Appearance before the Standing Committee on International Trade

Briefing material prepared for the Program Delivery Executive Director’s appearance before the Standing Committee on International Trade on May 2, 2024.

In 2022, the value of goods exported from Northern Ontario was $11.0 billion, marking a substantial 45% increase over the previous year. This milestone represents the highest export value the region has seen in the past 12 years, highlighting a significant economic upturn and demonstrating Northern Ontario's resilience and growth potential.

Northern Ontario's primary export sectors include manufacturing; mining; transportation and warehousing; professional, scientific and technical services; agriculture and forest products.

Recognizing the potential for trade to increase employment and wealth, FedNor supports not-for-profit organizations, such as MineConnect.

It represents the mining supply and services sector of Northern Ontario to help member businesses grow by improving access to trade and export-related information and services through its website, conferences, training and trade missions.

FedNor has also funded the Northern Ontario Exports Program through the City of Greater Sudbury that has supported 700 export-building initiatives. The program provides financial assistance and targeted training to help export-ready small and medium-sized enterprises, industry associations, and not-for-profit organizations from Northern Ontario access new markets.

FedNor plays a key role in supporting marquee events, such as Northern Ontario Mining Showcase at the Prospectors and Developers Association of Canada International Convention. The event provides participating Northern Ontario firms with an opportunity to network, make key connections and promote their products and services to an international market.

In addition to working with third-party organizations to support the trade ecosystem, FedNor targets its support to help trade-oriented businesses with the adoption and adaptation of new, innovative technologies that support scale-up, increased productivity and market expansion.

Since April 1, 2019, FedNor has approved more than $29 million in support of 34 projects to help companies become more competitive in both domestic and global markets.

Safesight Exploration, for example, benefited from direct funding to commercialize innovative technology to increase its manufacturing capacity, enhance productivity, increase exports and create new jobs.

Another example is Beam Paint and Colour, an Indigenous-owned company on Manitoulin Island. With the support it received, it expanded and purchased new equipment, enabling it to increase productivity to meet domestic and international demand for its paint products.

As a convenor and pathfinder, FedNor assists communities to strengthen their positioning in the global supply chain.

FedNor also works with its federal partners to support Northern Ontario organizations in accessing the range of export and trade programs and services through Global Affairs Canada; Innovation, Science and Economic Development, Export Development Canada and the Business Development Bank of Canada.

To elaborate further, I am happy to answer your questions.

Northern Ontario business profile

Northern Ontario is home to over 72,000 businesses, nearly all of which are small and medium-sized enterprises (SMEs). Only 71 companies in Northern Ontario have over 500 employees.
In 2022, the value of goods exported from Northern Ontario was $11.0 billion, marking a substantial 45% increase over the previous year. This milestone represents the highest export value the region has seen in the past 12 years, highlighting a significant economic upturn and demonstrating Northern Ontario's resilience and growth potential.
During the COVID-19 pandemic, exports in Northern Ontario experienced a notable decline, with a $2.5 billion decrease observed between 2019 and 2020. However, by 2022, the region showcased its ability to recover, with export values surpassing pre-pandemic levels.
Primary export sectors include: Manufacturing; Mining, Transportation and Warehousing; Professional Scientific and Technical Services; Agriculture and Forest Products.
In 2020, 9.4% of SMEs in Northern Ontario intended to expand sales in new markets outside of Canada over the next three years.
The United States remains the top purchaser of Canada exports, including Northern Ontario exports.
82% of exported goods and services from Northern Ontario SMEs went to the United States.
The value of Ontario exports to the United States rose nearly 14% from 2021 to $172.4 billion in 2022.

Issue: Direct support for trade

Key messages

FedNor acts as a funder, pathfinder and convenor in Northern Ontario. Trade and export is a priority area to support its key sectors, such as mining supply and services.
Through the Regional Economic Growth through Innovation program, FedNor offers direct support to businesses.
Through the Targeted Manufacturing Initiative for Northern Ontario (TMINO), companies can apply for financing to better plan, prioritize and implement changes that will result in efficiencies, improved quality, productivity, profitability and overall competitiveness.
FedNor directly supports sector capacity building through initiatives such as the Northern Ontario Exports Program (NOEP). It provides timely financial assistance and targeted training to help export-ready small and medium-enterprises (SMEs), industry associations, and not-for-profit organizations from across Northern Ontario kick open the doors to new markets.
NOEP has supported more than 700 export-building initiatives led by companies and organizations with product and service exports from sectors ranging from mining, forestry, manufacturing, fabrication, biotechnology, transportation, renewable energy, and the digital economy to consumer-packaged goods.
Since April 1, 2019 FedNor has approved $29 million towards 34 projects identified as supporting trade, which we define as the sale of exportable products or services outside the region that infuse dollars from outside the region into the Northern Ontario economy.
This includes 18 projects with $18 million in assistance to SMEs to assist with commercialisation and/or productivity improvements (selection of examples below).
- Wabi Iron & Steel Corp, repayable contribution of $410,250 to support the installation of new equipment and perform renovations to existing manufacturing facilities to reduce cycle and delivery waiting times. The project serves to eliminate backlog in demand for exports.
- Beam Paint, contribution of $100,000 to expand manufacturing capabilities and productivity for innovative, all-natural Indigenous-owned paint products, including building addition and new equipment, to create jobs and expand exports.
- Drillco Mining and Exploration, repayable contribution of $407,000 to build and test an additional 5 modular drilling units with spare packages for export sales to international drilling contractor and distributors.

Issue: Ecosystem support

Key messages

FedNor invests in organizations that provide foundational supports to businesses along the business continuum to help with scaling up to prepare for export and trade.
FedNor supports the trade ecosystem through its work with other federal departments, such as Global Affairs Canada; Innovation, Science and Economic Development Canada; Economic Development Export Services; Export Development Canada; and the Business Development Bank of Canada.
FedNor provides funding to third-party organizations to support business growth and development, including trade. Examples of these third parties are:
- Northern Ontario Angels
- Northern Ontario Exports Program
- MineConnect
Since April 1, 2019, FedNor has supported 16 projects with $11 million in assistance to not-for-profit organizations to help create, grow and develop strong and inclusive regional networks that support business growth and innovation (selection of examples below).
- City of Greater Sudbury, $1,606,250, to deliver the Northern Ontario Exports Program for three years. The program is designed to increase the exporting performance of Northern Ontario firms by developing management capacity in matters related to exporting and marketing, providing financial support to SMEs for marketing activities outside of Ontario, building sales management capacity and salesmanship abilities, providing market research services and creating a presence at MINEXPO the largest mining conference in the world.
- Economic Partners - Sudbury East/West Nipissing Inc, $679,505 to establish the Northern Ontario Agri-Food Pavilion at the 2023 Royal Agricultural Fair. The project provides a 7,100 sq. ft. pavilion for over 50 agri-food businesses to promote their products.
- City of Temiskaming Shores, $781,750 to organize the Northern Ontario Mining Showcase at the Prospectors and Developers Association of Canada (PDAC) International Convention, Trade Show & Investors Exchange. This provides an opportunity for Northern SMEs and organizations that would otherwise be unable to participate in such a high caliber event to promote their products and services to international and domestic markets. (note there were 7 related projects during the period.)
- Enaadmaagehjik (People Helping People), $318,354 to further engineering, financial and partnership development for an Indigenous-owned major wood pellet manufacturing plant that would create jobs, lower emissions, increase exports and generate revenue for the community.

Accelerated Growth Service (AGS) – FedNor role

We are one of several federal partners in the Accelerated Growth Service working group.
Front-line delivery officers refer companies to the program and support the company throughout the process.
Officers help growth-oriented companies find and access relevant support in a timely fashion.
FedNor has onboarded 12 clients from Northern Ontario to help them maximize their growth.

Industrial and Technological Benefits (ITB)

Hosted 11 business match-making events (Northern Ontario's Road to Defence – NORD) in Northern Ontario. Participants include local SMEs and large multinationals looking for suppliers.
Facilitated nearly 60 tours of Northern Ontario companies by defence multinational companies
Facilitating virtual and in-person introductions with international companies
Referring Northern Ontario companies to defence contractors looking for specific capabilities
Results include:
- Skyline Helicopter Technologies selected as the customer support centre for its Sikorsky S-76 helicopter for Eastern Canada
- Voyageur Aviation partnered with General Dynamics Mission Systems and the team won the $72M contract for the in-service support of the Manned airborne intelligence, surveillance and reconnaissance system

Challenges and barriers

Key messages

In Northern Ontario, 8% of all SMEs export goods or services (2020). This is lower than the national and provincial figures (12.1% and 14.6% respectively).
Businesses in small, rural and remote communities are isolated from the larger clusters and professional networks limiting their decision-making capacity, their access to corporate investments and their overall competitiveness.
Northern Ontario SMEs exhibit less business innovation activity, with a lower share of firms reporting adopted at least one type of innovation in the last three years compared to the rest of Canada (20.8% compared to 28.4% in 2020).
Energy, transportation and financing costs are higher in Northern Ontario than the rest of the province.
There is a lack of access to broadband and stable connectivity, especially in rural communities.
Businesses in rural and remote communities, including Indigenous communities, are small and are geared to respond to local and regional needs.

FedNor general

FedNor's overall core funding is $56.1M annually – if pressed, $15.1M of that is O&M.
FedNor, as all regional development agencies, is well suited to deliver smaller initiatives and special programming.
FedNor has 101 full-time staff and 53 positions are designated bilingual.
FedNor has offices in 6 cities, and a presence in Ottawa.
- Sudbury
- Timmins
- North Bay
- Sault Ste Marie
- Thunder Bay
- Kenora

Questions and Answers

Q: Which sectors were hit hardest by supply chain interruptions and labour shortages in Northern Ontario?

A: In July 2023, the Ontario Chamber of Commerce (OCC) reported that "The housing affordability crisis is significantly impacting the ability of businesses to attract and retain talent, exacerbating challenges associated with ongoing labour shortages, an aging workforce, and the housing crisis itself, as the labour needed to build more housing is increasingly priced out of communities across the province." The OCC 's most recent annual Business Confidence Survey found that most organizations in Ontario continue to report labour shortages in their respective industries (68%), with heightened job vacancies in the construction sector. Compounding these shortages is the record pace of net interprovincial migration losses, partly driven by poor housing affordability.

Labour shortages are affecting most sectors in Northern Ontario.
- Health - Hospital emergency rooms closing due to labour shortages
- Mining Supply and Services - Labour shortages coupled with new mine development puts pressure on competitive employment packaging. Housing and wages highly influence employment decisions.
- Transportation - Labour shortages. Rising cost of vehicles and supply shortage. Air service loss of routes and trend to move to larger aircraft with fewer flights.
- Manufacturing – Labour shortages and challenges from the increased costs of goods due to supply chain interruptions and inflation.

Q: How does the Regional Economic Growth through Innovation (REGI) program help businesses set themselves up for export and growth?

REGI invests in trade-oriented businesses seeking to accelerate their growth. Businesses scale up through projects that help them adopt new technologies and enhance productivity and efficiency.
REGI supports the business ecosystem through projects that support business development and commercialization activities that meet global needs.
FedNor supports export and growth through investment in successful initiatives such as the Northern Ontario Mining Showcase at the Prospectors and Developers Association of Canada Conference and the Northern Ontario Agri-food Pavilion at the Royal Agricultural Winter Fair, which connect businesses to more and diverse export opportunities.

Generic Q and A

Q: Are there any actions being taken by the government to mitigate the problems faced due to global supply chain disruptions?

A: FedNor provides regional support to businesses and not-for-profit organizations on a case by case basis. I would refer this question to my colleagues at Global Affairs Canada.

Q: Softwood lumber dispute

A: FedNor consults with Global Affairs Canada's Softwood Lumber Division to request trade risk assessments for forestry project applications.

Q: Sault Ste. Marie steel

A: FedNor is working together with federal and provincial partners to build a supply chain corridor to connect the early stage Critical Minerals extraction/processing activities in Northern Ontario to the battery and electric vehicle and manufacturing activities in Southern Ontario.

Q: Critical Minerals

A: FedNor works collaboratively with Natural Resources Canada and other federal and provincial partners to support the development of critical minerals projects and ensure that Northern Ontario is poised to take advantage of the opportunities tied to this sector.
FedNor advocates for the region as an advisor, pathfinder and convenor by seeking opportunities to collaborate across governments, with industry partners and Indigenous communities to ensure that the needs of regional stakeholders are well represented.

Critical minerals

27 active mining operations in the region
As high-growth sectors and the push towards a green economy drive demand for critical minerals (CM), Northern Ontario is uniquely positioned to become a global supplier of choice.
The federal government's 2022 CM Strategy aims to accelerate development along the value chain. Northern Ontario is viewed as a key region for national investment infrastructure funding (a provision of up to $1.5 billion over 7 years).

Challenges:

Infrastructure deficits (transportation and energy), capacity of Indigenous communities, balancing environmental concerns and growing labour force gaps.
Distance to markets

Opportunities:

Greening of the economy creates opportunities and demand for Northern Ontario critical minerals to strengthen the supply chain and fill gaps in Canada's electric vehicle battery value chain
Deeper collaboration and building partnerships and buy-in from regional communities, especially Indigenous communities
Number of strong development options near enabling infrastructure (such as roads and power lines) is high in Northern Ontario.
Opportunities include:
- For example, the Crawford Project is further advanced and has the opportunity to produce 20 times more nickel than the Ring of Fire Project.
- Onaping Depth Project;
- Lithium projects in the Thunder Bay area by Green Technology Metals and Rock Tech Lithium;
- Electra's cobalt sulfate refinery, and;
- G6 Energy's Kearney graphite mine, among others.

FedNor supports:

communities with capacity building
economic diversification
development of infrastructure
technology innovation and adaptation
FedNor supports Ring of Fire-related development projects and business development initiatives (such as road, airpark and multipurpose infrastructure project feasibility studies).
Over $15.7 million invested in support of Indigenous community readiness since 2009. Of this, over $6 million went to Comprehensive Community Planning (CCP) in First Nation communities and to support small communities in their economic development capacity.

Francophone support

Our region has 110,000 Francophones (people whose first official language is French). This represents 13% of the entire population of Northern Ontario and 20% of the francophone population in the province.
FedNor provides targeted support to official language minority communities in the region through the Government of Canada's Economic Development Initiative.
FedNor invested $6.4 million, or $800,000 annually, in support of 43 projects that supported businesses and organizations to take advantage of economic opportunities.
The funding facilitated the sustainable growth of these communities by promoting innovation, diversification, partnerships and increased support for small and medium-sized businesses.
As well as the Economic Development Initiative, FedNor's other core programs support businesses and communities in Northern Ontario, including official language minority communities.
The Northern Ontario Development Program and the Regional Economic Growth through Innovation Program have invested over $63 million in 134 projects in official language minority communities since 2015. This represents 19% of total funding provided by these programs.
Twelve of the 24 CFDCs in Northern Ontario offer services in both official languages and support projects in official language minority communities.
Since 2015, the CFDCs have approved over $33.7 million for 367 loans to francophone entrepreneurs.

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Appearance before the Standing Committee on International Trade

On this page

Northern Ontario business profile

Issue: Direct support for trade

Key messages

Issue: Ecosystem support

Key messages

Accelerated Growth Service (AGS) – FedNor role

Industrial and Technological Benefits (ITB)

Challenges and barriers

Key messages

FedNor general

Questions and Answers

Critical minerals

Challenges:

Opportunities:

FedNor supports:

Francophone support