A region of change

Waterloo Region Record

May 2, 2009

The economy of Waterloo Region is fundamentally different from a few years ago

This series of 11 essays on the global economic crisis by experts from the Centre for International Governance Innovation (CIGI) began with Daniel Schwanen's thoughtful reflections on the impact of the crisis upon Waterloo Region. "Why is it," he asked, "that a region celebrated nationally as 'well-positioned' for the future had the second highest unemployment rate among Canada's 27 urban centres?"

While Research In Motion announces surging revenues and Open Text is untouched by the stock market debacle, other firms are currently staggering and even disappearing. Driving through the south end of Kitchener, one quickly encounters the casualties, major manufacturers which together employed thousands of workers, such as Uniroyal Goodrich, Budd and Beckermann Kitchens. There is darkness now where overtime hours once illuminated the night.

This year we are facing the sharpest recession since the early 1980s. In 1982, the North American economies absorbed shock treatment from their central banks in an effort to curb double-digit inflation. Interest rates soared to an astonishing 19 per cent. Unemployment, already over 10 per cent, would reach almost 12 per cent the following year. Whatever the troubles today, those times, clearly, were worse -- at least for now.

As the local and national economy stumbled badly in the early 1980s, University of Waterloo history professor Ken McLaughlin and I completed a history of the City of Kitchener for which I had responsibility for the late 20th century. My conclusion reflected the pessimism of the period. We were a region deeply dependent upon the prosperity of the North American automobile industry, and its sickness appeared to be terminal. Kitchener MPP Jim Breithaupt told a public meeting that we had to prepare for new times or face the future of the "rust belt" that was spreading quickly through the American industrial heartland.

Breithaupt's words resonated with me. I had read Emma Rothschild's influential Paradise Lost: The Decline of the Auto-Industrial Age, which had appeared when the first oil shock struck in 1973. A second oil crisis occurred in the early 1980s and appeared to confirm Rothschild's dire predictions for the auto-industrial age. Her views were reflected in our history of Kitchener, in whose south-end auto-related industries had prospered after the auto pact between Canada and the United States was secured in the '60s.

Like so many other prophets, Rothschild and I appeared to be dead wrong when I revised the last chapter of the Kitchener history for a new edition in the mid-'90s. To be sure, Detroit and the traditional automobile heartland had hollowed out, and the "Big Three" had survived but not thrived. But positive change for Waterloo Region came not from Detroit but from Tokyo, as Toyota decided to locate one of its major North American plants just off Highway 401. Moreover, many new auto-parts plants took advantage of a lower Canadian dollar, and increased outsourcing of production by the Big Three and continued to thrive throughout the late '80s and early '90s.

Like most authors, I was reluctant to admit I had been wrong. Instead, I reflected on what we had lost: the great rubber factories; nearly all of Electrohome, the largest employer of the '70s; and a score of downtown businesses. The massive Dominion Tire building on Strange Street, designed by the great Detroit architect Albert Kahn, had become an empty and eerie monument. The historic Breithaupt factory was a memory; the nearby Baetz furniture factory rubble. I concluded: "Had a Kitchener Rip Van Winkle walked along King Street in 1996 after a 30-year sleep, he would have found few familiar names."

A bit farther north in Waterloo, where King Street bizarrely changes from West to North while going the same direction, "Rip" would have walked near the burnt out Seagram site which once produced millions of valuable barrels of booze. The Seagram Museum, which had linked the work done in the neighbouring Seagram plant with the history of alcohol, had survived the fire in 1993, but was to be closed in 1997. The City of Waterloo desperately scrambled to find ways to revive its decayed inner core.

While Seagram's was the Waterloo brand found throughout the world in the 20th century, the BlackBerry of Research In Motion was the mark of Waterloo in the 21st century. RIM's co-chief executives, Mike Lazaridis and Jim Balsillie, came to the rescue of Waterloo's empty centre when they established the Perimeter Institute and CIGI in downtown Waterloo, bringing the world's best scientists, social scientists and public figures to the city's heart.

CIGI now has more than 60 researchers, administrators and scholars in the former Seagram Museum. Soon, the Balsillie School of International Affairs, which promises to become the leading graduate institution in its field in Canada, will take form on the empty field beside CIGI. Both institutions reflect Balsillie's belief that Canadians have to understand better that their country is not an island, able to live unto itself, but an integral part of a constantly changing world that we are compelled to understand.

In his elegant introduction to the 11 essays by CIGI fellows on the current financial crisis that began in the Waterloo Region Record on April 21, Daniel Schwanen pointed out how CIGI's work has concentrated upon how current institutions must change to reflect new realities. What applies to the world applies to our own region.

In the ashes of the industrial giants of the past, a fire stirred which created the new generation of Waterloo Region and Canadian leaders who are responding to the challenges of today. No challenge is greater than the need to understand the turbulent currents flowing through the world economy today. Our essays, we hope, have made our contemporary crisis better understood and our future directions more fully recognized.

John English is the executive director of The Centre for International Governance Innovation in Waterloo.

The opinions expressed in this article/multimedia are those of the author(s) and do not necessarily reflect the views of CIGI or its Board of Directors.