The document provides an overview of key Ontario economic and business trends, including trends in steel production, automotive production, class 8 truck sales, housing starts, key commodities, and exports. It also discusses Ontario's fiscal update and fundamentals like infrastructure spending, competitiveness, productivity, hydro rates, and R&D spending.
Ontario is one largest steel producing provinces with companies like Stelco, Dofasco, Algoma, etc.
In 2008 there was 15,748 metric tons of steel and today there is 12,211 metric tonnes. This means Canada has lost close to 3.4 million metric tonnes of steel capacity since the 2009 recession
Source: World Steel Organization
Ontario is the largest Automotive producing jurisdiction in Canada. In 2008 there was 2.052 million vehicles manufactured in Canada or 15.9% of the Total. In 2014 Canada is now producing only 13.3% of the total production.
If you use 15.9% as the base production then that means close to 500,000 less vehicles are produced in Canada or 2 less plants. This makes sense since Talbotville Plant has closed along with elimination of some of the GM production in Oshawa.
Source: Ward Automotive
Ontario used to produced Class 8 Trucks with Navistar as well as Sterling Trucks. There is no class 8 truck production in Ontario anymore other than some small manufacturing in trailers or truck modifications
Source: The Trucker
Housing Starts are in decline in Canada as compare to 2013 peak levels of 214 starts.
USA has nearly double their housing starts which means more demand for lumber. Ontario has closed many sawmills due to high costs to operate, i.e. power rates. Ontario lacks any real strategy to take advantage of improving housing market in the USA.
Source: BMO
Oil prices have rebounded on average of $32/barrel since the 2009 recession. Oil investment in Canada has increases which has benefited metal fabrication/steel manufacturers in Ontario. Yet the Liberals have said nothing on how Ontario should be playing a bigger role in oil production in Canada.
Commodity prices come 25% to 50% depending on the commodity since their peak levels in 2011. Ontario government has been slow on the mining development, especially key commodities like chromite, lithium, nickel, etc. New mines create both new jobs that leads to higher revenue for the province. However, the Ontario government brought in new legislation that forced the negotiation of mining rights on to various companies. The new legislation has impacted the work of junior miners - http://www.mining.com/junior-miners-entangled-in-new-ontario-mining-regulations-14400/. The Ontario government also botched the chromite deposit when Cliff Resources pulled out due to the lack of commitment of the Ontario government to deal with the infrastructure issues - http://business.financialpost.com/2013/09/11/ring-of-fire-road-rejection-a-setback-for-cliffs-natural-resources/
Source BMO
Exports account for close to 40% of GDP
Exports should be 25% higher. Currently, Canada has close to $500B in exports. If Canada could expand exports by $125B then that would lead to close to 700K jobs. The issue is with capacity as many export businesses were driven out during the last economic downturn. New policies or expansion of current policies need to come into place to help expand exports
Canada needs to push for fair trade deals to bring down the current account deficit that is projected to hit $5B in 2014. Ontario depends on exports as such the Ontario government needs to work with the feds on programs like Export development or through grants/loans to export driven business.
Source: Ontario Government
Equalization is being cut by from $3.2B to $1.2B in 2014-2015. This means the revenues will fall by $2B
The government has not implemented revenue opportunities for either LCBO or OLGC as such those revenues will not be reflected in the governments revenue projections
Source – Ontario Government
Source – Ontario Government
Wage Freezes along with other initiatives to cap growth in expenses will face considerable pressure over the next few years
Ontario government is already committed to infrastructure spending to the tune of $14B/year. Transit is the recipient of 3.4B in funding.
Where does the government focus on the following areas:
Hydro rates
Loans/grants to support export driven businesses
Labor rates
Productivity
Post secondary education means nothing if students are not align with job prospects. The more seats at colleges/universities is not the solution as the economy only supports so many jobs that support post-secondary school education.
The province wants to bring in a new Ontario Pension plan that will cost employers on average $900/1,200 per employee or higher corporate taxes to fund transit or the possible elimination of the tax credit for meals and entertainment.
Hydro Quebec
Canada only spends 1.95% on R&D. R&D is very important as such there needs to be a new approach to support start up companies with accessing capital/brain power to move ideas from incubation to market
If Canada could expand to 3% then it could mean addition 15B in R&D and support job creation. Ontario has talked about new programs, but has done little in terms of supporting innovation other than handing on money to companies.