Until recently, when jobs started disappearing, most Newfoundlanders gave little thought to China.

Like most North Americans, people in the province have been pleased with the arrival of Wal-Mart and the other Big Box stores. Doubtless few noticed that most of those cheap electronics, toys and clothing bear tags reading “Made in China.”

A few shoppers may have wondered why it is so difficult to find a pair of running shoes manufactured in Canada. Fewer would know it is practically impossible to purchase a new television that is not built in Asia.

Newfoundland consumers, like those elsewhere in North America, have voted with their wallets for cheap offshore goods, rather than more expensive items made by Canadian or
U.S. workers.

Then, in June, Fishery Products International Ltd. decided to close its fish-processing plant in Harbour Breton, a town on the province’s south coast that relies on the fishery for its survival.

A month later, Abitibi Price Inc. announced it will shutter its Stephenville paper mill, eliminating 300 well-paid plant jobs and about 200 timber-cutting jobs in Labrador. At the same time, Abitibi Price said it will mothball one of two papermaking machines in Grand Falls and close its operations in Kenora, Ont.

There are significant differences between the fishing and papermaking industries, but there are also remarkable similarities in the reasons for closing the plants, particularly in Harbour Breton and Stephenville.

Unlike FPI’s other Newfoundland plants, which closed or switched to other species after the cod moratorium was imposed in 1992, Harbour Breton has continued to process cod.
But its lifeline is cod purchased from Russia and Norway.

Stephenville also suffers from a supply problem. With no wood available to the mill on the island part of the province, Abitibi Price has been cutting trees in Labrador and shipping them south to Stephenville.

Supply issues have dogged Harbour Breton and Stephenville for years. But, with a strengthening Canadian dollar, companies such as FPI and Abitibi Price are finding it increasingly difficult to compete in key U.S. markets. They have to contend with China, which has become an aggressive player both in fish processing and pulp and paper.

China has long been the world’s largest producer of seafood products, but its capacity to export fish was constrained until 2001, when it was admitted into the World Trade Organization. By 2002, it had become the world’s largest exporter of fish products.

Investments in fish-processing capacity by Chinese firms have resulted in job losses in Canada and the U.S. A Chinese worker’s wages are typically one-tenth those of a Canadian, a fact not lost on FPI as it assessed its Harbour Breton plant.

Similar economic realities face Abitibi Price and Canada’s other paper producers.
Soaring energy costs and softening demand have hit the Stephenville operation hard, although it is an efficient operation, because the mill has no capacity to produce electrical power. Chinese paper products are proving highly competitive in the face of sagging North American demand, forcing companies such as Abitibi Price to scrap low-performing assets.

In the industrial heartland of southern Ontario, the loss of jobs to overseas producers has been absorbed by other manufacturing sectors. But in a one-industry town, there are no alternatives.

In Newfoundland and Labrador, people are learning that there is a hidden cost to cheap Chinese goods. IE