Aggregates are big business in Peterborough and the Kawarthas. We mine them, ship them, and consume them.
A new report from the Ontario Chamber of Commerce (OCC), commissioned by the Ontario Stone, Sand & Gravel Association, titled The Long Haul: Examining the Implications of Far-From-Market Aggregates examines the value, impact and implications of mining, hauling and consuming aggregates.
Aggregates include gravel, sand, clay, earth, shale, stone, marble, granite, and other materials. It is used directly in construction as well as in the production of products like cement and concrete. It is a core product in most construction and infrastructure projects.
In 2019, production of new aggregates was worth $1.7 billion in Ontario, paying out $806 million in labour income and employing 13,400 people.
Central eastern Ontario, an area that includes Peterborough and the Kawarthas and the surrounding areas to the east and north, produced 22 million tonnes of aggregates, contributing $222 million to our GDP and directly employing more than 1,500 people.
Very little can be built without aggregates, making it a major contributor to Ontario’s $51 billion construction industry (2019).
It’s a product that is required in large amounts. Its value is inherently tied to the cost of getting it to market.
The report makes the case for keeping aggregate production near where construction and industry need it. The further it is hauled from, the more expensive it gets, the larger its carbon footprint, and the more trucks that are needed to get it there.
The Greater Toronto and Hamilton Area (GTHA) is dotted with quarries, but can’t keep up with its own supply needs. The GTHA consumes approximately 73 million tonnes of aggregate while producing only 25 million tonnes. This means that aggregate mining in areas like Peterborough and the Kawarthas plays a key role in not only our own development, but that of our larger neighbours.
Development in Ontario is not showing any signs of slowing. The GTHA is expected to consume 1.5 billion tonnes of aggregates by 2041. Our region is experiencing its own period of growth. The industry will continue to find efficiencies in production, recycling, and design, but demand for new product will continue. If quarries close or are not allowed to expand, aggregate consumers will simply buy it from further away.
The GTHA is increasingly relying on pits and quarries further away and can expect to exhaust all close-to-market aggregate production supply within the next 10 to 15 years.
The current average hauling distance for close-to-market production is 35 km. As those are exhausted, that average is expected to increase to 110 km (i.e. Peterborough to Toronto). This will increase the haulage cost from $5.92/tonne to $12.67 for a one-way trip. For a 32-tonne truck load, that’s a one-way increase of $216 per load. These costs will be passed on to builders, increasing the cost of things like homes, roads, and bridges.
Longer distances also mean trucks will not be able to make as many trips per day, requiring more trucks and more time driving. Sourcing aggregates further from market is expected to burn an additional 32.8 million litres of fuel, generating an extra 88,594 metric tonnes of CO2 emissions annually.
The report from the OCC is an examination of the industry and is not directly an advocacy item. What’s clear is the value of the industry, its integral role in our communities, and the implications for hauling aggregates from further distances – increased costs and pollution.
As our region grows and becomes more populated, conflict with pit and quarry operations will increase. There are legitimate concerns regarding dust, noise, air quality, water quality, and truck traffic. But simply saying “not in our backyard” is not going to be a helpful approach. Peterborough and the Kawarthas is a thriving aggregate producer for our own needs and those of our neighbours. We need to be proactive with this sector by addressing concerns, minimizing environmental impacts, and finding ways to integrate pit and quarry operations within our community.
After talking for two years about getting back to normal, normal continues to elude us.
It’s now the seventh wave of a gradually subsiding pandemic, inflation is at 7.7%, and the Bank of Canada just hiked its rates by a whopping 100 basis points.
Economists have been busy analysing our current situation and putting together some forecasts for where we’re headed.
The Business Development Bank of Canada (BDC) is figuring inflation will peak soon, breaking new records over the summer, followed by a period of decline as it’s expected to fall below 5% in early 2023 and returning to the Bank of Canada’s target range of 1% to 3% in spring.
One factor BDC highlights that will keep prices higher for a while is that supply chain issues have prompted businesses to move from "just-in-time" inventory management to "just-in-case." Increasing inventory is also adding to current goods transportation challenges. On the plus side, it’s getting easier for customers to find the products they want.
Many Canadians are still spending, even with costs going up. A survey by BDC showed that 25% of Canadians have not changed their spending habits because of inflation and the rest say they’re more likely to search for bargains than to restrict their purchases.
The Bank of Canada’s 100 basis point rate hike came in higher than predicted, citing that inflation has been higher and more persistent than it had expected. The overnight rate now sits at 2.5%, well above the 0.25% that was with us for most of the pandemic.
BDC is predicting that Bank of Canada rates should peak at 3% to 4%, likely hitting 3% by the end of the year. They also note that in a historical context these rates are still considered low, but we’ve become accustomed to low rates since the 2008 financial crisis.
Interest rate hikes, along with other factors, seem to be having some effect in cooling the housing market. According to Peterborough and the Kawarthas Association of Realtors, the average selling price of a home in Peterborough in June was $751,522, an increase of only 3.4% over June of last year. This is well below the peak of $885,153 in February, dropping the year-to-date average home price to $830,193. Rather than rushing to buy before they’re priced out of the market, some home buyers are now holding off to see how much lower prices will fall.
One of the other big factors driving inflation is the price of oil. It’s not just the price at the pumps hitting consumers, but the whole supply chain is largely passing fuel costs on to consumers. This includes the large amounts of fuel consumed by farming, mining, shipping, and construction. It’s even hitting tax bills with City staff recently citing an expected $2 million increase in fuel cost next year as one of the reasons for hiking property taxes by 3% to 4%.
The U.S. Energy Information Administration is predicting a decline in the price of crude oil, though likely not to where it was a few months ago. The price of crude oil increased from $87/barrel in January to $123/barrel in June. They’re expecting that price to drop through the second half of this year, eventually hitting $97/barrel by the fourth quarter of this year. That said, the rise and fall of crude oil prices influence but aren’t necessarily mirrored in the price at the pumps.
Another cause for concern is the possibility of an upcoming recession. Rising interest rates, soaring inflation, the pandemic and the ongoing war in the Ukraine are all contributing factors that have economists warning that Canada could slip into a recession in 2023 and maybe into 2024. Statistics Canada reported that our Gross Domestic Product declined by 0.2% in May, however BDC notes Statistics Canada’s preliminary estimates tend to underestimate the final results.
Of course, all of these predictions are based on a snapshot of the world as it is today. We’re only one geopolitical crisis, catastrophic weather event, or virus variant away from another game changer.
If nothing else, our business community have proven themselves to be resilient and adaptable. There is a path emerging in terms of an economic “normal” and overall there’s a greater sense of certainty in what lies ahead.
Downtown is the heart of our city. It’s a mix of history and progress. It’s a destination and a bustling hub of business.
As our City deals with an influx of growth, it’s important that we plan for what we want our city to look like in the future. The City recently adopted a new Official Plan. Now, the City is looking into creating a Downtown Heritage Conservation District to guide the future of what our downtown core will look and feel like.
For now, City staff are just looking for support to make sure council is on the same page in terms of doing more research on what will be involved in a heritage conservation district designation for the downtown. It’s still in the early stages, with research and consultations likely to be conducted in 2023.
What a heritage district will mean is far from decided.
All too often the historic building preservation process is triggered by applications from developers to renovate, expand, or demolish buildings. A heritage district should lay out the rules ahead of time. Taking out some of the uncertainty and risk should lead to increased investment.
A big part of the charm of doing business downtown is the historic architecture. It’s not something that can be replicated in other areas. It’s also not something that can be replaced when it’s gone.
It’s hard to image the downtown without icons like Market Hall, the Hunter Street Café District, and The Commerce Building at the corner of Water and Hunter streets. There’s something quaint about shopping and dining at a literal bricks and mortar building. There’s no question this atmosphere is an important cultural element for the community and local businesses.
A heritage district shouldn’t mean nothing changes. We’ve seen some amazing redevelopments of historic anchor buildings like the Y Lofts (former YMCA) and Venture North (former Promenade building) as well as up-scale offices like Lett Architects, Outpost 379, and Unicity. With the right vision and ambition, development of historic buildings can enhance our community.
The plan should also lay out the rules for what it takes for a new building to fit into the downtown vibe. Not every building downtown needs to be preserved as it currently sits. Ideally, the district will lay out the design elements ahead of time so developers know what they can build. Many are eagerly awaiting the replacement of the eyesore at 385 George Street North with a new building that will host local businesses and create needed housing.
There are a lot of challenges when it comes to renovating old buildings, but it’s important that any plan for the downtown include modern accessibility needs in its design criteria. Many of the buildings downtown were built at a time when accessibility wasn’t a consideration. Some buildings are easier to bring up to modern standards than others, but sometimes making buildings more accessible creates conflict with preserving history.
Similarly, fire codes add additional challenges to development of historic buildings.
At a time when our community is desperate for housing, we have a significant stock of apartments downtown that are current unoccupied due to challenges in meeting all the historic, accessibility, and fire code legislation. As a Chamber, we currently have a resolution on the books of the Ontario Chamber of Commerce called Maximizing Growth in Built Areas which essentially calls for all parties to work together to find solutions to making these residential units safe, accessible, and economically feasible — making them livable again.
A plan for the downtown has to be careful not to price out current tenants through increased rents, insurance costs, and other factors. We need continued investment, but not at the expense of losing the character and charm of the current businesses downtown.
There are concerns that too many rules regarding heritage preservation will drive away investment. Hopefully the business community is actively engaged in the process of defining these rules to help minimize this impact.
Similarly, the status quo has driven away investment. Some developers are intimidated to invest downtown because the rules aren’t straight forward. They often have a fair bit of money invested before finding out the details of what they can and cannot do with their property.
It’s important that the community, developers, business owners, and building officials are all engaged as part of the process to ensure that our plan for the downtown has the intended effect of both preserving what we cherish and spurring redevelopment. Done right, a Downtown Heritage Conservation District is an opportunity to create new investment and build a stronger downtown core.
Despite the pandemic and its restrictions on personal interactions largely behind us, there’s no sign that people’s habits are going to revert right back to 2019.
This is especially true when we talk about our online habits. The expectation to find what you want, book an appointment, order a product, or communicate with businesses online is expected to increase.
Additionally, businesses eager to move out of the pandemic are finding it tricky to hire enough staff to meet their goals. Digital automation is key to making do with less, including integrated inventory systems, team management software, and automatic lead generation. Any tool that cuts down on workload has become a valuable asset to maximize the effectiveness of the people they have.
To help local businesses make effective digital investments, the Peterborough and the Kawarthas Chamber of Commerce has re-launched our Digital Main Street program.
The Chamber has received a grant from the Digital Main Street program for a two-year Digital Service Squad (DSS) program, which provides small business owners with the tools, personalized technical support and access to funding needed to digitally transform their businesses. The role of the DSS is to empower small businesses across the region to navigate new tools to remain competitive.
The DSS is the cornerstone of Digital Main Street, with trained specialists who meet with brick-and-mortar small businesses, at no cost, to help them complete an online assessment and to introduce them to online training modules designed to build their digital knowledge and skills. This one-on-one DSS assistance includes support for basic website setup, Google Business Profiles, 360⁰ photos, social media presence, and much more. Squad members are also trained to help qualified small businesses with the development of their Digital Transformation Plan and then with the application process for a $2,500 Digital Transformation Grant.
To qualify for the Digital Transformation Grant, business owners must:
• Have a permanent brick-and-mortar location in Ontario
• Employ 1-50 employees
• Pay commercial property tax either directly or through commercial rent
• Be a registered business in Ontario and/or incorporated
Applications for the Digital Transformation Grant opened on June 21, with eligible brick-and-mortar small businesses able to apply for a $2,500 grant to adopt digital tools and techniques. The current intake period for applications will remain open until October 31, 2022 (or until funds have been exhausted). For more information about how to apply to the DTG or to access digital tools and training to improve your business, visit https://digitalmainstreet.ca/ to register on Digital Main Street and begin your journey.
Additionally, the federal government is launching the Canada Digital Adoption Program though the Ontario Chamber of Commerce, offering a grant of up to $2,400 toward adopting e-commerce solutions. The program also comes with a network of e-commerce advisors and our DSS can assist businesses in their e-commerce plan. For more details, visit https://www.peterboroughchamber.ca/canadian-digital-adoption-plan.html
To book a free consultation with a Digital Service Squad Team Member, contact Jacie Condon-Houghton at 705-201-1663 or Jacie@acorn30.com.
Investing in digital is key for all local businesses. We have experts available and grants to help make it happen. There’s no better time for local businesses to step up their digital game.