BY NICK STEWART

The numbers might tell a gloomy tale of the Sudbury economy, but digging a little deeper brings some of the shine back to the city’s nickel-tinged surface, according to federal analysts.

Although unemployment levels increased from 8.9 per cent in June 2009 to 9.8 per cent in July, the region has sat upon this plateau for most of the year, says Yves Decady, an analyst with Statistics Canada.

This means the area has largely stabilized, and may begin to show signs of growth in the months to come, he says.
In January 2009, Sudbury’s unemployment sat at 6.4 per cent before soaring to 9.2 per cent in February, a number it has circled ever since. This is nearly double the 5.2 per cent seen in July 2008.

The bulk of these job losses have come from the manufacturing sector, which experienced a loss of 5,700 jobs from July 2008 to July 2009. This contrasts with the “significant” gain in the service sector, which added 4,200 jobs through such areas as finance, insurance, real estate and health care in the same period.

“The service sector shows resilience, and has responded less to the economic downturn,” says Decady.

“That can be taken as a good sign, and reflects positively on the region.”

What’s more, the level of active participation has remained steady, meaning that people who have lost their jobs continue to search for work. This is largely a result of a continued confidence in the local economy, he says.

One sector providing some of that confidence is construction, which is thriving amidst the economic storm, according to Denis Shank, executive director of the Sudbury Construction Association (SCA).

More than 90 per cent of the SCA’s members are experiencing higher levels of business than this time last year, says Shank. Infrastructure funding from all levels of government is a major factor.

The vitality of the local construction sector is drawing more and more suitors from southern Ontario, where the implosion of the manufacturing sector has brought many projects to a halt.

This is contributing to the growth of the SCA, whose membership has risen to 240, the highest in its history.

Despite this influx of outside firms, many local companies are still in a good position to capitalize on projects, says Bob Cecchetto, owner of Tribury Construction, and president of the SCA. “If you’re coming in from somewhere else, you have to find places for your crews to stay, and that’s an added cost,” he says. “Add that to the good relationships local builders have with the local sub-contractors, and we’re at a definite advantage.”

Cecchetto should know: his company is working on the south end’s new 185,000-square-foot Wal-mart, as well as Laurentian University’s $17-million Vale Inco Living With Lakes Centre.

He’s also working on the $4.2-million addition of 70 new units at Collège Boréal’s student residence.

These are just some of the many projects underway in the Sudbury through the downturn. By June, city officials had issued $103 million across 750 building permits, nearly matching 2008’s year-to-date total of $106 million across 791 permits.

Among the major projects contributing to this total is the 153,000-square-foot Lowe’s Home Improvement Warehouse, located behind the SilverCity theatre in New Sudbury.

Due to be open this winter, Lowe’s is one of several businesses to be located in the area, where a 105,000-square-foot lot and a 23,000-square-foot lot are also available.

Similar expansion may be seen elsewhere in the city, as the Southridge Mall has received approval to expand from 300,000 square feet to twice that amount, conditional on infrastructure improvements.

Other projects include an 80-unit, six-storey low-income housing co-operative near the city’s downtown and 20 units of not-for-profit seniors’ housing in Capreol.

This heightened construction activity is driving growth among several local suppliers, including heavy equipment dealer and servicer Nortrax.

After moving from a 10,000-square-foot site on Pioneer Road to a new 21,000-square-foot building in the Lively industrial park this spring, sales at the John Deere subsidiary have quadrupled.

Plans are also in place to establish a manufacturing arm to cater to the mining industry once that sector begins to recover, according to general manager Eric Rennie.

“I’m not going to say that the economic problems don’t have an impact, but things really are going great.”

However, this strength has not translated to all corners of the building community, as new home construction this summer has slowed by 75 per cent over the same time last year.

Rather than new homes, many people are beginning to look at residential renovations, due in part to the federal government’s Home Renovation Tax Credit, says Guido Mazza, director of building and services and chief building official for the City of Greater Sudbury.

There has also been a rise in interest in apartments multi-unit housing, which has long remained stagnant in the city as builders elected to build more profitable single-family dwellings, says Mazza.

Now that demand for single-family dwellings has gone down, developers are starting to notice Sudbury’s low 0.7 apartment vacancy rate. “What might be garnered from some of this is that there’s a refocus on where the market is for these construction people,” says Mazza.

This is supported by Paul Corsi, president of the Sudbury Home Builders Association, who says the situation is “not very good” for for new home construction, with many plans being put on hold throughout the city.

The already “significant” impact of the slowdown on homebuilders may potentially be worsened by the passage of development charges by city council in July 2009, according to Corsi.

The new bylaw will gradually phase in higher fees on residential housing from $3,079 to $13,808 by 2012.

While council argued the increased charges would have no impact on growth, Corsi says the extra cost will discourage many buyers who are already hesitant about even the smallest bump in cost.

Similar hesitation has spread to the real estate sector, according to Catherine Bernier, president of the Sudbury Real Estate Board.

Through to the end of July 2009, residential sales reached 1,076, as compared to the 1,582 seen through the same period in 2008.

Those homes that are being sold are smaller and less expensive than those in years past, contributing to lower sales volumes of $43 million, as compared to the $69 million seen the same time last year.

Despite this dip, average sales prices have barely budged, dropping to $202,000 as compared to last year’s $218,000. This is a result of a drop in both supply and demand, which has kept things stable despite people’s expectations of drastically lower prices through the recession and Vale Inco strike, says Bernier.

For either real estate or home construction to return to its former health, however, Corsi says the local mines must come back online.

Indeed, the mining strike is having an impact not only on peripheral industries but also on the mining supply and service sector that employs 8,000 in the Sudbury region.

With activity at the city’s mines having ground to a halt thanks to strikes, early shutdowns, and ongoing development, firms with an exclusive local focus are struggling.

Four-day work-weeks and other cost-saving measures are being used by some businesses to off-set the financial troubles, which have led to more than 1,000 layoffs among local suppliers, says Dick DeStefano, executive director of the Sudbury Area Mining Service and Supply Association.

Firms who have foreseen the strike and a greater need to seek out markets beyond the Sudbury Basin will likely survive the current economic climate, adds DeStefano.

Some firms catering broadly to mining and other heavy industries are working to better position themselves within the local market through new ideas and new approaches.

This includes equipment rental and servicing business SMS Rents, which moved from its former location on Lasalle Boulevard to the former Cambrian Fitness Centre on Lorne Street.

The slowdown urged company officials to begin looking harder at generating additional interest from general contractors and eager do-it-yourselfers, sparking the move to the new location. Walk-in business has since tripled through the first half of 2009, says regional manager Brett Moroso. “This is the kind of growth we’d hoped for, and we’re going to survive through these hard times.”

Nick Stewart is a reporter for Northern Ontario Business.