Sudbury is the luckiest city in Ontario. Not only does the
community sit on top of the richest mineral deposit in North
America - that will still be producing valuable metals for
another 100 years - but is also home to the second or third
largest cluster of mining supply and service (MS&S)
companies in Canada.
Over the next few decades, while southern Ontario's auto sector
will be threatened by low-cost competition from China and
India, the Sudbury Basin's mineral resources and mining
expertise will be in demand around the world.
Clusters are concentrations of related companies and service
providers present in a specific city or region. Many economists
believe clusters are the future key to wealth creation and the
establishment of high-paying jobs, primarily through the global
export of goods and services. They also attract foreign
investment, enhance international competitiveness, industrial
productivity and are a significant engine for economic growth.
Canada has long been a world leader in underground mining, with
the largest operations located in Sudbury. Harvard Professor
Michael Porter is one of the world's most sought-after business
strategists on the competitiveness and economic development of
nations and regions. In 1991, the federal government
commissioned a study of Canada's trade competitiveness by
Porter. In the report, he identified an advanced supply cluster
in Sudbury's nickel industry and recommended its support.
All levels of government ignored his recommendation.
In the early part of this decade, David Robinson, an economics
professor at Laurentian University, was looking for a
development strategy for the region. He noticed a remarkable
strength in mining related research and government offices that
were related to mining.
Paul Reid, a development officer with the City of Greater
Sudbury, pointed out how large and important the local cluster
of MS&S companies was to the community. Robinson
recognized that together these elements were what global
researchers were calling a cluster.
He started alerting the local media and municipal government of
this growing but largely invisible sector and controversially
proposed that the city should forget about diversifying the
economy and concentrate on the mining sector.
Today he is recognized as the "Godfather" of Sudbury's MS&S
cluster and given credit for helping change public policy.
However, a key component of a successful cluster was an
industry association that worked on behalf of the individual
companies, most of whom were small- to medium- sized
businesses.
Dick DeStefano and the birth of SAMSSA
One person who paid keen attention to Robinson's theories was
Dick DeStefano a well-known Sudbury politician - he served as a
municipal councilor for seven years - as well as being involved
on a wide variety of commissions and boards all in the public
spotlight. One of his passions throughout his career was local
economic development.
In early 2003, the supposedly retired Mr. DeStefano met with
six supply and service company owners and proposed the
establishment of a local industry association that would work
on behalf of members.
By November of that year, the non-profit trade association -
Sudbury Area Mining Supply and Services Association (SAMSSA) -
was established with a five-member board of directors, all
active executives in the MS&S sector.
DeStefano, who is now SAMSSA executive director, said, "The
first year was a major struggle convincing regional mining
supply and service companies that an association would increase
their business opportunities globally when for years they had
done their business almost cloaked in secrecy."
More money is spent within a 500-kilometer radius of Sudbury on
underground hard-rock mining supplies than anywhere else in
Canada, the United States or Chile. In 2006, Inco alone spent
over $400 million on local supplies and services. That figure
will only grow with the recent announcement to bring the Totten
Mine into production. Xstrata Nickel is building Nickel Rim
South, while FNX Mining will be bringing their Podolsky project
into production in 2008, just to mention a few projects.
One of the main aspects of SAMSSA is the global nature of the
organization. During its first year, DeStefano made contacts
with 125 embassies focusing on their trade commissioners and
government agencies who might have been interested in
partnerships or distributorships. By focusing on the global
markets, SAMSSA was ensuring that the world mining community
understood that the local MS&S sector was open for
business, as well as lessoning their dependence on the local
mineral producers.
"The organization has gone a long way in globally branding
Sudbury as one of the best sources of innovative mining supply
and service products," DeStefano said. "The sector compliments
the mining industry and continues to emphasize its dedication
to increasing efficiency, productivity and lowering costs."
A 2006 Institute for Northern Ontario Research and Development
(INORD) survey conducted for FedNor at Laurentian University
indicates that innovation is extremely high among the cluster
of MS&S companies in Northeastern Ontario. The study
revealed that 83 out of 90 of the firms surveyed indicated they
were upgrading products and services, and 72 out of 93 had
introduced a new product or service in the preceding three
years.
Due to the productivity improvements in the mining sector, the
real growth will not be in expanding mining activity but in the
supply and service industry. Two years ago a SAMSSA study
indicated that about 17,000 people are directly employed in the
MS&S industries in Sudbury, North Bay and to a lesser
extent Timmins, compared to fewer than 10,000 working in the
extraction, smelting and refining sectors. A conservative
estimate of the annual payroll in this sector was about one
billion dollars. In Sudbury, 300 MS&S companies employ
approximately 11,000 people.
DeStefano said, "The shift in economic emphasis has great
significance for northeastern Ontario because it challenges the
traditional view that extraction and refining is the region's
major employment engine. For the first time in the 120-year
history of Sudbury mining, more people are employed in the
MS&S sector than in primary mining, smelting and refining."
In recognition of this sector's major contribution to the
region, the City of Greater Sudbury has made the mining supply
and services sector the community's No. 1 engine for economic
growth.
No provincial support
Both the Greater Sudbury Development Corporation and FedNor
continue to provide support grants for SAMSSA. However the
provincial government refuses to give the organization any
long-term funding to expand.
Mike Castron, former president of SAMSSA from Cast Resources,
said, "The provincial auditor general recently slammed the
McGuinty government for giving $32 million in grants to ethnic
groups without any accountability. The Ontario Cricket
Association asked for $150,000 and got $1 million. Yet when
SAMSSA met with the Minister of Northern Development and Mines
and his staff for funding support, we didn't get a single
penny. This Liberal government has their priorities mixed up.
"SAMSSA needs funding assistance for marketing materials, trade
shows, and incoming missions. These events and materials
provide information for potential clients to buy our tools and
technology and improve job opportunities in the north."
Notwithstanding provincial indifference, the world beyond
Queen's Park recognizes the importance of the rapidly growing
local supply and services sector, as witnessed by the trade
missions coming to Sudbury. Last spring more than 50 businesses
and government visitors from Brazil, Chile and South Africa's
North West Province met with SAMSSA members.
On June 9, 2005, David Courtemanche, who was the mayor of
Greater Sudbury, at the time, endorsed the efforts of SAMSSA in
his annual report to the Greater Sudbury Chamber of Commerce.
"...today, we're building upon generations of mining expertise,
and using that know-how to teach others around the world how to
mine better, faster, in more environmentally sound ways.
At the same time, we're now using our expertise to build the
tools of this trade, better than anyone else can, and selling
those tools to companies and countries, around the world...It
is the cooperative leadership of organizations such as SAMSSA
that is leading the way."
DeStefano said, "This has been a pilgrimage for me personally
and hopefully makes Sudbury and Northeastern Ontario more
prosperous economically and perhaps give the next generation an
opportunity to stay in the community that gave me and my family
such a great life."
Stan Sudol is a Toronto-based communications consultant and policy analyst who writes extensively on mining issues.
