Dr. Nicholas Staines, director of economics for the forecasting group WEFA Canada Inc., is sitting in front of his computer excitedly pulling up graph after graph that detail the economic condition of Canada.

"This is one I really like," he says, as a jagged blue line cuts the monitor in half. An excited economist, okay. But an exciting economist might seem like an oxymoron. Not so in the case of Staines. And what the thirtysomething graph junkie has to say should interest every company that does business in Canada or is considering opening its doors here anytime soon.

"Household incomes have been screwed down, while corporate profits are rising," he says. This underscores a shift in the country that is decidedly pro-business, he says, "which will hopefully generate wage and employment growth." Staines pulls no punches when he says "the consumer is dead," and he has the numbers to prove it. "But," he adds, "the changing conditions under which business is being done are very positive."

Example? "Take a look at what Honda is doing," he says, referring to the company's ongoing expansion of its plant in southern Ontario. "They are gearing while the cost of construction is cheap. But they are doing it slowly ... and planning to come on stream in 1998 when there is expected to be a rebound in consumer demand."

This is what Staines calls the "re-industrialization of Canada." Sure, retail operations are suffering under the economic strain of a country whose population is cash-strapped and debt-ridden, but trade and investment are booming, as witnessed by the fact that exports make up 40 percent of the country's GDP. Ontario is responsible for the bulk of this.

Between 1986 and 1991, as unit-labor costs spiraled upward and the recession set in, Canada's competitiveness collapsed. Staines points out, however, that since 1991 there has been an "extraordinary recovery" underway -- thanks in large measure to freer trade and an increase in trade competitiveness, which is rooted in a consistently weak Canadian dollar (versus the U.S. dollar) and a low rate of inflation.

So what does the future hold? Staines peers into his computer-cum-crystal ball and says the three-year projection looks bleak for some sectors, such as retail. But as corporate profits continue to rise and labor income falls, business is getting stronger. Add to this, the fact that both federal and provincial governments are making sharp, deep cuts in the name long-term prosperity.

He points to a steadily climbing line that represents substantial growth in corporate profits and adds: "And when it does, it's going to be one heck of a rebound."

--David Napier