February 19, 2010

Economic diversification paying off during Vale Inco strike in Sudbury

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.

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.”

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.

“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.

Canadian Press

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