Northern Policy Institute (NPI) is Northern Ontario’s independent think tank. They perform research, collect evidence, and disseminate ideas. They seek to identify policy opportunities to support the sustainable growth of Northern Ontario communities.
Potential Recommendations for Northern Ontario
Develop a Regional Manufacturing Strategy
Northern Ontario should develop a regional manufacturing strategy.
This will serve as a framework for manufacturing policy and help the region become an attractive destination for innovation, new business creation, and industry diversification. A regional manufacturing strategy would restructure existing manufacturing in the area and encourage new investment in high growth opportunities.
The impetus is to help stimulate manufacturing employment and business activity in Northern Ontario, which has been declining over the past decade. DV suggests that this could be done by expanding on existing programs such as the Industrial Research Assistance Program (IRAP) to attract industry to Northern Ontario, through increased access to infrastructure funding, incentives for innovation and research & development across key industries, and have higher levels of government support for major investments that would catalyze growth
Adopt a Strategy to Pursue Manufacturing Exports
Northern Ontario should develop a strategy to pursue manufacturing exports.
This strategy should focus on promoting businesses in Northern Ontario that have export potential. Currently, Northern Ontario is missing out on global market opportunities due to its lack of export activity.
There are numerous opportunities for Northern Ontario to increase manufacturing exports and create jobs. DV suggests that this could be done by identifying and targeting the trade and investment opportunities that exist in Northern Ontario, such as (1) the new requirements keeping companies out of the U.S.; (2) expanding trade with China and India; (3) exploring new markets for Northern Ontario’s energy resources; (4) improving Canada/U.S. trade deficits, which are hurting Canadian manufacturing; and (5) other opportunities that may exist through developing a more connected transportation system, such as expanding interprovincial freights across the North, which will help attract investment in infrastructure projects.
Adopt a Regional Infrastructure Strategy
Northern Ontario should adopt a regional infrastructure strategy, which would be similar to that prescribed by the 2008 report “Northern Prosperity: Overcoming the Challenges of Canada’s North” by the Senate Standing Committee on Transport and Communications.
The primary goal of this strategy is to identify and prioritize the infrastructure needs of Northern Ontario and engage stakeholders in decision-making processes through public-private partnerships (PPPs). DV suggests that this may assist in addressing the ongoing infrastructure gap in Northern Ontario.
We believe there are two options to deal with this gap: (1) use the existing infrastructure funding mechanism – Infrastructure Ontario and the Infrastructure Financing Authority of Ontario – for the procurement and construction of major projects, which would require significant management; and (2) create a special Crown agency to manage this process, such as a Northern Ontario investment corporation.
Develop a Strategy to Promote Regional Food Initiatives
Northern Ontario should develop a strategy to promote regional food initiatives.
The food sector is a major employer in Northern Ontario, with the sector accounting for over one in five jobs. This strategy should focus on investing in food processing and manufacturing to promote competitiveness and create jobs.
Currently, Northern Ontario is missing out on potential opportunities due to its lack of export activity. There are also several opportunities for Northern Ontario to become a global food hub, including (1) increasing exports and developing value-added products; (2) improving the environmental health of local food systems; and (3) expanding agricultural production through land use.
Adopt a Regional Tourism Strategy
Northern Ontario should adopt a regional tourism development strategy.
This should focus on the collaborations between local businesses by identifying strategic marketing opportunities and working together to promote services and destinations to Ontarians and visitors across the province. It would also encourage more activity to happen at night, which is when businesses are open, through events such as trolley tours, film festivals, and live theatre.
Increased visitor spending would have a multiplying effect on local economies.
Develop a Regional Innovation Strategy
Northern Ontario should develop a regional innovation strategy.
This strategy would provide a framework for promoting innovation in the region and help attract increased economic growth through business creation and expansion.
Northern Ontario’s existing innovation policy is underdeveloped, as there is limited funding available. This has resulted in limited incentives to innovate in the region.
DV suggests that the region needs to develop a more comprehensive innovation policy that includes research & development funding and supporting the creation of successful businesses.
Economic Diversification Recommendations
Economic diversification is an important policy goal for Northern Ontario, but it isn’t enough to focus solely on economic growth.
To achieve sustainable economic growth, communities must be able to attract new jobs, businesses, and industries. DV has identified several areas of opportunity for collaboration between government and Northern Ontario’s key industries that would help diversify the economy in Northern Ontario:
1. Develop an innovation strategy, similar to Canada’s Industrial Research Assistance Program (IRAP), to support the growth of local innovation and development.
DV understands that there are many barriers that Canadian businesses face when they try to innovate and build significant enterprises of their own. One of these barriers is the lack of access to public funding and incentives provided by the government.
The cost-shared innovation programs offered through IRAP not only provide an avenue for innovative research and development but support the manufacturer to translate their innovations into marketable products.
2. Match provincial funding for innovative research with business demand from Northern Ontario’s key industries.
DV recommends that the Ministry of Economic Development, Job Creation, and Trade consult with local stakeholders as a means to find out about the specific needs of local industries, and why a regional innovation strategy would be beneficial for Northern Ontario, beyond government funding for research projects.
3. Create a network of tech transfer offices to support businesses seeking to commercialize the technology in Northern Ontario.
Technology transfer offices are innovative hubs that bring together different players from the innovation ecosystem under one roof, including researchers, business and industry groups, financing organizations, and government services within a geographical area such as a municipality or region.
DV recommends that the Ministry of Economic Development, Job Creation, and Trade convene local stakeholders to group together with their strengths and expertise so they can collaborate outside their traditional setting.
4. Create a community economic development funding model for Northern Ontario communities with fewer than 5,000 people.
DV considers this to be an important part of a regional economic development strategy that should address the ongoing decline in income and job growth.
A community economic development model could provide financial support to qualified Northern Ontario businesses, while they develop their products or services, such as incubators and coworking spaces, or engage in expanding or developing new markets.
DV believes that this program could include a variety of services and funding streams including business incubation support, venture capital funding for early-stage businesses, mentoring and networking events for start-ups, business insurance assistance tools for potential entrepreneurs, and other resources to assist entrepreneurs with business models.
5. Build partnerships between businesses and educational institutions to develop the talent pipeline for Northern Ontario.
DV recognizes that there aren’t enough trained workers in Northern Ontario. This is a strategy that could play a big role in increasing the number of successful entrepreneurs from all sectors, as well as creating an environment where more people feel comfortable moving to Northern Ontario because they’re passionate about their idea and have the skills to execute their vision.
6. Expand funding opportunities for early-stage entrepreneurs to attract investment capital.
Funding opportunities such as those provided by SEDA through its Start-Up Canada initiative would be an important part of a regional economic development strategy in Northern Ontario. This initiative provides funding for early-stage entrepreneurs through its Community Futures Development Corporation network in Northern Ontario.
7. Support incubators and co-working spaces for entrepreneurs to share information and support each other through mentorship.
A business owner in Sault Ste Marie re-iterated the importance of incubators in bringing together people who are passionate about their projects, who have ideas and the skills to support each other’s businesses.
8. Develop a comprehensive strategy to attract investment capital to Northern Ontario.
DV recognizes that several incentives exist today that help brings workers into the province, including Industrial Revenue Bonds (IRB) and tax credits through the Scientific Research & Experimental Development (SR&ED) program.
However, DV believes that the province should create a more tailored investment strategy for Northern Ontario that can help attract businesses, investments, and top talent.
9. Explore funding opportunities for business support services in Northern Ontario.
The tourism industry would benefit from a community economic development funding model, similar to the way that the Ministry of Northern Development and Mines has built partnerships with First Nation communities.
DV recommends that partnerships between government and communities could be important in helping ensure credit and risk management services are accessible to Northern Ontario businesses who are trying to get a start-up off the ground.
10. Promote investment in Northern Ontario to the rest of Canada, and overseas.
DV believes that this is an opportunity for Northern Ontario to be part of a global market in creating jobs and increasing exports. The province could help support this increase through a national business attraction strategy, such as Clearwater East Economic Development’s partnership with the Federal Government.
This investment will help connect Clearwater East to markets in Eastern Europe, Asia, and Africa for companies located in areas designated by the federal government as economically depressed or remote.
Encourage new investment in high growth opportunities
Encourage new investment in high growth opportunities that would catalyze manufacturing activity in Northern Ontario by expanding on existing programs such as IRAP, increased access to infrastructure funding, incentives for innovation and research & development across key industries, and have higher levels of government support for major investments that would catalyze growth.
A. Expand on existing programs like the Industrial Research Assistance Program (IRAP) and expand the NCEDF to provide more financial support for Northern Ontario.
IRAP provides a tax credit to companies who have incurred eligible research and development expenses incurred in Canada, which are normally applied against their corporate income tax.
This is a program that helps companies attract investment capital, as well as add additional value to their products or services. It can also help them attract top talent to these jobs because it allows skilled workers with experience coming from universities in other provinces or countries to establish themselves and bring this knowledge back home so they can work within their specialized field in Northern Ontario.
Clearwater East Economic Development believes that access to similar funding, such as the NCEDF, would be essential to creating jobs, growing our economy, and attracting skilled talent. This program should be extended and more Northern Ontario communities should be included in this program.
A. Increase access to infrastructure funding to facilitate new industrial development in Northern Ontario.
The government provides a variety of grants and loan guarantees through the Canada Strategic Infrastructure Fund (CSIF) for companies looking to create new infrastructure in targeted industries such as manufacturing or information/communication technologies (ICT).
These can include a range of expenditures including financing for the construction of buildings, acquisition of land and equipment, or working capital loans for projects such as purchasing inventory or equipment. These investments provide a financial boost for companies that are looking to expand their facilities, as well as help lower the direct and indirect costs of construction.
This funding also helps build strong business relationships with communities because it allows for new businesses to access these resources as part of the “Northern Ontario Advantage”. International Rail Industries (IRI), a Nova Star Materials subsidiary, received a loan guarantee from the Canadian government under the CSIF in March 2015 that will allow them to construct an integrated mine and mill near Parry Sound, Ontario.
Along with this loan guarantee, they will be able to access other funding through the province’s Ontario Trillium Foundation and Nova Star Resources’ debt financing programs at Nova Star Bank.
B. Provide incentives for innovation and research & development across key industries in Northern Ontario to help improve productivity and increase profitability.
There should be government-funded programs that provide incentives for businesses to invest in innovation and R&D in key high-growth sectors such as mining, manufacturing, and film/TV/video productions.
These initiatives would benefit from the presence of colleges, post-secondary institutions, or high-powered research institutes to facilitate collaborative programs between industry, post-secondary institutions, or federal labs to access complex technology which otherwise would be uneconomical for a single company to develop independently.
This would support long-term productivity gains and lead to improved competitiveness of a sector across the economy.
The government can provide the industry with ways to tap into some of Northern Ontario’s wealth of resources by investing in R&D through postsecondary institutions, or other research labs and companies.
This can include helping businesses access these resources for technologies such as mining. The Province should create strategies like a Venture Capital Fund to invest in start-ups in Northern Ontario that have an innovative idea for a new product or service that could benefit from a technological breakthrough.
The province’s health care system is another area that would benefit from access to innovations and ways to improve treatment outcomes through technology. The government can encourage research and development by lowering the tax burden for companies that are attempting to compete with international companies.
C. Provide incentives for R&D to help firms in Northern Ontario improve their business processes and practices so they can better compete with their international counterparts.
It is important that governments, including the federal government, create programs that assist firms with R&D to develop new products or services.
Incentives like tax credits or access to funding help businesses create jobs and ensure that companies are competitive in the global marketplace as well as maintain existing jobs. Clearwater East Economic Development would like to see programs such as the federal government’s Technology Accelerator Fund, or a similar program that provides funding to firms looking to scale up their small businesses and create jobs.
This will help firms develop products or services, while also helping local companies that are looking to create high-quality jobs.
D. Support business growth through the creation and development of a customer base.
The government should be providing incentives and support for industries in Northern Ontario that want to grow their customer base by developing products and services for different sectors within Canada.
This research needs to be done by companies in Northern Ontario, as the vast majority of jobs will be within Northern Ontario companies. The government should encourage businesses in Northern Ontario to develop a product or service that can be sold across all sectors.
This would include giving tax credits, grants, and other forms of support to businesses so they can develop a product or service that can be sold across all sectors. Another way this could take place is through the sale of “Northern products” at designated international airports, border crossings, and major retail outlets.
This would generate significant sales for companies in Northern Ontario, while also supporting the development of local manufacturing expertise.
E. Encourage business leadership in the region through mentorship and education.
The government can help both entrepreneurs and established companies grow by encouraging more people to join the industry, and get training and support from other businesses in the region to learn more about their industry.
Furthermore, mentoring programs such as those used in Silicon Valley can be beneficial for developing business practices for companies in Northern Ontario. The government should also invest in formal programs or industry-specific training that will provide better insight into how to compete internationally as one of Canada’s top exporting nations.
F. Expand awareness of sectors within Northern Ontario by supporting local trade shows which will allow businesses to meet potential customers and suppliers easier without traveling out of the region.
The government should also support the publication of pamphlets and books that explain in detail the different sectors there are in Northern Ontario as well as their product or service offerings, which could be sold through local shopping areas or international ports.
This will allow businesses to develop a customer base that is aware of the different products and services they offer, which may lead to growth in the industry.
G. Create strategic plans to tackle specific challenges or opportunities within a certain sector which could include designing new business models, articulating policy reform, increasing productivity and research capabilities.
This will allow businesses that are underrepresented within certain industries to emerge more strongly in those markets. For example, the government should be willing to work with the municipality, industry sector, or postsecondary institutions to develop a new plan and strategy for a particular sector of Northern Ontario.
This will allow businesses in that field to emerge more successfully and will provide better opportunities for employment and economic growth in that industry.
Overall, the opportunities available to Northern Ontario are significant due to the efforts made by both federal and provincial governments over recent years. However, increased R&D is needed from both levels of government if Northern Ontario is going to compete on an international scale at the same level as southern Ontario or other regions across Canada.
Capitalizing on Northern Ontario's Natural Resources
For Northern Ontario to capitalize on its natural resources, it must develop a resource development strategy that takes into consideration both economic principles as well as social and environmental considerations.
This will help position the region to attract skilled business leaders, capital investment, and new market opportunities. This strategy must be embraced not only by the government but by all levels of the industry.
DV recommendations to build a resource development strategy that best positions Northern Ontario include:
1. Government must develop a long-term strategic vision for the region that takes into consideration both economic principles and social and environmental considerations.
It should be accepted as a shared responsibility between government, industry, and Aboriginal communities.
2. The government must leverage its regulatory powers to encourage growth while protecting the environment while also creating investment opportunities to create jobs in Northern Ontario.
This would enable governments to release funds available to businesses without penalizing them with incremental opportunity costs.
3. The government needs to realize that even though growth is necessary, it is not a sufficient condition for the prosperity of Northern Ontario communities.
Public resources should be directed at programs that ensure an equitable outcome for all players in partnerships with private sector companies and First Nations economic development initiatives.
4. The government needs to support the delivery of new infrastructure to ensure the sustainable growth of Northern Ontario communities by investing in capital programs such as rural roads, broadband Internet, and enhancements to health care facilities and services.
5. Northern Ontario municipalities need assistance from the province in addressing their unique capacity challenges through an enhancement to the Northern Ontario Municipal Fund (NOMF) that supports projects such as roads, water, and sewer systems.
Federal funding for these municipal infrastructure projects should be matched dollar for dollar by the provinces.
6. Mining companies considering expansion into Canada from abroad must be convinced there will be a stable regulatory environment on issues such as taxation, fees, and costs associated with resource development.
A stable regulatory environment, development, and delivery of infrastructure, and the resolution of First Nation land claims will improve our competitive standing to attract foreign investment.
7. The government must invest in a mining engineering program at Lakehead University that will enhance the local mining industry’s competitiveness in both domestic and international markets. Several mining companies would like to bring economic activity to Northern Ontario communities but do not have the technical expertise or human resource capacity to do so.
8. The government needs to support and facilitate the expansion of cottage industries and the growth of small businesses in Northern Ontario communities.
9. Northern Ontario must be recognized as a global leader in developing natural resources through the promotion of green energy and sustainable resource extraction industries.
10. Northern Ontario’s economic future is dependent on attracting foreign direct investment into its world-class natural resources.
It can only do so by providing a stable regulatory environment and by addressing the unique problems that make Northern Ontario such a difficult place to do business.
Conclusion
The government has made strides in supporting Northern Ontario’s economic development.
However, we need to focus on long-term strategies to ensure the region becomes a more attractive place for investment and diversification. This should include specific strategies for addressing resource development, small business expansion, and attracting foreign direct investments into Northern Ontario.
Northern Ontario also needs to capitalize on its rich natural resources by developing a resource development strategy that takes into consideration both economic principles as well as social and environmental considerations.
DV recommends that the government of Canada formally adopt the concept of inclusive prosperity as a foundation for governments’ future poverty reduction strategies and to use it as a guide for measuring progress and success.
As well, the Government of Canada needs to develop a long-term Northern Ontario economic plan that positions the region to attract skilled business leaders, capital investment, and new market opportunities. It is unrealistic to expect Northern Ontario alone to develop strategies that will position the region as a global player in terms of manufacturing, mining, and resource extraction.
Northern Ontario’s future success will depend on partnerships from all sectors of society, especially the provincial and federal governments. We have an established network of stakeholders and a workable concept to make Northern Ontario a global player in terms of attracting new and diverse investment.
Let me know what you think in the comments.