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Rahumathulla Marikkar lost his job to the Great Recession in 2009. He then arranged the financing to launch his own business, carpet tile maker Belletile Inc. (Moe Doiron/The Globe and Mail/Moe Doiron/The Globe and Mail)
Rahumathulla Marikkar lost his job to the Great Recession in 2009. He then arranged the financing to launch his own business, carpet tile maker Belletile Inc. (Moe Doiron/The Globe and Mail/Moe Doiron/The Globe and Mail)

Remade in Canada

Canadian factories find a new way to make it Add to ...

At stake is Canada's ability to maintain a diversified economy that is better able to weather cyclical downturns in demand and create jobs.

The jobs Mr. Marikkar fought so hard to create – and the ones he has yet to create – will be at risk if he can’t continue to compete.

“I am trying to help the people whom I’ve known most of my life in Canada,” the native of Sri Lanka says of his decision to start Belletile. “This project is my legacy.”

The factory death knell

Manufacturing is far from the only way for an advanced economy to generate wealth – some economists even argue that an economy based entirely on services could grow to be as wealthy as one with factories at its core. But with the possible exception of Singapore, few have: Indeed, the world’s strongest economies have a significant manufacturing base.

In Canada, the manufacturing sector had long been a key engine of economic growth and source of well-paying jobs, especially for workers lacking post-secondary education. For generations of Quebeckers and Ontarians, assembly line work offered a middle-class lifestyle and the promise of a decent pension in retirement.

Just a few years before the economic downturn, it looked as though Canada would escape the relentless decline that had ravaged such manufacturing powerhouses as Europe, the United States, Japan and Australia. Factory employment here actually grew in the early part of the 2000s, averaging about 2.3 million jobs between 2002 and 2004, compared with two million in 1997. But that growth was temporary. Factory jobs fell to 2.11 million in 2006, and continued to decline.

Then, the Great Recession hit.

For the factories so long-regarded as a key to Canada’s economic health, the global downturn of 2008-09 looked like a death knell.

Across the country, one-industry towns were left hollow versions of their former selves, as factories were idled and shuttered, and lower-end assembly jobs vanished, many of them migrating to Mexico and Asia. Between August, 2008, and December, 2009, job losses in the sector averaged a staggering 14,500 a month. Manufacturing as a percentage of Canada’s gross domestic product slipped from 14.5 per cent at the end of 2007 to as low as 12.4 per cent.

In the cascade of catastrophic economic news that battered North America through the winter of 2008-09, the closing of a Belleville carpet maker created barely a ripple beyond the eastern Ontario city that is home to 49,000. The decision by Atlanta-based Interface to shut down Belleville was just one among scores of other plant closings across the country, most of which were dwarfed by what appeared to be the imminent collapse of the auto industry.

As the recession deepened in the last weeks of 2008 and lenders tightened the screws on even the most creditworthy businesses, Interface, like thousands of companies around the world, sought to slash costs. Since the collapse of the U.S. real estate market was one of the causes of the recession, the supplier of carpet to the office and residential construction industries was hit particularly hard.

Five days after Christmas, 2008, Interface lowered the boom on Belleville, the company’s smallest plant, as part of a restructuring that eliminated 530 jobs across the company, or 14 per cent of its global work force.

For Belleville, a small city near the eastern end of Lake Ontario, the Interface closing coincided with cutbacks at a number of other manufacturing plants, notably auto parts makers. But Belleville was spared the kind of total collapse that swept other manufacturing-heavy cities, especially in Ontario.

“In the auto sector, we had plants that were running at less than full capacity or companies that had more than one plant and cut back to one or two plants as opposed to running two or three plants in the city,” Mayor Neil Ellis says.

At Interface, about 80 per cent of the laid-off employees had worked at the plant for 15 to 20 years, putting them squarely in the Canadian demographic most affected by the meltdown in manufacturing during the recession. Some found themselves among the rising numbers of laid-off manufacturing workers facing long-term unemployment: In 2009, 14 per cent of the country’s 1.9 million unemployed manufacturing workers were without a paycheque for more than 27 weeks, up from 10 per cent of the 1.3 million who were unemployed in the sector the previous year.

“I was out for eight months,” recalls Kevin Taylor, a 55-year-old mechanic. Unable to get a full-time job, he found work doing odd jobs at a local electrical contractor. “It was pretty hard. I worked steady graveyard [at Interface]so I had to get my life back [even]to trying to figure out when to sleep properly.”

Overall employment in Canada has returned to pre-recession levels, but thousands of the manufacturing jobs that vanished have not been recovered. The number of manufacturing jobs declined again last year.

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