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| Canada's Fast Cities |
May 4, 2005 |
Canada is emerging as a technology powerhouse, thanks largely to regional initiatives that have helped attract information and communications technology (ICT) and life sciences entrepreneurs. Backbone explores strategies for building a successful city or regional knowledge economy.
Canada has always had a rich base of primary industries, thanks to its abundant natural resources, and now the country is embracing the knowledge economy. Much of this innovation is being generated at the local level, creating conditions conducive to growing hightech economies.
These fast cities have gained leadership status as centres of technology excellence. Markham, Ont., which began marketing its high-tech industry in 1997, plays host to more than 700 technology companies including IBM, ATI, Motorola, and Lucent Technologies.
Thanks to projects such as the Innovations Synergy Centre, designed to link entrepreneurial businesses with academic and government resources, Markham has been consistently recognized as an high-tech centre.
One of Markham’s friendly high-tech rivals is Ottawa, which through organizations such as the Ottawa Centre for Research and Innovation and the Ottawa Life Sciences Council has developed a thriving economy.
The OCRI has instigated the $12 million SmartCapital initiative, to provide greater connectivity and more electronic services to the population. Other initiatives include TalentWorks, a project to organize workforce planning for emerging businesses. Drawing on the city’s rich academic community, the TalentWorks project included a faculty linkage plan designed to exchange staff between small- to medium-size businesses and academic institutions, bringing the two communities closer together and retaining talent within the region.
Other cities have found strength in numbers. Waterloo, Kitchener, Guelph and Cambridge in Ontario clubbed together more than a decade ago to form the Tech Triangle, a regional powerhouse for high-tech industry. Boasting 150 research institutions and a region-wide fibre-optic network, the Tech Triangle started as an informal alliance, but is now a large private-public partnership, marketing a regional ICT economy that employs more than 18,000 people in approximately 400 high-tech companies.
Out west, Calgary’s ICT sector has experienced double-digit growth on average for the past decade, according to Calgary Technologies, the city’s high-tech economic development authority.
Sixteen hundred technology companies are achieving revenues of $1 billion each year.
And, of course, there are Nova Scotia, Toronto, Mississauga and British Columbia, powerhouse regions profiled in the following pages.
With Canada highlighted in the 2004 KPMG Competitive Alternatives study as the lowest-cost G-7 country in which to do business, it’s no wonder that so many cities are proving attractive to growth economies. But sustaining that growth takes a mixture of economic foresight, governmental initiatives and a healthy dose of technological know-how. This supplement explores the success of four regions to find out how it is done.
NEARSOURCING PLUS EDUCATIONAL EXCELLENCE - NOVA SCOTIA
With the ocean never more than 35 minutes away, Nova Scotia has a lot to offer both tourists and residents, but for high-tech businesses the benefits are more than scenic.
Nova Scotia has built a strong reputation as a provider of “nearsourcing” services. Many companies now outsource their software development to offshore companies in India, but while this activity works for basic tasks such as software coding, there are cultural, language and geographical barriers that make complex tasks difficult to outsource. These include designing technical architectures. Nova Scotia seized the opportunity, capitalizing on its common language base and cultural fit. Nova Scotia only began to develop its nearsourcing strategy two years ago, and it could not have established its reputation so quickly without a strong workforce. Fourteen thousand of its 490,000 workers are involved in Information and Communications Technology (ICT) and it will continue to meet the growing demand for skills thanks to a first-class education system. With 11 universities, the province is able to produce more than 2,000 graduates in software- and technology-related programs annually.
With eight per cent of the province’s population studying at university, it was clear from the outset that when attempting to grow a technology economy, people were Nova Scotia’s top resource.
Aligning the educational and commercial interests in the province was critical, said Bob Daigle, director of business development for Nova Scotia Business Inc. “What businesses see when they arrive in Nova Scotia is an alignment that they appreciate between the academic, business and political communities,” he said.
With an 11.3 per cent growth in software and services employment last year and 11.8 per cent predicted in 2005, the region’s technology economy is riding a wave of success.
NOVA SCOTIA FAST FACTS:
Population 937,538
Provincial GDP $28.9 billion
Workforce 490,000
Number of businesses 33,138
FIRST AMONG CANADIAN INTELLIGENT CITIES - TORONTO
A high number of broadband connections may put a city ahead of the curve when it comes to encouraging high-tech growth, but it takes extra effort to qualify as an intelligent community. Toronto has emphasised innovation, a strong knowledge-based workforce and a drive to extend digital services to all sections of the population, creating what the Intelligent Community Forum (ICF) calls a digital democracy. No wonder, then, that the city was included on the ICF’s list of the top seven intelligent communities for 2005, and was the only North American city shortlisted.
“Toronto has the third largest number of Information and Communications Technology (ICT) workers in North America, and the highest in Canada,” Karen Thorne-Stone, Executive Director of the city’s Economic Development Division said. “It is able to fuel this kind of industry thanks to the depth of its workforce. The city’s 2004 E&B Data ICT survey showed it had 148,000 ICT workers—more than twice that of the second largest urban workforce in Canada.”
Access to markets is another benefit for Toronto businesses. The city’s economy is the third most diverse in North America, creating a market for ICT products and services developed and offered locally.
This unique selection of benefits has attracted ICT businesses to Toronto en masse. The city sports the highest number of digital media companies in Canada, and according to the E&B Data survey 65% of ICT firms plan to invest in Toronto this year.
The city is developing a more detailed IT strategy to further increase ICT-related business development opportunities in the area.
Other developments include a taskforce to help promote both wired and wireless broadband access for the city. As it moves into the second half of the decade, Toronto looks set to build on its reputation as a catalyst for technology companies.
TORONTO FAST FACTS:
Population 2.5 million
City GDP $129 billion
Workforce 1.4 million
Number of businesses 76,000
THE CENTRE FOR CORPORATE HQS AND RESEARCH - MISSISSAUGA
Located as closely as it is to Toronto, Mississauga has had to work extra hard to shine as an independent high-tech community, but thanks to its efforts it is being recognized in its own right as a centre of technology excellence. The City has turned itself into a case study for local businesses, having created an eCity program of its own that offers online government services portal.
The City has also worked hard to develop an environment that encourages the growth of high-tech businesses. Having set up the Mississauga Technology Association (MTA) 10 years ago to encourage networking among high-tech firms, it followed with the Mississauga Technology Business Accelerator (MTBA) in 2004. The MTBA provides technology, business and professional services to high-tech firms, particularly those in the Information and Communication Technology (ICT), life sciences and advanced materials fields.
With more than 850 ICT companies in the area, eight of which appeared among the top 25 multinational tech companies in Canada in the Branham list in this magazine, there is no shortage of demand for such services. Larry Petovello, director of the Economic Development Office at the City of Mississauga, said the city was among the first to install a high-speed fibre-optic ring.
“It was an important initiative for many technology companies that have decided to locate in Mississauga,” Petovello said.
The Bell Mobility campus is a good example of this growing confidence in Mississauga. The company established its corporate head office there and was closely followed by other divisions of Bell Canada. The campus they created has generated 4,000 jobs. Last year, Microsoft opened its first Canadian technical support centre and its new head office in the city, and companies such as NetSuite and Indian firm Satyam Computers did the same. Xerox continues to produce up to 70 patents each year from its research and development centre in Mississauga.
Looking to the future, the City recently contributed $3.5 million to create a Centre for Culture Communications and Information Technology (CCIT) at the University of Toronto at Mississauga. This facility will explore the relationship between communications, IT and culture.
MISSISSAUGA FAST FACTS:
Population 690,000
City GDP $29.8 billion
Workforce 400,000
Number of businesses 49,000
HIGH-TECH CLUSTERS MEET FIRST-CLASS LIFESTYLE - BRITISH COLUMBIA
When a high-tech economy spends a decade near the top of the list in terms of overall per-sector GDP growth, people take notice. British Columbia’s tech economy has done just this. Now contributing more than 3 per cent of overall GDP, it has outperformed many other sectors in growth terms since 1992, when its contribution to GDP was 1.7 per cent.
Its success stems from a concerted effort to grow the economy using an innovative business model called technology clusters. Clusters are centres of excellence in discrete technology subsectors. Information and Communications Technology (ICT) constitutes one cluster in the B.C. region, with others developing new media, power technology, wireless and life sciences.
B.C.’s sustainability technologies cluster is growing 60 per cent faster than the overall Canadian economy, and shares some focus with the separate power technology cluster, which works on alternative energy such as fuel cells, hydrogen and natural gas vehicles.
“With the emergence of energy hungry economies in Asia, rising oil prices and concerns over climate change, positive factors are aligning for new start-ups in this area,” said George Hunter, president of Leading Edge BC, a non-profit organization created in 2003 to promote B.C.’s technology sector.
B.C.’s sixth technology cluster—wireless—is rapidly becoming a centre of excellence, fuelled by the interest in mobile data communications. The wireless cluster contains more than 140 companies, more than two-thirds of which are privately held.
The clusters had been growing for decades, in some cases since the ’60s, and were given a strong start by Dr. Patrick McGeer, science and technology minister from 1976 to 1986.
As B.C. entered the new millennium, George Hunter and other industry leaders recognized that the time was ripe to integrate the clusters more effectively, to drive economic development. Beginning with the BC Technology Strategy in 2003 and the subsequent BC Integrated Technology Initiative (ITI), created in 2004, and the creation of the Leading Edge Technology Centre, the technology community has engaged in a series of coordinated activities that have forged a strong collaborative approach to forwarding the technology industry’s agenda.
The ITI, co-founded by 10 major industry organizations and funded by Leading Edge BC and Western Economic Diversification, was designed to develop critical comparative data on B.C.’s technology clusters and competing jurisdictions, to identify and address major barriers to growth including start-up funding, growing the technology labour pool, and stimulating research and development. ITI has helped create a fertile environment for the clusters to grow.
“Having six technology clusters has multiple benefits,” Hunter said. “Today, convergence, the integration of diverse disciplines and techniques, is the force behind new economic opportunities. B.C.’s clusters benefit greatly by their proximity.” Just as energy technologies draw on sustainable technologies research, life sciences companies depend heavily on ICT resources.
“Economically, multiple clusters minimize risk,” Hunter said. Just like a well-balanced investment portfolio, “the fact that you have a variety of technology clusters out there mitigates any upturns and downturns.”
This ability to look beyond the curve to address long-term growth goals is just one of the skills needed to sustain the development of a high-tech business community. Clusters are not always geographically located. Sometimes, companies in a cluster can be spread across a wide area, united by a common interest, rather than geography.
Clusters also span multiple communities, academic and commercial.
Consequently, you’ll find elements of B.C.’s technology clusters in its different regions, and not just in greater Vancouver, with its two million-strong population and hundreds of high-tech firms. The Thompson/Okanagan region is the second-busiest technology sector in B.C., and has completed its own cluster initiative, called the Okanagan Competitiveness Strategy.
Vancouver Island, which is known locally as Innovation Island, hosts more than 1,000 high-tech firms, representing all six technology clusters. Another 140 technology companies are located in the Cariboo region, which sports two post-secondary institutions with strong technology programs, and also houses the Innovation Resource Centre.
A prevailing characteristic of the selfmotivated cluster-based community, with its inter-cluster relationships and its strong emphasis on bottom-up innovation, is the lack of a hierarchical command structure.
Instead, Hunter said “it is a rich fabric of peer relationships, woven into a growing knowledge economy.”
“At a community level, the number of stakeholders that are present is vast compared to those for a company,” Hunter said, explaining that the skills involved in pulling them together are as much political as commercial.
“In building a community, you’re looking at every facet of the education, business, professional, and industry environments.”
One element that does draw the communities together is the region’s lifestyle. B.C. is well known for its high standard of living and beautiful terrain, and such attractions should not be underestimated when building a strong base of technical and business skills for a fast-growing technology community.
The young will often travel to a place like B.C. because of the area, Hunter said. Those professionals already on a career track will go where the job takes them, and with B.C.’s community of technology clusters offering so many opportunities they are increasingly likely to land on the west coast. When there, the lifestyle afforded by the region makes them less likely to leave, creating a culture of serial entrepreneurship in which businesspeople repeat their successes in the same place.
The technology sector’s overall contribution to GDP matches other sectors, within a diverse economy, including agriculture, accommodation and food services.
But its indirect contribution to the economy is an order of magnitude greater.
A PricewaterhouseCoopers report compiled as part of the ITI revealed that a $1 million increase in output from the technology sector would create a marginal growth of more than $600,000 in the overall provincial GDP.
The cluster initiative develops technology that enhances the operations of existing industries, particularly industries that deal with natural resources. A good example is the Kootenay region, with its heavy emphasis on mining and forestry. Many of the technology companies here supply these industries with
complementary processes and systems.
As B.C. moves toward the 2010 Olympics, it is continuing its effort to grow its technology sector using cluster-based economic development. “We’ll see a number of clusters fully emerge on the global scale and emerge as centres,” Hunter said.
The region is already well on the way to achieving this goal. For example, the life sciences cluster is ranked seventh in North America, and third in Canada, demonstrating its success within a heavily competitive environment.
Hunter expects to double the technology sector’s contribution to provincial GDP by the time the Olympic torch is brought to B.C. In the meantime, a broad community of exciting startups is preparing to set the world alight.
BRITISH COLUMBIA FAST FACTS:
Population 4,177,000
Regional GDP $133.6 billion
Workforce 2 million
Number of businesses 332,024
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