Ontario - Economy

Economy

Ontario is Canada's leading manufacturing province, accounting for 52% of the total national manufacturing shipments in 2004. Ontario's largest trading partner is the American state of Michigan. The government of Ontario posted a record C$21.3 billion ($20.7 billion) deficit for the 2009-10 fiscal year. The province’s net debt will rise to C$220 billion in 2010-11, or a record 37% of gross domestic product.

Ontario's rivers, including its share of the Niagara River, make it rich in hydroelectric energy. In 2009 Ontario Power Generation generated 70% of the electricity of the province, of which 51% is nuclear, 39% is hydroelectric and 10% is fossil fuel derived. Much of the newer power generation coming online in the last few years is natural gas or combined cycle natural gas plants. OPG is not however responsible for the transmission of power, which is under the control of Hydro One. Despite its diverse range of power options, problems related to increasing consumption, lack of energy efficiency and aging nuclear reactors, Ontario has been forced in recent years to purchase power from its neighbours Quebec and Michigan to supplement its power needs during peak consumption periods.

An abundance of natural resources, excellent transportation links to the American heartland and the inland Great Lakes making ocean access possible via container ships, have all contributed to making manufacturing the principal industry, found mainly in the Golden Horseshoe region, which is the largest industrialized area in Canada, the southern end of the region being part of the North American Rust Belt. Important products include motor vehicles, iron, steel, food, electrical appliances, machinery, chemicals, and paper. Ontario surpassed Michigan in car production, assembling 2.696 million vehicles in 2004. Ontario has Chrysler plants in Windsor and Bramalea, two GM plants in Oshawa and one in Ingersoll, a Honda assembly plant in Alliston, Ford plants in Oakville and St. Thomas and Toyota assembly plants in Cambridge and Woodstock.

However, as a result of steeply declining sales, in 2005, General Motors announced massive layoffs at production facilities across North America including two large GM plants in Oshawa and a drive train facility in St. Catharines resulting in 8,000 job losses in Ontario alone. In 2006, Ford Motor Company announced between 25,000 and 30,000 layoffs phased until 2012; Ontario was spared the worst, but job losses were announced for the St. Thomas facility and the Windsor Casting plant. However, these losses will be offset by Ford's recent announcement of a hybrid vehicle facility slated to begin production in 2007 at its Oakville plant and GM's re-introduction of the Camaro which will be produced in Oshawa. On December 4, 2008 Toyota announced the grand opening of the RAV4 plant in Woodstock, and Honda also has plans to add an engine plant at its facility in Alliston. Despite these new plants coming online, Ontario has not yet fully recovered following massive layoffs caused by the global recession; its unemployment rate was 8.1% (as of October 2011), compared to 8.7% in Jan. 2010 and roughly 6% in 2007.

Toronto, the capital of Ontario, is the centre of Canada's financial services and banking industry. Neighbouring cities forming part of the Greater Toronto Area, such as Brampton, Mississauga and Vaughan, are large product distribution and IT centres, in addition to having various manufacturing industries. The information technology sector is also important, particularly in the Silicon Valley North section of Ottawa, as well as the Waterloo Region, where the world headquarters of Research in Motion (the developers of the BlackBerry smartphone) is located. Providing more than 19% of the local jobs and employing more than 13% of the entire local population, Canada's Federal Government is by far the largest single employer in the National Capital Region, which centres on the border cities of Ontario's Ottawa and Quebec's Gatineau. Hamilton is the largest steel manufacturing city in Canada, and Sarnia is the centre for petrochemical production. Construction continues to employ more than 6½% of the province's work force as of June 2011.

Mining and the forest products industry, notably pulp and paper, are vital to the economy of Northern Ontario. More than any other region, tourism contributes heavily to the economy of Central Ontario, peaking during the summer months owing to the abundance of fresh water recreation and wilderness found there in reasonable proximity to the major urban centres. At other times of the year, hunting, skiing and snowmobiling are popular. This region has some of the most vibrant fall colour displays anywhere on the continent, and tours directed at overseas visitors are organized to see them. Tourism also plays a key role in border cities with large casinos, among them Windsor, Cornwall, Sarnia and Niagara Falls, which attract many U.S. visitors.