February 14, 2025
The Empire Club of Canada Presents
The Ontario Chamber of Commerce 2025 Economic Outlook and Business Confidence Analysis
Chairperson: Jenna Donelson, President, Board of Directors, Empire Club of Canada
Moderator
Amber Kanwar, Host, In The Money with Amber Kanwar
Panellists
David Lebeter, President and CEO, Hydro One Networks Inc.
Jennifer Lee, Senior Economist and Managing Director, BMO Capital Markets Economics
Flavio Volpe, President, APMA
Head Table Guests
Daniel Tisch, President & CEO, Ontario Chamber of Commerce (OCC)
Welcome Address by Jenna Donelson, President, Board of Directors, Empire Club of Canada
Good afternoon, everyone. Welcome to the Empire Club of Canada. My name is Jenna Donelson. I’m your host for today’s event, and chair of the board of the Empire Club.
To formally begin, I want to acknowledge that we are gathering on the Traditional and Treaty Lands of the Mississaugas of the Credit, and the homelands of the Anishinaabe, the Haudenosaunee, and the Wendat Peoples. I encourage you all to learn more about the Traditional Territory on which you live and work.
I would also like to begin today’s event by recognizing our sponsors. The Empire Club is a non-profit organization. Our sponsors generously support the club. They make events like this possible. And for those of you online, they make your viewing complimentary. So, please join me in offering a big thank you to our VIP Reception Sponsor, Waste Connections of Canada. And thank you, as well, to our Supporting Sponsors, the Association of Consulting Engineering Companies of Ontario, and Halton Industry Education Council, apprenticesearch.com. Thank you. We also deeply appreciate the ongoing support of our Lead Season Sponsors, Bruce Power, and Hydro One, and our VIP Reception Season Sponsors, Waste Connection, and Ellis Don. Thank you all. I’d also like to thank our Media Partner, the Toronto Star, and our AV partner, Bespoke Audio Visual. Thank you. And last, but not least, thank you to our Event Partner, the Ontario Chamber of Commerce. We couldn’t do it without you today. Thank you.
If you have a question for our speakers, please scan the QR code found in your program. For those of you online, use the Q&A function, if you want to ask a question. For those of you that are online, if you require technical assistance, use the chat feature, and our staff will be there to help you.
The Empire Club has been the place where important conversations that shape our province and our country have been happening, since 1903. Today, we’re proud to once again join forces with the Ontario Chamber of Commerce. Some of you may know that the Chamber was established in 1911, so I like to think of them as the new kid on the block. But all jokes aside, today’s conversation is a vital part of the broader discussions we’re having as a province, and a country. And certainly, it couldn’t be more timely.
Many of you in this room were here when we hosted Daniel Tisch, last year, then the new President and CEO of the Ontario Chamber. He was here to launch the Chamber’s 2024 Ontario Economic Report. Daniel, last year at this podium, you laid out your goal to offer a little bit of balance between the stark honesty that is required of this moment, and the hope we need to navigate towards a better future. I think those words may even be more salient a year later. And certainly, the work to strike that balance, even more important. With trade wars looming on the horizon, I struggle to think of a more critical time, to not only forecast the future, but actively affect change, and correct course.
Fortunately for us, today’s panel represents some of Ontario’s most influential thought leaders, across critical economic sectors. Many of them are working hard behind the scenes, as part of Team Canada, strengthening Ontario’s economy, and Canada’s economy, and we’re lucky that they are here today.
So, to lead our conversation, it’s my pleasure to introduce Daniel Tisch. Daniel has all—come on up, Daniel. I’ve got a brief bio. I think everyone in this room knows that you already have a wealth of industry experience and leadership, before taking the helm of the chamber, in 2024. From building up Argyle Communications, to holding senior roles in the federal government, over his 30-year career, Daniel has given valuable insights to CEOs, boards, and government leaders. And I’m delighted that you’re here today, Daniel, to offer those insights on the Ontario Chamber’s 2025 Economic Report. Thank you for coming to provide us with a clear-eyed view of Ontario’s economic landscape. Will you please all join me in welcoming to the podium, Daniel Tisch.
Daniel Tisch, President & CEO, Ontario Chamber of Commerce (OCC)
Well, thank you so much, Jenna, not just for your introduction, but for your leadership, and your partnership with us, with the Ontario Chamber team. And thank you, ladies and gentlemen, and members of the Ontario Chamber network, many of whom are represented here today, as we launch, as we unveil, the 2025 Ontario Economic Report.
Now, many people have called the last six weeks a wake-up call for Ontario, and for Canada. It’s a time of urgency, and it’s a time of opportunity. And that’s why I’m so grateful to all of those who are stepping up to lead, in this hour of need, like our Event Partner, our Event Sponsors, like those who’ve made the Ontario Economic Report possible, like our Lead Partner, Hydro One; our Presenting Partner, Bruce Power; our Research Partners, BMO and Léger; and of course, our incredible team at the Ontario Chamber of Commerce, who’ve pivoted so magnificently, since January began. We knew there’d be an Ontario election, at some point this year. We knew there would be likely a federal leadership change. We knew that there would likely be some sort of issue with the new U.S. President. But it all happened within a few weeks, and I’m so proud of this team. So, a hand, please, to our sponsors, and everybody who’s been part of this success. Thank you.
So, yesterday, I woke up in Washington, D.C., after an intense day-and-a-half with Canada’s premiers, and the leaders of our new Ontario Business and Trade Leadership Coalition, including my friend David Lebeter, here, as we met with our U.S. counterparts. And so, I took an Uber to the airport. From the lounge, I joined an update call with the leaders of our 150 local chambers, across Ontario. And then, I boarded the plane. On the plane, I found myself sitting near other Ontario businesspeople, who’d made the trip, and we talked a little bit about the mission. And as I settled in, I reflected a little bit on the conversations, all these conversations—not just in the last 36 hours, but from the last six weeks. And of course, I’ll admit, I felt some anxiety. How can we not, given what we’re facing, and what our economy is facing, and our businesses are facing, and our workers are facing? But I also felt some optimism. And that’s because I’ve never seen, in all the years that I’ve been doing this kind of work, a feeling quite like this. I’ve never seen more urgency, or more energy, in our business community. I’ve never seen political leaders more responsive to the things that we have to say. And I’ve never seen a greater determination to turn talk into action.
And as we prepare for leadership change in Canada, and we grapple with a shocking economic threat, following leadership change in the United States, our members, and our chambers, we uniquely understand the stakes involved for every business, for every worker, for every community. And we also know what Ontario and Canada need to do, to become more resilient today, and more competitive tomorrow. Because that’s what the Ontario Economic Report tells us. And as always, we have three chapters in the report, right? We have the Business Confidence Survey, we have an analysis of Ontario’s Economic Outlook, and then we have policy recommendations from the Ontario Chamber.
So, let’s begin with how Ontario businesses are feeling, today. Now, in December, when we reviewed the research, we saw some glimmers of hope, as you see on the screen, here. Because business confidence in the economy had grown to 26%. Now, that’s low, by historical standards, but it’s up from the nadir of 13%, a year ago. And the other thing that was kind of exciting is that close to half of the businesses surveyed have confidence in their own prospects. They expect to grow, in 2025, because they see stronger consumer demand, they see technological innovation benefiting them, and they see lower inflation. All good things.
But, here’s the but. We decided that we would ask the question again last week, in the face of U.S. tariffs. And the bad news is that when tariffs are on the table, business confidence drops to 15%, almost erasing the gains that Ontario’s made in the last year. And 67% expect U.S. tariffs to have a negative impact on their own business.
Now, one thing that’s not on this slide, but may interest you nonetheless, is that only 6% of Ontario businesses surveyed last week said they would consider relocating their business to the U.S., due to tariffs. Take that, President Trump. Yeah, you can applaud.
Before tariffs, the economic forecast for 2025 was for growth of 2.1%. After tariffs, our careful analysis tells us, we have no idea. Perhaps, Jennifer Lee from BMO can offer some insights on that question, in a few minutes. It’s a hard job. And that’s why the cover of this year’s Ontario Economic Report has a sticker on it, that says, “Ontario Economy: Fragile, Handle with Care.” Because fundamentally, it is a tale of two tomorrows, one with tariffs, and one without. And so, if tariffs are the difference between rising and plunging business confidence, which drives investment decisions, which drives employment decisions, how do we get our heads around this threat?
So, here’s my perspective, after many long discussions with Americans—not just this week, but going back to last summer, in conversations that I’ve been having with the CEOs of all of the eight U.S. state chambers that border Ontario. And my conclusion, or one of my conclusions from all this is that the tariff threat is not really about the border. I mean, the idea that Canada, and the Canadian border, is a threat to U.S. security, is preposterous. If anything, it’s the other way around. These are excuses, because the White House can’t impose tariffs, unless it can claim that there’s a national emergency.
So, it’s not about economic facts, or logic. I mean, seriously, do you think this guy really believes that a trade deficit is a subsidy, rather than his country producing less than it consumes? It’s like if I was to go to Tim Hortons, and order too many donuts, and then call a press conference, and then go out and say, you know, “We’ve been subsidizing the donut shop for too long. Mr. Tim Horton has been treating us very badly.” That’s kind of what it’s like, isn’t it? Right? Is it about reshoring investment in America? Well, maybe. Right? But that would take years. And, you know, tariffs raise prices, counter-tariffs hurt exports. And when America doesn’t have the jobs—sorry, the workers, to fill all of its manufacturing jobs today, that’s a problem. And I don’t know about you, but I think it just might be a problem for investors, who might think twice, when the Head of State will ignore the rule of law, and renege on an agreement that he himself signed. It’s not putting America first; it’s more likely putting North America last.
So, in Washington this week—David, you can, when you’re on the panel, you can tell us if you found something different—but as far as I know, not one of us found an American of any political stripe, who thought tariffs on Canada were a good idea. As one US chamber leader said, “Tariffs are a tax paid by Americans, at the worst possible time.” So, how do we explain it? I did meet one very strong supporter of President Trump, who assured me this was all very strategic—even the 51st state stuff. Right? He said it’s a negotiating tactic, to get Canada and Mexico to the table. So, I said, “Well, don’t you think the US President could get Canada and Mexico to the table, without threats that hurt all three countries, and their economies? What’s the end game?” Well, he smiled, and he admitted he didn’t know. Just a better deal for America.
But the threat is really, in my view, fundamentally about a narrative of the US being invaded by dangerous people, and surrounded by countries that aren’t customers; they’re trying to rip America off. And we need a counter-narrative, that’s just as compelling. One about Canada as a reliable partner, with whom America is immeasurably stronger. Because there are no winners in a trade war, there are only losers. Business owners fear for their livelihoods, workers fear for their jobs.
Now, I’m cautiously optimistic, coming back from Washington, that Canada and the US will come to a deal. But here’s the problem: so much of the damage has already been done. In the last three months, essential investments in manufacturing capacity, and productivity, and technology, in training, they’ve been deferred, or they’ve been denied. This is what we hear, from our members. And the damage to the reputation of US products and services in Canada, America’s biggest customer, that will take years to undo.
So, what do we do next? If there’s one thing I’ve heard from businesses and chambers, since last week, is that we don’t want to wake up to another Groundhog Day, as we did last weekend, when the whole country waited to learn whether we would be spared economic disaster. It’s a moment for Ontario and Canada to look ourselves in the mirror, to shore up our strengths, and to address our vulnerabilities. It’s going to get rough. We have to get buff. It’s a moment when we have to prioritize competitiveness over complacency, and diversification over dependence on our largest market.
And that brings me to the recommendations in the Ontario Economic Report—which also, by the way, mirror those in Ontario Competes, our election campaign platform. And we have four imperatives: a competitive business and trade environment, qualified people and diverse talent, healthy and sustainable communities, and growth-enabling infrastructure, the building blocks of Ontario’s competitiveness.
Now, some of these things are particularly urgent. In recent weeks, we brought together the leaders, the CEOs, of all of Canada’s provincial and territorial chambers, in a unanimous call for the premiers to dismantle interprovincial trade barriers, once and for all. Now, this is not going to grab election headlines. People are understandably more focused on jobs, affordability, healthcare, education, public safety; of course they are. But what would this mean, if we brought these barriers down? Let’s make it real. It means more choice, and lower prices for consumers, it means new opportunities for businesses to sell their products and services across the country, it means jobs for talented people where the demand is greatest, and it means more tax revenue for government, to provide support to business in transition, and services that Ontarians need.
Second, we need to triage those businesses and industries that are most at risk right now, to make their protection a priority in trade negotiations, and in business support programs. Because when a manufacturer’s footprint is gone, it’s like that Bruce Springsteen song. These jobs are going, boys, and they ain’t coming back to your hometown.
Third, we must keep making Ontario’s tax and regulatory systems more competitive. Taxes remain, according to our report, the single biggest priority still of Ontario businesses. But here’s what’s interesting: once you’re past taxes, their greatest concerns are for their people and for their communities.
And so, my fourth, fifth, and sixth points match their priorities. Businesses want more affordable housing, which requires not just investments, not just money, but also legislative and regulatory changes, to enable gentle densification. Businesses demand that we improve the capacity of our health system. And we welcome the commitment to connect two million more people to a family doctor, or health team. That’s good news. But Ontario doctors warn that the need will be double that, by 2027. And businesses need and rightly demand more action, to address the substance use crisis that is facing so many Ontario communities.
Close behind health, they want a commitment to secure Ontario’s talent pipeline. And let me say this, to all the party leaders: Ontario should aspire to have the best-funded post-secondary system in Canada, not the worst. That’s absolutely essential. I mean, it is reasonable and right that we’re now talking about spending billions of dollars to support businesses and workers, who might be affected by U.S. tariffs. But it would be ridiculous and wrong for us to spend billions subsidizing the present, while neglecting the future.
My seventh and final point is about infrastructure. Now, we welcome the huge infrastructure investments of recent years, and the commitments we’ve seen, right? In transit, in broadband, in clean energy, in nuclear energy, in electrification, in the EV supply chain, and in housing-enabling infrastructure. But both in Ontario, and beyond Ontario, this country simply must get better, much better, at getting big things built, and big things done. So, that means unlocking the critical minerals potential of our North, in true partnership with Indigenous people, Nations, and communities. It also means opening new pathways, so that our resources don’t just flow smoothly from north to south, but they also go from east to west, and then overseas.
So, as we do all this—which we can, and which we must—we must never forget the values that make us unique, the values that define Canada. When I was a small boy, I came here with my parents. And we arrived with very little, but this province and this country enabled us to fulfill our dreams. I know many people here today don’t come from privileged backgrounds. But I think it’s fair to say, as we sit here together today, and enjoy this beautiful lunch, in this beautiful city, in the heart of the financial district, we all now enjoy at least some form of privilege.
And you know, in business and political circles today, there’s a lot of chatter about how Diversity, Equity, and Inclusion don’t matter anymore. Well, the data from Ontario businesses in our report tell us, businesses don’t agree. DEI as a business priority is down very slightly, 2% from a year ago, right? Largely, because of economic reasons. But interestingly, the percentage of businesses with a formal DEI strategy is actually up 5%.
So, let me ask you, here’s a little poll we’re going to do, before we wrap up. How many of you work for, or lead organizations, that have made some form of DEI commitment, in the last five years? Put your hands up, please—keep them up, keep them up. Okay, so that’s a lot of hands. All right. Keep your hands up, keep your hands up. How many did it, at least in part, because it was the right thing to do? Okay. It still is. Keep those hands up. How many did it, not just because it was the right thing to do, but because it was the smart thing to do? Well, you know what? It still is.
This isn’t a time to back away from diversity; it is a time to double down. Because as Canada plots its course in a more competitive world, this commitment, your commitment, is one of our greatest competitive advantages. Because Ontario remains an immensely attractive destination for business investment, and global talent. And yes, our productivity problem is real. It’s very real. But it’s also reversible, with the right policies, and with the right strategy. But you and I need to work together, and we need to act together. That’s why it has never been more important, wherever you are in the province, that you’re involved in your local Chamber of Commerce, and I hope in the Ontario Chamber of Commerce, as well.
I’ll close with a final reflection on my return, about my return from Washington, yesterday. So, as I arrived at Pearson Airport, I looked at the people around me. I looked at the maple leaves, and the products in the stores. And I was reminded of something else that’s happened, in the last six weeks. As a country, Canadians are more united than we’ve been in a very long time. Right? There’s a reason why this hat [Which reads: Canada’s Not For Sale] sold 50,000 copies in one day, right? Because we’re more determined to defend our democracy, and more determined to safeguard our sovereignty. So, we have to make the most of this moment. These times are going to test us. They’ll test our resolve, and our relationships. They’ll test our courage, and our conviction. But please, let’s not let our challenges define us. Instead, let’s define the solutions together. It’s okay to feel anxiety, as we deal with uncertainty. But it’s possible to feel two things at once. We can also feel optimism, as we consider our opportunity. Because when all is uncertain, anything becomes possible. Together, let’s make prosperity possible. Thank you so much, for joining us today.
Jenna Donelson
Thank you, Daniel, for that fantastic speech, and for laying the groundwork for our conversation. I’m going to invite our panellists to come up on the stage, while I do a brief introduction of all of them. You all know in this room, David Lebeter, President and CEO of Hydro One Networks. He’s a seasoned leader, with more than 40 years of experience in the utility and forestry sectors. He’s known for improving safety, productivity, and customer engagement across Hydro One. Join me, in welcoming David.
We also have Jennifer Lee, Senior Economist and Managing Director at BMO Capital Markets Economics. She is renowned for her incisive analysis of the U.S. economy, and global financial markets, and a top forecaster in the euro area, and British pound. Welcome, Jennifer.
I’m so delighted that we also have Flavio Volpe, President of the Automotive Parts Manufacturers Association. He’s been a pivotal figure in the KUSMA negotiations, and the creation of Project Aero. He is a member of the Order of Canada, and also, my Empire Club board colleague. Welcome, Flavio.
And finally, moderating today’s panel is Amber Kanwar, host of “In the Money, with Amber Kanwar,” and a veteran business journalist, with nearly 15 years of experience covering financial markets on BNN Bloomberg. Please join me, in welcoming Amber to the stage. Over to you, Amber.
Amber Kanwar, Host, In The Money with Amber Kanwar
Well, thank you, everybody, for being here, and for that warm introduction. I was going to start by having everybody do their best Donald Trump impression, but I think we know that the winner is Dan on that. So, let’s just get right into it. Jennifer, it’s your job to forecast, and tell us what is the economy going to do in 2025. That’s a hard job, in any year. I imagine there’s so many variables. How are you managing this insane time on the desk?
Jennifer Lee, Senior Economist and Managing Director, BMO Capital Markets Economics
So, great question, and thank you very much, very honoured to be here today. So, I was saying to one of our economists yesterday that, you know when times are bad, when we are in such demand. Everyone’s out of the office almost every day, giving presentations, and meetings, and having discussions. But it’s not easy. Can I just tell you what happened, like, a couple of weekends ago?
Amber Kanwar
Please, yes.
Jennifer Lee
We thought we were going to be hit with that blanket tariff, 25% tariff on all goods, ex-energy, 10% on energy. So, we spent the weekend, literally, like, in front of the TV, we were on Teams—I didn’t want to get on video, because I look like hell. But so we’re talking about what is going to happen. How are we going to forecast this very uncertain environment? And it’s almost impossible. So, when Daniel was talking about what’s going to happen, I was like, “I have no idea, no clue.” But you have to make assumptions. But just to give you an idea, we had, before Friday, like on Friday night, we had 1.9% growth, just under 2% growth for Canadian GDP, for this year. And when we signed off on Sunday evening, or late afternoon, we had it at zero. So, basically, all the growth, if we had had that 25% tariff on everything ex-energy put on February 4th, then we would have had zero growth, probably recession. And then we revised it, after we got that, you know, 30-day reprieve, which I’m grateful for, but it brings us to, I think it’s March 4th. So, we’ll have to see what happens, whether or not it’s going to actually be implemented, you know, whether or not they’re going to put on the next phase, the 25% tariff on steel and aluminum.
And by the way, if anyone’s on the internet, you can just let me know what the President’s going to say. He’s got a press conference at one o’clock, now, and he’s going to talk about reciprocal tariffs. And I just want to know what’s he going to say, and when it’s going to happen. So, very difficult, very challenging. It makes life very interesting, but maybe not in the best way. So, I will take some boring, once in a while, so.
Amber Kanwar
Yeah. I think we all will. And yeah, let’s do some live time analysis. If anybody does see those tariffs come down, just feel free to shout them out. From the spreadsheets to the streets, Flavio, you see how this—you’re the streets. If that wasn’t clear, Flavio’s the streets. It doesn’t matter, I guess, right? If it’s implemented, or if it’s not implemented, or we get a one-month reprieve; it creates immediate uncertainty, decisions have to be made. What are your constituents doing?
Flavio Volpe, President, APMA
Well, I think they’re doing what everybody else is doing, right? We’re watching the show unfold in real time. You try normally, in this scenario, and even Trump 1.0, you say let it bubble, and let’s see what the objectives are, here. We don’t have that advantage yet, because I think yesterday, we had three different tariff proclamations. And I don’t know what reciprocal tariffs mean, if we don’t have a first set of tariffs—so, I’m not sure he does either. But the net effect of what he’s doing is causing for investments that haven’t had a shovel put in place yet. If you’ve got the luxury of time, you’re pausing.
But I will say that I’m talking to a lot of business leaders who are saying, it’s not so easy to just say those investments are safer on the inside of the American borders. The net effect of what he’s talking about is a general sales tax, that is going to cause inflationary pressures in that market. If he’s going to cut himself off from the steel, and aluminum, and nickel, and uranium, and potash, and everything else, that’s also not a great place to be investing right now. So, I know that we sit here, and we worry, because these are unprecedented exhortations by the leader of the free world. In the U.S., I’m sitting with Brad Harker, from the U.S. Consulate, and we talk all the time—I did tell him I was hot mic’d, so don’t say anything silly—but in the U.S., they’re dealing with an unprecedented constitutional crisis. You’ve got the Executive Branch trying to exert dominion over the Judicial Branch. That’s not good for business. You’ve got Executive Orders being written by staff that roll into congressional authority. I think that his next set of EOs is going to declare, he’s going to tell all the kids that Santa Claus isn’t real—sorry, if anybody’s in the room. So, it’s not all roses, right? You know, you’re sitting there, and you’ve got a return on expectation. The U.S. doesn’t look pretty right now, either.
Amber Kanwar
Jennifer, did you want to hop in on that?
Jennifer Lee
I was just thinking about, like…
Flavio Volpe
Santa Claus?
Jennifer Lee
…not only the, I’ve got to deal with that. He’s also, you know, pontificating on the Federal Reserve. You know, the Fed is supposed to be a very independent, you know, authority. And I believe I heard him say, a few weeks ago, I was listening to Fox News, and he said, “I know more about the interest rates than anybody on the Federal Reserve, or the Board of Governors,” which is kind of scary. So, that’s one place you don’t want to go. A lot of things are, you know, grey right now, but that’s one area you do not want to be interfering in. And that’s one area that concerns me a lot.
Amber Kanwar
David, how do you think about this? Because I’ve been on a lot of these panels, and you were on the ground, you were in Washington. Is that right?
David Lebeter, President and CEO, Hydro One Networks Inc
Correct.
Amber Kanwar
So, we can all say, intellectually, this doesn’t make sense. But it’s still happening. You’re a business leader. You’re in those, you know, discussions, communicating it doesn’t make sense. I’m assuming people say to you, “Yeah, we know, it doesn’t make sense.” But what do you do? What do you see as the path forward?
David Lebeter
Well, first of all, I agree with my other panellists. It’s unprecedented times. It’s a time to be concerned. But I’d also reminds people that this country and this province has been in bad places before. And we’ve always come through, and we’ve risen up through the other end, we’ve been stronger than we were, when it happened. And so, maybe, to add a little bit of optimism to the room, we can take this crisis, and turn it into an opportunity. And what it requires is business leaders to keep a cool head, stay focused, do what we can, to get voices south of the border arguing in our behalf. Because that’s where the change will come. If we can get them, our customers, our suppliers, through associations, get them. So, stay calm, work on that. And then double down on what we were already trying to do, in our country, which is, how do we improve our productivity? How do we make it easier for foreign companies to invest, and foreign dollars to flow into Canada? How do we build on what we have, which is a tremendous wealth of natural resources, a very diverse population, a very skilled and talented population. How do we build on that, and use this opportunity to drive forward and emerge stronger? So, it’s, on one hand, we have to be afraid, we have to pay attention, we have to do what we can. But on the other hand, let’s not waste this crisis; let’s turn it into an opportunity for us. So, I have a bit of optimism, as well.
Amber Kanwar
I know economists—and I think your colleague, Jennifer, Doug Porter, said I would vote for a productivity candidate any time. It’s just a tough thing to campaign on. But maybe now is the time where Canada does get serious about its productivity. You know the numbers. You know, Canada’s productivity has diverged and lagged from that of the U.S.
Jennifer Lee
I’m going to use a very scientific term, so maybe everyone should write this down: productivity blows, right now. I mean, I hate to say this, but it does. So, like everyone’s saying, this is a great time to have the tough conversations. First of all, we have to have our election, right? So, get parliament back, you know, we’re prorogued until, is it March 24th? I can’t remember now. Get everyone back, have this election, have a leader installed, and figure out how we’re going to fix this. I mean, it’s like everyone’s saying—I can’t remember who said this, a long time ago, but, you know, why let a good crisis go to waste, right?
So, this is a time, again, to have the tough conversations, start making—and this is one issue that is also worrying, and I hate to be the Eeyore on the stage here—but, you know, you’ve got all this uncertainty, confidence has been shot, you know, consumers and businesses, you’re seeing a lot of capital flows basically stop coming in. Businesses, who is going to invest in this kind of environment, when you have no idea what is going to happen? I’m going to quote, I think it was the Citadel CEO yesterday, was basically complaining, and speaking very loudly about all these issues. And he said, it’s not possible for multinational corporations to invest 5, 10, or 15, 20 years down the road, when there is so much uncertainty. So, we need something, and this is what is happening. And we don’t want—we need tax cuts, probably, you know? Corporate tax cuts. Things that will get businesses to invest in things to make us better, and faster.
Amber Kanwar
Well, and so maybe, then, we need leadership. We need to know what the leadership is going to be at the federal level, and at the provincial level, and how that’s going to shake out in the U.S. And Flavio, on the very practical work, you know, we’re in this crisis, in the midst of sort of a political uncertainty in our own country. Do you feel like it’s getting enough attention—it gets enough lip service. But is this political, you know, rankling in Ontario, and in Canada, making it difficult to come together, turn this into an opportunity?
Flavio Volpe
The crisis that we have was brought to our doorstep, and the psychology of that is important. We didn’t come, we didn’t rise to the occasion productivity gap—and by the way, in automotive, there isn’t one, in Canada—we didn’t rise to the occasion, we didn’t look at the metrics, and the math, and say we need to do better. This bomb went off. So, we’re all reacting to the bomb. And what happens there is, at first ,you get hit with the noise and the shockwave, and then you kind of do an inventory of, are we still here? And then you say, well, let me take this opportunity, while we’re fixing things, can we build them differently?
I’m on the Canada-US, the Prime Minister’s Canada-US Council. We did this Canada-US Economic Summit—I see some of the people here in the room that were there last Friday. First question everybody asked me was, was it worth it? Was it worth it? The conversations that we had at tables and breakout sessions—I don’t mind going behind a veil, on a few of these things—I sat at a table with the head of a steel company, head of a cement company, head of the Federation of Canadian Municipalities, head of an airline, head of a company, making the planes that that airline uses, and then the head of public policy at one of the biggest universities in this country. And we said, I guess, I was supposed to chair that, “Nobody wants to talk about cars; what do you want to talk about?” They said, well, if the federal government in the US, like if Donald Trump is writing EOs that invokes special federal powers that come from declaring an emergency, in that piece of legislation, that allows him to overwhelm the arguments, couldn’t we use—is Canadian federal legislation built the same way? That we can say, on trade-enabling infrastructure, or practical opportunities that we talk about, that never go anywhere, like, Bloomberg says we’re the number one supply chain in the world, for critical minerals. And yet, when I talk to Ford Motor Company, they go, when can I get the lithium? I say, I don’t know.
So, couldn’t we turn around and say, look, we’re going to declare five of these projects, whatever arbitrary number, and say, we’re going to deliver critical minerals in eight years, or in ten years. And now, the approval processes are consecutive; can we make some of those concurrent? We’ve got to consult with municipalities, and First Nations, and we’ll never be able to get through that—well, unless we want to. And what we said, in that table, we said the processing capacity in the world, 85% of the processing capacity in the world for that stuff is in China. So, if you mine it, you’ve got to send it over there, and then it comes back. There’s zero capacity in the U.S.
Couldn’t we tell Washington, in all of that spectrum—Democrat, Republican, MAGA, extreme left—say, you don’t have to send your critical minerals there; you can send them here. We’ll spend billions on the processing, as a national project. We’ll take concurrent processes, and make them—sorry, consecutive processes, and make them concurrent. We’ll enable steel companies and cement companies to, we’ll favour the alloys that they make, or the types of cement that they make, in federal procurement. And we’ll say, screw the WTO on rules, on matters of national interest. And then, say to the Americans—well, first, you say to the municipalities, and the Indigenous communities, you don’t have to negotiate with us; you’re in for five points, or whatever number it is. Get them in on the equity play, right at the beginning. Then say to the Americans, okay, we’ve set something up here for you. You can process locally, you can own the minerals there, we’ll give you first, a shot at it. But what we don’t have is a treasury heft to pay for the extraction and the processing, and we don’t have the market, a scale market to absorb it. You do. Here’s our grand promise: get the approvals done because it’s a national emergency, and we’ll do the processing. That’s our investment.
Now, that idea might go like that balloon, that gets stuck there, at the corner there.
Amber Kanwar
Oh, yeah.
Flavio Volpe
The question of leadership, in this country, as I’ve been looking at that blue balloon the whole time, saying this is an analogy…
Amber Kanwar
I thought you put it there for the metaphor.
Flavio Volpe
That’s March 9th, okay? The prime minister that set that conference up is gone March 9th. The next prime minister, he or she will be sworn in on March 15th. They’ll show up back in the house on the 24th. They may not even go. They might walk across street to Rideau Hall. Who does the follow up? And is it Ron Bedard at Dofasco? Is it Flavio Volpe at APMA? We don’t own those processes, but we’re all in. But can we define those projects? Do we have the leadership, that enables that thinking? Talking to Giles Gherson here, somewhere, do we have the legislation that allows that? All of that is what a practical national effort on moving the needle is. I bet, in that room, there was 20 conversations kind of like that. I worry that we wasted it, if we don’t have a follow up. I got my next council meeting tomorrow, and we’ll be like, “What’s next?”
Amber Kanwar
I’d love for you to pick up on that point, David. That the solutions are there.
David Lebeter
Well, if you think about, you know, environmental processing, for example, it’s a very linear process—environmental approvals, I should say. If we were to make that a parallel process, and if we were to standardize between the different provinces, and if we could remove the duplication that the federal agencies imply, in the provincial jurisdictions, all of a sudden, now you can move through that whole process much more quickly. And it enables anyone who wants to make an investment, whether it’s foreign investment, or Canadian investor, to have more certainty. The quicker they can get their project built and processing, producing the product, the more certainty they have.
And I agree with your comments, Flavio, about the uncertainty. America’s not a good place to invest now either. Because when you see the rule of law being trampled on, and you see rules changing at the whim of one person, why would you make billion-dollar decisions, multi-billion-dollar decisions, in a country that that could happen again, and you could be thrown out? When I was in Washington, I met with Edison Electric Institute, and I asked them, what are your American members worried about, with this current government? And they’re terrified they’re going to lose the Inflation Reduction Act, because they gave concessions, and they’ve made investment decisions, based on those terms. And if they go out the window, they’re going to be in a worse place than they were before the IRA came forward. And they’re saying, that frightens us. So, it’s not just Canadians north of the border that are worried, it’s Americans, as well. And it does create an unstable investment program.
We can have a stable investment regime. We have the minerals, we have the skilled workers, we have the manufacturing capacity, we have land, we have water, we have clean energy, which is really important. That’s not going to go away, by the way. Just because the President withdrew from the Paris Accord, consumers still care about the environment, they still want a clean economy. It might go forward slower, but it’s still going to move forward. Canada has all that. We just have to set the right stage. And I hope the premiers, and the federal politicians, can come together, and make that a reality for us.
Amber Kanwar
Both of these are observations that say, look at what we have, what we can do to appease the U.S. There’s another approach that is sometimes being taken and talked about is retaliating, trying to make it painful for the U.S. Is that a sucker’s game?
David Lebeter
I don’t think we’re talking about appeasing. We’re saying let’s build on our own strengths, and let’s compete in a different way. So, it’s not about appeasing. We have our own ability to move forward. That’s my take on it.
Flavio Volpe
You may have heard me on retaliation on the news over the last—I’ve done 192 interviews, unless this is the third, since January 1st, and 103, since February 1st. And it’s the idea, let’s just speak frankly about what we have, and who we are. We’re responding to a threat. And in that response to the threat from an unexpected source, that is extremely powerful and has leverage, we say, oh, my God, what can we give you? And we know with him, the first NAFTA renegotiation has spent every single round in Washington, and Montréal, and Mexico City, and we knew that what they do is, if you offer something, when you try to cut them off, they say thank you, put it in the pocket, and say this is what I really want.
On retaliation, I keep getting asked the same question on automotive. Shouldn’t we, like, it’s so critical for Ontario, shouldn’t we get a carve out? I said okay, let me walk you through it real quick. If you cause for parts not to ship. On March 18th, 2020, when the day after the president declared a pandemic, and on February 12th, 2022, when the Ambassador Bridge was blocked by 30 people in a pickup truck, parts that didn’t make it to shops, the assembly business shut down all over North America. For the Ambassador Bridge blockade, we went to court. APMA got an emergency stay, and we reopened it.
So, here’s what—we were one hour away last week from the last shift of production in automotive, before everything was going to shut down. Because if the seats made in London don’t get to the Jeep plant in Toledo, Ohio, then the Jeep plant in Toledo, Ohio, isn’t going to wait for the wheels from Kentucky. Everything’s going to shut down. What do we need a carve out for? This guy is going to learn, in automotive, that he’s going to shut down every plant in Alabama, Tennessee, Texas, Coahuila, Saltillo, Ontario, by doing something that he thinks hurts us. 60% of the aluminum that they use, 56% of the nickel, 23% of the steel, and 100% of the uranium, comes from here. We don’t have to do a retaliation; we have to do a strategic retaliation. Some of the damage, he’s going to do himself.
Amber Kanwar
Now, I hear you in the near term, and Jennifer, we’ve been really talking about this as tariffs on, tariffs off. Ultimately, this is to get to an end—and we might not know what that end is, but we could probably guess. It’s more investment in the U.S., and maybe, when the next plant is opened up by Ford, it’s not going to be in Ontario, it’s going to be in the U.S., so that maybe we can stop the amount of times we’re going cross border, to make a car. But do you think about that end, and this general trend towards nearshoring, and forcing investments in one country, that would take away from Canada?
Jennifer Lee
So, I know we have three minutes left. So, here’s what, I’m thinking so many things, and my head’s spinning right now. So, I don’t know what the end game is. I don’t think anyone knows—and I’m going to say that the last time I had drinks with President Trump and Melania at Mar-a-Lago, they didn’t say anything to me. So, I think some of this also has to do with what he was campaigning on—and don’t forget ,over 50% of Americans voted for him. So, we can’t forget that. And I know a lot of people say this is not rational, blah, blah, blah. But this is what it is. And I’ve heard so many companies also saying, you shouldn’t be doing this, this is going to, you know, kill the automotive industry. This is going to kill the steel industry—again, what I mentioned with the Citadel CEO.
Okay. I had a point to make, and I’m rambling, here. Tax cuts, tax relief. He needs to pay for that, and that’s what he campaigned on. Everyone wants to see, you know, he’s talking about cutting corporate taxes from 21% to 15%, no taxes on social security, overtime, tips, all that sort of stuff. And that’s going to cost a lot of money, right? And he wants to extend the Tax Cuts and Jobs Act, the TCGA, and that’s going to cost, like, that in itself is going to cost, like, $5 trillion, I think, over the next decade, and he wants to do that, and cut all those taxes, and all that tax relief, it’s going to be like $10 trillion. So, nobody knows how much all these revenues from tariffs are going to bring in, but I think it’s the Tax Center, Tax Policy Center, said $1.1 trillion, for whatever he’s going to tariff for Canada, Mexico, and China. So, they’re going to bring in roughly $1.1 trillion. $1.1 trillion, versus roughly $5 to $10 trillion in expenses, ain’t going to cut it, right? So, I think that also has to do with whatever his endgame is—and then again, I don’t think anyone in this room, even in the Oval Office, really knows what the ultimate endgame is.
Amber Kanwar
It’s, I mean, away from that, it is about investing those jobs, and bringing those jobs back to the U.S. And David, you know this. When a Canadian company is looking to grow, and to expand, where do they go? Generally, they’re expanding—maybe not Hydro One, but, generally, they’re expanding in the U.S. And I can’t help but wonder, if all of this is going to make that imperative—you know, fine, there’s nationalism, there’s pride in Canada. But you know, if they’re going to be favoured, if they’re going to be penalized—and here, I know consumer-packaged goods companies that are saying, do I need to shift my production to the U.S.? Because yes, I’m a proud Canadian company, but I’ve got stuff waiting at the border that is going to be 25% more expensive, in the next month. Like, how quickly do I have to move on this? These are decisions that are being talked about and made.
David Lebeter
It’s, so the—fair points. I think it’s interesting that the survey that the Ontario Chamber of Commerce did showed only 6% of the businesses were thinking about relocating.
Amber Kanwar
Maybe that’s what they’ll say…
David Lebeter
Yeah. So…
Amber Kanwar
…like, what they’ll fuss up to, but….
David Lebeter
…I think we’ve got to separate the short-term, and the long-term. Short-term, you’re going to probably want to do that. Long-term, consumers are still going to want to buy the best product at the lowest cost, and those are advantages. So, if we address our productivity issues, if we’re able—and we have already, we already have a large manufacturing base. Don’t underestimate that. It takes a lot of time and money, to build a manufacturing base. Flavio, you know that from the automobile sector. It takes a lot of time and money, to train people up, to work in those factories. We already have that. So, short-term pain, but long-term gain. The reason those factories are here today is because they’re a lower-cost producer than what is in the U.S., and I think long-term, consumers are going to still demand the lowest price. There will be some of what you talked about. But at the end of the day, consumers are voters. And when they see the prices going up, and there’s a lower-cost alternative that’s equal quality, that will prevail in the long run. I think that’s part of the global world we live in today. I’m a proud Canadian. I wouldn’t want to see us lose our manufacturing. But I also recognize certain things can be produced other places in the world at a lower cost, and the same quality. So, we should do that.
Flavio Volpe
I’ll just say one last thing. I went to the inauguration, of the non-parade that happened, and the non-event. What happened was, for those of us who were down there, you saw Americans from all ends of the spectrum and demographics, the well-heeled, wearing MAGA stuff, and to people who didn’t have two pennies to rub together. It’s a movement. It’s not the same political spectrum that we have here. That movement will suffer pain longer than we do. But the one calculation that its leader didn’t make—and I think none of us expected—is this is this rise of Canadian nationalism is also a movement. And I think we’ll match that resilience. And they’ve underestimated us. And I say, don’t underestimate us twice.
Amber Kanwar
All right. Well, I think that’s a wonderful note to end on. Thank you so much. Thank you so much for your thoughts, and your candour. And I’ll hand it back up to you.
Note of Appreciation and Concluding Remarks by Jenna Donelson
Agreed. What a great note to end on. Amber, our panellists, thank you so much. I’m going to invite you to take your seats, while we close out. Let’s give them another round of applause. I think we can all agree that their contributions were incredibly important, to help us navigate the uncertainties of the moment, but also, the opportunities of Ontario’s economic future, or as Dan said so well, making the most of the moment.
Thank you all for being here, and a part of this very important conversation. Once again, we owe a very special thank you to our sponsors, who helped drive events like this at the Empire Club. And I’d also like to take a moment to recognize some people in the room. We have our students and young leaders here. We’ve got students from Queens, from Humber College. We are glad you’re here. Thanks for being a part of this. And on that note, Queens students, I’d be remiss, if I didn’t mention that Dan Tisch is a Queens alum twice over. So, there you go. That’s where your degree can take you.
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I also hope you will all join us for two exciting upcoming events. On February 19th, we will be in conversation with an expert panel on “Manufacturing and Exporting in the New World Order: Trade, Tariffs, and Trump.” Don’t miss this exciting opportunity to build on today’s conversation, as we discuss threats to trade, and to Canadian sovereignty. And on March 20th, we are hosting a first-of-its-kind event at the Empire Club on women’s health. Join Terri Hart, as she sits down with Karli Farrow, President and CEO at Trillium Health Partners, Joanna Griffiths, founder and president of Knix, and Dr. Wendy Wolfman, director of several women’s health clinics at Mount Sinai Hospital. Tickets for both events are available now.
As a club of record, all Empire Club events are available to watch and listen to on our website. The recording of this event will be available shortly. Thank you again for being a part of this important conversation. I wish you all a wonderful afternoon. This meeting is now adjourned.
