Northeast reeling from recession

The Northeast has seen it?s fair share of ups and downs over the years. Any region, or community, that is dependent on the fortunes of the resource sector knows first hand what the phrase boom and bust really means. While most of the province has been reeling since the fall financial crisis, our region has been struggling since the collapse of the forest sector and oil and gas slowdown. However, there was room for some optimism.

According to the BC Check-Up, Regional Edition, our region was facing challenges going into the current recession. After years of growth, our economic engine sputtered in 2008–business incorporations were down and unemployment was up. Oil and gas exploration and drilling activity has been on the decline since 2007, and the forest industry continues to bleed red ink.

However, our economy was still creating jobs, albeit at a slower pace. All of the region?s job creation took place in the service sector, which grew by 2,300 jobs in 2008.The greatest service sector job growth occurred in health and social assistance (1,000), accommodation and food service (500), and transportation and warehousing (300 jobs). The only industry to decline on the service side was scientific and professional services, with a loss of 200 jobs. The increase in services at a time when oil and gas and forestry were in decline can be partly explained by a greater need for social and health care supports, as well as spouses or newly unemployed taking work in the service sector to augment family income.

In comparison, the region?s goods-producing sector declined by 900 jobs last year. In the manufacturing sector, forest product operations continued to lay off workers. The total number of workers in this sector declined from 2,100 in 2007 to less than 1,500 in 2008. Canfor closed its Fort Nelson Polarboard OSB plant and Chetwynd sawmill, resulting in the loss of 423 direct jobs. The Takama plywood mill in Fort Nelson also closed last year, putting 290 mill workers and 100 loggers out of work. More recently, the Tembec pulp mill in Chetwynd closed in February 2009, eliminating 180 direct jobs and 120 associated jobs in the Northeast.

The downturn in the resource sector also affected the region?s small businesses, and the number of business establishments dropped 2.7 per cent last year, which was twice the rate of provincial decline (1.3 per cent), and the fastest decline of all regions in the province. In addition, fewer entrepreneurs risked new enterprises in an uncertain economic climate. The number of business incorporations declined 18.1 per cent.

While the numbers paint a gloomy picture, they do not tell the whole story. Seven projects, worth $1.1 billion, began construction in the last quarter of 2008. Other major capital projects in the region should move forward once commodities prices rise. The forestry sector will come back, although it will be structured very differently. Times are tough, but we?ve been here before and come out the other side. A resilient and innovative spirit defines the Northeast, and our communities and businesses will be ready to capitalize on the opportunities that will come with the inevitable economic recovery.

Ben Sander is a chartered accountant with Sander Rose Trobak, with offices in Dawson Creek and Fort St. John. The BC Check-Up report is available online at:

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