How Ontario Forgot Its Rust Belt

The mantle over the fireplace in my grandmother’s basement is home to a collection of family artifacts: an old hockey puck, an empty whiskey bottle from the 1950s, and a group photo of 12 factory workers from the Peterborough General Electric Plant taken in 1934. Among them is my great-grandfather, Milo Heath, one of the foremen at the plant. He worked at the plant overseeing the production of a variety of products, including fuses for artillery shells used during World War II.

Milo ultimately landed his son Frank a job there as a tool and die maker. Frank worked there until his retirement, electing to continue his passion for the trade by teaching it at the local college. The company was good to my mother’s side of the family, as it was for thousands of others who worked at the plant over the years.

Today, the plant is a shell of its former self. Employment peaked at 5,000; today, that number barely crosses 300, and the factory will soon close. The factory is an expanse located just outside the downtown core. Occupying a square city block, it is an impressive testament to the manufacturing glory days of many small North American cities. The city of Peterborough, Ontario is not alone. Countless cities in Canada and the United States that blossomed during the manufacturing boom of the 20th century now lie dormant as a result of a radical shift in the economy.

I moved away from the Peterborough area to attend Western University in London, Ontario. Nestled two hours away down the 401 from Toronto, London is the 11th largest census metropolitan area (CMA) in Canada. A provincial leader in health care and post-secondary education, London — like Peterborough — is part of a growing number of cities in Ontario who are experiencing many of the same pains that cities in the American Rust Belt have been dealing with since the 1980s. Collectively, they form “Ontario’s Rust Belt”.

These cities — London, Windsor, Sudbury, Thunder Bay, Sault St. Marie, Peterborough, North Bay, Chatham, Timmins, and Cornwall — were once industrial powerhouses, built on a rich history of manufacturing or extraction work, but they are all on the downturn. Each of them except Windsor has experienced a net loss of jobs since 2008, while the rest of the major cities in Ontario — specifically those clustered around the GTA or Ottawa — have recovered from the 2008 recession and are by all accounts flourishing.

The struggles of Ontario’s Rust Belt are similar to those of our American counterparts: poverty, crime, drug abuse, homelessness, and low labour-force participation rates plague all of these cities. At an individual level, these issues are often linked, putting additional stress on public services like health care, policing, and homeless relief services.

For those who grow up in the Ontario Rust Belt, the thought of remaining in their rapidly decaying hometown pales in comparison to the vibrant culture of a city like Toronto, so we get a twofold impact on the health of our Rust Belt cities: a higher percentage of adults are in trouble, and our bright youngsters can’t wait to leave. Rural flight and the brain drain from smaller cities to large ones concentrates ambitious youngsters who have been wooed by high-paying jobs and an environment full of like-minded individuals.

In the most mobile generation in history, small towns are struggling to retain talent. It also doesn’t help the situation that more young people than ever are seeking post-secondary education due to the value placed on knowledge in our current society. These individuals may return to their hometowns one day to settle down with their family, but as Robert Putnam has described at length in Bowling Alone, these individuals will likely buy a large house in the suburbs and not get involved in their community. The largest contribution to the city these boomerang children will make will be their property taxes. Civic engagement has been on the downturn for decades, and it’s largely because, as a society, we don’t want to play with each other anymore.

In Ontario, we just emerged from a Provincial election with a dramatic shift in the political composition of our government. During the election, most of the talk centred around the region where 80% of the job growth of the past decade has taken place: Toronto. While talk of the economy is always central to any election, one other area of concern for residents of the GTA is the exorbitant cost of living.

The mass influx of high-paid talent to the city has created incredible demand for housing, and the ballooning average housing price in Toronto has had a ripple effect from the GTA outward as the middle class flees to maintain their lifestyle. A similar situation is currently underway in Silicon Valley, where almost half its residents express a desire to leave because they can’t afford a house. Grossly inflated housing prices have outpaced salaries, and the hard-working, intelligent people who flocked there to start their career are fed up.

Back in my hometown of Peterborough, housing prices have doubled in just nine years, driven by the construction of an extension to the Highway 407 expressway. Once complete, the express toll route will reach close to the southwestern border of the Peterborough CMA and will turn parts of the once isolated city into yet another bedroom community for those who work in the GTA. To give some perspective: my parents purchased the first home I lived in for $40,000 in 1988. It would sell for over $350,000 today. In 1988, a typical job at the GE factory would have paid $25 dollars an hour. Today, that figure remains the roughly same, yet housing prices have continued to rise.

Some may see the migration from the GTA to perimeter cities like Peterborough as a net positive because the population (and tax base) of the region will increase, but it will also drive the current local population out because they can no longer afford to live in their own city. This is what has already happened with cottage country that surrounds much of Peterborough: families who have owned property there for generations have been forced to sell due to increases in property taxes thanks to a massive capital influx and construction boom from residents of the GTA.

What we’re seeing in Toronto has already been happening in places like New York, Chicago, or San Francisco. As Matthew Stewart wrote in The Birth of a New American Aristocracy:

“Yet there is a paradox. The rent is so high that people — notably people in the middle class — are leaving town rather than working the mines. From 2000 to 2009, the San Francisco Bay Area had some of the highest salaries in the nation, and yet it lost 350,000 residents to lower-paying regions.”

With many of the middle-class fleeing for hopes of affordable housing, the poor don’t have the luxury of mobility. They’re typically stuck in a minimum-wage job that forces them to live far away from work so they can afford rent. Commuting is incredibly detrimental to one’s health, and those in the lowest income brackets are already dealing with more health problems than anyone else. This places a huge burden on our already overburdened health care system. It’s a vicious cycle that shows no signs of slowing down.

In 2009, Nicholas Reding published Methland, a book that documented the rise of methamphetamine abuse in the Rust Belt town of Oelwein, Iowa and the role it played in shaping the town’s history over the next two decades. Oelwein is a model for many small towns in America or Canada; these towns often sprung up around 1 or 2 dominant employers — either a factory or a mine — and when the jobs left or the facility was purchased by a multi-national and wages were slashed, the fallout was disastrous.

In the case of Oelwein and much of the American Midwest, meth became wildly popular in part because it allowed individuals to work longer hours at a remarkable pace (before their addictions took over). Due to the slash in hourly wages thanks to corporate greed and an influx of illegal immigrants willing to work for lower wages that corporations were happy to offer, competition was fierce. Meth was the edge many individuals needed to stay employed and earn a decent living, so the drug ran rampant in the American Midwest during the 1980s and 1990s.

Eventually, the influence of the drug took its toll and the towns infested by it — already suffering from the economic fallout — appeared to be lost. But, as Reding describes, what saved Oelwein beginning in 2005 was a combination of federal policy and municipal leadership.

Larry Murphy, mayor of Oelwein at the time, enacted a series of initiatives designed to resuscitate the town. Murphy worked hard to revamp the look of the decrepit downtown core, he attracted new business to the abandoned factories, and the town invested in technical education. These all bolstered the local workforce and contributed to the retreat of meth in the community and injected life into an otherwise dying town.

The case of Oelwein reads very similar to many of the cities in the Ontario Rust Belt, each nursing their own cocktail of problems caused by a collapse of the manufacturing sector and concentration of high-paying knowledge worker jobs in large cities. The concentration of highly-skilled workers in large cities has created a race to the bottom, where the bulk of these cities’ populations lose out to the few that can afford to live there. In a city where its nurses and teachers have to live over an hour away from work to afford a decent living, it should come as no surprise when the quality of core services in large cities begin to suffer. It seems that no matter where you go, things are looking bleak.

The solution is to shift the focus to Ontario’s Rust Belt. Toronto is too expensive for most people to maintain a high standard of living, and the infrastructure can’t keep up with the population influx. Recently, Toronto was named the worst city of North America for commuting. Clearly, something needs to change if both Ontario’s Rust Belt and its crown jewel are to prosper.

Implementing tax incentives and grant money for companies to set up shop in mid-sized cities to encourage talent migration is a great way to start. It’s already happening on the West Coast of the United States as people are fleeing the Bay Area in droves to purchase a home. Numerous cities in Texas, Oregon, and Northern California are experiencing booms in migration as a result.

Post secondary education is also crucial. Nearly all of the Ontario Rust Belt cities are home to a university and/or college. These institutions can be calibrated to seed the economy of the city they’re in. Just look at the case of the University of Waterloo’s relationship with the Kitchener-Waterloo region’s tech sector. UW’s exceptional software engineering program has produced graduates that have founded numerous successful companies that now anchor the region. Other programs at UW have piggy-backed onto the software engineering program and integrated into the tech boom to provide companies with non-technical employees that help round out a business in roles like sales, marketing, or human resources.

Education doesn’t have to be focused on the high-tech sector. If you examine the outlier that is the German manufacturing sector, you can see why many of their companies are so successful and have retained and grown their talent pool. Many German companies are borne out of a history of excellence from their local university. For example, the cluster of 39 measurement technology companies in the area of the old university of town of Göttingen are the result of the leading role that Göttingen University’s mathematics faculty has had for centuries.

The Provincial government should look for these partnerships that already exist and invest in them further, or look to open up new schools designed to sustain and help enhance the dominant companies in the region. Recently, the Government of Ontario announced that three new universities were opening in the GTA. I believe this is a poor choice: if our government wants to maintain a balance in the province, it should have opened these schools in mid-size cities that have the capacity for supplying local students, with the aim to attract and retain out-of-towners. The net impact would be far greater.

*Update — the funding for these schools has been taken away by the Ontario government. No word on what will come of these proposed schools.

Adam Smith once wrote that “wherever there is great property there is great inequality. For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many.”

If we are to continue down our current path, things will continue to get worse for cities in the Ontario Rust Belt. For each small gain there will be a massive setback. Many local politicians have failed to grasp the severity of the situation, but the reality is this: most of the small to mid-sized cities outside the GTA in Ontario are in a tailspin. Many in local government fail to recognize this because the largest salary increases have been for those very individuals, while those at the bottom end of the spectrum have seen their income dwindle.

There have been steps in the right direction.

Countless examples exist of old factories getting re-purposed as new offices or housing projects. The old Kellogg’s Plant in London has been re-purposed into The Factory: an adventure park that offers a variety of activities. A new medical marijuana plant has opened where the Hershey Company used to call home in Smiths Falls. I could go on. Ontario’s Rust Belt has seen some signs of life, but there is still much work to be done.

I am not sure what the future holds for the Ontario Rust Belt. I am not an economist, a sociologist, or a political scientist. But I am — like I’m sure many others are also doing — paying attention. I am paying attention to the growing number of people out of work. I am paying attention to drug abuse epidemics. I am paying attention to the fact that I’m fortunate enough to be employed in a job I enjoy, and part of my societal responsibility in the future will be assisting those less fortunate than I through the support of policies that do so.

It is my hope that those in a position of political influence will also pay attention.

“A person may cause evil to others not only by his actions but by his inaction, and in either case he is justly accountable to them for the injury.”