Sault Ste. Marie: Ontario Steel City Looks to Forge New Path
Institute for Research on Public Policy
Canada’s renewed embrace of industrial policy and megaprojects signals a decisive shift toward an activist ‘nation-of‑builders’ strategy. However, a real test of its success is whether it can support lasting, community‑led prosperity in regions that depend on natural resource extraction or energy generation.
In many such places, oil, gas, minerals and other commodities will remain central to their economic future for decades. Therefore, the challenge is to structure new investments so that they are less environmentally harmful and give local communities greater control, more lasting benefits and stronger resilience to shocks, rather than locking them into narrow roles as export corridors moving goods to international markets.
Megaprojects can support that kind of grounded sovereignty only if they are embedded in robust regional development strategies that are defined with communities, not merely in their name.
We propose five pillars for such a framework:
Without this foundation, there is a real danger the language of strategic autonomy and values‑based realism will sit atop familiar staple‑driven development patterns, in which investment looks impressive on paper but communities dependent on primary commodities such as minerals, natural gas or oil remain exposed to volatility, environmental stress and externally set patterns of economic development.
The 2025 federal budget explicitly positions Canada as a nation of builders entering a new era of activist industrial strategy centred on large‑scale infrastructure, energy and critical minerals development.
These investments are framed as a generational response to a rupture in the global order. Trade wars, supply chain fragmentation and climate imperatives are said to demand courageous investments, not incrementalism, in productivity, resilience and sovereignty.
This new era of nation-building is propelled by four institutional innovations: the Building Canada Act; a capital budgeting framework that separates day‑to‑day spending from long-term investments; the One Canadian Economy Act, which aims to remove internal trade barriers; and the co-ordinating role of the new Major Projects Office (MPO).
The federal Sustainable Jobs Action Plan, released in February 2026 in compliance with the Canadian Sustainable Jobs Act, adds a workforce and community dimension to the Build Canada agenda. It aims to:
The action plan thus frames the labour and community dimensions of the megaproject wave not as separate social policy concerns, but as integral to Canada’s bid to become, in the government’s words, “an energy superpower.”
The MPO’s list of projects reveals the industrial policy priorities: large liquefied natural gas (LNG) facilities (LNG Canada Phase 2, Ksi Lisims LNG); critical mineral mines (Red Chris copper, McIlvenna copper, Crawford nickel, Matawinie graphite, Sisson tungsten); major transmission projects (North Coast Transmission Line, Yukon-B.C. Grid Connect); electricity generation (northern hydro, Ontario nuclear); port infrastructure (Grays Bay, Contrecoeur); and northern corridors and highways (Mackenzie Valley, Arctic Economic and Security Corridor).
The MPO-referred projects represent over $100 billion in proposed investment with the potential to support more than 100,000 jobs. Each project is presented as individually transformative and in aggregate as the backbone of a trillion‑dollar investment wave expected to generate tens of thousands of jobs and underpin a more resilient, diversified economy.
The Sustainable Jobs Action Plan positions community benefit agreements, prevailing wage requirements, unionized labour provisions and Buy Canadian policies as the primary instruments through which workers and communities will share the benefits of major projects. The idea is that these mechanisms will be attached to federal investments as standard conditions rather than negotiated case by case.
At the same time, provinces are advancing their own industrial strategies For example, British Columbia’s Look West explicitly brands the province as Canada’s economic engine. It promises to secure $200 billion in investment, double technology and life‑science employment, and deliver a portfolio of LNG, critical minerals, transmission and defence‑linked projects that closely overlap with the MPO prerogatives.
From a regional development perspective, this is a familiar pattern. Weaver and Gunton’s historical analysis of Canadian regional policy (from 1982) traces a long arc from drought assistance to megaprojects, in which successive federal strategies sought to harness large‑scale infrastructure and resource investments to close regional gaps. The results were mixed at best.
Their reading of the “staple theory” tradition, rooted in Harold Innis’s work on the fur trade, emphasizes the risks — referred to as the staples trap — that can arise when decisions about resource projects are made outside the affected region. In such cases, most of the profits flow to distant shareholders and governments, while local economies end up reliant on a single industry whose fortunes rise and fall.
In this view, the problem is not that communities produce staples such as oil, gas, minerals or other raw materials, but that they can be left with limited decision‑making power, few opportunities to add value locally and great exposure to downturns if markets, technologies or regulations change. What is new in the current moment is less the reliance on staples and export corridors than the way these are justified as tools of geoeconomic resilience and sovereignty in a world of great-power rivalry.
The MPO model echoes this earlier reliance on staples and mega‑infrastructure, now branded in the language of critical minerals and clean energy.
The Sustainable Jobs Action Plan represents an effort to attach a worker- and community-centred logic to the project pipeline. While this ambition should be acknowledged, the plan’s instruments remain primarily oriented toward individual workers and employment outcomes: skills training, apprenticeship pathways, income support and labour mobility. The harder questions of community governance, cumulative impacts and place-based resilience receive far less attention.
The danger — well-documented in Canada — is that without strong institutions to capture a share of the wealth generated, build linkages between local businesses, workers and public services, and manage the combined social, economic and environmental impacts over time, megaprojects can reinforce the staples trap even as they promise transformation.
Will Canada’s emerging industrial architecture — federal and provincial — deliver what Prime Minister Mark Carney described in his Davos speech as “the value of our strength” for communities, rather than simply raising the walls of a resource fortress that leaves localities exposed to volatility and external control?
Bent Flyvbjerg’s work on megaprojects provides a sobering empirical counterpoint to the current policy optimism. Drawing on global datasets, he demonstrates that megaprojects — typically defined as ventures of more than US$1 billion with long lead times and multiple stakeholders — are subject to what he calls an “iron law”: over budget, over time, over and over again.
Approximately nine in ten such projects exhibit significant cost overruns, with real overruns of 50 per cent being common and substantially larger deviations not unusual. Schedule delays and benefit shortfalls — where projects attract fewer users, generate less revenue or deliver smaller economic, social or environmental gains than promised — are similarly pervasive. Projects that are on time, on budget and deliver promised benefits constitute a vanishingly small minority.
Flyvbjerg argues that these outcomes are not primarily attributable to unforeseeable technical challenges. Rather, they arise from systematic optimism bias and strategic misrepresentation in the planning phase, as project proponents and political champions underestimate costs and risks while overstating benefits to secure approval.
He terms this behaviour “inverted Darwinism,” where the least realistic projects are often the ones that survive the selection process. The prevalent “break–fix” model, in which projects are allowed to proceed on shaky premises and then restructured after major overruns or failures, leads to substantial waste and misallocation of public resources.
This has uncomfortable resonance for Canada today. The MPO’s mandate is to accelerate projects deemed nationally strategic and the 2025 federal budget emphasizes speed, regulatory certainty and catalyzing additional private capital investment.
Yet, there is little in the budget architecture that guarantees adherence to the kind of reference‑class forecasting — using data from past, similar projects to make more realistic estimates of costs, timelines and benefits — and rigorous risk management that Flyvbjerg recommends. Nor are there robust mechanisms to prevent downside risks from disproportionately falling on local communities while upside benefits accrue to private or extra‑regional actors.
Given the scale of the proposed investments and their concentration in already vulnerable regions, the absence of an explicit institutional response to his iron law of megaprojects is a striking omission.
The Community Transformations Project of the Institute for Research on Public Policy (IRPP) joins a long tradition of community and regional development scholarship to offer a different vantage point. Rather than taking projects or sectors as the unit of analysis, it maps Canadian communities according to their susceptibility to workforce disruption that could arise from global decarbonization, technological change or trade realignments.
Susceptibility is not treated as a simple proxy for decline or job loss. The project explicitly recognizes that new investments — such as electric vehicle battery plants in southern Ontario — can generate substantial net job creation even as they disrupt existing occupational structures and strain local housing and services. Rather, the core concern is whether institutions are in place to support people‑centred transitions: ensuring decent work, social protection and inclusive, participatory governance in the face of rapid change.
This community‑centred framework jars with the MPO model in which the primary unit of decision‑making is the megaproject and the central objective is national competitiveness. Many of the communities flagged as susceptible in the IRPP mapping — resource towns, Indigenous communities, northern and rural regions — are the very places that will be affected by the new LNG, transmission, mining and infrastructure projects.
For example, Kitimat and Kitamaat Village are navigating the opportunities and risks associated with the LNG Canada and Cedar LNG projects. Other communities have faced more acute risks — such as those affected by the 2014 Mount Polley mine tailings dam breach in the Cariboo region of B.C. — where environmental and social impacts raised serious questions about whether local costs exceeded local benefits.
Similar concerns have been raised around large gold projects such as Victoria Gold’s Eagle mine in Yukon, where promised employment and revenue must be weighed against long‑term environmental and community vulnerabilities.
If megaprojects proceed without being embedded in community‑led transformation strategies, there is a serious risk that they will amplify susceptibility rather than reduce it — intensifying housing pressures, fiscal dependence and environmental stress, while offering only transient employment gains.
Over the past year, we (the authors) held community and regional energy dialogues across northern British Columbia as part of the University of Victoria-led accelerating community energy transformation initiative in partnership with the University of Northern British Columbia.
These dialogues revealed concerns and aspirations that are only partially captured in government strategies. Participants emphasized energy reliability, resilience and independence rather than aggregate energy supply alone.
End‑of‑line grid communities and off‑grid rural residents described acute vulnerability to outages and climate‑driven hazards such as wildfires, drought and extreme cold. They told us about episodes when extended blackouts at -30 C posed existential risks.
Many express interest in decentralized, locally owned energy systems — small‑scale hydro, solar, biomass, district heating and storage — to reduce dependence on distant infrastructure, the operation and maintenance of which they do not control.
Large transmission projects such as the planned third phase of the North Coast Transmission Line (NCTL) — twinning the existing high‑voltage line from Prince George through Terrace to Bob Quinn Lake to power new mines, LNG facilities, ports and other industrial projects — are viewed ambivalently. They may enable industrial development and improve service for some, but they can also deepen negative extraction dynamics if not paired with community‑scale investments and governance.
Look West acknowledges some of this tension, touting the NCTL as a nation-building project while emphasizing First Nations co‑ownership and federal co‑investment. However, it has far less to say about decentralized systems, community energy governance or local control over reliability, which is where the concerns of northern community residents lie.
We also heard a pervasive demand for impartial, context‑specific information about emerging technologies and projects. The community members at our sessions repeatedly noted the dominance of proponent‑driven narratives and the absence of trusted, non‑partisan sources on issues such as heat pump performance in northern climates, the life‑cycle impacts of wind turbines and batteries, or the implications of LNG electrification for local grids.
This information deficit contributes to polarization and fatigue. Residents articulated a desire for “knowledge hubs” and regionally anchored institutions to provide tailored analysis and training, both informational (on emerging technologies, regulations and project options) and practical (on skills for local planning, construction, operations and maintenance of energy systems).
Yet both the November federal budget and Look West remain largely silent on building such independent, place‑based knowledge infrastructure, even as they rely on communities to support controversial projects in the name of national resilience and strategic autonomy.
We also heard about the severe capacity constraints within local governments and civil society.
Municipal staff describe being at or beyond capacity, forced to choose between responding to immediate crises, applying for complex grant programs and engaging in long‑term planning. Many funding streams require preparatory studies or strategic plans that communities lack the resources to commission, creating a chicken‑and‑egg problem.
Access to skilled trades and professionals is limited. Communities depend on itinerant contractors and engineers, which undermines continuity and local learning. This raises doubts about the ability of communities to engage on an equal footing with proponents and federal agencies in negotiating the terms of megaprojects.
Look West contains an ambitious workforce agenda — doubling trades training investment, expanding technology and professional programs, and leveraging immigration — yet its primary emphasis is on supplying labour for provincial and national projects. Its focus is not on funding the governance, planning and organizing capacities that would allow communities to shape those projects in line with their priorities or their local economic development initiatives.
Finally, power asymmetries and cumulative impacts were central themes. The experience of Farmington, a community in northern B.C., is emblematic of these issues. Residents recounted decades of intensive shale gas development followed by a rapid push for industrial wind projects in what they describe as a regulatory vacuum, with unclear setbacks (minimum distances from properties), confusing health and environmental standards and inconsistent lease terms.
They told us about the emotional and financial burden of negotiating complex contracts without funds for legal support, the fragmentation of communities between those residents who secured leases and those who bore the noise, traffic and landscape impacts without compensation, as well as a growing sense of alienation from decision‑making processes at both provincial and federal levels.
Similar dynamics appeared in our conversation in Burns Lake where community members described their village as an “energy transport to elsewhere” — referring to the local Nechako hydroelectric reservoir, which powers coastal industry and natural gas pipelines that run through the community. Local residents continue to shoulder rising energy costs, growing wildfire and drought risks linked to the reservoir, and the burden of aging civic infrastructure and limited municipal capacity.
Carney’s diagnosis of “performance of sovereignty while accepting subordination” resonates not only internationally but also domestically. Unless Canadian communities have effective means to shape and constrain megaprojects, they risk enacting the rituals of consent without substantive power.
These dialogues also showed northern B.C. communities actively articulating their own visions. Smithers residents discussed energy diversification, circular economy initiatives and active transportation; Mackenzie participants linked energy strategy to post‑mill economic restructuring and tourism; Atlin discussions centred on local ownership, equity and the relationship between energy, food and cultural continuity. These are nascent community transformation strategies, emerging from lived experience rather than external blueprints.
The test for Look West and federal industrial policies is whether governments can recognize, fund and align with these bottom‑up strategies, rather than treating communities as passive hosts for nationally strategic assets.
Taken together, Flyvbjerg’s evidence, Canada’s history of regional policy, the IRPP’s community‑centred methodology and the themes we heard in our community dialogues in B.C. point toward a central conclusion: megaprojects can support community transformation only if they support robust regional development strategies that are defined with the communities, not merely in their name.
This implies several shifts in the design and governance of Canada’s current industrial strategy. We suggest five directions:
A place-based analysis, such as the IRPP’s mapping and community profiles, offers a foundation for identifying where workforce and community disruption risks are greatest. The Sustainable Jobs Action Plan explicitly draws on this community susceptibility framework, which is a welcome recognition that place matters in the design of transition policy. In the most susceptible regions, governments should support long‑term, community‑led transformation planning processes that map assets, vulnerabilities and desired futures across sectors. They should draw on Indigenous planning practices and emphasize culture, health and well-being, as well as economic dimensions.
Megaprojects and MPO support should then be evaluated in light of their contribution to these locally articulated trajectories, rather than assuming that any nation-building project is beneficial by definition.
Pre‑investment in local capacity must become a central, not peripheral, budget category. We heard at our B.C. energy dialogues that without dedicated staff, knowledge institutions and training systems, communities cannot meaningfully co‑design or navigate large projects.
The November federal budget contains elements that could be repurposed — skills and immigration measures, support for AI and clean‑tech ecosystems, community funding envelopes — but these are not systematically tied to MPO projects or targeted at susceptible regions.
A more coherent approach would link every megaproject referred to the MPO to an associated package of community‑scale investments: funding for local organizations acting as connectors and for planning processes; regional training and credentialling programs; and knowledge hubs capable of providing non‑proponent analysis. The same can be said of provincial initiatives.
Institutional mechanisms to internalize value within regions are essential to escape the staples trap. This goes beyond equity stakes and benefit‑sharing agreements, important as they are. It also entails these measures:
The MPO approval process itself does not impose local or regional procurement requirements on megaprojects, but federal spending tied to those projects is now subject to the Buy Canadian Policy (December 2025). This policy mandates Canadian content preferences on contracts of $25 million and above — a meaningful, if partial, step toward keeping more value in the region.
Without such measures, the national balance sheet may improve while local economies remain locked into narrow, externally driven roles.
It is worth noting that while the importance of these kinds of opportunities seems to be increasingly recognized and rightly supported in relation to First Nations communities as rightsholders, non-Indigenous communities are sometimes excluded from this approach.
The MPO’s mandate should explicitly incorporate community transformation criteria and cumulative‑effects governance — regional systems for assessing and managing the combined social, economic and environmental impacts of multiple projects over time, rather than approving each one in isolation. This should be done with particular attention to the inclusion of Indigenous knowledge and rightsholders.
Today, the MPO’s criteria for the national interest focus on autonomy, economic benefits, Indigenous participation and climate contributions. These should be broadened to include reduction in community susceptibility (as defined in the IRPP’s methodology), improvements in quality‑of‑life indicators and robustness of local governance arrangements.
Clear and transparent information on project goals and socio-economic impact at the submission stage is a foundation for inclusion and participatory decision-making for local governments.
In regions such as the northwest critical conservation corridor in B.C. and the Yukon, project approvals should be conditional on regional cumulative‑effects assessments that integrate environmental, social and economic dimensions, rather than proceeding on a project‑by‑project basis.
Far from being a drag on Canada’s ‘nation‑of‑builders’ ambitions, this upfront regional work can accelerate good projects by giving proponents clearer rules of the game, reducing litigation risk, and avoiding costly mid‑course corrections when community or ecological limits are breached.
Finally, Canada should institutionalize the megaproject risk management tools that Flyvbjerg and others have developed.
This should include these practices:
These practices would not eliminate the inherent uncertainty of large projects, but they would shift the balance away from the break-fix model that has so often proven costly.
In the end, the ambition to “Build Canada Strong” through industrial policy and nation-building projects should be judged by both the gross value of investment mobilized and the lived experience of communities along the new export corridors of energy and minerals.
If, a decade from now, residents of places such as Burns Lake, Mackenzie, Farmington, Terrace, Atlin and Smithers can say they have more control over their futures, more diverse and decent work, more resilient infrastructures and greater capacity to navigate geopolitical and economic rupture, then Canada’s current megaproject wave — and B.C.’s Look West strategy within it — may reasonably be called transformative in Carney’s sense of principled, values‑based realism.
If not, Canada risks repeating an old story: impressive projects on paper, fragile communities on the ground.
This commentary was undertaken thanks in part to funding from the Canada First Research Excellence Fund, as part of the University of Victoria-led Accelerating Community Energy Transformation (ACET) initiative. The Northern Community Energy Dialogues project is part of the ACET initiative.
