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Chasing smokestacks: Towns getting creative in wooing industry

Communities pull out all the stops in the face of global competition

Canada's manufacturing sector expanded in February, official GDP data shows.

After 20 years in Scarborough, Ont., Castool Tooling Systems canvassed employees, looked beyond the traditional business belt and moved its operations to a small town northeast of Toronto.

The manufacturer, which makes tooling for aluminum extruders and die casting industries, relocated in 2006 to Uxbridge, a pretty little township with Quaker roots and a population of about 20,000. Taxes were comparable to Scarborough. But land was more plentiful and less expensive. And, its 60 employees became reverse commuters.

“We saw no benefit to being in a congested area,” said Paul Robbins, general manger of Castool, which ships 95 per cent of its products outside the country.

Castool has since grown to 120 employees, and it’s in the midst of a $2.4-million expansion to enlarge its facility to 60,000 square feet. It’s also one of the highest-paying employers in the region, drawing on a pool of local talent.

“It’s comfortable and relaxing,” Mr. Robbins said. “And there’s lots of air.”

It was also a win for Uxbridge, where homeowners often grumble about high property taxes (the municipal tax base is about 85 per cent residential) and where officials are trying to lure industry and commerce to town. The township has grant programs for redevelopment, rehabilitation and signage, as well as tax incentives – or relief – for brownfields and heritage properties. Working with regional authorities, and on its own, to find ways to woo new business has become a dominant preoccupation.

The business of going after business is extremely competitive. You’re competing with countries around the world

— Ken Coates, public policy professor at the University of Saskatchewan

For small towns across Canada, ‘chasing smokestacks’ has long been the primary method for growing a community. But traditional industries – mills, factories and agriculture – have been drying up or dying off, leaving behind a trail of laid-off workers and shuttered doors. Without new businesses, small towns risk vanishing completely.

“Our small towns are facing enormous pressure to deal with globalization,” said Ken Coates, a public policy professor at the University of Saskatchewan. “The business of going after business is extremely competitive. You’re competing with countries around the world.”

They're also actively trying to lure businesses from other Canadian communities, an understandable impulse, but one that provides no net gain to the country.

Feshly-baked mooncakes pass along a conveyor belt at a factory in Shanghai.
Feshly-baked mooncakes pass along a conveyor belt at a factory in Shanghai.

Coates, who is also holds the Canada Research Chair in Regional Innovation, said small towns are better off cultivating their own businesses and keeping entrepreneurs at home. They could also sell their logistical advantages to Asian companies who are looking for a toehold in North America.

Some places dangle carrots such as tax incentives, seed money or funding.

Enterprise Saint John in New Brunswick, a non-profit group aimed at job creation and facilitating startups, produced 14 new businesses through one of its programs earlier this year. Also this year, the Nova Scotia government stepped in with an $8.9-million pledge to tire manufacturer Michelin in return for the company’s promised $64.1-million expansion to its factory in Annapolis Valley. Nova Scotia coughed up the cash to help a rural region in a troubled economy because it didn’t want to see new jobs created elsewhere.

Communities are also getting creative

Mundare, Alta., is probably been best known as a premier purveyor of Ukrainian sausage and its 12.8-metre high roadside tribute to the meaty treat. But the town (pop. 855) attracted nationwide attention by offering downtown lots to prospective businesses for the bargain-basement price of a loonie. As further incentive to set up shop in the predominantly agricultural town, businesses would see their municipal taxes waived during construction as well as reduced rates on their tax bill for the first three years of operation. Of course, the business must be up and running quickly and meet the town’s needs.

“We were looking at these empty lots that we were basically cutting grass on,” said Colin Zyla, Mundare’s chief administrative officer. “We’re open to any type of business as long as it’s viable.” Since the program was introduced in 2011, a realty company has been built and a registries business is about to open in the building. Two more proposals for new businesses are expected within months. “We believe this has been quite successful for us,” Zyla said.

Back in Uxbridge, Castool wasn’t lured by municipal programs or enticements. But Ingrid Svelnis, Uxbridge’s chief administrative officer, said the township is in preliminary discussions with a few new businesses. It’s also sponsoring a novel “win this space” competition, which wraps up Oct. 20, offering would-be entrepreneurs $12,000 toward the first year’s lease of commercial space as well as in-kind professional services, such as advertising, printing and window cleaning.

“We are very excited with the opportunities that will come from this great initiative,” Svelnis said.

(Photo courtesy Reuters)