UofM dean says he sees recovery in The Pas' future, Churchill is a different story
Michael Bennaroch says a diversified economy will help The Pas survive but Churchill will struggle
As an economic crisis worsens in Northern Manitoba, the dean of the Asper School of Business at the University of Manitoba says The Pas should recover but Churchill is in a "crisis."
Michael Benarroch said the north will struggle in the short term but a diversified economy in The Pas means the town will attract new investment and employment. The isolation of Churchill makes a comeback more difficult, even with government intervention, he said.
"I think other than the tourism industry, there's not a lot there. I think the people there are quite resourceful, there's a greenhouse and a few little things like that, but it's very difficult in Churchill," Bennarcoch said.
In July, the Denver-based company OmniTrax announced it would be closing the port as well as reducing rail service to the northern Manitoba community. The Public Service Alliance of Canada, which represents Port of Churchill workers, said the port employs 10 per cent of the local population of around 800 people.
It's not likely that private investment will step in to revitalize Churchill, and even government funds need to see some kind of return in the northern community, Bennarcoch said.
Tolko, the largest employer in The Pas, said operations at the local forestry products mill will cease on Dec. 2 and all 332 employees will be laid off.
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How much more can Churchill take?
It's not a very diversified economy, so not very much more.
Tourism seems to be the industry that they are trying to build. It's something that our provincial government has talked about and I noticed that they came out with an announcement with some funding.
But if they can't save the port and they can't save the railway track, that's a major blow to a small isolated location like Churchill. That would not be something they could easily recover from and I think a number of people would probably leave the city because they couldn't find alternative ways to make their income.
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Can Churchill survive if port workers leave?
It will survive in some form but it will be much smaller than it is now.
Often there are other services that also supply the port, people travelling from outside who are coming in — managers and supervisors from OmniTrax — other services that the port might have needed, and those things also get negatively impacted by this.
So, it's pretty tough for Churchill to survive in its current form. It will certainly become much smaller and there is no other prospect in the short run, so it's going to be very difficult.
Should the port and railway be run by government?
It's very difficult to find a financial case, a private sector case, that would be profitable. The kind of investment that's necessary in the railway is very large and for the kind of return that you are getting, it is not going to happen.
It appears as if private sector, by itself, is not going to be able to do this and a decision has to be made whether this than becomes a priority and whether the governments want to put money into that.
Governments don't have endless pockets, they are all dealing with deficits — the federal government, the provincial government — and they have to make sure that if they put money into this that it makes some semblance of economic sense, even though at the end of the day they may decide that certainly there is a non-economic reason for it.
They've got some very difficult decisions to make.
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How much more can The Pas take?
I think The Pas is a little bit more diversified.
In addition, I think that the plant in The Pas, it produced a particular product, it wasn't a very diversified plant and it became uncompetitive. I don't think that it necessarily means that the industry is uncompetitive in The Pas.
There may be other markets around recycling, around the use of recycled paper, there may be other markets for that product and, I would hope, more potential for The Pas in the future.
It's never great to lose a big employer. Imagine in Winnipeg, if you think about 300 people in a town of 6,000, well in Winnipeg we'd be talking about 40,000 jobs being lost ... that would be an enormous, negative impact on our economy. That's what these economies are feeling in the short run.
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I do think they have more opportunity in The Pas and I think they are more diversified and have a resilient economy that has other sectors.
With all of these, it always does help if government can come in and help in the interim, if government can help with the transition.
So when you hear that people up north don't even qualify for employment insurance in Churchill, they need some transition to help them in the short term so that they can overcome those hurdles once your income is kind of cut off.
In The Pas, there is a little bit of time, a few months, Churchill it was much quicker and without alternative forms of income supplement I think that doesn't bode well.
It's a crisis in Churchill, there's no doubt about that.
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This Q&A has been condensed and edited for clarity.