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Hamilton Economic Development

Hamilton Highlights Newsletter – February 2016

In the February 2016 edition of Hamilton Highlights…

  • Success in the City – Get Your Tickets
  • Hamilton Makes National News (Three Times in One Week)
  • ELEV8 Pitch Night to Showcase Local Startup Talent
  • Embrace UX Conference Coming to Hamilton

Click here to read the February 2016 Hamilton Highlights newsletter.  If you are interested in signing up for the Hamilton Highlights newsletter, click here.

Colombian Business Opportunities Seminar

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Can small businesses afford to pay employees a living wage? This bakery owner thinks so

Josie Rudderham can’t live on $11.25 an hour and she doesn’t think her bakery staff should have to, either.

“It’s under the poverty line,” said Ms. Rudderham, co-owner of the Cake and Loaf bakery in Hamilton. “These are people I have to work with every day and I have to look them in the face.”

When Ms. Rudderham and her partner, Nicole Miller, started the bakery five years ago, their goal was to funnel profits into wages so that they could afford to pay more than Ontario’s minimum.

“I’m the child of two social workers so I’m a bit of a socialist at heart,” she said. “I wanted to provide meaningful employment for people – jobs people could stay at and still have families and still go on vacations and still buy houses.”

Rudderham and Miller wanted to pay staff at least $14.95 an hour – the living wage for Hamilton based on calculations set for 2014 by the Ontario Living Wage Network and the Canadian Centre for Policy Alternatives.

The calculation, made every two years, includes groceries, rent, a transit pass, child care and extended health insurance for a family of four when both parents are working and making that wage.

It doesn’t include saving for retirement, paying off debt, taking vacations or buying a home. In Ontario, 80 businesses have signed declarations saying they intend to pay employers a living wage.

“It’s a fairly frugal calculation,” said Tom Cooper, co-ordinator of the Ontario Living Wage Network. “It reflects what people need to earn just to get by.”

Ms. Rudderham and Ms. Miller couldn’t afford to pay staff that right away, but last October the two “felt we were financially ready.”

The bakery increased wages for their 17 staff members to $15 to $18 an hour from $12 to $15. Managers earn more.

There wasn’t much of an initial reaction, Ms. Rudderham said. “It wasn’t that they rushed out and thanked us or anything,” she said. “We said, ‘We need you all to help us accomplish this because we have to meet certain sales goals.’ ”

But staffers with two jobs were able to quit their second jobs and came in less tired, Ms. Rudderham said.

Even though December is the bakery’s hardest month with long hours and a lot of stress, “productivity went way up,” she said. “It was subtle and people just seemed happier.”

The conventional wisdom is that when businesses raise wages, that raises their production costs and then they have to raise prices – and then they get beaten out by their competitors and have to lay off staff, said David A. Green, an economics professor at the University of British Columbia.

But that doesn’t seem to be the case, he said. Research shows that after minimum wages are increased, companies do hire less. But that applies only to teen workers, he said. “Once you get past 20-year-olds, the end result is that the employment rate has not really changed.”

Surprisingly, research also shows that when the minimum wage goes up, the likelihood of a business laying off a worker in the next year actually goes down.

“We think it comes down to the idea that you can operate a firm in the same industry in very different ways,” Prof. Green said. “Places like Costco, Lee Valley Tools and In-N-Out Burger in the U.S. have a reputation of taking care of their employees and intuitively, you think they’ll get beaten out by places that don’t, like Walmart – but they don’t.”

If you pay low wages, you save on labour costs day to day, but you get high turnover and employees who have no real reason to make your company succeed, he said.

“If you work at a place where you think there’s a future, you have better morale,” Prof. Green said.

Becky Reuber, a professor of strategic management at the Rotman School of Management at the University of Toronto, thinks that paying a higher wage gives a small business a better chance of hiring – and keeping – good employees.

She doesn’t think a wage hike would guarantee better work from every employee. “If you’re doing this to have people become part of the team and stay longer, then you want to make sure you’re giving a raise to someone who’s good and not someone who’s calling in sick all the time or has weak customer skills,” she said.

As long as a business has the cash flow to afford it, paying higher wages sounds like a “win-win,” Prof. Reuber said.

But it costs more to live in some places and that will raise labour costs for businesses that want to pay living wages there, Prof. Reuber said. In Toronto, the 2015 living wage is $18.52 an hour. In Vancouver, it’s $20.68 an hour.

Ms. Rudderham, who hopes to eventually pay staffers $20 an hour, said giving workers more is “fundamentally a matter of priorities.”

“There are a lot of businesses where there’s a lot of profit being made and it could be distributed to employees,” she said.

Article courtesy of Jason Tchir, The Globe & Mail

Hamilton ready for post-Steeltown boom as loonie continues to sink

HAMILTON—For Graeme Smith, cheese is the new steel.

The laid-off steelworker-turned-entrepreneur serves gourmet grilled cheese to former co-workers at the restaurant he opened on gentrifying Ottawa St., in the shadow of Hamilton’s steel mills.

When Smith landed a job at Stelco in 2006, a year before it became the now-insolvent U.S. Steel Canada, he believed he landed a lifelong career like his father, who worked at the mill for 38 years.

“But the writing was on the wall,” he said.

He was laid off within a year of the new ownership’s takeover, and used Ontario’s Second Career Program to go to culinary school, where he developed a business plan for his 20-year dream to open “Gorilla Cheese.” His concept became Hamilton’s first food truck in 2011, and a permanent part of its re-invigorated restaurant scene in November.

His story is emblematic of Hamilton’s newfound narrative: the scrappy community that pulled itself up by the bootstraps to prove there is life after Steeltown.

Even as a U.S. recovery and low Canadian dollar breathe new life into the city’s manufacturing sector, Hamilton is focused on diversifying the local economy away from its former dependence on heavy manufacturing, the fate of which is largely determined by global cycles beyond its control.

The port city’s steel-driven manufacturing base — once the Canadian home to a who’s who of industrial leaders from Westinghouse to Procter and Gamble — has shed some 25,000 jobs since 1976, as major employers lost out to new cheap global competitors amid the rise of the Canadian dollar.

“We were in desperate need of diversifying the economy and growing the economic base,” said Neil Everson, City of Hamilton economic development director.

The realization came at an auspicious moment — just before the 2008-2009 recession battered the city’s manufacturing sector, sending output down 16 per cent in 2009.

City hall believes that this focus on diversification is one of the major reasons Hamilton weathered the recessionary storm as well as it did, and even managed to post lower unemployment rates than the provincial or Canadian averages.

Hamilton has been rated Canada’s most diverse city economy by the Conference Board of Canada, which expects it to make strides in economic growth, employment and personal income levels over the next three years.

The city’s transformation away from a reliance on one dominant sector can be a lesson for oil-dependent communities that are smarting from a crude downturn, Everson said.

The principle is deceptively simple: “Don’t put all your eggs in one basket.”

But execution has been less easy. The public sector is the new economic driving force, and the city needs private companies to create more of that growth, Everson said. Hamilton ranked just 67th out of 121 Canadian cities on a Canadian Federation of Independent Business survey of best communities for entrepreneurship.

Steel is still the biggest private-sector employer here. Even if Hamilton’s fortunes are less susceptible to the ebb and flow of the commodities market, manufacturing is still a giant piece of its economic puzzle. The sector is expected to drive municipal growth this year, as a low loonie makes Ontario-made goods cheaper and a U.S. recovery spurs demand.

The city’s steel manufacturers are part of a rebound in Ontario auto part shipments to the U.S. over the past six months. ArcelorMittal Dofasco plans to hire 1,000 workers over the next three years. U.S. Steel Canada, which is mostly shuttered and has slashed its workforce, has been recalling workers in recent weeks.

National Steel Car, which makes railroad cargo containers, laid off 520 workers just before Christmas when it shut its oil tanker line due to a slowdown in orders. But 300 of those workers have been recalled to work instead on two additional freight lines where orders are picking up, partly thanks to a low dollar. It expects to have all of the workers back by March and even plans to hire.

While the City is encouraged by a rebound in it traditional manufacturing base, it is more excited about the opportunity that the low loonie provides to attract new foreign investment in the sectors it’s focused on, including advanced manufacturing, life sciences and technology.

Advanced Hamilton-based manufacturers have succeeded by focusing on knowledge-based, value-added production to give them an advantage over lower-cost competitors.

A multitude of smaller players are in expansion mode, including waste water filter company Fibracast and autoparts maker Stackpole. They employ hundreds rather than thousands of people, but combined they have helped the city to more than make up the jobs lost in heavy industry.

Output from the city’s manufacturing sector is expected to increase by two per cent in 2016, thanks in part to the growing food processing business, led by a Maple Leaf Foods super-plant and investments from major agricultural players at the port.

Much of Hamilton’s economic diversity relies on the growth of “eds and meds” sectors, a focus that is a popular route to economic development for recovering Rust Belt cities. The research-focused health care industry is now the city’s biggest employer, providing some 20,000 jobs, while education is its fastest-growing sector.

The information and cultural industries, which have grown since the city became an affordable destination for artists in the 2000s, is another of the city’s fastest growing sectors. The Conference Board projects that a low loonie will make it an even more attractive location for film shoots.

To passersby, Hamilton’s economic renaissance has been overshadowed by the factories spewing smoke over the Burlington Skyway, clouding a transformation inside the city that Ontario’s economic development minister has touted as a role model for recovery.

But now an increasing number of Toronto developers and families are ready to invest in Hamilton’s skyrocketing, but much more affordable, real estate market.

“We were the city that people drove by and see the smoke stacks and went ‘Oh, what a dirty city’,” said Smith, sitting at a table in his little grilled cheese shop, giving a knowing smile toward the steel mills at the end of the street.

“But people from Hamilton are happy being the little kept secret because we’re happy with what we’ve got here.”

The businesses

Hamilton has more than made up for the loss of manufacturing jobs by adding to the workforce in the knowledge-based sectors it’s focused on. Its average unemployment rate was 5.4 per cent in 2015, less than the average in Canada or Ontario, and it’s lowest since 1976.

On the lakeshore, the Hamilton Port Authority desperately needs land to meet the growing demand for space from a steadily rising base of agri-business customers that surround steel company lands.

“We’ve been almost using a shoehorn now to bring in new customers and fitting them all into the footprint we’ve got,” said the port’s vice-president Ian Hamilton.

The port has seen about $200 million in investment from agri-companies in the past five years. In addition to a sugar refinery and a new craft brewery, construction is underway for a third grain terminal and a new flour mill.

Attracting agricultural tenants was an intentional strategy by the port to offset some of the losses from shipping steel-related products it was seeing in 2007.

“We recognized we were too dependent, we just didn’t recognize we were going to lose that chunk of business, that we were going to be filling this void.”

Agriculture hasn’t filled the entire 4 million tonne loss from the steel business, but has replaced about half.

Hamilton anticipates demand for shipping cargo to the U.S. will grow further due to the lower dollar. But he believes it will take another half a year to see the real opportunities arise.

Hamilton’s port, the busiest on the Canadian side of the Great Lakes, has 130 tenants on long-term leases and just 27 acres of vacant land, compared to 200 acres in 2007. The port has expressed interest in buying at least some of the parcel of adjacent U.S. Steel land.

“That’s one of our challenges now with the success is we just don’t have the land to meet that demand going forward.”

Here’s a look at how other Hamiltonians are building the new economy:

Information technology

Waterloo doesn’t own tech, said David Carter, executive director of Hamilton’s Innovation Factory. But without a startup incubator of Hamilton’s own, the city risked losing a lot of “interesting collisions” — with health care, advanced manufacturing and other burgeoning sectors — to the city an hour away.

The Forge incubator opened its doors in January 2015 and houses about a dozen young companies in various stages of development — from QCard, an app designed to help people with cognitive impairments remember tasks, to Chipsetter, a low-cost microchip machine for companies to make small batch circuit boards.

Hamilton may not have a RIM yet, Carter said, but “it’s not hard to see a generation here that in five years will be significant employers.”

Nix Sensors Inc. grew from engineering student Matthew Sheridan’s house through the incubator into an eight-person team. Sheridan, now CEO, moved the company briefly to Waterloo. He had offers to move into programs in Boston and San Francisco, but decided to return to Hamilton. “There’s no shortage of talent here, and definitely no shortage of community support as well.”

Creative industries

Erin Dunham was always going to Toronto to eat because Hamilton had few independent restaurants where she wanted to hang out. So she opened one — and then four more. Dunham and partner Matt Kershaw own Other Bird food group, which opened Rapscallion Rogue Eatery, one of Hamilton’s hottest restaurants, four years ago. Since then, their team has grown from five to 70 people.

The growth of the creative industries, spurred by an influx of artists into the city since the new millennium, has sparked a grassroots scene that has helped the city’s “cool factor” she said. Art Crawl, a decentralized once-a-month art show, spawned the award-winning Supercrawl festival which now attracts more than 130,000 visitors.

“It’s all very much spontaneous, it’s not being centrally organized but it’s all happening,” said Rob Zeidler a developer who recently converted a turn-of-the- 20th-century Imperial Cotton factory into an affordable workspace hub that houses 60 artists, filmmakers and fashion designers.

“The art scene has become the symbol of the revitalization of Hamilton.”

Life sciences

Hamilton’s health sector is the city’s biggest employer. It grew by eight per cent over the past five years. McMaster University, Hamilton Health Sciences and St. Joseph’s Healthcare Hamilton have won global awards and recognition for research capabilities. The sector attracts more than $200 million in research revenue annually.

The industry’s economic impact could be even greater if the group can bridge a gap between innovation, research and commercialization, said Rob MacIsaac, CEO of Hamilton Health Sciences.

The next step is to create more partnerships with the private sector, to spin off private companies to help sell products and services being developed in Hamilton around the world. There are currently about 300 life sciences companies operating within Hamilton, but a relatively small presence of multinational companies.One recent international collaboration will see Germany’s Fraunhofer, Europe’s largest applied research organization, partner with McMaster University to create the Biomedical Engineering and Advanced Manufacturing research facility, which will focus on regenerative medicine, cell therapies and innovative diagnostics.

Real estate

Hamilton is one of the hottest markets in the country, fuelled in part by Torontonians moving west because they’re priced out of the market in the big city. Home prices in Hamilton rose by nearly 10 per cent in 2015, about the same as in Toronto. But prices are about half as much, with the average hovering around $363,000.

Vanessa Perry and her husband reluctantly moved back to the city where they grew up from Toronto three years ago, when she was pregnant with their first child. But they are converted.

“Hamilton was really starting to make a big change so on our return to Hamilton we started to see a lot more local small businesses opened up, new restaurants, condo conversions and it really just seemed like there was a whole different vibe.”

Now, as a real estate agent in Hamilton, Perry serves clients in similar situations. Perry said Hamilton is starting to see an increase in bidding wars and sales of homes for above asking price. Prices in her area near Gage Park have risen nearly $100,000 in the three years they’ve been there.

Advanced manufacturing

ArcelorMittal Dofasco continues to hire and invest in its Hamilton harbour facility, telling a starkly different story from its competitor next door, where U.S. Steel sits mainly idle and on the verge of collapse. “Make no mistake, steel is still a very, very important economic engine in the city of Hamilton,” said Sean Donnelly, president and CEO ArcelorMittal Dofasco.

The Canadian division of the global steel giant is a bright spot for the world’s largest steelmaker and recently invested $120 million in a new line for advanced high strength steel for the auto and construction industries.

Still, it is the quiet local manufacturing successes like Ancaster-headquartered specialized oil pump maker Stackpole that have stepped in to fill the void left by industrial giants that, unlike Dofasco, have left the city.

The company employs about 700 people in Ancaster and is expanding its powdered metals plant by about one-third to meet current demand and plan for new business it expects to win as North American auto sales heat up. “Stackpole makes things on vehicles that I wouldn’t consider to be commodity parts — that you can just buy a lot cheaper overseas. There’s a lot of intellectual property involved in what we do,” said Paul Bartel, general manager of the Ancaster division.

Article courtesy of Sunny Freeman, The Toronto Star

Food is the new steel at Hamilton’s Lake Ontario ports

Amid a rout in global steel markets, the port that serves Canada’s steel town has found a new focus: food.

“Agriculture is the new steel,” says Ian Hamilton, vice-president with the Hamilton Port Authority, which owns or manages 600 acres of land at the western tip of Lake Ontario.

Mr. Hamilton (yes, that’s his name) is overstating things: He knows grain terminals and large crops will never replace the thousands of steel-industry jobs Hamilton has lost.

But there’s a new optimism at the port, driven by the construction of a third grain terminal, a new flour mill and the recent arrival of a handful of agri-food companies, including a sugar refinery and two craft breweries.

In the past five years, the number of agri-food companies at the port has grown to about 14 amid more than $200-million of investments.

Elsie Lynch, co-owner of port restaurant Two Cougars and a Cafe, has seen this shift firsthand.

“We used to get business from this side,” said Ms. Lynch, waving a hand toward the steel mills, “now we get it from this side.” She is pointing at the north end of the port. That’s where the food companies are clustered, occupying the piers, sheds and warehouses that used to be home to steel makers and metal recyclers.

“Business is still good,” said Ms. Lynch, glancing at a dining room that is three-quarters full late in the morning. Diners wear ball caps and coveralls, and no one seems fussed by the sign at the door that reads No muddy boots.

Since 2009, the amount of grain and fertilizer moving through the Port of Hamilton has more than doubled to 1.7 million tonnes in 2015, making up the volume lost to the steel industry, the port says. Agriculture now accounts for about 18 per cent of the port’s volume.

Meanwhile, steel-related shipments – iron ore, coal and coke – account for 60 per cent of volumes, down from 74 per cent in 2009.

The Hamilton waterfront is famous for the blackened lands and smog-belching steel mills that serve the once-mighty Ontario manufacturing sector. Ore and coal still arrive by ship from the mines of eastern Quebec, but Hamilton’s steel output has plunged amid slumping global demand and cheaper supplies from China.

Stelco, now known as U.S. Steel Canada, is in bankruptcy protection and has halted steel production. Next door is ArcelorMittal Dofasco, which churns out a yearly 4.5 million tonnes of steel and employs 5,400, even as its parent posts an $8-billion (U.S.) loss amid falling prices.

“We need two things in Hamilton: We need jobs and we need [tax] revenue. It’s been very difficult [since Stelco fell into bankruptcy],” said entrepreneur Ron Foxcroft, owner of Fluke Transport, which moved its main operations to the port six years ago. Fluke now rents 400,000 square feet in warehouse space from the port and operates 500 trailers that carry consumer goods – no steel, no auto parts.

Despite the troubles in the steel business, it remains the port’s biggest industry and its biggest revenue generator. But agriculture is the port’s fastest-growing business and has become the second-largest, measured by cargo tonnage and revenue.

For growers, the rise of a new agri-food hub offers new markets for their crops. “Investments in agriculture, particularly grains, are always something we support and are pleased to see,” says Barry Senft, head of Grain Farmers of Ontario, which represents the corn and soybean growers that dominate the farmland in Southwestern Ontario.

McKeil Marine Ltd., which has operated tug boats in the harbour for decades, is among the shipowners adding ships to move grain. The booming agriculture business at the port has helped the company thrive in a tough economic climate, said Blair McKeil, son of the company’s founder.

In 2007, the year the failed Stelco was bought by U.S. Steel, the port’s leaders took a hard look at its list of tenants, which was dominated by steel makers and related businesses. The port began approaching agricultural companies – grain shippers and fertilizer distributors – and pitching the port’s strong points: access to the St. Lawrence Seaway and two major railroads, the nearby system of highways and the U.S. border.

“It’s a great location,” said Derek Jamieson, president of P&H Milling Group, the Parrish & Heimbecker subsidiary building a $45-million (Canadian) flour mill that will process Western Canadian wheat for Ontario bakeries.

“Once you start to get known as a hub, they come to you,” the port’s Mr. Hamilton said, seated in a corner office at its waterfront headquarters. “We’re squeezing people in now.”

On this day, shipping on the seaway is closed for the season and the only ships in sight are the ones tied up at the piers. But on the piers, pile-driving is under way at P&H’s flour mill and the concrete silos have begun taking shape at G3 Canada Ltd.’s grain terminal.

Karl Gerrand, chief executive officer of G3, which took control of the former Canada Wheat Board last year, said the Winnipeg-based company picked Hamilton as the place to build a new terminal partly because the rail access will allow the company to buy and ship farmers’ crops year round. The terminal, due to be open by next year, gives the company its first footprint in the Southern Ontario crop market, home to the country’s biggest growers of corn and soybean. The site also completes the G3’s eastern supply chain, which feeds its terminals in Trois-Rivières before reaching overseas buyers.

“Hamilton’s really important for us,” Mr. Gerrand said by phone.

To make room for more tenants, the port is eyeing the 800 acres owned by U.S. Steel Canada. The land would require a major cleanup after more than a century of steel making, but the port is accustomed to making contaminated land suitable for other uses, said Bruce Wood, the port’s chief executive officer.

“It’s not a pretty site, but that’s what we do,” Mr. Wood said.

Article courtesy of Globe & Mail

Hamilton Highlights Newsletter – January 2016

In the January 2016 edition of Hamilton Highlights…

  • Take the Employer One Survey
  • Innovation on a Napkin
  • Work Continues on West Harbour Redevelopment
  • Save the Date for Success

Click here to read the January 2016 Hamilton Highlights newsletter.  If you are interested in signing up for the Hamilton Highlights newsletter, click here.

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