s what drives the loss,” he said.

Electricity costs for small industrial consumers in the Ottawa-area increased by 50 per cent between 2010 and 2016 according to the study; in Toronto the average increase was 48 per cent. Outside of Ontario the average Canadian increase for industrial consumers was only 15 per cent.

In late 2016, a group of businesses united under the banner of the Coalition of Concerned Manufacturers of Ontario to warn the government that high electricity prices were a real threat that could lead factory owners to look at moving elsewhere.

Economists have warned for some time that Ontario’s high electricity costs could impact competitiveness. In surveys conducted by the Conference Board of Canada, business owners have cited electrical bills as a leading obstacle to investment, according to chief economist Craig Alexander. “The climbing electricity prices have put Ontario manufacturers at an increasing competitive disadvantage,” he said.

Premier Kathleen Wynne announced plans in the spring to cut hydro rates by 25 per cent this year while capping increases to the rate of inflation for the next four years, a move that will save consumers $24-billion. Ontario’s Auditor-General is expected to release a report on Tuesday morning that is critical of that plan, especially the decision to move billions in new debt needed to finance the rebates to a Crown corporation rather than the government’s books.

Story by: Justin Giovannetti

Originally published by The Globe and Mail: https://beta.theglobeandmail.com/news/national/high-electrical-costs-have-driven-thousands-of-manufacturing-jobs-from-ontario-report/article36610740/?ref=http

 

Related Articles


Latest Articles

  • Video: LEDVANCE Lightpoint Learning Facility

    Video: LEDVANCE Lightpoint Learning Facility

    February 23, 2024 LIGHTPOINT Studio & Showroom, the brand-new corporate classroom training facility, located at their national customer service and sales center (NCSSC) in Westfield, IN. Go HERE for more information Read More…

  • How Effective Communication Reduces Plant Hazards

    How Effective Communication Reduces Plant Hazards

    February 23, 2024 By Rick Farrell, President, PlantTours In plant operations, the margin for error is notoriously slim. The smallest oversight, a single misinterpreted instruction, or an unnoticed alert can be the difference between smooth operations and catastrophic failures. While advanced technologies and protocols play an undeniable part in ensuring safety, the bedrock upon which… Read More…

  • A Guide To The Most Essential Hand Tools for Electricians

    A Guide To The Most Essential Hand Tools for Electricians

    February 22, 2024 By Jonard Tools It is currently a great time to be an electrician- however, you’ll need the right hand tools for the job. In this article Jonard Tools highlight the most essential hand tools for electrical work, as well as dive into the specifics of how they are utilized and why they’re… Read More…

  • New Research on Smart Home Technology and Market Trends

    New Research on Smart Home Technology and Market Trends

    February 22, 2024 AI-driven features in home energy management and security systems excite more than half of the current smart home users, concludes new research exploring the perceptions, preferences, and reservations of residential renters and owners regarding the adoption and usage of smart home technologies. However, the survey also highlights data privacy concerns and high… Read More…


Changing Scene

  • Third Annual Greenlee® Experience Contest Accepting Entries Until March 15

    Third Annual Greenlee® Experience Contest Accepting Entries Until March 15

    February 27, 2024 Greenlee® is bringing back Greenlee Experience for a third year to celebrate electrical and utility professionals for their hard work and achievements. Entries are being accepted until March 15 for the all-expenses-paid trip being held July 31 to August 2, 2024, at one of its manufacturing facilities in Elyria, Ohio. Six grand… Read More…

  • LEDVANCE Canada Welcomes Cristiano Konofal as National Account Manager

    LEDVANCE Canada Welcomes Cristiano Konofal as National Account Manager

    February 26, 2024 LEDVANCE Canada has introduced Cristiano Konofal as their National Account Manager. “I am thrilled to announce the return of Cristiano Konofal as a National Account Manager. Cristiano has extensive experience working with our customer base and has technical skills that will be an asset to our team. We look forward to seeing… Read More…

  • Government of Canada Invests in TDG Transit Design Group

    Government of Canada Invests in TDG Transit Design Group

    February 23, 2024 The Governemnt of Canada has announced a FedDev Ontario investment of over $1.6 million for TDG Transit Design Group, a manufacturer and designer of made-in-Canada, energy-efficient LED lighting systems for the global rail transit industry. Through this investment, TDG Transit Design Group will adopt new equipment at its newly expanded 10,000-square-foot facility… Read More…

  • Alberta to Invest in Apprenticeship Seats Through 2024 Budget

    Alberta to Invest in Apprenticeship Seats Through 2024 Budget

    February 23, 2024 Through their Budget 2024, Alberta’s government would invest an additional $24 million per year over the next three years to create 3,200 apprenticeship seats at 11 post-secondary institutions across the province. The new investment would bring the total funding through the Apprenticeship Learning Grant for the 2024-25 academic year to $78 million…. Read More…