Laurentian cuts could take more than $100 million out of Sudbury’s economy – The Sudbury Star

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Reductions will have wide-ranging economic, intellectual and social impacts, Northern economists say

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The impact of job and program cuts at Laurentian University this week will have profound and potentially long-term effects on the economy in Sudbury and Northeastern Ontario, experts told The Sudbury Star this week.

Laurentian, which filed for creditor protection in February, announced on Monday it would cut 58 undergraduate and 11 graduate programs, while laying off 110 faculty as part of its court-supervised restructuring under the Companies Creditors Arrangement Act.

Livio Di Matteo, professor of economics at Lakehead University in Thunder Bay, said the fact Laurentians administration has chosen to restructure under the CCAA is indicative of the dire situation in which the university finds itself.

Companies that go into that type of creditor protection are most often private sector firms, he said, which are well-defined entities with a relatively narrow function.

CCAA restructuring is a rather blunt tool, because its basically to satisfy creditors and creditors, as long as they get their money, are quite happy with cost cuts being paramount, as opposed to any type of long-term impact and what the plan is for long-term revenue projection and recruitment, Di Matteo said.

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Most universities have exigency provisions, but they really are long and cumbersome. This is the other extreme.

The cuts announced on Monday will have a major impact, he said, both immediately and in the longer term, as the school has shed roughly a third of its course offerings and about 30 per cent of its faculty.

I have heard 100, 110, but that is just faculty theres no numbers on staff, Di Matteo said. Just faculty alone, based on average salaries, youre looking at a $15 (million)-$20 million direct hit to wages in Sudburys economy. If you look at indirect effects, in terms of the spending and multiplier effects, youre probably looking at an impact of anywhere from $30-40 million.

Administrative positions and other staff may account for just as big a hit, he said, pushing the number to $60-80 million in direct impact on the local economy.

A potential drop in enrolment, as students consider options other than Laurentian to pursue a post-secondary education, means less money will be spend locally on residence, apartments and restaurants.

Its hard to do an economic impact analysis on the fly, but I would be surprised if the total loss in the immediate term to the economy of Sudbury wasnt in the $100-150 million range, once the impact on wages, salaries, staff, faculty and student spending are all factored in, he said.

Natalya Brown, associate professor of economics and co-ordinator of the economics program at Nipissing University in North Bay, said the laid-off Laurentian faculty and staff, whose jobs help support local businesses and charities, will not easily find work theyre qualified for in the North.

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They have also bought homes, so that could have implications for the housing market, as well, said Brown, reached on Tuesday afternoon. Youre going to see a lot of that expenditure leaving the community and a lot of that expertise and brain drain in the community, and thats not just going to have an impact in the short term, but in the long term, because having a university with a wide range of programs is an attraction piece for Sudbury. It attracts a lot of students, not just from the region, but also outside of Ontario and internationally. A lot of those students stay in the community, because they like what they see, so this could have impacts on skill-matching and labour shortages in the future.

Universities are creativity centres and drivers of innovation, Brown said, and researchers often consult with local businesses and give their time to social enterprises and charities, which could be sources of future growth.

Especially on the environmental front, with the kind of resource-based economy we have in the North, researchers are very important players, she added.

Im wondering wonder how the decisions were made in terms of which programs were cut. You look at the list and I was surprised to see environmental studies and some other programs that I think young people are really getting excited about and are very attractive programs being cut, because I think there will be growth in the future. A university is not a corporation and it has a responsibility to the community that it is in to provide relevant programming, and it just seemed weird that these programs were cut in areas where we need that expertise and we need to build a workforce with those skills and knowledge.

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Contacted on Tuesday, the Greater Sudbury Chamber of Commerce said it was unable to accommodate an interview request, but supplied a statement from Cora DeMarco, chair of its board of directors.

Laurentian University is a key economic pillar of our community, and has contributed immeasurably to Sudburys growth, research, economic wellbeing, and quality of life; it is one of the many reasons Sudburians are proud to call Sudbury home and why Sudbury remains an attractive option for international students, DeMarco said. We acknowledge the university is undergoing a challenging and difficult restructuring process, and our thoughts are with those impacted. We are optimistic the institution will emerge out of this process to remain a key economic contributor and employer within our community.

bleeson@postmedia.com

Twitter: @ben_leeson

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Laurentian cuts could take more than $100 million out of Sudbury's economy - The Sudbury Star