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Livio Di Matteo is a professor of economics at Lakehead University.

There’s a good argument to be made that Canada would not exist as we understand it today without Thunder Bay.

The 19th-century federal policies around building the Canadian Pacific Railway made it necessary to build cities on Northern Ontario’s lakehead. Port Arthur and Fort William, the cities that would amalgamate into Thunder Bay in 1970, became grain shipment points for the prairie frontier, bringing the area prosperity. That was only amplified by provincial government policies supporting the myriad industries that followed suit: forestry, mining, shipbuilding, rail-car manufacturing, pulp and paper. And the economic infrastructure that was laid in the first third of the 20th century provided opportunities for immigrants in the area’s sawmills, pulp mills, grain elevators and manufacturing plants.

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This was the golden age of Thunder Bay’s economic development. By the 1970s, the city offered numerous well-paid industrial and transportation jobs for unskilled labour, spawning a large and prosperous local middle class that required little investment in education. Moreover, the relative isolation of the local economy created a captive market for retail goods and services, as well as a cozy business environment dependent on a few key industries in a company town.

But then the veneer of that golden age began to chip off. Thunder Bay was forced to adjust to labour-saving technological change, greater global competition in resource industries, shifting grain markets and the decline of the grain trade. The forest-sector crisis ultimately saw three out of four pulp mills and a major sawmill close. Deep cuts to the work force this summer at Bombardier – whose manufacturing plant has become a crucial part of the city’s landscape – are a continuation of this saga.

As its traditional resource and transportation sectors shed employment, Thunder Bay diversified into health care, postsecondary education and government services, with the broader public sector accounting for 30 per cent of employment. So now, the city remains a company town – but the public sector is the company, making the city extremely sensitive to the whims of politicians in Ottawa and Toronto.

Despite that, Thunder Bay’s economic growth remains arrested; it has not been able to generate sufficient opportunities beyond the activities that powered its initial growth. As a result, the city’s population has not grown since the 1970s. The economy has evolved into an enclave of high-paying and more secure knowledge-economy jobs, broader public-sector jobs and a swath of minimum-wage service jobs. The municipal tax base is stretched thin, providing spending and service levels that evolved when there was a lucrative industrial tax base; property taxes have been rising for years. After decades of youth out-migration, the population is aging faster than the Canadian average, even with the influx of a young and rapidly growing Indigenous population.

Its dual role as a city and a region makes economic transition even harder to pull off. Federal and provincial resources for health, transportation, education and social services are geared to its municipal role, but Thunder Bay is also expected to function as a regional health and social centre for the entire northwestern region of Ontario – an area the size of France.

This has increasingly made economic polarization, mental-health and addiction problems and a decaying social fabric marked by crime, drugs and an increased use of shelters and food banks a fact of life in Thunder Bay. In many respects, what has happened here mirrors the state of affairs in the U.S. Rust Belt or Northern Italy’s industrial cities, where economic trauma has fuelled populism and negative attitudes. Here, increased friction with a young, growing and more assertive Indigenous population with legitimate needs and aspirations can spill over into racism.

How Thunder Bay deals with its economic and social challenges should not be viewed as a spectator sport by smug urban elites in central Canada. What is happening here is not comeuppance for bad behaviour. Thunder Bay is the canary in the coal mine for the rest of Canada – a country so vast and sparsely populated that other cities, forced to also function as centralized regional hubs with the conspicuous absence of the provincial and federal governments, will surely soon experience similar struggles.

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This is what can happen when you are a small economy in a changing world, dependent on a few key export industries that tank. Those who cannot see that need to look in a mirror and open their eyes.

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