December 1, 2005

Job losses challenge Canadian Liberal re-election

By Randall Palmer

CORNWALL, Ontario (Reuters) - Canadian Prime Minister Paul
Martin is running his re-election bid on the strength of the
economy but his campaign buses ran straight into job losses on

In many respects the Canadian economy is ticking along
well, with a booming trade surplus and a string of budget
surpluses that are the envy of the G7 rich nations. But its
manufacturing sector is getting hammered.

The day before Martin arrived at the small industrial town
of Cornwall, on the St. Lawrence River, Domtar Inc. announced
it was shutting its local paper mill and laying off 520 people
because of high energy prices and the muscular Canadian dollar.

It is a story that has been replayed again and again,
particularly in the industrial regions of Ontario and Quebec,
crucial to Martin's hope of winning the January 23 election.

More than 220,000 jobs have been created in Canada in the
past year, but 129,000 manufacturing jobs have been lost.

"Unfortunately, these kinds of things happen, but when they
happen it's important to understand that we've all got to stand
together," Martin, who won acclaim for having eliminated budget
deficits in the 1990s, told students in a local high school.

He said he had offered retraining assistance for those
affected. Earlier he told reporters in Montreal: "One of the
reasons for having a strong economy in Canada is to be able to
help people who lose their jobs."

But outside the Cornwall school, Domtar worker Alex Daye,
53, criticized the prime minister for not having helped the
paper industry the way he had bailed out steel and automakers.

"We could have used a little bit of help, too. But today is
a little late for him to come around for votes," he said.

Daye said he would vote for the leftist New Democratic
Party, whose leader, Jack Layton, spent the morning in Oshawa,
Ontario, where General Motors announced last month it planned
to shut down a car plant.

Layton warned that the auto industry was going to vanish
unless other nations gave Canada the same access to markets
that Canada gives them.

The NDP has only a slim chance in Cornwall's electoral
district, currently held by a Conservative, but Daye's remarks
underscore the difficulty for political campaigns in Ontario at
a time of a mixed economic news.

"There is no strategy in this country for our major
industries who are having to compete in a tough world,"
Conservative campaign co-chair John Reynolds told Reuters after
talking to Daye and a few other workers Domtar is laying off.

He said Conservative moves to cut energy taxes could have
helped Domtar a little. He also noted that planned Liberal
corporate income tax cuts had been shelved in April as part of
a deal with the NDP and said that may have cost Cornwall jobs.

Ontario has 106 of the 308 seats in the House of Commons --
making it the most critical battleground in any election. While
the Liberals could pick up some seats they potentially have the
most to lose: they have 74 seats while the Conservatives have
23 and the NDP seven. Two are vacant.

In the last election, in June 2004, the Liberals took 45
percent of Ontario votes to the Conservatives' 32 percent, and
the NDP's 18.

But that Liberal lead over the Conservatives has shrunk to
just two points in the latest poll, by Ipsos-Reid, a result
that could spell a major shift.

(Additional reporting by David Ljunggren in Ottawa)