VZCZCXRO1865
RR RUEHGA RUEHHA RUEHMT RUEHQU RUEHVC
DE RUEHON #0161/01 2011956
ZNR UUUUU ZZH
R 201956Z JUL 09
FM AMCONSUL TORONTO
TO RUEHC/SECSTATE WASHDC 2876
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHME/AMEMBASSY MEXICO 0154
RUCNCAN/ALL CANADIAN POSTS COLLECTIVE

UNCLAS SECTION 01 OF 02 TORONTO 000161 
 
SIPDIS 
 
STATE FOR EBB/TPP/MTAA 
PASS TO USTR 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD EINV EIND PREL PGOV CA
SUBJECT: Oshawa and Windsor: Company Towns Looking for New Life 
 
¶1. (U) Summary: Ontario's auto manufacturing sector has been deeply 
affected by the current economic downturn, resulting in the 
province's highest unemployment rate (9.6%) in 15 years.  Oshawa and 
Windsor are two Ontario cities that are heavily dependent on the 
auto sector.  Both cities are looking to develop alternative 
industries in an attempt to diversify their economies and to help 
increase stability.  End Summary. 
 
---------------------- 
AUTO SECTOR PAIN ACUTE 
---------------------- 
 
¶2. (U) Employment at auto assembly plants in Ontario fell 13.4% in 
the past year to fewer than 37,500 workers, the lowest level since 
¶1973.  Manufacturing jobs in the province are expected to shrink to 
26,400 by 2013, according to the Conference Board of Canada. 
Parts-sector jobs in Canada have shrunk by 23.7% to about 62,200, 
the lowest number since 1982. 
 
¶3. (U) Two of Ontario's major manufacturing centers, Oshawa and 
Windsor, have been especially hard hit by the current economic 
downturn despite being hundreds of miles apart.  Windsor, where 
Chrysler Canada is based, is considered the automotive capital of 
Canada.  Located next to Detroit, 23% of all jobs in Windsor are in 
manufacturing, most of which are auto-related, compared with 13% 
province-wide.  230 miles southwest of Toronto, Windsor has a 
population of 208,402.  In Oshawa, 40 miles east of Toronto, where 
General Motors Canada (GM Canada) is based, about 18% of the economy 
is made up by the auto sector.  With a population of approximately 
152,000, Oshawa is the dominant economic center of largely-rural 
Durham Region. 
 
¶4. (U) In May 2009, 42,000 Ontario jobs disappeared, mostly in 
manufacturing.  Many of these losses were the result of structural 
economic change, and are unlikely to ever return, according to an 
auto industry expert.  At 14.4%, Windsor currently has the highest 
unemployment rate of any metropolitan area in Canada.  In March, 
12,550 Windsor residents collected employment insurance (EI), an 
increase of 92.2% compared to a year ago. 
 
¶5. (U) In Oshawa, unemployment increased to 8.7% in June 2009, up 
almost a percentage point since May.  Though that is above the 
national average (8.6%), Oshawa's rate remains below the provincial 
average (9.6%).  The lower-than-expected unemployment rate is in 
part due to the fact that many Oshawa residents continue to commute 
to Toronto for work.  Some laid off workers from GM's Oshawa 
facility had commuted from nearby communities such as Peterborough 
and Cobourg, and thus are not counted in Oshawa's unemployment rate. 
 Still, the number of EI claims in the Oshawa area was up 36% to 
8,200 in May. 
 
---------------------------- 
AUTO-RESTRUCTURING AFTERMATH 
---------------------------- 
 
¶6. (U) Although some industry experts speculate that the auto sector 
will recover in Ontario, Oshawa and Windsor are looking at new 
possibilities in the industrial and service sectors to boost their 
respective economies.  The University of Windsor has commissioned a 
C$110-million engineering innovation center and will start 
construction this fall.  The center will continue to service the 
area's traditional industries, specializing in mechanical and 
automotive engineering.  In 2006, the Windsor-Essex region was named 
one of the top 20 research communities in Canada by Research 
Infosource, indicating potential for advancing innovation and 
commercialization of life sciences in Windsor. 
 
¶7. (U) Even though Windsor currently has no nuclear power 
production, with its highly skilled manufacturing workforce, it 
could be a strong candidate for developing alternatives to the 
area's traditional industries, possibly including energy production 
(nuclear, solar and wind).  Glenna Carr, chair of Atomic Energy of 
Canada Ltd. (AECL) said in March 2009 that the region could expand 
into the nuclear sector by creating partnerships between government, 
educational institutions and the private sector to create 
transitional learning for skilled workers. (Note: The future of 
Canada's nuclear program is unclear since the GOC is considering 
privatizing government-run AECL.  End Note.) 
 
¶8. (U) The Ontario government, in conjunction with Oshawa-based 
University of Ontario Institute of Technology (UOIT), has committed 
to using nuclear power to produce hydrogen as a sustainable source 
of energy for automobiles.  The future of this project is also 
uncertain until a decision is reached on the future of AECL.  Still, 
Oshawa-based Durham College and UOIT will receive a combined total 
of C$65-million of stimulus from the provincial and federal 
governments, C$45-million of which will be used to construct an 
energy systems and nuclear science research center at UOIT.  GOC 
 
TORONTO 00000161  002 OF 002 
 
 
officials hope that the center will ensure UOIT's place as Canada's 
leading university for energy research. 
 
¶9. (U) Comment: Both Windsor and Oshawa remain heavily dependent 
upon auto manufacturing for their prosperity.  Although Windsor has 
the potential to develop alternative industries, including 
manufacturing and nuclear energy production, AECL's uncertain future 
privatization weakens its economic prospects.  Like Detroit, Windsor 
may be too closely tied to the automotive sector to come out of its 
economic troubles ahead of a larger recovery by the Detroit Three 
automakers.  Oshawa has a chance of rebounding if it can capitalize 
on its strengths in the energy and manufacturing sectors by focusing 
on renewable energy.  With its more diversified economy and role as 
a bedroom community for Toronto, Oshawa is likely to recover more 
quickly if the Province can maintain a relatively healthy economy. 
 
BYSFIELD