Tableau de bord, région métropolitaine de Montréal = Trend chart, Greater Montreal region, 1 décembre 2001, Anglais

[" TRI GRE/ OH A R T i QUARTERLY PUBLICATION OF STATISTICAL ANALYSIS OF THE BOARD OF TRADE OF METROPOLITAN MONTREAL PRODUCED IN PARTNERSHIP WITH CANADA ECONOMIC DEVELOPMENT VOLUME 4, NO 2, DECEMBER 200 1 Montreal\u2019s economy, like that of Canada as a whole, had been feeling the impact of the economic slowdown in the U.S.since the third quarter of 2000.However, like many analysts, we expected the recovery to begin this fall.Unfortunately, the events of September 11 eliminated any hope of an immediate upturn by shattering the confidence of consumers and investors.Montreal was particularly hard hit because the terrorist attacks had a major direct which impact on our exports, which represent more than 50% of our total production, as well as on our tourism and aerospace industries, which, together, generate economic spinoffs of about $14 billion.Nevertheless, considerable efforts on both sides of the border to stimulate domestic demand through both monetary and fiscal policies will soon take effect, and - provided no further catastrophe intervenes in the meantime - we can expect the recovery to begin in the first half of 2002.AGAINST ALL ODDS: SOME POSITIVE NEWS ¦\tThe labour market steady for now ¦\tHousing resists the economic slowdown ¦\tThe quality of health care improving in Montreal, compared with the rest of Canada ¦\tThe downtown real estate market in good shape INDICATORS TO WATCH ¦\tBusiness tourism down in Montreal ¦\tAerospace industry in a tailspin ¦\tFewer and fewer jobs for high school dropouts THE CED REPORT Montreal\u2019s bio-industries sector has everything it needs to address important global issues of health care, food supply, and the environment.HIGHLIGHTS MONTREAL\u2019S ECONOMY PARTICULARLY HARD HIT l+l Développement\tCanada Economic économique Canada Development Canada 2 North Belt Laval South Belt MAP of THE METROPOLITAN AREA ¦\t111 municipalities ¦\tPopulation: 3.5 million ¦ 55% of Quebec\u2019s GDP ¦ Corporate tax: 75% of Quebec\u2019s total contribution ¦ 1.7 million jobs Montreal, Laval and North and South Belts THE FOLLOWING STATISTICS cover the census metropolitan area (CMA).Where unavailable, the MUC territory or the City of Montreal were included.These are the latest statistics available at the time of printing Published and distributed free of charge by LEADERSHIP [MQpiféa1 the Board of Trade of Metropolitan Montreal\u2019s monthly journal THE TREND CHART for Greater Montreal is open to the participation of any organization dedicated to the progress of the metropolitan region.Reproduction of this document, in whole or in part, is authorized with credit to the Board of Trade of Metropolitan Montreal.Publication director: Éric Veronneau, economist Telephone: (514) 871-4000, ext.4052 Fax: (514) 871-1255 E-mail: everonneau@ccmm.qc.ca In collaboration with: Francis Letendre Available on the Board of Trade\u2019s Web site at: www.btmm.qc.ca/presse/tdb 3 page 1.HIGHLIGHTS\t1\t \t 3.TRENDS AND OVERVIEW\t4 \u2022 United States\t4 \u2022 Canada\t4 \u2022 Quebec\t4 4.ECONOMIC CONDITIONS\t5 \u2022 Gross domestic product\t5 \u2022 Consumption\t6 \u2022 Labour market\t6 \u2022 Housing\t7 \u2022 Foreign trade\t8 \u2022 Financial markets\t8 5.ECONOMIC SECTORS\t9 Transportation\t \u2022 Air traffic\t9 \u2022 Port traffic\t10 Aerospace\t10 Real estate\t11 Tourism\t12 6.QUALITY OF LIFE\t13 Education\t13 Public health\t14 7.CANADA ECONOMIC\t DEVELOPMENT\t15 Bio-industries - A promising sector for Greater Montreal?\t Economic Development By uniting strengtl i: Canada Economic of Quebec comm We support their s, the community moves forward.Development promotes the efforts unities dedicated to going farther, business projects and their partnerships.Our goal:To support community strength.Prospering in Harmony Community Strength I\tCanada Economic Développement ¦\tDevelopment\téconomique Canada Canada Chambre de commerce du Montréal métropolitain Board of Trade of Metropolitan Montreal 5 Place Ville Marie, plaza level, suite 12500, Montreal (Quebec) H3B 4Y2 Telephone: (514) 871-4000 Fax: (514) 871-1255 E-mail: info@ccmm.qc.ca TRENDS AND OVERVIEW THE UNITED STATES Before September 11, the United States was already experiencing a significant economic slowdown.But as the Federal Reserve System had substantially lowered interest rates and companies had successfully reduced much of their inventory over the past year, conditions were ripe for an upturn in the third or fourth quarters.The events of September 11 dashed those hopes by undermining the country\u2019s major economic lever - household consumption, which accounts for 68% of the GDR In October, the U.S.Department of Commerce announced the first decline in the American economy in 42 quarters, ending the longest period of uninterrupted growth ever experienced by our neighbour to the south.During the third quarter, its real GDP fell by 0.4% after posting a slight gain of 0.3% in the preceding quarter.In October, the U.S.labour market posted its strongest monthly decline since 1980, with a loss of 415,000 jobs.The unemployment rate grew to 5.4% from 4.9% in September and from 3.9% in October 2000.The U.S.consumer confidence index published by the Conference Board fell to 85.5 in October, compared with 97.6 in September - a 12% drop in a single month.The numerous anthrax attacks in addition to the mass layoffs by companies have greatly undermined household confidence.While it is difficult right now to estimate the extent and duration of the current slowdown, available data leads us to agree with the majority of analysts that the U.S.economy will \u201ctechnically\u201d enter a recession in the fourth quarter of 2001'.1 An economy technically enters a recession after two consecutive quarterly declines in real GDP.CANADA The Canadian economy is very sensitive to fluctuations in that of its major trading partner, the United States.Even before September 11, our economy, like that of our neighbour to the south, had begun to experience a slowdown.Signs of this slowdown had been visible for the last few quarters.Between August 2000 and August 2001, the constant dollar GDP grew by just 0.4%.The latest indicators for the U.S.economy do not bode well for Canadian exports in the third and fourth quarters.In the United States, the constant dollar GDP experienced negative growth in October; retail sales are down; and consumer confidence has been badly shaken.Considering that Canada exports almost 35% of its GDP to the United States, the anticipated decline in U.S.demand could have a strong impact on the Canadian economy in the next few months.Nevertheless, the efforts of both countries to stimulate consumption, particularly by slashing interest rates, lowering taxes, and injecting public funds into the economy, could successfully minimize the extent and duration of the anticipated slowdown.(See gross domestic product article, page5) QUEBEC As we go to press, very few statistics are available regarding Quebec\u2019s third quarter economic performance for 2001.We can say, however, that the economic situation in Quebec is very similar to that in the rest of Canada and the United States.As a result, the economic slowdown of our largest trading partner will no doubt have negative repercussions on Quebec exports and thus on the Quebec economy as a whole.Despite a very modest 0.6% increase in Quebec\u2019s GDP in the second quarter, consumer spending, housing, and the job market remained fairly robust throughout 2001.Between January and August, retail sales grew by 5.2% compared with the same period last year, while housing starts jumped by 6%.In Quebec, 45,500 new jobs were created between January and September.However both retail sales and housing starts began to lose steam in the second quarter, as numerous layoffs were announced in September and October.Greater Montreal, which represents almost 55% of Quebec\u2019s GDP, was particularly hard hit by the September 11 attacks.Montreal\u2019s tourism industry, which generates economic spin-offs of $1.8 billion annually, and its aerospace industry, the sixth largest in the world in terms of production and the third largest in terms of jobs, were both rocked by these tragic events.(See Aerospace article, page 10).So far, consumer confidence remains high, enabling the Quebec economy to stand its ground.But this confidence is fragile and depends greatly on the continued health of the labour market, which, given the current state of the U.S.economy, is precarious. 5 ECONOMIC CONDITIONS THE GROSS DOMESTIC PRODUCT CANADIAN PRODUCTION AT A STANDSTILL Although Statistic Canada\u2019s latest figures on Canada\u2019s gross domestic product (GDP) do not take into account the impact of this fall\u2019s attacks on New York, they nevertheless clearly indicate that, long before the tragic events, our economy was greatly affected by the slowdown of the U.S.economy.In August, Canada\u2019s constant dollar GDP increased by just 0.1%, and for the four months prior to that, growth was practically nonexistent.In fact, between August 2000 and August 2001, Canada\u2019s economic activity grew by just 0.4%.Manufacturing production, which increased by 0.1% this August, actually fell by 4.6% over the previous 12 months.Some sectors, however, did perform well in August.Residential construction grew by 2.1%- the strongest increase since July 2000.Wholesale trade grew by 1.1%, supported by the strong demand for motor vehicles.Information and cultural services jumped 0.7%, thanks to increased sales of telecommunication, broadcasting, film production, and software services.On the other hand, production of computers and electronic and telephone equipment fell 3.2% in August.Transportation services fell by 0.7%, and food and lodging, by 0.8%.Given that Canada exports almost 35% of its total production to the United States, the attacks against our major trading partner will affect Canadian production for the next few months.We can only hope that the labour market will not be too hard hit and that the exceptional flexibility of our monetary policy along with the tax measures announced by governments on both sides of the border will have the desired effect, stimulating both our domestic demand and the confidence of American consumers.Canada's real GDP %\t(quaterly variation expressed in annual variation) TTT co m r* at r\u2014 t\u2014 en ct\tv\u2014 ro in § - 5 co m r- co\too\tco\tco\tco\too\tat\tat\tat\tat\tat at\tat\tat\too\tat\tat\tat\tat\tat\tat\tat at\tat\tat\tat\tat\tat\tat\tat\tat\tat\tat = = = = = ggggg N N CM N CM CM CM N N CM Source: Statistics Canada 6 CONSUMPTION CONSUMER CONFIDENCE SHAKEN Consumer price index Quaterly variation (1997=100) Since early 2001, consumers - whose spending accounts for 60% of Quebec\u2019s GDP - have been the mainstays of Quebec economic growth through their purchases of both durable and nondurable goods.In Quebec, as in the whole of Canada, retail sales were up 5.2% in the first eight months of 2001 compared with the same period last year1.Since April, however, this growth has slowed considerably.Between January and April of this year, retail sales grew by 3.5%, but between April and August, they increased by just 0.3%.The steeper decline in sales of durable goods, such as automobiles, furniture, and clothing, suggests that consumers are beginning to react to the economic slowdown by reducing their discretionary spending.Moreover, in Quebec, the consumer price index, published by the Conference Board of Canada, fell from 116.7 in the second quarter to 112.6 in the third quarter.Source: Conference Board of Canada Canada Quebec The reduction in interest rates of 300 basis points since early 2001 and the lowering of income taxes effective since July should, theoretically, stimulate consumption between now and the second quarter of 2002.Nevertheless, since consumer confidence is very sensitive to labour market conditions, and since the prospects in this area are rather gloomy, we can expect to see a decline in consumer spending, although the extent and duration of that decline remain to be seen.1.August 2001 retail statistics, published on October 22, 2001.EMPLOYMENT EMPLOYMENT FAR LESS GLOOMY\tHelp wanted index THAN EXPECTED\t(1996=100) Although many analysts expected the labour market to stumble badly in October, Statistics Canada\u2019s latest labour force statistics show that 4,600 new jobs were actually created in Quebec that month, compared with 24,000 in September.The unemployment rate rose just 0.1% over the previous month to 8.5%.Despite a significant slowdown in employment growth, the latest results are far less gloomy than might have been expected, given the avalanche of bad news we\u2019ve heard since September 11.In Quebec, the sectors turning in the strongest job-creation performance were education and commerce, with gains of 9,100 and 8,000 jobs respectively.Finance and insurance (-7,600), transportation and storage (-5,300), and manufacturing (-2,500), on the other hand, have been harder hit by the economic slowdown - especially since the September terrorist attacks.And despite the many layoffs in the information technologies sector early this year, that industry has nevertheless created 45,500 jobs (+1.5%) in Quebec in the first nine months of this year.5 Source: Statitics Canada Montreal Quebec Canada 7 In October, Statistics Canada\u2019s Help Wanted Index, a measure of companies\u2019 intentions to hire new workers - nevertheless dropped 2.9% in Montreal from the previous month.This was the 13th consecutive drop since September 2000, for a total of -26%.We mustn\u2019t kid ourselves: the latest employment statistics simply indicate that the labour market has not yet fully reacted to the current economic slowdown.With the freefall of the U.S.economy and the layoffs resulting from the events of September 11, we can certainly expect a more significant drop in employment in the coming months.HOUSING HOUSING STARTS STABILIZE IN OCTOBER Up till now, the housing sector has been the most impervious to the current economic slowdown.According to the Canadian Mortgage and Housing Corporation, in the first ten months of the year, housing starts in Greater Montreal were down just 1 % over the same period last year.Since January, there have been 10,541 housing starts, compared with 10,666 in 2000.This decrease nevertheless reflects a 33% decline in the construction of rental housing units.Despite a significant decrease in housing starts in August (-27%) and September (-31%), the situation appears to have stabilized in October, since residential construction dropped just 1 % that month compared with October 2000.In metropolitan Montreal, the largest number of housing starts has been on the South Shore and in Vaudreuil-Soulanges, with increases, in October alone, of 11% and 33% respectively.The Island of Montreal, on the other hand, posted a decrease of 12%, largely due to a major slowdown in the construction of rental housing units.The resale market is still extremely dynamic in Greater Montreal, however, with resales up 14.1% between September 2000 and September 2001.There are several reasons for the housing sector\u2019s resilience, including low mortgage rates, the scarcity of rental housing, and strong job creation in Montreal in recent years.Despite the current economic slowdown, the combination of the strong demand for housing, announced public investments in the constmction of rental housing, and low interest rates ensure that the housing sector will likely remain strong for the next few months.There is Montreal housing starts (deseasonalized data as a moving six-month average) Thousands of units Source: SCHL S\t8\t8\t8\t8\ta CTJ\tJ t\tO\")\td J\tCT>\t0) ill one unknown component: the labour market.If that should deteriorate significantly in the coming months, people could decide to postpone housing investments, even if mortgages rates remain very low. 8 FOREIGN TRADE CANADIAN EXPORTS CONTINUE TO FALL1 The latest international trade figures released by Statistics Canada indicate that in August 2001, the value of Canadian exports had dropped to its lowest level in 17 months, or $34.1 billion.This was a 3.4% decrease from July and an 11% decrease from January, when exports reached a record $38.4 billion.Moreover, sales have fallen off in almost every sector, except the automobile industry, which grew by 1.9%.Exports to the United States have fallen by 2.7% and those to other parts of the world, by 7.8%.These results are even more disturbing as they do not take into account the impact of the September 11 tragedy on our exports to the U.S.Considering that Greater Montreal exports more than 50% of its production, that more than 85% of its exports are destined for the American market, and that one job in three is related to foreign trade, this decline, aggravated by the September attacks, will have a negative impact on production and jobs in the last two quarters of 2001.Despite the drop in export volume, Canada\u2019s balance of trade is nevertheless positive (+48.3 billion) because Canadian imports also fell by 0.9% to 29.7 billion.Imports would have dropped more sharply except for the increase in the automobile, agriculture, and consumer goods sectors.Machinery and equipment imports have nevertheless declined steadily since the beginning of the year, indicating that companies have been investing less for the past year, potentially dulling their competitive edge on international markets over the long term.Billions $ Canadian exports (deseasonalized data in constants) « as co % É § Source: Statistics Canada In conclusion, Canadian exports have followed in the footsteps of the U.S.economy, which has been experiencing a slowdown since the fourth quarter of 2000.The events of September 11 have only worsened this situation.The significant deterioration of the U.S.job market in October will no doubt weaken domestic demand and thus have a negative impact on the order books of Montreal exporters.1 By the time you read this.Statistics Canada will have published Canada\u2019s international trade figures for the month of September.As we expect this trend to deteriorate, and if that is the case, the above analysis will be timely and extremely relevant.FINANCIAL MARKETS AND PRICES INFLATION RATES The consumer price index was 2.6% in September compared with 2.8% in August.However the core inflation rate, which excludes the eight most volatile components plus the effect of changes in indirect taxes, was down slightly from August to 2.3%.Despite low interest rates, there is little chance of inflationary pressure until the economy turns around.INTEREST RATES Since January, the Bank of Canada has lowered its interest rate by 300 basis points, including 125 points since September 11.On October 23, it was set at 2.75%, the lowest bank rate we have seen in Canada in the past forty years.By relaxing its monetary policy, the central bank hopes to strengthen consumer and investor confidence and thus stimulate domestic demand.tooooz 9 The latest statistics on the U.S.economy nevertheless do not bode well for our own economy.The Bank of Canada may therefore announce yet another decrease in interest rates at its next meeting on November 27.EXCHANGE RATES In November, the Canadian dollar fell to 62.33 cents U.S., compared with 66.05 cents last June.Today\u2019s low interest rates, reduced prices for raw materials, and poor export prospects are all exerting intense pressure on our dollar.If the economic situation continues to deteriorate, and if the Bank of Canada again reduces interest rates, the value of the Canadian dollar could continue to fall.STOCK MARKETS In the past few weeks, the major North American market indexes have registered strong growth.The Dow Jones Industrial Average has gained more than 10% since October 1, 2001, and the Standard & Poor\u2019s Index grew by 8% during the same period.These indexes have benefited from the latest geopolitical developments, low interest rates, and lower oil prices.On our side of the border, the TSE 300 has grown by about 6% since early October.ECONOMIC SECTORS TRANSPORTATION AIR TRAFFIC MONTREAL AIR TRAFFIC IN A HOLDING PATTERN Total passengers at Montreal airports Following the September 11 terrorist attacks on the United States, all U.S.and Canadian airspace was closed for at least 48 hours.During this period, no private or commercial planes were allowed to take off from Canadian airports.According to Statistics Canada, about 250 cross-border and international flights were nevertheless rerouted to major Canadian airports.Although travel gradually resumed beginning September 13, airlines have considerably cut back on the frequency of their flights.Statistics Canada further reports that total Canadian air traffic was down 9.8% in September 2001 compared with the same period last year.Like other Canadian airports, those in Montreal have not been unaffected by this loss of traffic.After chalking up average growth of 4.7% since the start of the year, passenger traffic plummeted 24% in September compared with the same period last year.Dorval airport was the hardest hit, with the number of passengers slashed by 26% in September compared with September 2000, while Mirabel\u2019s loss was only 7%.This is understandable since the majority of trans-border flights originate in Dorval.Since the attacks, Air Transat, Mirabel\u2019s primary user, has eliminated 1,300 employees and about 30% of its flights.Air Canada, Dorval\u2019s biggest carrier, has had to ground 84 planes, or 2% of its fleet.It has also announced the elimination of an additional 1,000,000 950,000 900,000 850,000 800,000 750,000 700,000 650,000 600,000 Source: Aéroports de Montréal 5,000 jobs, bringing the year-to-date total to 9,000.Normal activity will not likely resume any time soon.According to Jim Cherry, president of Aéroports de Montréal, the volume of activity at both Montreal airports will be down 20% at least until the end of the year. 10 PORT TRAFFIC THE PORT OF MONTREAL AFFECTED BY GLOBAL ECONOMIC SLOWDOWN Last October, the Montreal Port Authority announced that during the first eight months of 2001, total traffic moving through the port had decreased by 7.3% compared with the same period last year.Even container traffic, which has grown at an average annual rate of almost 7% over the past five years, grew by just 5.2% compared with the same period last year, representing a decrease of about 25% in the average growth for this period.An anticipated drop in the demand for steel products in North America has had a dramatic impact on non-containerized cargo traffic since the beginning of the year.As of August 31, 2001, traffic in this category amounted to 310,557 tons, a decrease of 52.5% compared with the same period last year, when it was 654,337 tons.Liquid bulk traffic, on the other hand, increased by a healthy 5.1%, on average, during the first eight months of the year.This increase is due largely to the 8.6% increase in petroleum products traffic, which alone represents almost 30% of the Port of Montreal\u2019s total traffic.Total traffic at the Port of Montreal (In millions of tons) 22 21 20 19 18 17 16 15 1994\t1995\t1996\t1997\t1998\t1999\t2000\t2001 (Estimate) Source: Port of Montreal If these trends continue, total traffic moving through the Port of Montreal this year could be 19.2 million tons, or 8.6% less than in 1998, the year the port turned in its best performance of the decade.Nevertheless, given current economic conditions and considering that half of all Montreal port traffic comes from the United States, we can expect traffic slowdowns to be even greater than predicted in the coming month.AEROSPACE MASSIVE LAYOFFS IN MONTREAL\u2019S AEROSPACE INDUSTRY The September 11 attacks on the United States have particularly affected the world\u2019s aerospace industry.These events shattered the confidence of American investors and consumers, but what hurt the aerospace sector especially was that the terrorists employed commercial planes on scheduled flights.The closing of U.S.airspace for an entire week coupled with the catastrophic decline in world demand for air travel has had a serious impact on the already precarious financial position of airlines around the world.Not to mention that this will naturally have negative repercussions on the order books of aerospace companies.The aerospace industry is an extremely important player in Greater Montreal.Our aerospace sector is the sixth largest in the world in terms of production and third in terms of number of jobs (after Toulouse and Seattle), with 42,000 jobs at 250 companies.In Montreal, this industry accounts for 55% of Canadian production and generates sales of more than $12 billion annually.Moreover, Montreal is the only place in the world a plane can be built from the ground up with locally manufactured parts.Considering that 75% of Montreal\u2019s aerospace production is exported and that 53% of Canadians working in this sector are located in the metropolitan area, it\u2019s not surprising that this fall\u2019s events have hit the region\u2019s aerospace sector so hard.Since September, several major local companies have announced massive layoffs.Bombardier plans to eliminate 3,800 jobs (2,000 in Montreal), while Pratt & Whitney and Bell Helicopter Textron will cut 600 and 285 jobs respectively.Montreal suppliers will likely be forced to reduce staff as well. 11 Bombardier Aerospace estimates that in the next few months, its suppliers will have to eliminate 2,000 to 4,000 jobs, representing between 5% and 10% of their labour force.In addition, the Quebec Aerospace Association predicts that Quebec subcontractors could lose up to 25% of their contracts in the coming months.The position of the airline industry, already precarious prior to September 11, has deteriorated considerably since then, with many air carriers experiencing serious financial difficulties.Air Canada and Air Transat have announced the elimination of 5,000 and 1,300 jobs respectively.Just this past November, Canada 3000 declared official bankruptcy which increased job loss in this industry by an additional 4,800.Internationally, several major carriers are also on the verge of insolvency.Swissair and Sabena have already placed themselves under bankruptcy protection, and United Airlines, the second largest airline in the world, is now threatening to close up shop.Even if we put aside the current economic slowdown, the world crisis in the airline industry will inevitably affect Montreal\u2019s aerospace industry for the next few months REAL ESTATE LOW BUILDING VACANCY RATE IN DOWNTOWN MONTREAL In downtown Montreal, office space vacancy rates for Class \u201cA\u201d and \u201cB\u201d1 properties are the lowest they have been in ten years.According to a market study carried out by Devencore, in just two years, the combined vacancy rates for both types of office building fell from 11.4% to 7.6%, compared to almost 17% in 1993.This low office vacancy rate is due to the sustained economic growth experienced by Montreal in the past few years and the fact that there have been no sizeable Class \u201cA\u201d developments in Montreal\u2019s downtown core since 1991-92, when 1250 René-Lévesque, 1000 de la Gauchetière, 1501 McGill College, and the World Trade Centre were constructed.Of course the very low vacancy rate in the more prestigious buildings (5.8% in July 2001) benefits the owners of Class \u201cB\u201d buildings, for two reasons: 1) Those seeking Class \u201cA\u201d properties are forced to turn to the highest-rated Class \u201cB\u201d properties, and 2) The higher prices generated by the scarcity of Class \u201cA\u201d properties forces renters to move into less prestigious accommodations.We have already seen increased corporate demand for sectors normally deemed to be less desirable, such as Maisonneuve Boulevard, Sherbrooke Street in Westmount, and Old Montreal.This situation could change in the next few months as a result of both the steeper than expected economic slowdown, which could force companies to limit their fixed capital expenditures, and new real estate developments which are expected to create an additional 1.5 million square feet of quality office space over the short term.These two factors will necessarily halt the increase in rental rates and reverse the current office space vacancy trend in Office space vacancy rate in downtown Montreal (Class \"A\" and \"B\" combined) % 18 16 14 12 10 \t\t6,8 \t\t \t\t 12\t\t H\t\t \t\t \t\t \t\t 1991\t1993 ,» :f\t\t K\t,3 11\t,4 \u2014 7,6 II 1995\t1997\t1999\t2001 Source: Devencore downtown Montreal.1.Class \u201cA\u201d buildings are considered the most prestigious, were built within the past ten years, are located in the heart of downtown Montreal and have the best services as well as have the easiest access.Class \u201cB\u201d buildings are large office buildings, are located in or near the downtown core, are older, are less accessible, and are located further from services than are the higher-class buildings. 12 TOURISM MONTREAL\u2019S TOURISM INDUSTRY HARD HIT Not surprisingly, the events of September 11 have taken a heavy toll on Montreal\u2019s tourism industry.The latest statistics published by Tourisme Montréal indicate that in October 2001 hotel occupancy rates in Greater Montreal were down 17.5% from August (86.8%) and 3.4% from September (73.75%).Compared with the same month last year, the occupancy rate fell by 14% (82.7% in October 2000 compared with 71.21% in October 2001).In terms of economic spin-offs, September is usually the most important month for Montreal\u2019s tourism industry.Yet in this month alone, the direct and negative impact of the attacks is estimated at about $40 million, meaning revenues were slashed by some 20 to 30%.Although airport security measures have been reinforced, people are still generally afraid to fly, and, one month after the attacks, the number of pleasure tourists is still lower than it was this time last year.The Quebec government is planning to invest $15 million - or $6 million more than last year - in promotional campaigns encouraging foreign tourists to vacation in Quebec.Industry Canada will do the same for the entire country by releasing a budget of $20 million for a campaign inviting Canadians and Americans to travel within Canada.But what is most critical to Montreal\u2019s tourism industry right now is business tourism, which, according to Tourisme Montréal, is practically moribund.This type of tourism represents approximately 20% of the total volume of tourists and 30% of tourism expenditures in Greater Montreal.Greater Montreal hotel rates (2000-2001) Ill irt 91 llh I ¦ i s m A- M- J- J- A- S- 0- N- 00 00 00 00 00 00 00 00 00 00 00 00 01 01 01 01 01 01 01 01 01 01 Source: Hotel Association of Greater Montreal Considering that in periods of economic slowdown or recession, companies considerably reduce their business travel, there is no reason to expect any improvement in this area before next spring.But with luck, tourism activity will pick up before the summer season, which accounts for approximately 50% of revenues for Montreal\u2019s entire tourism industry.0 13 I SPECIFIC ECONOMIC SECTORS EDUCATION EMPLOYMENT AND EDUCATION LEVELS Since the early 1990s, the structure of Quebec\u2019s labour market has changed dramatically.In particular, the \u201ctechnical shift\u201d1 undergone by Quebec\u2019s labour market has been much more favourable to those with a post-secondary diploma or university degree.Between 1990 and 2000, the number of jobs held by workers without a high school diploma dropped by 287,000, or 31%, while those held by workers with a post-secondary diploma jumped by 343,000, or 37.7%.At the same time, the number of jobs held by university graduates climbed by 59%.As a result, slightly more than half of all jobs are now held by those with post-secondary diplomas (55.6%), and only one out of every five (18.6 %) by those who never completed their high school education.This is a somewhat worrisome situation for Greater Montreal because, in the past few years, the high school graduation rate in the metropolis has fallen (65.4% in 2000), while the number of jobs available to those without a high school diploma is also shrinking.If the problem of high-school dropouts is not resolved, the growing gap between the needs of the labour market and the performance of the secondary school system will generate significant social costs with a negative impact both on the quality of life of Montrealers and on the city\u2019s ability to compete.Employment trends in Quebec (by level of education \u20141999=100) % Source: Ministère de l'Éducation (Québec) No secondary school diploma Secondary school diploma Post-secondafry diploma University degree 1) Performance and Potential 2001-2002, Conference Board of Canada PUBLIC HEALTH COMPARED TO THE REST OF CANADA, HEALTH CARE IMPROVING IN MONTREAL 14 Once again this year, Maclean\u2019s magazine published a study on the quality of health care in 54 Canadian cities with 100,000 inhabitants or more.According to this report, Montreal has made progress in this area.In terms of health services, Montreal rose from 13th to 11th place among the 15 cities with medical schools, and in a comparison of all the cities studied, it climbed nine places, from 29th to 20th.The factors contributing most to Montreal\u2019s progress compared to the other Canadian cities studied were 1) lower hospitalization rates for cases of flu and pneumonia because of increased home care services, 2) the ability of hospitals to serve a large pool of clients from other regions, and 3) a higher number of general practitioners and specialists per capita.On the other hand, Montreal performed poorly in terms of birth weight and life expectancy.The study also noted a wide disparity within the Island of Montreal, with life expectancy in wealthier neighbourhoods up to ten years longer than in more underprivileged districts.It should nevertheless be noted that this disparity is more closely linked to government policies on poverty, employment, and education than to the quality of health care as such.Since the Maclean\u2019s report is based on statistics from 1998-1999, a time when the Quebec government was just beginning to reinvest in the health-care system, it is possible that, by next year, Montreal will have once again been able to increase its relative standing for health care provided by Canadian cities.Canadian health care rankings (2001) / £ £ â 4 J é 4 J # / / i / f Source: Maclean's and Canadian Institute for Health Information CANADA ECONOMIC DEVELOPMENT REPORT BIO-INDUSTRIES - A PROMISING SECTOR FOR GREATER MONTREAL?BACKGROUND The emergence of the bio-industries sector is attracting the attention of many organizations at both the national and international levels.Studies of this industry, focused primarily on the use of biotechnologies, face significant methodological challenges.Bio-industries cut across broad sectors, including health, nutrition, the environment, and agriculture, and this overlapping of activities makes it difficult to collect and analyse data.There are nevertheless many indications that, despite considerable challenges, this sector has a promising future in Montreal.MONTREAL\u2019S POSITIONING Greater Montreal clearly has much to offer in terms of promoting the development of bio-industries.In particular, it is cheaper, on average, to operate a business in Montreal than elsewhere in either Canada or the United States.Another powerful attraction is Montreal\u2019s sophisticated university network supported by an infrastructure of high-profile research centres.Our city also boasts a high level of expertise and excellence in the development of patent medicines, which demand far more in terms of research and development (R&D) than do generic drugs.INDUSTRY CHALLENGES Access to capital and a highly skilled labour force are the major challenges facing this industry.This sector is characterized by considerable, recurring needs for financing, and R&D is often associated with high risks that are often difficult to assess.Companies also require capital to market the products developed by bio-industries.As international markets open up, managing intellectual property strategies throughout the world is also becoming a significant issue.Bio-industry sectors in Quebec \u2022\tHealth, reproduction, and nutrition Human Animal Plant \u2022\tEnvironment \u2022\tTechnologies-tools \u2022\tServices Source: Répertoire des entreprises des bio-industries du Québec, Management Chair, ESG-UQAM, 2001.Life sciences business operating costs (United States = 100) United States Ottawa Kingston San Juan Canada Montreal Quebec Saskatoon Halifax 100 SSSSSESS 93.7\t \t \t3JŒ4 1 ¦\tnrrxri \t \ti\ti\ti\ti\ti, SB an\trnrnrT~rl \t 90\t91\t92\t93\t94\t95\t96\t97\t98\t99\t100 Source: The Competitive Alternatives: A comparison of business costs in North America, Europe and Japan, KPMG, 1999. 16 Managing knowledge and staff, the availability of a highly qualified, highly educated labour force (doctorates and post-doc-torates), and developing management skills are the major challenges associated with human resources.In fact, the Biotechnology Human Resource Council is working with Human Resources Development Canada to tackle these challenges.Other steps are also being taken.For example, UQAM\u2019s Chaire en gestion des bio-industries responded to this need by launching an MBA program in bio-industry management in January 2001.OUTLOOKS Many Montreal stakeholders in the bio-industries and biotechnology sector are taking action, reviewing their strategies and investigating ways to maximize the development of this promising sector.BIOQuébec, for example, has announced plans to organize a consultation forum to map out concrete solutions for the development of Quebec bio-industries.Montréal International plans to announce a strategic plan as well as an action plan for Greater Montreal in the near future.UQAM\u2019s Chaire en gestion des bio-industries has launched a series of studies, including one on Montreal, aiming to support the strategic positioning of the sector and identify industry needs.These should be made public in 2002.Bio-industries will likely receive a big shot in the arm from discoveries in very promising arms of the life sciences such as genomics, proteomics, and bioinformatics.Quebec\u2019s Conseil de la science et de la technologie considers bioinformatics (the organization, management, and analysis of information) to be an essential lever in the development of this sector.Ultimately, bio-industries and biotechnologies will likely play a critical role in the development of solutions to major global problems, including health care, the food supply, and the environment.The region\u2019s many assets and the active involvement of stakeholders lead us to believe that Greater Montreal will contribute greatly to those efforts.Number of companies with openings (by sector, in %, 1999) Human health Biotech-agriculture Bio-informatics Canada No openings Openings Source: Statistics Canada, Biotechnology Use and Development Survey, 1999 Biotechnology products and processes (By sector, all stages of development) Bio-Informatics Agriculture Human health Food processing \t \t> S 785\t> \t- S 233\t\t\t\t> \t \t Number Source: Statistics Canada, 1999.By Dany Provençal Canada Economic Development In collaboration with Stéphane Pronovost and Marie-Claude Collette Canada Economic Development "]