New Brunswick had a promising start to the 21st century. The economy was growing. Employment was increasing. Businesses were investing. From 2000 to 2007 more than $8 billion was invested in large-scale projects. The introduction of natural gas brought a clean and efficient source of energy. Forestry was at its peak in terms of its economic contribution and jobs. We became a hotbed for customer contact centres and national back offices, drawing on an advanced telecommunications infrastructure and a bilingual workforce. The Information Technology (IT) sector was growing, and we were at the front end of a substantial expansion of public- and private-sector research spending that doubled investments in R&D between 2000 and 2007. The government was in a solid fiscal position, had balanced its books and, along with all other provinces, was benefitting from a significant expansion of federal government transfers.
But there were storm clouds in the distance. For decades, a surplus of workers meant that industries did not have to worry about recruiting and retaining employees. Then came the 2001 Census, which projected the province was on the cusp of an unprecedented demographic shift. For the first time, New Brunswick’s population declined from the previous census taken in 1996. The government responded by creating a population growth strategy. Addressing these challenges became the focus of the government in 2006 as it targeted a 100,000-increase in the population by 2026.
A range of economic and demographic challenges all came together in the mid-2000s. The labour market was tightening. Many of the industries that had sustained growth were showing signs of weakness. The Canadian dollar was rising, eroding the competitiveness of key industries such as tourism. Manufacturing was beginning to feel increased global competition. Mining was in decline and was set to drop even further with the closure of the Bathurst-area Brunswick Mines. The customer contact centre and national back office cluster, which had peaked in 2004, was shedding workers. Several large forestry mills closed and were dismantled. Forestry lost one-half of its value to the provincial economy in just a few short years.
This left New Brunswick’s economy in a weak position when the recession hit in 2008. After the recession, the federal government decreased its direct and indirect spending in the province. The large private investment boom fizzled. All the while, unsettling demographic and industry trends continued. The other provinces emerged with at least some growth and net new employment. Our economy, however, remained stagnant and so did employment.
Deeper dive: The impact of the Canadian dollar on our economy
We depend on the United States as an export market more than all other provinces. In 2015, 90 per cent of our international merchandise exports (by value) went to the United States. The ongoing fluctuation of the Canadian dollar compared to the American dollar creates challenges for our economy. In January 2001, $1 Cdn was worth 62 cents U.S. By November 2011, the value of the Canadian dollar had skyrocketed by 78 per cent to $1.10 U.S., but by May 2016, $1 Cdn had fallen back down to 76 cents U.S.
Our exporters suffer when the Canadian dollar is high. On the other hand, they can generate aboveaverage profits from U.S. sales when the dollar is low. In the long run, New Brunswick exporters need to build business models that are profitable at currency conversion rates in the range of $1 Cdn being worth 80 to 85¢ U.S. When the Canadian dollar is weak, exporters should invest in productivity improvements to help sustain their business when the dollar is stronger.
In the longer term, New Brunswick exporters must diversify their markets to be less reliant on the United States.
Between 2008 and 2014, real gross domestic product (GDP) – the broadest measure of the economy – declined in New Brunswick by 0.1 per cent. During the same period, GDP rose by five per cent in Nova Scotia and nine per cent on Prince Edward Island.
The number of people working has also declined. We had 6,800 fewer people working in 2014 than in 2008. Manufacturing alone shed 5,200 workers. By comparison across the country nearly 800,000 more people were working in 2014 than in 2008.
Business investment has gone down by nearly $1 billion per year. Many of the industries that created jobs in the early 2000s are now cutting jobs.
Our population younger than 45 has declined steadily – dropping by 84,000 between 2000 and 2014. This is more than the population of Saint John.
We have to go back to 1979 to find as few people younger than 45 participating in our workforce as there were in 2014 .
Number of New Brunswickers younger than 45 in the workforce (000s)