SHERBROOKE — Jeffrey Casselman had a grand plan to make Shermag Inc. globally competitive and erase the losses that darkened his furniture company's balance sheet.
He was going to cut back Canadian production, close some Quebec plants, move all routine work to China, use what was left of the Canadian work force to make high-end custom furniture, and turn a profit.
What he hadn't counted on was the "the lady in Lennoxville" -- the person in one of his Sherbrooke-area plants who made him realize that the Old Economy cannot be made new overnight.
On a visit to the plant, he explained that instead of cranking out hundreds of the same piece day after day, the Lennoxville workers would now make one piece at a time, custom-designed for each buyer. But he was taken aback when the employee told him, with fear spilling out of her eyes: "I don't think I can do that."
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Sherbrooke has Old Economy written all over it, and is having trouble responding quickly to a relentlessly changing world economy that is crushing everything that once made the city work. Its transition to a knowledge-based economy has seized up because of unforeseen difficulties.
The picturesque city, about 150 kilometres southeast of Montreal near the U.S. border and the ski hills of the Eastern Townships, dates back to the early 1800s. Its manufacturing base -- textiles, rubber, plastic, metallurgy, pulp and paper, a slaughterhouse -- was a microcosm of what has kept Canada prosperous for decades.
Until recently, that is. The manufacturing sector across Canada is crumbling. Blame a strong currency, rising commodities prices, surging competition from China and U.S. head offices focusing on problems in their own backyards. In Sherbrooke, a large chunk of the economic base has been seriously eroded in just a few years.
The city has not been left bereft of resources. It boasts two universities, some colleges and a major medical centre -- New Economy trappings that should be Sherbrooke's hope for future prosperity.
The city clearly wants to move beyond its manufacturing roots and transform itself into a hive of technological innovation, using the universities and the hospital as a base. But that's proving to be easier said than done.
Sherbrooke is wrestling with a high secondary school drop-out rate that is leading to an undereducated underclass, the standard of living is below average, and funds for research and development are dwindling. There is a thriving, educated elite but it is culturally isolated from the rest of the community and its struggles to adjust to the New Economy.
"The learning curve to learn the new way of doing things is steeper than I thought," Mr. Casselman says in his corner office in downtown Sherbrooke. "It never dawned on me that 'the lady in Lennoxville' would be scared to do it."
Shermag and Sherbrooke are fighting against time. The longer it takes for Mr. Casselman to retrain his work force and refocus his operations, the longer he carries a loss on the company's books. And for Sherbrooke, the future depends on the ability of business, academic and community leaders to collectively bridge the gulf between Old Economy and New. If not, it risks being swept away in the rushing tide of globalization.
"We want to be leading edge. And we have the capability of doing it. The ties with the university community are there. But it's very difficult," observes Onil Proulx, president of a Sherbrooke human resources consulting firm that helps companies restructure and displaced employees find new jobs.
The days of mass production are over, he says bluntly, but business leaders and the academic community have been timid in dealing with the change. Business executives are not coming forward to lead the transition. And the university, he says, is not interested in getting its hands dirty on the plant floor.
"It goes both ways," he says.
Both groups need to move beyond symposiums and round tables to co-operate on plans that are dynamic enough that they spread to the key economic players of the region, he says.
By some measures, Sherbrooke is doing well. It has a fairly low unemployment rate of about 7.1 per cent. Its economy expanded by a respectable 2.7 per cent last year. Its population is growing modestly. Those numbers suggest an underlying strength that can keep the economy chugging along.
