Oil and gas have given Canada a reprieve.
The country's economy looks blissfully strong right now, with record-low unemployment, sky-high profits and steady growth without much inflation.
But it's a prosperity that is not sustainable unless Canada -- especially those regions that don't benefit directly from oil and gas -- develops a strategy that will outlast the oil and gas boom.
"Things are too good, and that's scary," warns Edmonton's mayor, Stephen Mandell.
He says Canada should remember that while tons of money was made in recent decades in auto and auto parts, the focus is shifting. Now the oil sands is booming, and it's Alberta's time.
"But we must diversify, and that's the challenge."
The global economy is in the midst of a radical transformation, forcing countries into contortions to adapt to forces that transcend borders. Canada is no exception. Manufacturing, the mainstay of Canada's comfortable growth of the past two decades, is now the purview of countries with cheaper labour. Instead, it's a services economy, based on smart people and great ideas, that is generally driving developed countries and maintaining that standard of living.
In Canada's case, however, our embrace of the services economy has been tentative and, relative to the rest of the world, slow. Luckily, oil and gas have energized Canada's economy at a time when the rest of the world is rapidly adjusting to a different reality -- taking the pressure off Canada to adapt.
What happens when the bloom comes off the commodities rose? Canada has what it takes to remain a prosperous country with a high standard of living -- if it strategically leverages its strengths. Oil and gas have given the country some time to figure it out.
But ask leading economic thinkers whether they believe Canada is on the right track, and, to a person, they'll take little solace in the way the global economic transformation is playing out here.
"We're sleep-walking through this. We're lulled into a false sense of security," says Jayson Myers, chief economist for the Canadian Manufacturers & Exporters.
The country is definitely not a disaster zone. There are pockets of strength and dynamism in every province. But there are also a multitude of regions that are struggling to move beyond manufacturing and the Old Economy, and embrace the New. With the global and national economy in flux, the transition is what we make of it.
With some effort and investment, Canada could go the Kitchener-Waterloo route. The people of Waterloo Region in Southern Ontario are tasting the transition first hand. Manufacturing has carried the region for decades, and many of the area's plants are shutting their doors or scaling back on local production. Yet, Waterloo is thriving because of a dynamic confluence of good ideas, business investment, education and a culture of co-operation among community leaders.
Or Canada could go the Sherbrooke route. The southern Quebec city's manufacturing machine has been decimated too, and it has an academic and entrepreneurial community that is trying to fill the void. But their momentum is not strong enough to carry the whole region, and Sherbrooke's standard of living is below average.
As a country, we are teetering between the two approaches.
On the surface, what holds true for Waterloo Region seems to apply to the country. Sure, manufacturers are closing their doors or laying off people. It's a profound economic restructuring. But it's also a natural progression for a wealthy and diversified economy.
The manufacturers that are scaling back are not the companies of the future of Canada anyway, economists argue. They had excess capacity, or head offices in the United States, or were involved in making products that can be manufactured much more cheaply elsewhere and had no good reason to stick around.
The general strength and diversity of the country's economy is able to absorb that turbulence. Or at least that's what the numbers tell us.
Consider Randy Dauphin. The 35-year-old lost his job as a systems analyst at Tiger Brand Knitting Co. Ltd. in 2004 when the clothing producer succumbed to global competition and moved its production from Waterloo Region to China.
Mr. Dauphin polished up his résumé, received multiple job offers close to home, and jumped at a chance to manage information technology for the University of Waterloo's retail operations, such as the bookstore and computer store. He got a 20-per-cent raise and a better benefits package, not to mention a job that he loves.
