Location Quotient

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Location Quotient

In order to determine the level and degree of business and industrial specialization, thus the economic diversity that may be developing in the region, location quotients (LQs) have been calculated to identify and measure the concentration of industry/business activity by major sector and/or sub-sectors.

The industry concentration in the region relative to Ontario and Southwestern Ontario reveals the highest concentration of labour in the following sectors in 2006:
• Agriculture, Forestry, Fishing and Hunting (LQ Ontario- 5.61, Southwestern Ontario- 2.28)
• Manufacturing (LQ Ontario- 1.59, Southwestern Ontario- 1.11)
• Arts, Entertainment and Recreation (LQ Ontario- 1.25, Southwestern Ontario- 1.28)
• Wholesale Trade (LQ Ontario- 1.11, Southwestern Ontario- 1.26)
• Construction (LQ Ontario- 1.09, Southwestern Ontario- 1.07)

Three major industries exhibit LQs within the ‘high’ range, with values in excess of 1.25 or greater. This labour force measurement is the number of residents in the labour force, but who may not be employed in the region.

The very high LQ in the region’s Agriculture, Forestry, Fishing and Hunting industry is a clear indication of the strength of agriculture, farming and support activities in the region. For the manufacturing industry compared to Ontario in 2006, there was significant labour force
concentration in:

• Animal food (LQ 17.30)
• Rubber product (LQ 13.39)
• Boiler, tank and shipping container (LQ 5.76)
• Navigational, measuring, medical and control instruments (LQ 4.77)
• Dairy product (LQ 4.47)
• Cement and concrete product (LQ 3.83)
• Aerospace product and parts (LQ 3.05).

For the manufacturing industry compared to Southwestern Ontario in 2006, there was significant labour force concentration in:
• Fibre, yarn and thread mills (LQ 12.62)
• Spring and wire product (LQ 6.08)
• Animal food (LQ 5.96)
• Aerospace product and parts (LQ 5.06)
• Rubber product (LQ 4.95)
• Navigational, measuring, medical and control instruments (LQ 4.01)
• Boiler, tank and shipping container (LQ 3.00)
• Cement and concrete product (LQ 2.56)
Many of these industries listed also experienced labour force growth during the five year (2001-2006) time period. This finding suggests local competitive advantage for being located in the region.

There is labour force concentration in the Arts, Entertainment and Recreation industry. This is driven by the Stratford Shakespeare Festival. The performing arts companies had very high location quotients (compared to Ontario 9.23, compared to southwestern Ontario 10.25) in 2006. The labour force LQ has remained constant during the five-year time period.