Rising oil production south of the border could be a shot in the arm to Hamilton's manufacturing industry, a prominent labour economist says.
The International Energy Agency (IEA) said earlier in November that the United States is set to become the world's largest oil producer by around 2020.
The IEA said recent technological developments will allow companies to extract massive amounts of oil from shale rock deposits in the American Midwest.
"That would be unambiguously positive for the Canadian manufacturing industry," says Jim Stanford, an economist with the Canadian Auto Workers, Canada's largest private-sector union.
He reasons that big increases in U.S. oil production would reduce the price of the commodity, and in turn, push down the value of the Canadian dollar.
A low dollar, he says, would render Canada's traditional hubs of industry more attractive places for companies to make their products. "I am absolutely confident that a decline in the Canadian dollar would help manufacturing in Hamilton."
This development comes after more than a decade of heavy job losses in Hamilton's manufacturing sector. Between 1996 and 2006, Hamilton lost about 6,000 — about 10 per cent — of its manufacturing jobs. (The 2011 census numbers would provide a more current picture, but they haven't been released yet.)
However, clues suggest the past six years were similarly unkind to Hamilton's blue-collar workers.
Statistics Canada says that between 2004 and 2010, Ontario lost about 320,000 manufacturing jobs, and about one-third those were shed during the 2008-2009 recession.
High dollar has hurt Canadian manufacturing: McMaster prof
Over the past 10 years, the Loonie has experienced a steady rise in its value in relation to the U.S. dollar. At one point in 2002, it was valued at about $0.62 USD. Since 2007, it has hovered around parity.
McMaster University economics professor Bill Scarth estimates over one-third of the jobs losses in Canadian manufacturing sector over the past decades came as a result of the rising dollar.
Though he agrees with the logic that rising U.S. oil production could theoretically lead to a Canadian manufacturing boom, he isn't so confident that it will occur in practice. He says the enormous public debt that the U.S. is carrying will function to depress the U.S. dollar, keeping the relative value of the Canadian dollar fairly high.
Even if Ontario were to experience a resurgence in manufacturing, it probably won't result in a massive influx of type of low-skill factory jobs that were once the bread and butter of Hamilton's economy, says Sue Rimack, a business analyst with the City of Hamilton's economic development office.
"Manufacturing has really changed," she says. "When you're looking at many of the jobs, a lot of them require some sort of post-secondary education." Companies use high-tech machines to take on tasks that humans once handled, she adds. "Someone like ArcelorMittal Dofasco has fewer staff now, but [production] volumes are way higher."