Is the Grand Falls-Windsor economy really "booming"?
On Wednesday, CBC reported with some fanfare that the Grand Falls-Windsor economy was booming, despite the closure of its pulp and paper mill.
The story, by reporter Carolyn Ray, aired on both radio and TV, and you can read another version of it online.
The story really grabbed my attention. If indeed the economy is booming, that is big news. And, if it is, I want to know why.
Unfortunately, the item failed on both counts. It did not offer adequate proof of a boom, nor did it explain what might be fueling it.
The only hard evidence offered was a statistic on housing. There are 60 housing starts so far this year, compared to 16 at this time last year. However, when you consider year-over-year statistics, as blogger Ed Hollett does here, its not as impressive. There were 118 housing starts in 2008, 50 in 2009, and 60 so far this year.
In other words, housing starts are holding their own, with the exception of a slump in 2009, the year the mill closed.
Another quoted source is a local automobile dealer. Now, car salesmen are nice people, but they like real estate agents are not exactly reliable sources of economic data. No matter what the reality is, they are conditioned to say, business is great, and, given enough time, will also say Now is a good time to buy.
In this case, the reporter says the local Toyota dealership is selling so many cars, its expanding to a brand new, multi-million dollar building. (I cant find substantiation for this, in council minutes for 2010, news stories or press releases, so lets assume its breaking news.) The car dealer credits workers from the hospital, an already diverse economy and people moving home to retire.
I dont really buy that analysis. Yes, I am sure there are some people moving back home. But can you replace 750 high-paying jobs with returning retirees? Not to this extent. As for the areas main hospital, it was there before the mill closed nothing has changed and it, alone, cannot sustain a boom.
There is some truth to the diverse economy to which the car salesman refers. Not mentioned in the news story are establishment of the Home Heat Rebate Centre and Youth Addictions Office, development work in the cranberry industry, and expansion or renovations to the hospital and the College of the North Atlantic. These, combined, could account for the housing starts so far this year.
But can the boom be sustained? What happens next year? Is Carolyn Rays bright sunny intro to her story really warranted?
Forget the image of a dusty old mill, she reports. Around here, the only dust people want to talk about comes from construction zones. Its hard to avoid that sound of development. What some people feared would be a bust is now a boom.
Sorry, but that dusty old mill is a critical factor in this story that we cannot forget. Most of the 750 employees received severance packages (from the provincial government), which has also been fueling some economic activity in the short term.
However, their EI benefits are running out right about now. The true impact of the mill shutdown will not be clear until that reality comes home to roost.
The reporter also doesn't mention that student enrollment is on a steady decline, as are teaching units. There are plans to amalgamate two elementary schools into one, and there are now four empty and dormant schools in the town.
Some businesses in the town are struggling, and more than 15 have closed their doors since December 2008, the most recent being Doolys nightclub.
But, really, it all comes back to those 750 former mill employees. Heres how the Town Council described the situation in its 2010 budget document:
On December 4, 2008 Abitibi announced that they were closing their paper mill in Grand Falls-Windsor. This would directly affect 750 employees. Over the past year, the mill closed and our region dealt with the fallout. Although this impacted many on an individual basis, the town and region weathered the brunt of the mill closing remarkably well. Most retail businesses experienced impressive growths and our local industries who relied on work from the mill, were competitive in markets new to them. Over the years, our economy has diversified so that there is evidently a critical mass of employers other than the mill. These employers and businesses were significant enough to dampen the blow.
Did you see that? There is evidently a critical mass of employers? What does that mean? And did you notice that string of positive statements, without any facts to support them?
To me, it sounds like theyre whistling past the graveyard.
In closing out her piece, Carolyn Ray offers another reason for the economic boom:
Many people believe it was the uncertainty around the mill that held others back from spending. Now that they know its gone, its full steam ahead.
Yeah, right. People saved their money because they were worried about the future. The mill closes, confirming their worst fears, so people start spending. Um, no I dont think so.
Outside of the indicators referenced above, there are no glaring examples of economic hardship in Grand Falls-Windsor. I have only the best wishes for the future prosperity of the town. And I think there is validity in reporting on the strong housing market.
For example, saying some people are optimistic about economic activity, while tempering that with information about mill workers coming off EI support, would have been fine.
After all, there are thunderheads gathering on the horizon. You do not remove 750 high-paying jobs from a community without serious economic impact. And the only way to deal with that fallout is to recognize the facts and confront them head-on.
Playing Pollyanna will do nobody any good.
UPDATE: For those who missed the CBC item, here is a complete transcript.
Many people wondered how big a blow the mill closure would be to the entire community (of Grand Falls-Windsor). Well, we had Here Nows Carolyn Ray take a look at the towns economy and what she discovered may surprise you.
Forget the image of a dusty old mill. Around here, the only dust people want to talk about comes from construction zones. Its hard to avoid that sound of development. What some people feared would be a bust is now a boom.
We dont look at it as a destitute town. We look at it as a growing town.
It got even busier, I think. Compared to last year, it seems even busier than last year this year.
It is busier. 60 new homes compared to 16 last June. This neighbourhood went up after the mill shut down.
Obviously people are still coming in and buying. So obviously they havent depended on the mill like people have thought.
The housing market is so hot, King has real estate agents knocking on her door, wanting to sell her two year old home, but she cant find another place to build.
Because there looked like there was a lot of land available, but there is so much housing construction on the go that as soon as land is open its being sold, the blocks of land are being sold.
And its not just housing. The Toyota dealership is selling so many cars, its expanding to a brand new, multi-million dollar building.
We kind of all held our breath a couple of years ago when the mill did close, in March, and wondered what would happen next. But since that time business has continually picked up, month after month.
The reason? Well, Thistle credits workers from the hospital, an already diverse economy and people moving home to retire.
The proof is in the pudding. We feel confident in the region and the businesses there.
Many people believe it was the uncertainty around the mill that held others back from spending. Now that they know its gone, its full steam ahead. Carolyn Ray for CBC News