Economic Base Analysis for the Town of Perth & District

Prepared by:

December 12th, 2002 (Updated on May 15th, 2003)

Introduction
Matthew Fischer & Assoc. Inc. is an independent consulting firm founded in 1997 to serve Canadian economic development agencies. It was contracted by the Town of Perth to conduct an Economic Base Analysis to help the community target its economic development programs more precisely. We are grateful to Industry Canada for providing partial funding for this study under the PEMD Investment program. An Economic Base Analysis is a statistical tool that uses employment data from Statistics Canadas Labour Force Survey to profile the composition of the local economy. The analysis requires comparable data over a specified time period to measure changes in the economy. In the course of our consultations with community leaders it became quickly apparent that Perth is part of regional economy that includes the adjacent Townships of Tay Valley (formerly Bathurst, Burgess & Sherbrooke) and Drummond/North Elmsley. The three communities together have a combined population of 18,113 (2001 Census) and a substantial number of the township residents work and shop in Perth. It is also clear that there is a substantial amount of movement (for both work and shopping) between the Perth area, Smiths Falls and the Ottawa region. As a result, to get an accurate picture of the economy we must look beyond the borders of the Town of Perth and consider the regional marketplace. We face a significant challenge when the study area is not a Census Metropolitan Area as defined by Statistics Canada. As is the case in Perth and district, many of the statistical measures we rely on are not collected (or published) except as part of a census and unfortunately the relevant data from 2001 Census will not be available until the spring of 2003. Therefore we must rely on 1996 Census Data for the Town of Perth and the surrounding region. Fortunately, with the help of the Labour Market Analyst at the Kingston HRDC office we have found comparable data for the 1991/1996 period for the Town of Perth, Smiths Falls and Carlton Place. We believe this provides the most accurate profile of the regional economy. Matthew Fischer, BA, CED, Ec.D., President

182 Willow Ridge Road ILDERTON, ON N0M 2A0 Tel: (519) 666-3668 Fax: (519) 666-3670 Email: mfischer@execulink.com Page 1

Introduction to Economic Development

Economic development is not one simple, discrete activity. It is actually a number of separate programs and initiatives, each with multiple stakeholders, specifically selected as part of a comprehensive strategy to address the unique needs and opportunities of the community. These initiatives can include: Elements of a Comprehensive Economic Development Program New Business Attraction Business Retention & Expansion Small Business & Entrepreneurial Development Tourism Facility Development & Tourism Promotion Downtown & Commercial Development Special Projects (such as: Creating a Business Incubator or Tourism Attraction) From a study of the best practices of scores of international and domestic economic development agencies, we have developed six maxims that serve to guide community economic development programs. Maxims of Economic Development 1. Existing businesses will account for as much as 90% of economic growth in the community. They deserve priority attention in an economic development program. 2. 70% to 85% of new Foreign Investment is follow-on investment by MNEs (Multi-National Enterprises) already established in Canada. Foreign-owned subsidiaries in the community should be the primary focus of an international business attraction program. 3. In every community, there will be too many opportunities to effectively pursue. To be successful, strategically select a few initiatives and recruit a broad base of community support to pursue them. 4. Targeting is critical to an economic development plan. Establish realistic targets based on the communitys Comparative Advantages for specific industry sectors or types of businesses. 5. Personal contact is the most effective means of communicating a communitys attributes to a potential investor. 6. An introduction or personal referral from a trusted source is the most effective entree to a decision-maker. A development officers personal network, at home and abroad, is his/her most valuable asset. Each community is unique, having evolved its own set of industries and sectors through the individual decisions of investors and entrepreneurs based on the influences of geography, history and political forces in the community over the years. Page 2

To more effectively target a communitys economic development program, it is important to understand the strengths and weaknesses of the local economy and to identify the communitys competitive advantages for particular industries and businesses. An Economic Base Analysis is a useful tool that provides a solid statistical measure for each individual sector of the local economy, thereby establishing a foundation for the communitys economic development strategy.

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Perth Introduction

The Town of Perth is located in Eastern Ontario about mid-way between Kingston and Ottawa on Highway 7. It is a picturesque community on the Tay River (part of the Rideau Canal System) in the midst of the popular summer vacation area known as the Rideau Lakes District.

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Perth and the surrounding Townships combine to form a single regional market with Perth acting as the commercial/service centre. In addition the area is becoming increasingly attractive to commuters working in Kanata and the western part of the Ottawa Region. The 2001 Census records the population of Perth and its neighbouring communities as follows: Population 2001 Census Town of Perth Tay Valley Twp. Drummond / North Elmsley Twp. 1996 5,902 5,180 6,187 17,269 2001 6,003 5,440 6,670 18,113

The Planning Department of the Town of Perth prepared the following map to illustrate the primary and secondary trading area for the community.

Regional Market Area

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Due to the popularity of the Rideau Lakes District as a vacation area, there is a huge seasonal influx that has a significant impact on retail sales in the community. Perth has a diversified manufacturing base of 28 companies with a total estimated employment of 1,560, including some well-known names. Manufacturing Firms (employing >100) Company Product Brown Shoe Company Shoes 3M Canada Tape Products Perth Soap Liquid & Bar Soap Albany International Paper Making Weaves OMYA Processing Calcium Calcite Central Wire Manufacture Fine Wire Grenville Castings Drive-shaft/Axle Assemblies Employment 325 250 165 150 150 100 100

Based on the 1996 Census, (the most recent data available) the Town of Perth had a slightly higher rate of unemployment than Ontario, however as shown in the following table, unemployment was skewed with fewer males unemployed in Perth and more females than the Ontario norm. Participation rates were lower than Ontarios and the average income in Perth was approximately 15% lower.

1996 Census Town of Perth Employment & Income

Labour Force Characteristics Unemployment rate Participation rate Avg Total Income
(persons reporting income)

Perth Perth Perth Ont. Ont. Ont. Total Male Female Total Male Female 9.4% 6.2% 12.2% 9.1% 8.7% 9.6% 56.5% 63.5% 50.8% 66.3% 73.0% 60.0% $23,428 $29,602 $18,355 $27,309 $33,599 $21,048

Comparing the education characteristics of Perth residents to Ontario we find that on average Perth residents are less well educated. This is not unexpected given the generally rural nature of the area (college or university experience is not demanded as frequently). 12.7% of Perth residents have completed university compared to Ontarios 18.8% and 43.7% of Perth residents have a trades or college certificate or diploma compared to 45.9% across Ontario.

1996 Census Town of Perth Education Attainment

Educational Characteristics Population >25 yrs with Grade 8 Population > 25 yrs with High School Perth Perth Perth Ont. Ont. Ont. Total Male Female Total Male Female 11.0% 8.4% 13.3% 11.7% 11.0% 12.3% 64.9% 68.6% 61.8% 69.4% 70.4% 68.4% Page 6

Population >25 yrs with Trade/College Population >25 yrs with University

43.7% 12.7%

47.8% 14.3%

40.8% 11.6%

45.9% 18.8%

49.1% 20.5%

43.0% 17.2%

Interestingly, a report by HRDC Ontario Region found at: http://www.on.hrdc-drhc.gc.ca/english/lmi/eaid/ore/cen96/eo/510lm_e.html profiled the labour market characteristics of Economic Region 510, during the period of this study and reported that Lanark County (in which Perth is located) significantly outperformed the other counties in ER 510 between 1991 and 1996. Among other things, the report measured changes in Labour Force, Employment and Unemployment. It is summarised in this table. Note that total employment rose in Lanark County by 1,825 jobs or 7.1% while across the region it declined 2,965 jobs for a loss of 0.6%.

Economic Region 510 - Labour Market Change from 1991 to 1996

Source: HRDC Ontario Region
Labour Force % Employed % Unemployed %

Stormont Dundas Glengarry Prescott Russell Leeds Grenville Ottawa Carleton Lanark ER 510

-545 -1.0% 2,765 2.033 890 2,310 7,460 7.9% 4.5% 0.2% 8.4% 1.3%

-1,660 1,995 990 -6,100 1,825 -2,965

-3.3% 6.1% 2.3% -1.7% 7.1% -0.6%

1,125 765 1,050 7,000 485 10,420

24.8% 33.3% 34.4% 25.4% 23.8% 26.4%

A companion report on the population changes in ER 510 found at: http://www.on.hrdc-drhc.gc.ca/english/lmi/eaid/ore/cen96/eo/510pop_e.html showed that although Lanark County is the smallest of the counties in ER510, in terms of population growth Lanark outperformed all but Prescott Russell, especially among the all important 15/24 and 25/54 year old age groups, the prime working years for the labour force.

Economic Region 510 - Population Changes from 1991 to 1996

Source: HRDC Ontario Region
Actual Change % Change % Change 15/24 yrs % Change 25/54 yrs % Change 55+ yrs

Stormont Dundas Glengarry Prescott Russell Leeds Grenville Ottawa Carleton Lanark ER 510

3,460 6,825 6,050 42,995 5,040 64,370

3.2% 10.2% 6.7% 6.3% 9.2% 6.4%

-0.1% 4.7% -0.5% -2.9% 4.6% -1.6%

3.9% 11.6% 8.7% 6.3% 10.8% 6.9%

5.6% 9.4% 6.8% 10.3% 8.4% 9.1% Page 7

Economic Base Analysis

Effective economic development programs are grounded on a clear understanding of the strengths and weaknesses of the local economy and of how the local economy is performing in the regional context. An Economic Base Analysis provides such a foundation. The analysis consists of two components: a Location Quotient Analysis profiling the current composition of the economy - and a Shift Share Analysis measuring the relative changes that have taken place during the period of the study.

Location Quotient Analysis

A Location Quotient analysis is a measure of the relative concentration of each sector in the local economy compared to a reference area, in this case the Province of Ontario. The Location Quotient Analysis also shows which industry sectors are Basic (attracting new money to the community through the export of products or services) and Non-Basic (re-circulating money within the community through retail expenditures or provision of personal services). A Location Quotient is the ratio of employment by industry to total community employment compared to the reference area. Where the LQ = 1.00, the ratio of employment in that industry to total employment in the community is the same as that for the Province. Where the LQ > 1.00, employment in that industry is more concentrated in the community than in the Province. If the LQ for a particular industry is high (LQ > 1.25), it implies the community possesses a competitive advantage for that industry and that it is likely serving customers outside the local market (exporting). Where the LQ < 1.00, employment is less concentrated than in the Province. When an industry is significantly less concentrated (LQ < 0.75), it implies a leakage of dollars to a nearby community. We are grateful to Ms Lorie Truemner, Labour Market Analyst at the Kingston office of Human Resources Development Canada for providing the labour force data that became the foundation of this analysis. Our examination has focused on a data set prepared by HRDC for the HRCC Areas of Perth, Smiths Falls and Carleton Place. The complete list of communities within this study area is in the appendix.

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Location Quotients Perth, Smiths Falls, Carleton Place - 1996

Industry Sector Agriculture & Related Fishing, Trapping, Forestry & Mining Manufacturing Construction Transportation & Warehousing Communication & Other Utilities Wholesale Trade Retail Trade Finance & Insurance Real Estate & Insurance Brokers Business Services Government Services Educational Services Health Care & Social Services Accommodation & Food/Bev. Services Other Services Total Source: HRDC Based on 1996 Census Ontario Employ 131,060 39,375 922,570 290,430 198,555 173,040 278,220 662,815 228,880 111,895 411,070 304,640 369,325 369,325 350,945 414,980 5,401,415 Perth Area Employ 1,870 220 5,995 2,855 1,320 1,080 1.565 4,755 1,005 585 2.045 3,050 2,310 4,185 2,430 2,835 38,105 % of Perth Total 4.9% 0.5% 15.7% 7.4% 3.4% 2.8% 4.1% 12.4% 2.6% 1.5% 5.3% 8.0% 6.0% 10.9% 6.3% 7.4% 100% L.Q. 2.02 0.79 0.92 1.39 0.94 0.88 0.80 1.02 0.62 0.74 0.71 1.42 0.89 1.16 0.98 0.97

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Note the high concentration (high L.Q.s) of the Agriculture, Construction, Government Services and Health Care sectors. These four sectors collectively employ nearly 12,000 persons or 31% of the total employment in the area. It is also noteworthy that these sectors are so diverse. In the event of a downturn in any one sector, the others should be unaffected. The Manufacturing sector, which is the single largest employment group in the community (5,995 employees or 15.7% of total), has an L.Q. of 0.92 making it only slightly less well represented than the provincial norm. We note that within the manufacturing sector there is strong diversity of industries providing further stability in the economy. (See list of significant industries contained in the Introduction). Several sectors are significantly under represented in the LQ Analysis. In particular the full range of Financial, Commercial and Business services is significantly underrepresented in Perth and district. We attribute this to the proximity of Ottawa, where many of these services are very well developed.

Shift/Share Analysis
We undertook a Shift Share Analysis to measure the growth/decline of each sector relative to the provincial economy. The Shift Share Analysis attributes changes in total employment of each sector to provincial and industry-wide influences. It also serves to point out those industries for which the community possesses a competitive advantage. A Shift/Share Analysis is actually three separate measurements: Reference Area Growth Effect is the change in employment that could be attributed to the overall growth/decline of the reference area (the Province). Industrial Mix Effect is the change in employment that could be attributed to the growth/decline of the entire industry sector. Differential Shift Effect is the most important because it shows the relative change in employment in the industry and is a measure of the local economic performance of the industry. The three measures combined total the actual Employment Change during the period of the study. A Shift Share Analysis is a powerful tool because it reveals real growth versus apparent growth in each industry sector. For example, a modest increase in employment in one sector could be masking the fact that locally the industry is not keeping pace with stronger growth in the Province. The Shift Share Analysis measures whether the local share is growing or declining relative to whats happening elsewhere in the Province. It also self adjusts for the business cycle in the reference area to provide a more stable measurement of the growth. Page 10

Shift Share Analysis - Perth, Smiths Falls, Carleton Place 1991/1996

Industry Sector
1991/1996 Employ Change Reference Area Growth Effect Industrial Mix Effect Differential Shift Effect

Agriculture & Related 45 Fishing, Trapping, Forestry & Mining -10 Manufacturing 375 Construction 70 Transportation & Warehousing -115 Communication & Other Utilities -110 Wholesale Trade 490 Retail Trade -105 Finance & Insurance 170 Real Estate & Insurance Brokers 105 Business Services 115 Government Services -700 Educational Services 305 Health Care & Social Services 85 Accommodation & Food/Bev. Services 625 Other Services 640 Total 2,005 Source: HRDC Based on 1991 - 1996 Census

-12 -1 -36 -18 -9 -8 -7 -31 -5 -3 -12 -24 -13 -26 -11 -14

-104 -48 -86 -514 91 -91 210 -233 -75 60 243 -950 35 533 168 383

160 40 497 601 -197 -12 286 159 250 48 -116 274 283 -422 469 271

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It is especially noteworthy that all but four sectors have positive (+) Differential Shift Effect results in the analysis. This means that despite the recession that gripped the Province during the early part of the decade, the economy of the Perth Area showed relative buoyancy. During the period 1991 to 1996, the Perth and district economy grew 5.5% while the economy of Ontario shrank by 0.6%. Several sectors stand out. The Accommodation & Food/Beverage Services grew by 625 jobs for a net increase of 34.6%. More significantly the Differential Shift Effect (DSE) was +469 which means the hospitality sector in Perth enjoyed substantial growth despite a general decline in the sector across the rest of Ontario. The Manufacturing Sector grew by 375 jobs for a net increase of 6.6% however the DSE was an impressive +497. Both sectors are highly valued in the local economy because they are exporters (their customers are all outside the region) and they draw new money to the local economy for redistribution through payroll and other purchases of goods and services. Despite employment growth of only 70 jobs, the Construction sector rated an impressive DSE of +601 - the strongest sector in the analysis - meaning that compared to the Province the local industry did remarkably well. During the early 1990s, construction across the province experienced a severe contraction. This was not the case in Perth. However the Construction industry is a following rather than leading industry sector, meaning that it is responsive to growth elsewhere in the economy, but does not itself produce growth. Although it is difficult to target Other Services because of the diversity of businesses included in the sector (it includes everything from Funeral Homes to Automotive Repair and Barber/Hair Styling), employment grew by an impressive 640 jobs for a net increase of 29.1%. The DSE was +271. The bubble graph on the following page attempts to combine several measures in one image: The size of each bubble reflects Total Employment in that sector. The horizontal axis is the Location Quotient for each sector with LQ=1.00 in the centre The vertical axis is the Differential Shift Effect (DSE) showing the relative growth/decline of each industry.

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The graph is divided into four quadrants. Upper Right industries in this quadrant are more concentrated in the community (higher LQ) and have grown (positive Differential Shift Effect) Lower Right industries in this quadrant have a high LQ but are declining based on a negative DSE Upper Left industries in this quadrant are under represented in the community (low LQ) but have exhibited growth over the last five years (positive DSE) Lower Left industries in this quadrant are not only under represented in the community (low LQ) they are declining (a negative DSE).

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Economic Performance Classification System

A friend and colleague, Dr. Emanuel Carvalho is Associate Professor of Economics at the University of Waterloo and assistant director of the Economic Development Program administered by the University of Waterloo on behalf of the Economic Developers Association of Canada. He has developed an Economic Performance Classification System employing both Location Quotient and Shift Share Analysis techniques to help make some sense of an Economic Base Analysis. I call it the Carvalho Scale. This classification system takes into account the concentration (L.Q.) of each industry within the local economy, the overall growth or decline (Industrial Mix Effect) of the industry across the province and the relative growth or decline of the industry (Differential Shift Effect) in the local economy.

Carvalho Scale - Economic Performance Classification System

Classification High 1. Driving 2. Accelerating 3. Rising Medium 4. Evolving 5. Transitional 6. Moderate 7. Promising 8. Yielding 9. Modest Low 10. Challenging 11. Vulnerable 12. Marginal
Location Quotient Industrial Mix Effect Differential Shift Effect

> 1.25 0.75 1.25 < 0.75 > 1.25 0.75 1.25 < 0.75 > 1.25 0.75 1.25 < 0.75 > 1.25 0.75 1.25 < 0.75

Positive Positive Positive Negative Negative Negative Positive Positive Positive Negative Negative Negative

Positive Positive Positive Positive Positive Positive Negative Negative Negative Negative Negative Negative

We have applied Dr. Carvalhos classification system to the economic base analysis for Perth and district and produced the following table. The names Dr. Carvalho assigned to each category in the classification system are still under development, so instead we have used a numerical value for each of the 12 categories, with 1 being the highest economic performance.

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Carvalho Scale Economic Performance Classification - Perth & Area 1991/1996

Industrial Sector High Accommodation & Food Service Other Services Wholesale Trade Education Services Real Estate & Insurance Brokers Medium Agriculture & Related Construction Government Services Manufacturing Forestry, Fishing, Mining, Oil/Gas Retail Trade Finance & Insurance Transportation & Warehousing Health Care & Social Services Low Business Services Communications & Other Utilities Reference: Dr. Emanuel Carvalho University of Waterloo
Classification

2 2 2 2 3 4 4 4 5 5 5 6 8 8 9 11

These numbers reflect the composition of the local economy and growth factors as of 1996. There have been a lot of changes in the intervening six years especially considering the widespread adoption of information technologies in all types of businesses. Nonetheless, it would be rare to see a major shift in the overall direction of the economy without some obvious and significant force acting upon the community. Examples could include a significant new industry locating in the community or the closure or downsizing of a large business. We have not been able to identify any such event in the community since 1996. The economic data from the 2001 census will be released in early 2003. We plan an update of this analysis at that time.

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Recommendations Targeting Perths Economic Development Program

Economic development officers are understandably concerned with all sectors of the local economy, however economic development programs tend to concentrate on those sectors and businesses producing exportable goods and services because they have the greatest impact on the economy. These are sometimes called Basic Industries. For example, most retailers, hairdressers, video rental business and other personal services businesses (sometimes called Non-Basic Industries) exist primarily to serve customers in the immediate market area and therefore are limited in their growth potential by the population of the trade area. They are nonetheless important to the economy because they re-circulate money within the local economy through their payroll and through their purchases of goods and services. On the other hand, businesses with exportable products or services, such as manufacturing, consulting engineering and tourist establishments (which export by attracting customers to the community) inject new money into the local economy. Also they are not restricted by the size of the local market and therefore can grow independently of the local economy. These industries are most often the focus of economic development programs. There can be both Basic and Non-Basic elements in a given sector. For example, a major shopping centre, big box store, antique store or car dealership could be drawing customers from outside the area or could be catering to the needs of tourists. To the degree this happens, they too are exporting or bringing outside revenues into the local economy. The purpose of this plan is to strategically focus community efforts on those sectors offering the greatest growth potential for the community. Tourism Infrastructure We recommend that the first and most significant target for Perths economic development program be the Accommodation sector. In this discussion we draw a distinction between the two pillars of tourism programs: Destination Marketing Tourism Investment Development We believe the economic development office has a significant role to play in the development of new attractions and services in effect attracting investment to build the tourist infrastructure of the community. However we believe the responsibility for marketing the community and its attractions/services to potential visitors is best handled by those businesses benefiting directly from visitor expenditures. They have Page 16

direct control over the product and therefore are in the best position to adjust the promotion program to the intended market. Between 1991 and 1996 there was strong employment growth in the accommodations sector (an increase of 625 jobs representing a 34.6% increase). We have noted however that in spite of the importance of the tourism industry in the Rideau Lakes District, the range of commercial accommodations in Perth (hotel and motel rooms) is surprisingly limited. From casual observation, we believe there is potential for additional rooms in Perth. We envision potential interest in two different styles of accommodation: a highway commercial style of facility in a high visibility location on the Hwy 7 corridor serving travellers, both business and personal, passing through Perth. a destination inn style facility, perhaps capitalising on the heritage architecture of the community, that would be attractive for get away vacations. Both styles should be studied in depth to understand the market demand and potential investment opportunities. We are aware of at least one prospective investor examining the market for additional hotel rooms in Perth and we believe the Town should continue to support and encourage this and other projects as they are brought forward. We are pleased to note that the Town and this prospective investor have jointly undertaken a study looking at the tourism market in Perth and district (the public part of the study) and the feasibility of a proposed destination resort (the private portion of the study). This is an excellent example of a public/private partnership in economic development benefiting both the community and the prospective investor. Once again, from casual observation, it appears that the other component of this sector, the Food & Beverage Services, is well represented in the community. There are a wide variety of restaurants and cafes in town catering to every taste. Manufacturing The Manufacturing sector is the largest employer group in the community (almost 6,000 employees in 1996) and although the Location Quotient shows only normal concentrations (LQ 0.92), the relative growth during the 1991 to 1996 period was extremely strong with a DSE of +497. We recommend that continued growth and development of the Manufacturing Sector be a priority for the Town of Perth, with the primary focus of the Economic Development Program being Business Retention & Expansion (BR&E). Page 17

A priority for the BR&E program should be the foreign-owned enterprises in Perth. More than half the employment in Perths manufacturing sector is in three foreignowned companies, 3M, Brown Shoes and O.M.Y.A. which together account for 810 of the 1560 manufacturing jobs in the community. Recall the 2nd Maxim of Economic Development that states: 70% to 85% of new Foreign Investment is follow-on investment by MNEs (Multi-National Enterprises) already established in Canada. Foreign-owned subsidiaries in the community should be the primary focus of an international business attraction program. The Community Development Officer for the Town of Perth is actively networking with local businesses. We encourage this because it has been proven to be the most effective economic development program initiative. As part of this networking, the Community Development Officer will be seeking every opportunity for the Town of Perth to encourage additional capital investment by foreign-owned firms. The diversity of Perths existing manufacturing businesses makes targeting specific types of manufacturing enterprises more difficult because there is no concentration of core capabilities on which to build. Customer Contact Centres Beginning in the mid-90s a number of companies, led by the banks and financial institutions began establishing dedicated customer contact centres to improve customer services available by telephone. The technique spread rapidly and soon an entirely new industry was born. Ontario boasts of more than 3,000 customer contact centres employing more than 150,000 people, approximately half the Canadian total. Canada has been proven to be very cost competitive and as a result a large number of American companies have moved north of the border, especially in the later part of the last decade. There is a wide variety of customer contact centres, from the low-end telemarketing services to extremely sophisticated technical support services. Many are extensions of large multinational companies for example 3M, Xerox, IBM, Royal Bank, Air Canada. Others are third party contractors providing services to different clients. The range of services provided by customer contact centres can be widely varied, such as hotel reservation services, CAA emergency 800 calls and 1-800-nurse which provides emergency and after-hours medical advise. Wages and salaries in most of these firms are competitive with other sales and service organizations. The more sophisticated (example: technical support centres) offer compensation packages in the mid-$50Ks to $60Ks for skilled personnel. Page 18

Increasingly customer contact centres are seeking locations in smaller communities, where they hope to experience less competition for labour and where the turn-over rates are often much lower. It is recommended the Town of Perth partner with the Provincial marketing and promotional activities of the Ontario Government and Bell Canada entitled Call Ontario, established to attract North American Customer Contact Centres.

Conclusion
During the period 1991 to 1996, while the rest of Ontario was struggling its way out of recession, the Perth Area enjoyed excellent growth with all but five sectors (Forestry, Transportation, Communications & Utilities, Retail and Government) posting increases in employment. Overall the Perth Area economy grew 2,005 additional jobs for a 5.3% growth rate during the period. With the exception of the miscellaneous category Other Services, the Accommodation & Food Services sector posted the largest absolute growth (625 jobs) and one of the highest DSEs at +469. An L.Q. of 0.98 implies that the Perth area has a normal concentration of tourist businesses despite being located in a vacation region. This suggests the sector be targeted as growth pole for the community. Manufacturing is another sector that enjoyed vigorous growth during the 1991/1996 period (an increase of 375 jobs) despite a softening of the sector across the balance of the province. In fact the DSE for manufacturing (+497) is marginally higher than that for the Accommodations sector (+469) and the only reason it did not rank higher in the Carvalho Scale was because the across the province industry was in decline. Similarly, the Manufacturing sector has only normal levels of concentration (L.Q. 0.92) despite the sector being the largest employer in the community. These two sectors alone were responsible for 50% of the job growth (1,000 out of 2,005) in the Perth Area between 1991 and 1996.

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Appendix
Population by Municipality for HRCC Areas of Perth, Smiths Falls & Carleton Place
Municipality Beckwith Township Carleton Place Town Ramsay Township Almonte Town Darling Township Pakenham Township North Crosby Township Westport Village Newboro Village North Burgess Township South Sherbrooke Township Bathurst Township Drummond Township Perth Town Lanark Township Lanark Village Lavant, Dalhousie & North Sherbrooke Township Oso Township Olden Township Kennebec Township Clarendon & Miller Township Palmerston & North & South Cannonto Township North Elmsley Township South Crosby Township Bastard & South Burgess Township Kitley Township South Elmsley Township Wolford Township Merrickville Village Montague Township Smiths Falls Town Total 1991 4,564 7,432 3,624 4,382 470 1,782 968 664 282 1,021 669 2,888 2,771 5,576 1,461 890 1,381 1,361 811 765 473 393 2,833 1,677 2,610 2,191 3,065 1,438 989 3,620 9,439 72,490 1996 5,495 8,450 4,451 4,611 527 2,007 1,097 683 291 1,269 732 3,179 3,185 5,886 1,722 865 1,515 1,413 906 968 545 406 3,018 1,910 2,692 2,461 3,574 1,603 1,027 3,802 9,131 79,421 % Change 16.9% 12.0% 18.6% 5.0% 10.8% 11.2% 11.8% 2.8% 3.1% 19.5% 8.6% 9.2% 13.0% 5.3% 15.2% -2.9% 8.8% 3.7% 10.5% 21.0% 13.2% 3.2% 6.1% 12.2% 3.0% 11.0% 14.2% 10.3% 3.7% 4.8% -3.4% 8.7%

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Labour Force by Major Industry Perth, Smiths Falls, Carleton Place 1991/1996
Industry Sector 1991 Agriculture & Related 1,825 Fishing, Trapping, Forestry & Mining 230 Manufacturing 5,620 Construction 2,785 Transportation & Warehousing 1,435 Communication & Other Utilities 1,190 Wholesale Trade 1,075 Retail Trade 4,860 Finance & Insurance 835 Real Estate & Insurance Brokers 480 Business Services 1,930 Government Services 3,750 Educational Services 2,005 Health Care & Social Services 4,100 Accommodation & Food/Bev. Services 1,805 Other Services 2,195 Total 36,100 Source: HRDC Based on 1991 - 1996 Census 1996 1,870 220 5,995 2,855 1,320 1,080 1,565 4,755 1.005 585 2,045 3,050 2,310 4,185 2,403 2,835 38,105 Change 45 -10 375 70 -115 -110 490 -105 170 105 115 -700 305 85 625 640 2,005 % Change 2.4% 6.3% 2.5% -8.7% -10.2% 31.3% -2.2% 16.9% 17.9% 5.6% -23.0% 13.2% 2.0% 25.7% 22.6% 5.3%

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Labour Force by Major Industry Province of Ontario 1991/1996

Industry Sector 1991 Agriculture & Related 139,880 Fishing, Trapping, Forestry & Mining 50,290 Manufacturing 942,995 Construction 358,890 Transportation & Warehousing 187,830 Communication & Other Utilities 188,630 Wholesale Trade 233,910 Retail Trade 700,920 Finance & Insurance 253,140 Real Estate & Insurance Brokers 100,090 Business Services 367,200 Government Services 411,455 Educational Services 365,230 Health Care & Social Services 457,115 Accommodation & Food/Bev. Services 322,955 Other Services 355,310 Total 5435840 Source: HRDC Based on 1991 - 1996 Census 1996 131,060 39,375 922,570 290,430 198,555 173,040 278,220 662,815 228,880 111,895 411,070 304,640 369,325 513,615 350,945 414,980 5401415 Change -8,820 -10,915 -20,425 -68,460 10,725 -15,590 44,310 -38,105 -24260 11,805 43,870 -106,815 4,095 56,500 27,990 59,670 -34,425 % Change -6.31% -21.70% -2.17% -19.08% 5.71% -8.26% 18.94% -5.44% -9.58% 11.79% 11.95% -25.96% 1.12% 12.36% 8.67% 16.79% -0.63%

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UPDATE
May 15, 2003
With the release of the economic data from the 2001 Census we have been able to update the location quotient calculations with more current information. We have been able to obtain data on the Employment by Industry from 2001 Census for Perth and Lanark County with which we have calculated Location Quotients specifically for Perth compared to both Lanark County and the Province of Ontario. This data will not be directly comparable to the 1996 Location Quotient analysis in the body of the report because it was based on a larger area (Perth, Smiths Falls and Carleton Place). For the updated Shift/Share Analysis we relied on data supplied by Statistics Canada from the Labour Force Survey covering Economic Region 510 less Ottawa. Although this region is substantially larger that the Town of Perth, it was the smallest jurisdiction for which we could obtain comparable, historical data. The updated analysis serves to reinforce the recommendations from the originally analysis focusing on Tourism Development and Manufacturing as priority sectors for the Town of Perth Economic Development Department. Respectfully submitted:

Matthew Fischer, Ec.D. President

182 Willow Ridge Road, RR #3 Ilderton, ON N0M 2A0 Tel: (519) 666-3668 Fax: (519) 666-3670 Email: mfischer@execulink.com

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Location Quotient Analysis - 2001

Perth Compared to Ontario & Lanark
Employment by Industrial Sector
Agriculture, Forestry, Fishing & Hunting Mining, Oil & Gas Utilities Construction Manufacturing Trade Transportation & Warehousing Information & Cultural Industries Finance & Insurance Real Estate & Rental & Leasing Professional, Scientific & Technical Services Management, Administration & Support Educational Services Health Care & Social Services Arts, Entertainment & Recreation Accommodation & Food/Beverage Services Other Services Public Administration Total 2001 Census Data - Total Labout Force 15 years and Over by Industry Ontario 123,675 21,110 46,325 332,255 984,330 950,730 280,150 171,750 292,555 108,890 429,100 264,915 371,200 531,790 121,955 380,055 273,125 308,955 5,992,775 Lanark 935 185 250 2,490 5,010 4,555 1,385 705 715 465 1,965 1,000 1,510 3,710 540 2,125 1,420 2,405 31,370 Perth 20 35 55 135 430 455 100 40 75 15 150 60 135 325 35 260 90 130 2,545 LQ Ontario Ref. 0.38 3.90 2.80 0.96 1.03 1.13 0.84 0.55 0.60 0.32 0.82 0.53 0.86 1.44 0.68 1.61 0.78 0.99 LQ Lanark Ref. 0.26 2.33 2.71 0.67 1.06 1.23 0.89 0.70 1.29 0.40 0.94 0.74 1.10 1.08 0.80 1.51 0.78 0.67 % of Total Perth 0.79% 1.38% 2.16% 5.30% 16.90% 17.88% 3.93% 1.57% 2.95% 0.59% 5.89% 2.36% 5.30% 12.77% 1.38% 10.22% 3.54% 5.11%

Note: Significant Differences in LQ's between Perth/Ontario & Perth/Lanark found in Finance & Insurance, Educational Services, Health Care

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Economic Region 510 less Ottawa

Source: Special Tabulation by Statistics Canada, Labour Statistics Division, Labour Force Survey

Ontario
Employment by Industrial Sector Agriculture & Related Forestry, Fishing, Mining, Oil & Gas Utilities Construction Manufacturing Trade Transportation & Warehousing Finance, Insurance, Real Estate & Leasing Professional, Scientific & Technical Services Management, Administration & Support Educational Services Health Care & Social Services Information, Culture and Recreation Accommodation & Food/Beverage Services Other Services Public Administration Total 1996 105,100 45,700 50,000 261,400 903,700 783,400 243,800 372,400 313,300 180,600 339,800 503,000 231,800 314,600 242,300 289,900 5,180,800 2001 84,700 37,800 49,700 343,300 1,087,600 923,700 276,200 394,500 436,600 249,400 358,100 552,500 299,100 341,600 253,900 274,800 5,962,700

Employment Change -20,400 -7,900 -300 81,900 183,900 140,300 32,400 22,100 123,300 68,800 18,300 49,500 67,300 27,000 11,600 -15,100 781,900 Employment Change 0

Per Cent Change -19.41% -17.29% -0.60% 31.33% 20.35% 17.91% 13.29% 5.93% 39.36% 38.10% 5.39% 9.84% 29.03% 8.58% 4.79% -5.21% 15.09% Per Cent Change 0.00%

Economic Region 510 less Ottawa

Employment by Industrial Sector Agriculture & Related Forestry, Fishing, Mining, Oil & Gas Utilities Construction Manufacturing Trade 1996 5,400 2001 5,400

7,800 24,800 17,600

11,900 28,500 19,300

4,100 3,700 1,700

52.56% 14.92% 9.66%

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Transportation & Warehousing Finance, Insurance, Real Estate & Leasing Professional, Scientific & Technical Services Management, Administration & Support Educational Services Health Care & Social Services Information, Culture and Recreation Accommodation & Food/Beverage Services Other Services Public Administration Total

8,000 5,600 3,700 3,700 8,100 16,900 5,500 8,200 6,700 10,500 133,900

7,600 4,400 7,100 5,200 7,900 17,200 4,200 9,100 7,300 8,800 145,100

-400 -1,200 3,400 1,500 -200 300 -1,300 900 600 -1,700 11,200

-5.00% -21.43% 91.89% 40.54% -2.47% 1.78% -23.64% 10.98% 8.96% -16.19% 8.36%

Shift Share Analysis

Employment by Industrial Sector Agriculture & Related Forestry, Fishing, Mining, Oil & Gas Utilities Construction Manufacturing Trade Transportation & Warehousing Finance, Insurance, Real Estate & Leasing Professional, Scientific & Technical Services Management, Administration & Support Educational Services Health Care & Social Services Information, Culture and Recreation Accommodation & Food/Beverage Services Other Services Public Administration

Employment Change 0 0 0 4,100 3,700 1,700 -400 -1,200 3,400 1,500 -200 300 -1,300 900 600 -1,700

Reference Area Growth Effect 815 0 0 1,177 3,743 2,656 1,207 845 558 558 1,222 2,551 830 1,238 1,011 1,585

Industrial Mix Effect -1,863 0 0 1,267 1,304 496 -144 -513 898 851 -786 -887 767 -534 -690 -2,132

Differential Shift Effect 1,048

1,656 -1,347 -1,452 -1,463 -1,532 1,944 90 -636 -1,363 -2,897 196 279 -1,153

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