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### Viewing cable 05HALIFAX59, SOUTHWEST NOVA SCOTIA STRUGGLES TO DIVERSIFY ITS ECONOMY

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
05HALIFAX59 | 2005-03-09 15:46 | 2011-04-28 00:00 | UNCLASSIFIED | Consulate Halifax

`

    This record is a partial extract of the original cable. The full text of the original cable is not available.

    091546Z Mar 05

` `

    UNCLAS SECTION 01 OF 02 HALIFAX 000059

    SIPDIS

    E.O. 12958: N/A
    TAGS: ECON PGOV ETRD EFIS CA
    SUBJECT: SOUTHWEST NOVA SCOTIA STRUGGLES TO DIVERSIFY ITS ECONOMY

    ¶1.  During a recent visit to southwestern Nova Scotia, CG met
    with fishery, lumber, business and economic development
    representatives to discuss current prospects for the region.
    The area around Yarmouth, NS, remains heavily dependent on
    income from the fishery (approximately 70% according to most
    estimates) as well as ferry connections to Maine which bring in
    tourist dollars primarily in the summer months.  The region is
    aggressively courting business and government to add jobs or, in
    some cases, fighting hard simply to retain those that now exist.
     In many ways Yarmouth and environs are typical of small to
    medium sized communities throughout the Atlantic region.

    FIRST THE GOOD NEWS

    ¶2.  From the fishery, recent news has been good.  The lobster
    fishery and associated businesses were worth approximately C$200
    million to the local economy, clams about C$10 million.  Stocks
    in both cases seem to be doing well and are being harvested at
    sustainable levels.  The haddock population has unexpectedly
    rebounded to such an extent that local fish packers expect
    longer seasons and significantly higher harvests over the next
    five years.  They are now working to re-develop markets for
    fresh haddock in the U.S. and elsewhere after a number of lean
    years.  The fisheries in Maritime Canada and New England are
    quite integrated, with products passing in both directions
    during the year depending on which areas are open for fishing.
    Maine lobsters, for example, are often shipped to Yarmouth for
    live storage during the height of the Maine season, then shipped
    back to the U.S. during the off-season.  Processing and packing
    plants in Prince Edward Island buy U.S. and Canadian lobsters
    not suitable for live sale and cook and can the meat.  This
    ready market helps support prices on both sides of the border.
    A Canadian firm, Connors Brothers, has invested heavily in
    sardine processing facilities in both the Maritimes and Maine,
    selling products in North America and Europe.

    ¶3.  The othe i of good new from the fshery i tha very
    inustry epresntaive that CG spoke to said that
    implementation of U.S. bioterrorism border controls had gone
    smoothly.  The industry remains nervous about their extremely
    perishable cargo being harmed by border delays, but to a person
    the industry reps praised the way the USG had brought in the
    controls and said that they were having no problems with "just
    in time" deliveries of seafood to distributors, processors and
    restaurants in the U.S.  Inadequate border infrastructure, in
    particular the Calais-St. Stephen bridge, was the biggest source
    of delays, they noted, not U.S. border regulations.  Fish
    packers were particularly grateful for the advice and
    accessibility of Embassy CBP representative Eric Couture.   CG
    noted the Ambassador's support for a new bridge and the
    excellent work that the Maine and New Brunswick communities had
    done to cooperate on the issue.

    THEN THE NOT-SO-GOOD

    ¶4.  Although the fishery has been relatively strong in recent
    years, other aspects of the local economy have not done as well.
     The forestry sector continues to shed jobs as a result of the
    softwood lumber duties and now the rising Canadian dollar, and
    local lumber firms continue to argue that they are being
    unfairly penalized for the activities of central and western
    Canadian provinces and producers.  Most firms in the region are
    relatively small and have come under "huge financial stress," as
    one industry representative put it.  Atlantic Canadian firms buy
    the vast majority of their timber at market rates from private
    landowners, and in fact find themselves complaining to the
    Canadian federal government about unfair competition resulting
    from non-market stumpage fee policies on crown land in central
    and western Canada.

    ¶5.  The area is also fighting a trend toward centralizing jobs
    and services, something perceived to benefit Halifax at the
    expense of other less densely populated areas of the province.
    For example, the SW Shore Development Authority is mounting a
    major lobbying effort to keep the Royal Canadian Mounted Police
    from consolidating its telecommunications operations in Truro,
    about 50 miles north of Halifax.  The dozen or so jobs that the
    RCMP regional telecoms office provides might not seem like much,
    but the Yarmouth region is prepared to fight hard to retain
    them, enlisting the help of federal MPs and provincial MLAs.
    The cancellation of the NHL season was also a blow to the area,
    even though it has no NHL team.  The New York Islanders had
    signed a contract to do their pre-season training in Yarmouth
    for three years, and the season's cancellation meant the loss of
    hotel, restaurant and ice arena revenues.  Air service to
    Halifax has been eliminated, further creating a sense of
    isolation in the area.

    COMMENT

    ¶6.   The region around Yarmouth is in many ways typical of a
    number of small and medium sized communities throughout Atlantic
    Canada.  Many were and remain heavily dependent economically on
    the fishery, an industry which has struggled for years with
    declining catches and moratoria on harvesting traditional
    species.  The growth of the lobster and crab fisheries has
    brought the overall value of catches back to relatively high
    levels, but has not generated the same levels of employment as
    groundfish did.  Another traditional source of jobs in parts of
    the Atlantic provinces, forestry, has been hurt significantly by
    the softwood lumber dispute, and employment in the forest
    products sector has suffered as a result.  Offshore energy
    development in Nova Scotia and Newfoundland has generated jobs,
    but the economic benefit of the offshore is felt mainly in the
    capitals of Halifax and St. John's, leaving other areas behind.
    Like other parts of the region, Nova Scotia's southwest shore is
    seeking to attract new businesses to diversify the economy, but
    the task has not been an easy one.

    HILL

`