Ontario’s Manufacturing Sector Attempting to Survive Rising Electricity Costs

Ontario’s Manufacturing Sector Attempting to Survive Rising Electricity Costs

A recent study by the Fraser Institute has found links between Ontario’s rising electricity prices and a drop in manufacturing sector jobs. The study has specifically pointed at Ontario’s high electricity costs as a direct cause behind this decline, placing 64% of the blame on those costs. That 64% represents approximately 75,000 jobs lost since 2008 as a result of the electricity prices.
October 23, 2017

    A recent study by the Fraser Institute has found links between Ontario’s rising electricity prices and a drop in manufacturing sector jobs.  It outlined that Ontario has the highest hydro rates in Canada, as well as some of the highest costs in North America.  Ontario’s electricity costs are also among the fastest growing, rising 48% in Toronto, from 2010 to 2016.  With the manufacturing sector being a crucial part of Ontario’s economy, as well as accounting for 40% of Canada’s exports, the industry is a strong one that has proven resilient to economic challenges.  However that industry has also started showing signs of stress over the last decade.

The Fraser Institute has noted that Ontario’s manufacturing sector has recovered slower than neighboring jurisdictions from the last recession, and its share of the GDP has decreased over the last decade while in other jurisdictions it is rising.  This data shows that factors such as global demand, exchange rates, and technology cannot solely account for the decline.  The study has specifically pointed at Ontario’s high electricity costs as a direct cause behind this decline placing 64% of the blame on those costs.  That 64% represents approximately 75,000 jobs lost as a result of the electricity prices.

The study also looked into the role that policy had in electricity prices and job losses.  The Government of Ontario’s green energy policy push has created jobs in the green tech industry, however, the study claims many of those are temporary and 1.8 jobs were lost for every green job created.  The Government has continued to back its decisions to push for a greener economy and, to its credit, coal has been phased out, smog has been reduced, and Ontario is one of the leaders in green infrastructure.  These positive changes have come at a cost which is reflected in the hydro rates as well as job losses. 

Overall Ontario’s manufacturing sector has been struggling and lagging behind.  Companies are closing doors and jobs are being lost.  However, there are still many businesses that are still doing well and employing hundreds of thousands of Ontarians.  Businesses that strive to improve and invest in new technology can reduce their electricity costs and lessen the burden of Ontario’s high hydro rates.  There are many opportunities to reduce electricity costs, and many of which can be partially funded through government funding.  In order for Ontario’s companies to thrive in this market, they need to be ahead of the curve in regards to energy management, and a Certified Energy Manager, such as those at Canadian Energy Strategies is the first step in the right direction.

Links: Fraser Institute

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