CREDIT: DAVID MCNEW
The declining cost of crude oil might encourage our neighbours south of the border, but the dollar isn't done dropping.

As the second semester gets underway and graduation looms ever closer, the job market is looking bright for graduates in Ontario. The continuing decline of the Canadian dollar relative to our American counterpart points to an increase in manufacturing and value-added jobs for the province and the country at large. The results may not be immediate, but a comparatively low Canadian dollar means that it will be cheaper for Americans to purchase goods and services from north of the border.

Despite the ongoing closures of food processing facilities – in particular Heinz’s and Kellogg’s, which have both pulled out of southwestern Ontario – there will be a major uptick in contracts for local manufacturers. Food processing is not a good indicator of the broader sector’s performance, because there are different elements that come into play. Kellogg’s attributed its closure to an ongoing decline in the sale of breakfast cereals, not exorbitant labour or environmental costs. Thanks to the North American Agreement on Labour Co-operation, Canadian businesses that deal in consultation services will reap the benefits of a weak Canadian dollar as its expertise become increasingly cheaper relative to the alternative.

Although the shift towards globalization has affected manufacturing in all of North America, the economic impact on Canada has been catastrophic for the sector. The decline was less impactful in the United States, where the cost of labour is considerably cheaper and there is a higher value placed on domestic manufacturing and production.

As a result, there is a portion of the manufacturing sector that could save money by outsourcing to factories north of the border if the dollar disparity remains significant enough. That increase in economic activity will lead to lower unemployment rates, a major factor in the federal election expected to take place in the fall.

A greater shift is taking place in the country in addition to the economic movement caused by the growing currency disparity with the United States. As the value of crude oil continues to decline, the National Post reported that some companies are planning far-reaching layoffs, including Civeo Corp, which is planning to lay off 30 per cent of its employees in the Canadian oil fields. The thousands of Canadians who moved out west, lured by the promise of high pay, will be returning to their home provinces to seek work.

The ongoing free fall of the Canadian dollar is in no small part due to the international crude oil market. With the Bank of Canada unwilling to adjust the rate of inflation and the Organization of Petroleum Exporting Countries refusing to cap the increase in oil production from the American fracking operations, the Canadian dollar isn’t done dropping yet.

The good news is that an ongoing decline in the cost of crude oil will yield an increase in travel and a little relief for your wallet at the pumps while simultaneously buoying the Canadian economy as our goods and services become cheaper across the border. The bad news is that the collapse of the Russian currency and the volatility of ours are both caused by a tiny organization that has its hand on the world’s crude oil valve. Now that’s real power.
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