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The Price of Independence
A Short History of Guelph-Wellington Business, Part 3

by Ken Montague

(published in the Wellington Business Digest, Vol. 1, Issue 6, June 1985)

The Guelph area awoke from the Great Depression with a new view of itself and a new approach to its problems.  The policy decisions made then have largely determined the business conditions we now work under.  The aims decided on were the local control of economic activities and a balanced diversity of such activities, even at the expense of slow growth.

Guelph business leaders had finally to accept that since our older and larger neighbours had cut off our trading area in every direction, there was just no way that Guelph could be bootstrapped into a size or position where it could compete on equal terms.  Consequently, the pursuit of growth gave way to the pursuit of viable independence.

The Depression had taught some hard lessons. Guelph had seen the devastation which hit a small city when large employers moved or collapsed, and to avoid such vulnerability the city began to fend off large manufacturers and to rely on smaller and locally owned firms.  The city also had learned that it was the non-manufacturing sectors which kept things afloat when times were tough.  The Reformatory and the Associated Colleges, for example, had trickled their wages and salaries into the city throughout the troubles.  The result was a passion for diversity and a refusal to let any one firm or any one business area become so dominant that the region became tied to its fortunes.

The practical result was that a growth area like manufacturing had to be kept in check until weaker ones, such as commercial activity, could be strengthened.  If this were not done, Guelph would become an industrial satellite shared by, and controlled by, Kitchener, Hamilton, and Toronto. Guelph's rate of growth was thus tied to the growth of the weakest sector of its economy, which was very weak indeed.  Guelph's commercial life was a shambles.

The effect on manufacturing was predictable.  In the decade 1941-1951, Kichener grew 31% to around 45,000, largely as the result of new manufacturing activity.  Guelph grew too - faster than it had ever done. - and it grew on manufacturing, but only to 27,000, an increase of 18%.  At 22%, Guelph had the lowest proportion of its population involved in manufacturing of any city in its class.  Wages were low, managerial skill had to be imported, and the pool of investment capital was merely a puddle.

None the less, Ontario's boom in manufacturing was on and companies needed land.  In spite of discouragement and obstruction from the Board of Trade, big factories began to appear in the 1950s.  General Electric broke the ice in 1954, with Fiberglass, Foseco, and Imperial Tobacco right behind.  By 1961, nearly 40% of the work force was involved in manufacturing and the ideal of independence through diversity was in danger.  It was the service sector, primarily that part devoted to education and medicine, which was called upon to restore the balance.  The 1960s saw, for example the blooming of the Associated Colleges into that hopefully amiable giant, the University of Guelph.  In 1961, this sector accounted for a quarter of the work force, but by 1971, it accounted for one-third.  Manufacturing, though it continued to expand, was by then itself down to employing only a third of the labour force. A balance had been reached and the relative size of these sectors has remained remarkably constant into the 1980s.

The weak link, however, was trade and commerce.  By the 1950s, retail trade was nowhere near what the population would justify and the wholesale trade had been all but wiped out.  From 1961, this sector was employing only 14-15% of the work force and only now are we seeing greater relative activity. From the 1940s on, the Board of Trade tried frantically to improve matters, but all it could do was help to hold the line. That in itself was a major accomplishment , given the small home market, the easy access to large neighbours, and the lack of local experience and expertise in marketing.

The Board of Trade tried to sell the idea of Guelph as a central hub surrounded by a rim of dandy markets.  One booster even included Kitchener in the market area for his department store.  The unpalatable truth was of course quite the reverse.  Guelph was itself a market shared by the neigbours, and it was ludicrous to suppose that Kitchener and Hamilton consumers leapt into their cars to come and savour the delights of shopping in Guelph.  The lack of variety alone precluded such a possibility.

As the area grew, however slowly, newcomers often found Guelph insular, conservative, and even a bit cranky.  They would not have known that the city's actions were dedicated to preserving its independence as a social, political, and economic entity, and that those actions were by and large successful.  There have been prices paid for independence, of course.  For example, low growth rates have meant that global conditions which would only slow the growth of a more expansive city would produce unemployment and actual hardship here.  Guelph's periodically high unemployment rates still bedevil us.  Slow growth also affects the ability to absorb changes in technology and business practices, which has occasionally made us a little old-fashioned and parochial.  However, such prices have bought what was wanted: independence and some increase in prosperity.

The process begun after the Great Depression is not yet complete.  For example, our predecessors managed to hold on to the nucleus of a viable commercial sector, but its real development is only just beginning.  What they didn't have, and we do, is a large enough home market to support the number and variety of commercial enterprises needed in a healthy city.  By avoiding absorption into neighbouring economies, earlier policy-makers have allowed us to reach a size where we have a chance for a local marketing bonanza.  In manufacturing too, our increasing size allows us to accept larger factories or industry segments without being wholly hostage to their well-being.  We can afford to think of newer kinds of activity, such as tourism and convention services or the University's proposed techno-park.  While Guelph and area will continue to expand carefully, more can now be done to increase the prosperity of the existing community.

There are always dangers, of course.  Somebody might decide to hold another recession.  Business leaders used to just hanging on might fail to see the need for more positive and aggressive attempts to service our growing local markets.  But things look far better than they have since early in the century, and the process started the Depression may yet reach completion.


Part 1 Thin Air and Lots of Money
Part 2 Staying Alive


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