By Tom Collins
Ontario businesses are being lured to the United States.
Pro-business government groups from American states, particularly in the south and Midwest, are becoming very aggressive trying to convince businesses, including agri-businesses, to leave Ontario to escape escalating hydro costs.
Many states are offering guaranteed electricity rates for 10 years or a break on taxes, said Windsor-Essex Regional Chamber of Commerce CEO Matt Marchand.
Marchand said he fields calls every day from local businesses wondering if they should go south. “Almost every greenhouse operator has that discussion,” Marchand told Farmers Forum.
Marchand said southwestern Ontario lost at least $500 million in investment to Ohio alone in the last few years. Marchand expects the losses will climb as hydro prices continue to escalate and the cap-and-trade tax adds to costs.
There are no statistics on how many businesses have moved to the U.S. from Ontario.
Last year, Food and Beverage Ontario CEO Norm Beal would get a call once a month from a business owner saying he is having trouble choosing Ontario as a place to make future capital investments. Now he’s getting several calls a day, saying the pressure from U.S. economic development teams is tremendous.
Beal, who owns a winery and a restaurant in the Niagara region, tells Ontario businesses they need to look at more than just electricity prices. Employee health care, easy access to free, clean water and corporate tax rates are other factors that should be considered. But businesses tell him hydro savings make up for shortfalls in other areas.
Beal was visited by a Missouri business team encouraging business south. The team consisted of eight people representing different areas of government. A government organization in Buffalo has one mission: To get businesses to move to Northwestern New York State.
“Our processors in the province are getting phone calls from (these groups) daily,” said Beal.
To stop the bleeding, Beal said the province needs to do an economic impact assessment on all policy decisions and new legislation before implementing them.
“There are many policies being put in place, including carbon tax and trade, where there is no economic assessment being done to analyze what the impact is going to have on the competitiveness for business in Ontario,” he said.
Beal said many of the states in competing jurisdictions have pro-business laws such as right-to-work legislation (a law that states an employee does not need to join a union or pay dues to a union), low energy rates, and no talk of carbon taxes.
Mucci Farms at Kingsville in Western Ontario is building a new greenhouse in Ohio as hydro rates there are one-third Ontario’s rate.
Leland Industries, a Toronto screw and bolt manufacturer, is looking to open a new plant in Illinois because Ontario “costs are just out of sight,” the Toronto Star reported. Meanwhile, Amazon.com chose to open its first Canadian cloud data centre in Quebec instead of Ontario because of electricity costs.
A Maple Leaf Foods official said his company would save $7.5 million to $12.9 million a year by moving its Ontario plants to other jurisdictions. Kellogg’s and Heinz have already closed up shop in Ontario.
It’s not just big companies which are affected. East Hawkesbury mayor Robert Kirby knows an Ontario farmer living on the Ontario-Quebec border that would save $250,000 annually in electricity bills if he literally moved across the road.
None of this should be any surprise to the government. A 2015 survey by the Ontario Chamber of Commerce said that five per cent of Ontario businesses were expected to close down within five years due to rising electricity prices.