Vancouver looks to Pacific to shake recession. An '86 fair on world transportation to play up Canadian city's trade quest

When Ted Duncan looks out his office window at Vancouver Harbor, he sees events that could shape this port's economic future. Mr. Duncan, an economist with the British Columbia Office of Innovation, can glimpse things at the Expo '86 fairgrounds, where next year's international transportation World's Fair is to be held. The fair opens next May 2 and runs through Oct. 13, marking Vancouver's 100th anniversary.

And just a few degrees in the other direction, cargoes from this metropolis of 1.1 million depart for the Pacific Rim -- a vital region for this city. Not only Asian trade but Asian investment is counted on to take Vancouver out of a wrenching recession.

``When I first came here my house went for $50,000,'' says Garvin MacDonald, an executive with Microtel Pacific Research, a telecommunications firm. ``In six months, it could be sold for $120,000. Things were happening a little too fast then.'' But with the recession, housing prices slumped.

Microtel could be a microcosm of the city and much of British Columbia beyond the lower mainland region. Hard times forced Microtel to slash 800 from its work force of 3,300, but reorganization and examination of new alternatives make many think the company's prospects are pretty sound.

What is clear is that Vancouver's traditional resource base -- timber, fishing, mining, metals, energy -- can no longer sustain growth. A high living standard and laid-back style characterize this area, but a savage downturn saw unemployment reach more than 17 percent during the recession. It remains 15 percent today.

``The problem,'' a government official notes, ``is that we can get competitive in lumber or in manufacturing, but that means laying off workers or automating.''

Despite the unemployment rate, salaries are high. ``We are viewed as a hotbed of labor unrest,'' says Peter Thomson, vice-president of Discovery Park Foundation, a group orchestrating the high-technology research park drive.

While the provincial government is headed by W. C. Bennett of the pro-business Social Credit Party, pockets of antibusiness sentiment dominate in Vancouver. Mr. Bennett's austerity program a few years ago slashed one-fourth of the government payroll. His solution to economic woes comes in the form of tax credits, enterprise zones, and an end to many existing taxes.

``Much of our infrastructure program began in the recession,'' says Gary Smallenberg, executive director of the newly created Ministry for International Trade and Investment (which coincidentally carries the MITI abbreviation made famous in Japan). ``That is a clear sign of our commitment to get things moving here.''

Expo '86 is another sign that Vancouver intends to establish itself as a key link between North America and the Pacific Rim. Expo will allow East Asians to witness firsthand the amenities offered by British Columbia. The 22-week extravaganza -- with its theme of ``World in Motion World in Touch'' -- ranks as a solid promotional tool.

``There simply isn't enough capital here to help us develop our economy,'' says Richard Allen, chief economist at the British Columbia Credit Union. He and others acknowledge that Asia is counted on to provide much of that capital. They see Expo as a powerful lure.

The international exhibition -- usually cited as a full-fledged World's Fair -- will carry an $800 million price tag. Expo brass concede it will probably sustain a $250 million loss but contend that might be canceled out by long-term benefits.

Expo president Michael Bartlett insists the financial losses of the recent Knoxville and New Orleans fairs will be averted. Estimates of visitor attendance have tumbled, however, and the 14 million or so expected to come will have to be lured despite a background of unfavorable -- and unjustified -- perceptions of the local weather.

Unless Expo spinoffs are realized, many will return to unemployment lines after the 22-week extravaganza ends. Hotel vacancies would soar.

Expo's real aim is to secure more trade with Asia. Trade is already following the United States pattern: Pacific imports and exports are surpassing those from Europe. Along with upgraded rail, port, and highway facilities, a proposed multibillion-dollar liquefied natural gas project -- with plans nearly complete -- is one of several major developments that should boost Asian exports.