Good afternoon, Chair and committee members. Thank you for the opportunity to be in front of you this afternoon to talk about FedNor. My opening remarks will attempt to describe the structure and conditions in which FedNor works.
FedNor is a regional development organization that is responsible for economic development, job creation, and economic diversification in northern Ontario. It delivers on this mandate through its programs and initiatives. We deliver it through our partnerships with all other federal departments, the Province of Ontario, and other stakeholders in northern Ontario.
FedNor has a very large service area. Northern Ontario represents 90% of the land mass in Ontario, but is home to only 7% of the population. Slightly more than half of northern Ontario's 833,000 residents live in the five major centres. The remaining folks live in smaller rural communities and in first nations communities.
In total, there are 150 municipalities, 80% with a population of 2,000 or less. The region is also home to 110 of the 126 first nations communities in Ontario. Close to 90% of those 110 first nations communities have fewer than 1,000 people. Of those 110 first nations communities, 29 are remote communities, accessible only by air or by winter road.
Northern Ontario faces a number of significant challenges. First, while progress continues towards building a more diversified economy, the region remains highly dependent on resource sectors, making northern Ontario's economy susceptible to global economic downturns and market fluctuations. We have seen these fluctuations in the mining industry, the steel industry, and the forestry industry, where there was a major downturn several years ago which we are now coming out of.
The second challenge has to do with the large number of northern Ontario communities that are small, rural, and remote. Many of these small communities lack the capacity, both fiscal and human, to take advantage of economic opportunities. They require support from FedNor to assist in laying the groundwork needed to support them in their efforts to spur economic development and economic diversification in their communities.
The third challenge relates to the small and medium-sized enterprises in northern Ontario. It remains a concern that these SMEs, and most of them are small, have a difficult time accessing funding for their projects, given that they are in rural areas, away from traditional funders. Moreover, because they are located in small, rural, and remote communities, potential lenders consider them to be higher risks. When they try to access traditional sources of funding, they are often refused for this reason.
In addition, northern Ontario's vast geography and low population combine to amplify challenges related to transportation, infrastructure, energy costs, ICT/broadband gaps, and access to a skilled workforce. For example, many companies continue to have difficulty finding skilled workers to replace retiring employees.
Two studies recently carried out, one in the northeast by Laurentian University and one in the northwest by Lakehead University, found that over the next five years in the mining and forestry industries alone there will be a need for approximately 40,000 new workers in each of these jurisdictions.
In regard to manufacturing, unfortunately, northern Ontario lags behind the rest of the province significantly. We have 880 manufacturers in the region of northern Ontario. This accounts for only 4% of manufacturers across the province. Of those, roughly 19% are involved in exporting their products outside the region, both nationally and internationally, compared to 42% in southern Ontario.
Our major industries—forestry, mining, and steel—are huge users of energy. No doubt you have been hearing about the energy costs in Ontario, and the energy costs in northern Ontario are higher than in other jurisdictions, affecting the ability of the companies in these industries to make investments needed to take advantage of growth opportunities and to continue to diversify their business operations.
FedNor, through its support of strategic projects, in collaboration with all federal, provincial, municipal, and first nations partners, continues to work to address these challenges and promote opportunities in the region.
These challenges are not new to northern Ontario. We have suffered these cycles in the mining and forestry industries time and time again. Stakeholders are, above all, resilient and continue to focus their efforts on opportunities for diversification, as opposed to simply putting up their hands and saying that the challenge is too great.
I would now like to turn my attention to the opportunities that we have in northern Ontario and that FedNor is involved in to a great extent.
A growing global demand for minerals, coupled with the region's rich mineral resources and reserves, as well as knowledgeable and innovative mining cluster, represents a wealth of opportunities in our mining sector. This includes the generational mining opportunity known as the Ring of Fire development, on which I would be pleased to speak to you in more detail later in the presentation.
The northern Ontario mining sector is innovative. It is world-class and world-renowned. It does business in many jurisdictions across the globe, and it finds itself in the very enviable position of being able to provide those kinds of services globally.
Emerging from a long downturn and facing the expiry of the softwood lumber agreement, the forestry industry is now making large investments in value-added forest products and new clean and green technology, resulting in operational improvements, growth in these companies and, bottom line, jobs being created in the communities in which they reside.
As an example, in Thunder Bay, a major strategic partnership is currently leading efforts to establish a wood-based biochemical cluster, a project that aims to hasten mass production and the successful commercialization of green biochemicals derived from wood in northern Ontario.
In a nutshell, rather than looking at a tree as a two-by-four or a two-by-six, we are now looking at a tree for the chemical compounds that it represents, and how it can add value into the chain of products that we see developed in the world. This is a major initiative, featuring a number of important industry players—Resolute Forest Products, a major international company; Natural Resources Canada; Sustainable Development Technology Canada; the Province of Ontario; Lakehead University; and FedNor itself—who have been working in collaboration to develop this innovative technology and bioproducts that can be marketed to the world.
This is a great example of what the future holds for the forestry industry, which we believe will continue to prosper and bring value-added to the communities in northern Ontario.
Agriculture is also on the rise in northern Ontario, in large part because of the affordability of land. With over a million acres of available agricultural land in northern Ontario, you can buy an acre of land for approximately $500, whereas in southern Ontario that same acre of land will cost you somewhere between $5,000 and $25,000. FedNor is working diligently with community and industry partners seeking to take advantage of this opportunity.
Longer growing seasons are enabling our agricultural businesses to grow different kinds of crops, creating a more productive and diverse agricultural landscape across northern Ontario.
The region is also home to other existing and emerging innovation clusters in areas including health care, research, and green technology. Again, I would be pleased to offer more comment in those regards.
Last, probably one of the most significant key opportunities that northern Ontario has involves the region's significant indigenous population. Again, 110 of the 126 first nation communities in the province are located in northern Ontario.
While the north's overall population continues to decline, if not flatline, first nations communities are seeing their populations increase. With 29% of the local indigenous population under the age of 15, it is clear that the contributions of indigenous youth will be vital to the north's future success. It's an opportunity to promote a more proactive and participatory approach to economic development in those communities, including the advancement of resource development opportunities in the far north where many of our remote communities are located.
In conclusion, FedNor has acted and will continue to act as the Government of Canada's lead economic development organization to help northern Ontario communities diversify their economies and prosper in the future. I believe that FedNor is well positioned to deliver on its mandate, the government's priorities, and to work in unison with all its partners to ensure that communities across northern Ontario are provided with the tools they need to help them succeed in the future.
Thank you for allowing me these opening comments, and I look forward to your questions.
