A different kind of stimulus package: How ending poverty can save the economy

Photo by Chris Bolin for the Globe and Mail

Friday, May 06, 2011 – Globe and Mail

Behind corridors lined with contemporary Canadian art, sitting at a dark wooden table in his downtown Toronto office, Ed Clark offers some economic advice that might not typically come from Bay Street.

Give the poor a tax break.

“I say, ‘Why don’t you cut the taxes of the most overtaxed people?’ It isn’t Ed Clark,” the Toronto-Dominion Bank CEO said in an interview earlier this year. “It’s the people at the low end, because they face the highest marginal tax rates.”

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Toronto’s manufacturing isn’t dead: We’re dining out on its success story

Friday, December 31, 2010 – Globe and Mail

The belly of Soham Ajmera’s business smells of warm garlic and sounds like a million motorized hamster wheels.

The factory floor hums and squeaks as a series of caterpillar-like, chain-mail conveyor belts roll, stretch and bake endless rows of teardrop naan. The This flatbread Rube Goldberg machine will churn out 20,000 pieces of the flatbread today, made to order under private labels for supermarket shelves.

Around the corner, dozens of a massive muffin operation is under way as trays of tins filled with morning-glory batter are transferred to slowly rotating vertical ovens before they’re shipped off to fancy coffee shops across the country.

The Ajmera family’s FGF Brands has grown since its 2004 inception as a maker of almond-flour muffins to a baking flatbread behemoth, provider baker of President’s Choice naan and Starbucks muffins.

Forget the struggling automotive industry: This is Toronto’s industrial heartland.

In 2010, Ontario’s manufacturing sector added jobs for the first time since 2004 and grew in GDP for the first time since 2005, according to a study released Dec. 29 Wednesday – turning a corner, economists said, after years of relentless decline.

But even Jim Stanford, a CAW economist and vice-chair of the Ontario Manufacturing Council, admits the hard-hit manufacturing industry has a long way to go if it hopes to return to pre-recession levels. The Centre for Spatial Economics predicts that won’t happen until 2020.

It’s an optimistic outlook, but also painfully slow.

Unless you count the food manufacturing industry, that is.

In 2010, Ontario’s manufacturing sector added jobs for the first time since 2004 and grew in GDP for the first time since 2005, according to a study released Dec. 29.

But even Jim Stanford, a CAW economist and vice-chair of the Ontario Manufacturing Council, admits the hard-hit manufacturing industry has a long way to go if it hopes to return to pre-recession levels.

The food manufacturing industry, however, seems an exception to the rule.

Southern Ontario may be better known for the cars it used to turn out by the thousands, but by 2008, Greater Toronto’s food-manufacturing sector had already eclipsed the area’s automotive industry: 58,460 employees to 45,830, according to Statistics Canada Labour Force Survey data.

The GTA’s food-processing sector is the second-largest cluster in North America, beating out Chicago but behind Los Angeles, which carries the continental title for greatest number of people employed slicing, pasteurizing, baking, juicing and packaging.

And it’s still growing – as it has been steadily over the past 15 years – even while many of the region’s blue-collar jobs have disappeared. Toronto’s proximity toprime location within easy driving distance of key markets in Canada and the U.S., combined with a renewed focus on local food and the home-team advantage when it comes to pumping out diverse cuisine, have helped keep companies competitive and profitable.

So while the hard-hit manufacturing industry struggles to return to its pre-recession levels, its food-sector cousin can savour a different success story.

Michael Wolfson, the city’s food and beverage sector specialist, says businesses are taking advantage of incentives to move back to Toronto. Long criticized for its disproportionately high commercial-tax rate compared to other municipalities, the city has been trying sweeten the deal for industrial developers with grants and waived fees: to reverse that ratio while offering other reasons for companies to set up shop: A tax increment equivalent grant in select areas of the city waives building permit and planning fees over a specified period; industrial developers who invest at least half a million dollars in new or expanded development or retrofits are eligible for rehabilitation grants.

And the city’s apparently counterintuitive planning tactics might be paying off. In an economy where housing development is in high demand, Toronto kept some sites zoned industrial, kiboshing condo development on land developers saw as prime residential real estate that would bring in more money than a factory in the midst of a manufacturing slowdown.

But Build Toronto spokesman Bruce Logan says the city has gotten “a lot of interest” in one city-owned property, a 10-hectare industrial-zoned piece of surplus land near Lakeshore Boulevard and Islington in Etobicoke they hope will go to a company developing it for food-processing purposes.

But Build Toronto spokesman Bruce Logan says the city has gotten “a lot of interest” in one of those designated properties, a 10-hectare industrial-zoned piece of land near Lakeshore Boulevard and Islington in Etobicoke they hope will go to a company developing it for food-processing purposes.

Even investors and private-sector giants are buying the hype: George Weston Ltd., owner of grocery giant Loblaw, bought artisan Ace Bakery for $110-million in November. And Premium Brands, based in Richmond, B.C., bought a majority share in Torontonian Maximum Seafood in July – the Richmond, B.C.-based company’s first Central Canadian acquisition.

The municipal government’s tax-break carrots aside, it makes sense (especially in an economy bracing for triple-digit oil) for businesses to set up shop nearby the people they’re selling to, the people they’re buying from and the people who are working for them.

“The food industry is a 24-hour, seven-day-a-week industry. So you need access to labour, you need access to transit to get people to the midnight shifts,” Mr. Wolfson says, adding that the city’s reputation as being too stodgy and interventionist for businesses to grow isn’t entirely warranted.

When Quebec-based Lassonde Beverages wanted to expand elsewhere in Canada, a Toronto location was a must. Now more than six years old, their Toronto plant – the company’s largest outside Quebec – pumps out 53 million litres of juices and fruit cocktails a year. It boasts what plant manager Daniel Marcoux calls “the most modern aseptic bottling line in the world,” used to package juice for sterile environments such as hospitals.

“We’re located close to the airport and the highway system. … If you look at the corridor between Toronto and Niagara Falls, that’s 7 million people, roughly. So it’s a big chunk of our market,” Mr. says plant manager Daniel Marcoux says. “Your major suppliers are within driving distance.”

“And we’ve got the work force.”

“When you calculate in development fees and our costs of operating, we’re not as bad as people think in terms of the 905 region. We’re quite competitive.”

A University of Toronto study completed last month and provided to The Globe sheds light on a sector that’s maturing as it’s growing: While Toronto’s food manufacturers are still overwhelmingly small – with fewer than 50 employees – the number of small and medium-sized businesses has shrunk over the past decade, while the number of companies with more than 200 employees has grown. In that same time, the Toronto area’s total number of people employed in the sector went up, as well.

Robin Somerville, an economist with the Centre for Spatial Economics, notes it’s important to remember, when comparing food-industry and auto-industry jobs, the latter tend to pay better – way better. Even if the economy is adding food-sector jobs while shedding positions in auto plants, the payroll isn’t equivalent.

“But that’s a paradigm that maybe we just have to let go of,” he says. “Auto manufacturing is ongoing massive changes and restructuring. … These are not quite the gold-plated jobs we had in the ’80s and ’90s.

“Food manufacturing,” he adds, “does require an awful lot of people with various skills: There are engineers, scientists and chefs … and it’s got a large number of spinoffs in associated industries.”

The growth plays off the city’s desire, often viewed as a social-engineering anachronism, to use its planning prerogative to keep blue-collar jobs within city limits. Much of the city is zoned employment areas, left open only to industrial development in a city of flashy new residential projects. Condo-hungry developers thought the city was crazy when, as it began to sell off the first dozens among an estimated thousands of pieces surplus land, it designated some sites industrial when they could arguably fetch a better price if turned into high rises as the real-estate market soared and local manufacturing stalled.

“We are in discussions but it is very, very early so don’t have anything to report,” he said in an e-mail. “The market is very competitive.”

Lately they’ve been trying to develop that human capital: With 93 per cent of its 120 employees immigrants, Lassonde’s Toronto location has become involved in ESL and literacy programs with the school board and other local organizations. They’re also a member of Pearson International Airport’s “eco-business zone” Partners in Project Green, and are embarking on efforts to refurbish their lighting and refrigeration systems in favour of more energy-efficient models.

That isn’t to say things have been easy: The recession, a high dollar and renewed scrutiny on the food-processing industry thanks to such high-profile health scares as the 2008 listeria outbreak have meant it can be challenging to scare up enough capital to get started or expand, says Stewart Metcalfe, vice-president of Colliers Food Facilities Group.

Even when bakery and produce operations picked up initially, he says, “meat was almost a dirty word.”

“Producers trying to get capital in that sector were probably not seeing arms wide open from the banking system.”

Now that’s starting to change: Mr. Metcalfe says Super-Pufft, whose packaged snacks range from cheese curls to popcorn and potato crisps, recently bought a 400,000-square-foot former Goodyear site in Etobicoke that’s slated to become one of Canada’s largest food-processing plants.

And with global food security increasingly top of mind, Mr. Metcalfe argues, outsourcing food production becomes less palatable an option.

Mr. Ajmera relocated to Toronto for reasons both practical (to fill an unmet flatbread need) and sentimental: He says he fell in love with Toronto while passing through as a business student in Detroit. Toronto’s vitality reminded him of his native Bombay.

“We passed by the Don Valley, I saw all the apartment buildings. There what a sight: It was beautiful. I said, ‘That’s it.’”

He stays, he says, because it’s home: His Canadian-educated sons live here, as do his grandchildren. But there’s also a compelling business case to be made. If there weren’t, there’s no way FGF Brands, which he founded with friend Jim White, would be not only surviving but expanding in an increasingly competitive market.

“I’m in the baking business, and this is the best place to be based,” Mr. Ajmera says. So he learned to roll with the punches: When retailers seeking to target recession-weary consumers asked for cheaper products this year, he rolled out “tiers” of naan – some without expensive buttermilk and ghee – to keep prices down.

The latest challenge is parity, which makes it harder to target his primary market in the U.S. If the loonie stays high, he’ll consider opening another plant south of the border. But “my business is not currency trading. My business is manufacturing. If you’re going to talk globalization, then we’ve got to be competitive regardless of where you are. Right?”

FGF Brands has grown steadily after opening at his sons’ behest, a decade after Mr. Ajmera sold his first baking company, Dough Delight. And after upgrading three times to larger buildings, the company plans to add a second plant on the other side of Steeles, a few blocks away from their headquarters on the Concord side of the Vaughan-Toronto border. It’s a base he plans to pass on to his sons Tejus and Ojus Ajmera, who work with him now.

“They are the future. They are the business. And I’m the proud father.”

Skyrocketing real estate in Toronto’s wealthy enclaves endangering economic diversity

Photo by Deborah Baic/The Globe and Mail

Tuesday, December 21, 2010 – Globe and Mail

Growing up the northwest end of Toronto, Irma Baldanza aspired to live in a place like Lawrence Park.

“I remember driving through areas like Forest Hill and Lawrence Park, where my Dad would point out and say, ‘Look at these beautiful houses,’ that sort of thing,” she said. “Once I got married and we started thinking about owning a home, this is one of the areas we looked at.”

The couple started out with a relatively affordable house on Yonge Street and Blythwood Road in the mid-1980s, moving in 1990 to a red-brick Georgian house they could add on to over the next several years, accommodating a growing family. In the past two decades, Ms. Baldanza has seen the treed neighbourhood become increasingly attractive for wealthy families – and, more recently, developers and investors – drawn to the larger lots and green spaces.

In a city where property is increasingly at a premium, the rarity of a neighbourhood of large lots just blocks away from a major transit artery makes for dramatically increasing property values. It helps to have good schools – both public and private – and engaged residents eager to pitch in for fundraising and beautifying initiatives.

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Toronto’s Three Cities: A metropole of extremes, losing middle ground

Photo by Peter Power/The Globe and Mail

Wednesday, December 15, 2010 – Globe and Mail

TORONTO — Toronto is becoming a city of stark economic extremes as its middle class is hollowed out and replaced by a bipolar city of the rich and poor – one whose lines are drawn neighbourhood by neighbourhood.

New numbers indicate a 35-year trend toward economic polarization is more pronounced: The country’s economic engine, which has long claimed to be one of the most diverse cities in the world, is increasingly comprised of downtown-centred high-income residents – most living near subway lines – and a concentration of low-income families in less dense, service- and transit-starved inner suburbs.

Three years ago, University of Toronto professor David Hulchanski published a paper on Toronto’s “Three Cities,” illustrating a growing socioeconomic disparity among the city’s census tracts.

But the three-way divide Prof. Hulchanski and his fellow Cities Centre researchers described is swiftly being reduced to two, according to a new paper they will release Wednesday. Toronto, a predominantly middle-class metropolis just three decades ago, is increasingly dominated by two opposite populations – one with an average income of $88,400, and another of $26,900.

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Recession hit hard, recovery came slow for immigrants

Tuesday, October 5, 2010 – Globe and Mail

As employment grows with a reviving economy, so does the unemployment gap between the country’s highly educated newcomers and their Canadian counterparts.

Among university graduates, recent immigrants were hit hardest by the recession, and new research shows they’re still at a disadvantage compared to Canadian-born university grads as the job market picks up.

The employment gap between newcomers and people born in Canada is greatest among those with the highest credentials and educational backgrounds, according to a Community Foundations of Canada report to be released on Tuesday.

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In China, out-of-work migrants destabilizing

Friday, January 23, 2009 – San Francisco Chronicle

Anna Mehler Paperny


On a recent Sunday morning, the scene on the K290 train heading west from Shanghai to China’s rural heartland was one of chaos.

The hard-seat cars teemed with passengers, many of them migrant workers fighting to place their baggage in overhead compartments or find space to sit in the aisles.

Chun yun, or spring festival transport, is the world’s largest human migration, involving hundreds of millions of people annually traveling home before the Lunar New Year. But this year, migrants returning home before the Year of the Ox begins Monday got an early start after hundreds of thousands of workers lost their city jobs.

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China’s wild west

Urumqi, China
Photo by Anna Mehler Paperny

Anna Mehler Paperny

Maclean’s Magazine – December 4, 2008


China’s Xinjiang region, in the deserts and mountains of the country’s far northwest, could be two parallel universes. One is on the receiving end of a flood of foreign investment, home to swiftly multiplying oil derricks and gleaming office towers. This is the image the Chinese government wants to spring to mind when foreigners think of Xinjiang, the “wild west” whose economy Beijing is trying to bring level with the more prosperous areas of the country. The other, home to about eight million Uighurs, functions in a different language and boasts wholly foreign religion, culture and food. To a visitor it’s like another country entirely. And that’s what has Beijing worried.

In August, the region was rocked by violent attacks in the west that killed at least 33 people. The unrest, which the Chinese government has blamed on Uighur separatist groups, humiliated the government and shook China’s ostensibly shatterproof national security leading up to the Beijing Olympics. In Xinjiang, the aftermath is still palpable. It’s translated into heightened security measures—omnipresent guards and checkpoints, among other things—and tightened restrictions on religious practice for the Muslim Uighurs, one of China’s 50-plus ethnic minorities that are separated from the Han majority by language and a deep-seated, mutual distrust.

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