15 May 2013

The Decline of the Forest Empire #nlpoli

While an official with Corner Brook’s municipal government  understandably has to say wonderful things about the economy in the west coast city, a look at some numbers shows the city is feeling the effects of a larger problem in the province.

SRBP took a look at newsprint production levels and the value of newsprint exports from 2003 to 2012.  The numbers are all from the annual editions of the budget document called The Economy.

The picture is not pretty.

newsprint exports

After two mill closures, newsprint production in the province is down to the mill at Corner Brook.  The current level – less than 260,000 tonnes annually – is about one third of what the province produced less than a decade ago.

The annual production for the Kruger mill is Corner Brook is pretty much at capacity, at least based on the information in The Economy and current workforce levels at the Corner Brook mill.

When you look at the value of exports, you get pretty much the same pattern.

newsprint value

Current value of exports has been around $160 million annually since 2009.  This is an estimate since the provincial government no longer reports the actual value of exports.  They just give the tonnage of output and the estimated average price per tonne of newsprint in North American markets for the year.  They changed their reporting for 2006 and then after Abitibi closed its last mill in the province in 2009.

This is not rocket science.

Odds are that the growth in employment Corner Brook has apparently experienced hasn’t been from any great things at the Kruger mill. Here’s what the City of Corner Brook’s business services manager told the Western Star:

“Interestingly enough, even though we saw a drop in our GDP in 2008 and 2009 that was on par with the other cities in the report, our employment numbers rebounded in 2010 at a rate that was higher than most, and continued to improve into 2011 when others did not.”

More likely, the cause of any growth in employment was provincial government hiring.

And that brings us back to the wider theme of the past decade;  the decline of the private sector economy and the parallel growth of the provincial role in the economy as an unsustainable replacement.

Yes, friends, we are talking about the fragile economy, as Corner Brook politician Tom Marshall dubbed it. That’s the same Tom Marshall who complained in 2011 about his own government’s policies and how the private sector investment in the province just wasn’t where it needed to be.

What you can also see in these newsprint figures is part of the explanation for why the provincial government’s non-oil revenues have been pretty much flat-lined since 2009 or so.