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Canada 2009 Federal Budget Analysis

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					Ontario Labour Market Update
       October 2009
            Fundamental Economic Drivers



 U.S. Outlook

 Energy/Commodity Prices

 Monetary Policy and the Canada/US Exchange Rate

 Exports

 Fiscal Policy



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                    Projection Summary for the US




                                   3 2009     Q4 2009   Q1 2010   Q2 2010
GDP Growth                              0.5       0.0       0.6       0.7
GDP Inflation                           0.4       0.5       0.6       0.6
Unemployment Rate                       9.7      10.1      10.0       9.7
3-Month T-Bill                          0.2       0.2       0.2       0.3
                         Energy/Commodity Prices

($US Per Barrel, West Texas Intermediate)


160

140

120

100

 80

 60

 40

 20

   0
    2003          2004          2005        2006   2007   2008   2009

Source: New York Mercantile Exchange

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                                        Exchange Rate US/Canada

                            1.10
 USD = U.S. dollar (noon)




                            1.00


                            0.90


                            0.80


                            0.70


                            0.60
                                2003   2004   2005   2006   2007   2008   2009

Source: Bank of Canada nominal noon exchange rates

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            Fiscal Policy- Economic Action Plan


 Economic Action Plan in the January 2009 federal budget included
  major infrastructure spending over the next twenty-four months.

 EI is acting as an automatic stabilizer to the economy by providing
  income support to laid off workers. Additional funding for EI
  supports this stabilizing function.




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Demographics are important




                             8
                            The current situation

   Demographics and population aging are slowing labour force growth and
    the participation rate is also weakening as a result of the downturn. This has
    moderated the upward pressure on the unemployment rate.
   The province's unemployment rate fell to 9.2% in September a decline of
    0.2 percentage points from August.
   The good news is that employment in Ontario increased slightly for a third
    consecutive month in September, and has risen by 39,000 since June.
   The bad news is that compared to last September, just before the start of
    the labour market downturn, Ontario employment has fallen by 205,000 (-
    3.0%).
   September employment gains were in retail and wholesale trade,
    construction and in manufacturing.
   Infrastructure spending and the Economic Action Plan starting to impact the
    economy
                                                                                     9
                                Ontario Employment and Unemployment Rate

                  6,800                                                                  20

                                                                                         18
                  6,700
                                                                                         16




                                                                                              Unemployment Rate %
Employment 000s




                                                                                         14
                  6,600
                                                                                         12

                  6,500                                                                  10

                                                                                         8
                  6,400
                                                                                         6
                                                                                         4
                  6,300
                                          Employment            Unemployment rate        2
                  6,200                                                                   0
                       Sep-07                          Sep-08                       Sep-09



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             By Region and Major Municipality


 Southwestern and Northern Ontario remain the areas most affected
  although the Toronto situation has also deteriorated.

 Windsor Economic Region Unadjusted Unemployment Rate for
  September 2009 was 12.3%.

 London and Toronto Regions at 10.9% and 10.4% respectively.

 Northeastern Ontario Region Unadjusted Unemployment rate was
  9.9%.



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    Autos have been key and forestry remains problematic

   Auto industry restructuring has been ongoing. Return to work for Chrysler and
    emergence of GM from bankruptcy have lessened the uncertainty although the
    sector, particularly parts, will continue to evolve.
   Continuing uncertainty around forestry bankruptcies.
   Forest products have been Ontario’s second biggest net export, over $9 billion
    (newsprint, market pulp, lumber and composite panels). Vertically integrated industry.
   Lack of capital investment over last 20 years in research and development, new
    technologies, mills and equipment
   Collapse of US housing boom resulting in lower prices for lumber and most other
    building materials
   Northwest Ontario most dependent and affected
   Pulp and paper’s “perfect storm”
    - rapid rise in Canadian dollar
    - rise in energy costs and transportation costs
    - low cost foreign competitors
    - decline in demand for newsprint


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    But some sectors’ employment is up over the past year
   Finance Insurance and Real Estate

   Professional Scientific and Technical Services

   Information Culture and Recreation

   Other Services including Repair and Maintenance, Personal Services, Civic
    Organizations and Private Households




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               And commodities are coming back…
   The price of gold is at a record high
   The Bending Lake Iron Group is developing plans for an open pit iron mine
    south of Ignace in Northwest Ontario. The main industrial site for the mine
    will be located in Atikokan. Once the mine is operational they expect to
    employ 300 full time workers.
   Higher oil prices are good for Alberta but not so good for Ontario
   However high energy prices can also be a catalyst for development.




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    Green Shoots…the impact of Green Energy Investments

   New investments imply new labour market opportunities

   Energy Conservation and Demand Response

   Green Energy Act September 24 2009
         Feed-in-tariffs- wind and solar farm construction
         Increasing domestic content requirements

   Power transmission investment in $2.3 billion in projects designed to
    increase reliability of power transmission in the province.

   Half of the projects will be located in Northern Ontario. These projects are
    expected to create 6,000 jobs and thousands of megawatts of energy


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                              Green Energy impacts
   New opportunities in a wide range of manufacturing and green energy services
          • Wind turbine manufacturing jobs in welding, machining and fabrication
          • Financial analyst-budgeting, cost of sales and ERP analysis for growing solar
            technology supplier
          • Financing specialist start-ups and real estate acquisition for new energy developments
          • Key accounts representative with engineering technician background for industrial
            markets and distribution generation
          • Electrical transmission line construction

   New skills in existing professions
          • LEED commercial office construction planning and management
          • Instrumentation and Controls Engineer- Energy conservation
          • Supervisor, Meter Communications & Technology

   New emerging fields and professions
          •   Electrical Grid Load management and Demand Response consulting
          •   Residential and industrial energy auditors
          •   Engineering technician and installer-HVAC systems and solar energy
          •   Municipal Energy Conservation Coordinator
          •   In-water windfarm maintenance
          •   Superintendent for photovoltaic construction site

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