Diversification helps Sudbury keep economy in check as Vale Inco strike drags on

The Canadian Press ~ The News
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SUDBURY, Ont. - Three decades ago, a nine-month miners' strike in Sudbury devastated the northern Ontario city's economy and drove home the perils of being a one-industry town.

Today, more than 3,000 employees of nickel miner Vale Inco are approaching their seventh month on strike with no end in sight. Like the Inco strike of 1978-79, this increasingly bitter labour dispute is causing great hardship for those workers who rely on the company for their income.
However, the city as a whole is coping in a way that would have been impossible 30 years ago, thanks to a concerted attempt at economic diversification.
Mayor John Rodriguez said the city's leaders realized after the devastation of the '78-'79 strike that without diversification, "we were condemning ourselves to forever being hewers of wood and drawers of water, and (the resource companies) would just rip and run."
"Following that strike, the leadership of the community got together and said we wanted to imagine Sudbury in 2000," Rodriguez said. "It was decided that we'd diversify in health-care delivery, in education, in government services, tourism and retail."
Inco - a Canadian mining icon that was bought by Brazil-based Vale for $19 billion in 2006 - is still the largest private-sector employer in Sudbury, but the city's effort to become a regional centre for various public services has rewarded it with a far more stable economy.
Today, the city prides itself on being a northeastern Ontario hub for health care, education and government. With a cancer research and treatment centre, two colleges and a university, provincial government services - including the head office of the Ministry of Northern Development and Mines - and a growing retail sector, Sudbury is no longer a one-industry town.
The city of 150,000 had little choice but to diversify its economy if it wanted to keep its unemployment rate in check as Inco and Falconbridge - the other major employer in the region's mining industry, now known as Xstrata Nickel after an acquisition by the Swiss mining giant in 2006 - slashed their workforces over the years.
At the height of the mining industry's influence in the 1960s, Inco's Sudbury operations employed 25,000 people and Falconbridge had 7,500 workers. Automation and technological advances whittled those numbers down over the years to 3,200 and 700, respectively. As a result, the mining companies that used to dominate Sudbury's economy now account for approximately five per cent of the region's workforce.
And outside of the mining sector, "those people aren't affected by the strike at all," said Debbi Nicholson, president and CEO of the Greater Sudbury Chamber of Commerce.
"They're still going out and buying the new vehicles and buying the furniture and taking the trips and doing all of that stuff, so all of that money still flows in the community."
Nicholson said there are several indications that Sudbury's economy has only been negatively impacted by the strike "to a very small degree."
"We've attracted a lot of new retail development to the community, with some of the big box stores, new Wal-Mart and new Lowe's stores, and those people wouldn't invest in this kind of a community if they didn't think that there was going to be a return on that investment."
Ultimately, Nicholson said the attitude among Sudbury's business owners during the strike is one of "life goes on." She was supported in this assessment by several community business leaders.
"We had a new restaurant open in late fall, and I went there on a Saturday night before Christmas and at 5 p.m. there's a lineup outside the door. What recession? What strike?" said Mitch Speigel, a mortgage broker and former president of Acme Building and Construction Ltd.
Speigel said the commercial real estate market in Sudbury is relatively slow, but blames this on the recession more than the strike. Meanwhile, the residential market is "steady," with an average home price of $200,000.
Some sectors, such as the mining supply and service industry, can't avoid the impact of a seven-month-long strike at the biggest mining company in the region. However, even mine suppliers are reaping the benefits of diversification.
Dick DeStefano, executive director of the Sudbury Area Mining Supply and Service Association, or SAMSSA, estimated that 4,000 jobs in the industry have been lost either temporarily or permanently due to the strike. He said that while most companies in the industry were operating at around 85 per cent capacity at the depth of the recession, that has dropped to as low as 30 per cent in some cases, taking an estimated $500 million out of the local economy.
"Yet all the big box stores are still busy," he said. "The rest of the economy seems to be sustaining a level of economic activity... that seems to be reasonable enough to create some wealth amongst the retailers and so on," DeStefano said.
In part, this is because Sudbury's mine suppliers - a huge industry that DeStefano says includes about 700 companies with combined revenue of $5 billion to $6 billion and 12,000 to 15,000 employees - have branched out to other minerals, other locales and even other countries.
For example, some Sudbury-area suppliers have found work in the so-called Ring of Fire mineral deposits in the James Bay area of northern Ontario, the gold fields near Timmins, Ont., and farther afield in Newfoundland, British Columbia, the potash mines of Saskatchewan, and even Mexico and Chile.
DeStefano estimated that 30 per cent of Sudbury's mine suppliers were completely reliant on Vale Inco for their revenue before the strike started, and about half of those companies are now "looking at alternative markets and alternative commodities." He added that not a single member of SAMSSA has gone out of business since the strike started.
Sudbury's unemployment rate was 10.4 per cent in January, the most recent month for which data is available from Statistics Canada. By comparison, the Canadian unemployment rate was 8.3 per cent, but several Ontario communities, including Oshawa, St. Catharines-Niagara and Windsor met or exceeded Sudbury's level.

Organizations: Inco, Falconbridge, Vale Ministry of Northern Development and Mines Sudbury Area Mining Supply and Service Association Greater Sudbury Chamber of Commerce Wal-Mart Lowe's Acme Building and Construction Statistics Canada

Geographic location: Sudbury, Northern Ontario, Ontario James Bay Timmins Newfoundland British Columbia Saskatchewan Mexico Chile Oshawa

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