Ontario: Canada’s can-do province
The Canadian province prospers by meeting challenges across many industry sectors with boldness and flair.
“Can’t do that.” It’s a phrase that seems nearly absent from the vocabulary in Ontario.
From the Canadian province come numerous examples of impressive achievements – accomplishments that many civic and business leaders elsewhere wouldn’t have even tried. This can-do mentality has yielded bold initiatives and success stories in both the private and public sectors.
Build a brand-new, technology-oriented university at a lightning-fast pace? They’re doing it in Ontario. Operate automotive plants even more successfully than the Japanese? Can do. Create a booming suburb practically from scratch and populate it with a “who’s who” of multinational companies? Done that. Grow the economy and maintain a balanced provincial budget while American states and cities are facing their biggest fiscal crises since the Great Depression? It’s happening in Ontario.
The can-do attitude is quite valuable to the private sector doing business in Ontario. Businesses choosing Ontario often cite as reasons the province’s top-notch R&D and training initiatives, agreeable tax and regulatory structures, and an enviable quality of life that consistently ranks among the world’s highest. They also like the way the attitude manifests itself among employees, who demonstrate a high work ethic and a no-nonsense approach that translates into productivity and innovation.
A Different Kind of Economic Headline
The economy is sluggish, jobs are vanishing, businesses are hurting, and governments are having trouble staying afloat while providing much-needed services. Such stories are common across the United States. It seems unlikely that a Canadian economy so linked to that of the United States could prosper while American numbers are so gloomy. But it’s another can-do in Ontario.
Economic growth and job creation in Ontario and Canada lead the average of the G-7 countries and the United States. Economists believe it will stay that way for the foreseeable future, with continued employment gains, improved disposable income, and slowing inflation. A greater percentage of the Canadian population is working than in the United States, even though higher immigration is causing the Canadian population to increase more rapidly. Among major industrialized economic powers, Canada has the best growth in gross national product per person.
Meanwhile, taxes in Ontario are down. The combined corporate tax rate is expected to fall to 30.1 percent by 2006, significantly below the U.S. federal level. Add in U.S. state taxes and the comparable American rates range from 35.9 percent in Michigan to 43.0 percent in New Jersey, according to KPMG. Even so, Ontario’s provincial budget is balanced and the province is not struggling to deliver important services, as many U.S. states are.
The world seems to be noticing these impressive accomplishments. A recent study compiled by the Chicago real estate firm Jones Lang LaSalle put Toronto at the top of the list of hot North American commercial real estate markets. Canada’s largest city beat such American hot spots as Atlanta, Las Vegas, and Phoenix. Toronto also beat other Canadian cities such as Calgary, Vancouver, and Montreal.
Healthy Future in Ontario
The biomedical industry is something practically every North American jurisdiction desperately wants to develop. Can-do Ontario has done so in a big way, particularly in the corridor running from London to Ottawa and taking in the Toronto area, Kingston, Hamilton, Guelph, and Waterloo. Specialties include bioinformatics, nuclear medicine, genomics, proteomics, tissue engineering, bioproducts, agbiotech, microarrays, and xeno-transplantation.
Already, more than 600 biotech, pharmaceutical, and medical-device companies operate in Ontario, which has the continent’s third-largest biotech concentration. The province’s biomedical discoveries through the years include more than a quarter of the known disease-related genes, insulin, the cardiac pacemaker, and the dopamine receptor. Additional discoveries seem likely down the road, because Ontario graduates more life-sciences students per capita than most American states. Also helpful are the many initiatives geared toward building the industry, including the Biotech Commercialization Centre Fund, Ontario’s Centres of Excellence, the Ontario Cancer Research Network, and the Ontario R&D Challenge Fund.
The industry is filled with current and rising stars. Ontario’s renowned R&D strength has attracted operations of nearly all of the world’s biotech and pharmaceutical giants, including Amgen, AstraZeneca, Bayer, Eli Lilly, GlaxoSmithKline, Johnson & Johnson, Novartis, Pfizer, Roche, and Wyeth.
Up-and-coming players include Biovail, a Mississauga-based pharmaceutical firm that specializes in oral controlled-release products and has grown from zero to hundreds of employees in less than a decade. Founder Eugene Melnyk credits the area’s scientific talent and its business-friendly environment.
Another star is Ottawa’s Adherex Technologies, which seeks advanced cancer treatments. It, too, is less than a decade old, and decided to locate in the Ottawa Life Sciences Technology Park to take advantage of the R&D infrastructure and the quality of life that is so critical in attracting top-notch life-sciences workers.
With a major piece of the biomedical industry centered in Toronto, the area is getting a new centerpiece. MaRS, short for Medical and Related Sciences, is building a 1.2-million-square-foot MaRS Centre downtown in the heart of what’s known as the Discovery District. The project will include R&D facilities, incubation space, and room for more-developed life-sciences companies to grow.
Biotechnology is one of the factors contributing to the astonishing growth of Mississauga, incorporated three decades ago and now Canada’s sixth-largest city. Within its bio cluster are more than 400 companies, including both startups and Canadian locations of multinational players. Under the long-time leadership of its progressive mayor, octogenarian Hazel McCallion, the city has attracted so many bio companies that its cluster has become known as “Pill Hill.” Mississauga also is the home of Canada’s busiest airport, Lester B. Pearson International, where a massive $4.4 billion expansion project is under way to improve efficiency and boost passenger and cargo capacity.
Ontario Is Building IT
Alexander Graham Bell offers evidence that Ontario’s can-do spirit has been around for a very long time. It was in Ontario that Bell dreamed up the concept of the telephone, while visiting his parents near Brantford. And while he built the first phone in Boston, he only tested it there between rooms – the first test over telegraph wires was conducted in Brantford.
Bell would be astonished to see how communications and then information technology flourished in the province that was, as he called it, his “dreaming space.” Today, that space is home to more than 6,000 companies and 308,500 employees involved in information and communications technology, located in three main clusters: the Waterloo region, Greater Toronto, and Ottawa.
The Waterloo region, including the cities of Waterloo, Kitchener, and Cambridge, is often referred to as “Canada’s Technology Triangle.” It’s a hotbed of innovation, as indicated by a number of factors, including the many unincorporated, fledgling companies located there and contributing to the area’s high growth. Among its better-known tech players is Research In Motion (RIM), a world leader in the mobile communications market and creator of the highly regarded BlackBerry wireless platform.
Greater Toronto is filled with big names in this sector, including the Canadian segments of IBM, Motorola, and Microsoft, as well as the world headquarters of Nortel. It has 1.78 percent of all employer business establishments in the combined U.S. and Canadian economies, yet it is home to 3.22 percent of those in the information & communications technology (ICT) sector. It boasts the fourth-highest concentration of commercial software companies in the world, and is one of the continent’s hottest animation centers.
Ottawa, meanwhile, has significant semiconductor operations as well as locations of such well-known names as Nokia, Cisco, and Corel. It, too, has more than its proportional share of ICT businesses. It also has the country’s highest-educated work force, with more engineers, scientists, and Ph.D.s per capita than any other Canadian city.
Telecommunications are superior across the province, not just in the populous southern portions but in North Bay, Sudbury, and Thunder Bay as well. On the data side, the CA*Net3 network is the world’s first network designed exclusively to carry Internet data traffic, and its capacity is said to be 16 times greater than the Abilene network’s, the fastest current American initiative.
Driving Ontario Forward
Detroit may be well known as the center of the North American automotive industry, but Ontario is making a strong grab for the continent’s automotive spotlight. Many Americans are probably unaware that Ontario is second only to Michigan in North American automotive production.
The province is home to 14 major auto-assembly plants. Ontario’s vehicle-assembly capacity has grown by more than one fifth in the past several years, compared with 3 percent growth at U.S. assembly plants. There also are some 500 auto-parts plants across the province. Altogether, some 140,000 people make a living in automotive pursuits.
Even more important than the size of the industry, however, is the quality of its work. Ontario’s plants boast superior manufacturing efficiencies, evidenced by the fact that Ontario workers spend less time than their American counterparts building such vehicles as the Toyota Corolla, GM Silverado and Ford F-Series pickups, and DaimlerChrysler minivans. And a disproportionate number of J.D. Power’s plant awards have gone to assembly plants in Ontario, including one of GM’s Oshawa car plants, which was cited for the highest quality in North America. This kind of quality has inspired picky Toyota to choose the Waterloo region for the first-ever Lexus production outside of Japan. The RX300 model will be produced there starting this year.
Surprisingly, such quality workmanship does not come at a high price, as average manufacturing wages are significantly lower in Ontario than in competing U.S. automaking jurisdictions. A KPMG analysis finds Ontario’s after-tax cost for start up and operation of manufacturing facilities to be just 90 percent of that in the United States.
GM’s investments include the establishment of the Canadian Regional Engineering Centre in Oshawa. The move brings total vehicle design and development capability to GM’s Canadian operations, which trace their roots back to the 1867 founding of the McLaughlin Carriage Co. The new engineering operation has a number of specialties, including improving vehicles’ ability to operate in the cold.
At the engineering center, “growth has been phenomenal because of the availability of engineering talent,” says Stewart Low, public-relations manager for GM of Canada. “We have a strong educational system, one that’s producing world-class engineering talent.”
Statistics indicate that Ontario is the call – center capital of Canada and a leading global location for call centers. The reasons behind this industry cluster’s success are numerous.
For starters, costs are lower and productivity is higher at Ontario’s call centers compared with those in the United States, in part because of higher education rates. Compare Ontario’s leading call-center locations with those in the United States and the educational difference is striking. In Ottawa, 77.7 percent of the residents have attained at least a high-school certificate, as have 71.7 percent in Toronto. In Jacksonville, Fla., the rate is 56.8 percent, in Phoenix it’s 54.3 percent, and in Salt Lake City it’s 57.3 percent.
A significant percentage also continue with postsecondary schooling, and there they find a wealth of programs geared toward helping the call-center industry succeed. Of the province’s 29 colleges, some sort of training in call-center operations is available at 16.
Another key factor landing Ontario on the global call-center map is its multilingual population. English is, of course, the primary language, spoken with a relatively neutral accent. But significant numbers speak such languages as French, Mandarin, Cantonese, Italian, German, Portuguese, Polish, Spanish, Greek, Japanese, Filipino, Russian, Ukrainian, Arabic, and Punjabi.
Erna Neufeld, vice president of operations at a major call-center operator known as Minacs, points to another significant plus about operating in Ontario: “We’ve been able to enjoy very low turnover rates,” she says. High turnover, often exceeding 100 percent, is a given at American call centers. But the average turnover rate for Ontario call centers is 20.4 percent across all industry sectors. “There’s a high work ethic here,” she points out. “We invest a lot in their training. This is not a pass-through job.”
A Learning Experience
The province also employs its can-do spirit to meet educational challenges. One of the biggest is the ever-growing need for technology graduates. Ontario’s ambitious answer: build a brand-new university, known as the University of Ontario Institute of Technology and sharing a campus with the existing Durham College in Oshawa. The institution is becoming a reality at an amazingly quick pace: It was created by the Legislative Assembly in June 2002 and will hold its first classes this fall.
The new university will be able to handle 10,000 students in less than a decade, and will be ready for 1,000 this fall, says Gary Polonsky, founding president and vice chancellor. Nine degree programs will be available initially, he says, with more added each fall along with graduate studies by the fall of 2007. The University of Ontario Institute of Technology will be the province’s first laptop-based institution.
Already quite well established is the University of Waterloo, with a reputation that often ranks at the top of Canadian universities. It is well known as a source of innovation – just ask Microsoft, which has hired many Waterloo graduates for their strong computer-engineering skills. A prime place to tap this innovation is the University of Waterloo Research & Technology Park. The R&T Park ensures continued support for pure and applied research and innovation.
Besides boosting technology, the new university going up in Oshawa is part of the province’s answer to another challenge, known as the “double cohort,” a situation caused by the decision to move the province’s educational system to the same 12-year schedule common elsewhere, a year shorter than what had been traditional in Ontario. The result is a temporary higher-education space crunch caused by the simultaneous graduation of two high-school grade levels. The new university will handle some of those students, and other institutions are gearing up for increased demand as well. Durham College, for example, is adding a new wing to handle more students.
R&D and Innovation
Ontario is serious about maintaining its position as a leader in innovation, and has taken numerous steps in that direction. One was the creation three years ago of the Ontario Science and Innovation Council, charged with advising the province on science and technology policy and how to make Ontario more competitive.
The council decided it would be useful to keep a record of Ontario’s progress in this area, so it created the Ontario Innovation Index as a way to take the province’s innovation temperature. The index measures all aspects of Ontario’s “innovation system,” from tech support to infrastructure investment to community awareness and support of science and technology.
Leaders were pleased but not surprised to learn that Ontario is doing well in such measurements when compared with other places. One reason is the province’s appealing tax incentives, which make research and development a bargain in Ontario. The Conference Board of Canada charts the after-tax cost of R&D in various places, and has found that tax breaks reduce the cost of $1 worth of R&D in Ontario to roughly 50 cents – below that in such research-intensive places as North Carolina and Michigan. A KPMG business-cost study, meanwhile, found that biomedical lab research in Canada is 28 percent less expensive than in the United States, 25 percent less expensive than in Germany, and 52 percent less expensive than in Japan.
Ontario is a prime place to conduct clinical trials, biomedical researchers have found. In addition to the wealth of scientific and medical talent, the province has an amazingly multiethnic population and one of the world’s largest integrated, publicly administered healthcare systems, which also happens to be a factor in the province’s high quality of life.
The province currently is pumping millions of dollars into development of ORION, the Ontario Research and Innovation Optical Network. The aim is to create a province-wide high-speed fiberoptic research network linking Ontario’s 43 postsecondary institutions and more than 50 publicly funded research institutions and organizations.
In classic can-do style, Ontario hopes to play a role in one of the most significant research projects around: the drive to bring fusion to market as a large-scale energy source. It is one of four potential sites worldwide for a new research facility to be operated by ITER, an international collaboration involving Canada, China, the European Union, Japan, the Russian Federation, the United States, and possibly South Korea.
The goal is to harness fusion, the energy source that powers the sun and other stars. It’s said to be a safe energy source, and it’s both clean, producing no greenhouse gases or nuclear waste, and sustainable, because the fuel source is hydrogen.
Copyright S/H Publications Incorporated Jun 2003
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