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| Sailing Virtual Waters in Atlantic Canada |
September 3, 2002 |
By Donalee Moulton
GOVERNMENTS ON CANADA’S EAST COAST HAVE BEEN SEARCHING FOR A GOLDEN INDUSTRY SINCE THE DECLINE OF SAILING SHIPS AND COD STOCKS. EYES ARE NOW turning to the information technology (IT) sector to realize the promise of prosperity, and where there is hope, there are also government resources.
The Atlantic region has three strengths critical to building a thriving IT sector, said Stephen Dempsey, president and CEO of the Greater Halifax Partnership (GHP), an investor organization with a mandate to grow the local economy.
The region’s top pillar of strength is its abundance of raw resources, particularly brain power. In Nova Scotia, for example, each year more than 15,000 degree-toting graduates flood the job market from 11 universities throughout the province.
Thousands more graduate from Nova Scotia Community College, which is currently planning to increase its capacity by 50 per cent over the next few years.
And if the brain power IT companies need isn’t readily available, the government has committed to paying for specialized training. In New Brunswick, forgivable loans to technology and communications companies are often earmarked for training new employees.
Affordability is the Maritime region’s second stronghold. A recent KPMG study gave top marks to Charlottetown for supplying an environment conducive to strong bottom lines. The 2002 Competitive Alternatives Study compared 105 cities in nine countries on 27 cost components including tax rates and operating costs.
Charlottetown took home the gold among provincial capitals as the most cost-effective place to do business.
Finally, there is market access. The three Maritime provinces butt up against New England. Newfoundland and Labrador, also relatively handy to the U.S., are closer to Europe than any other Canadian province. In the wake of Sept.
11, more U.S. companies are looking north to trusted trade partners, Dempsey said.
These factors have contributed to a strong and growing IT sector, said Patrick Brannon, research analyst with the Atlantic Provinces Economic Council, an independent research institute based in Halifax. The speed and importance of that growth is reflected in New Brunswick, for example, where the IT sector now accounts for six per cent of the province’s total GDP.
But brains, cost and proximity factors are not enough to sustain a sector, and all four East Coast governments are pumping money into making sure their provinces are IT rich. In particular, money is being spent to ensure infrastructure is in place and market connections are made.
“Governments play a critical role in helping to establish a cost-effective infrastructure,” Dempsey said. “We need access to markets.We need airlines here going to the world markets. We need roads. We need Sunday shopping. We need to say we are open for business.”
In P.E.I., for example, the government has spent $20 million building the Atlantic Technology Centre, a 126,000-square-foot four-storey technology complex designed to lure tech companies to the province and lend a lucrative hand to those already up and running.
The centre, scheduled to open this summer, offers wired office space, an IT education and training academy, a business incubator, specialized research labs,multimedia theatres, digital audio and video editing facilities, smart boardrooms and exhibition areas.
Trade missions, on the other hand, take the IT sector out of the four Atlantic provinces and onto the home turf of potential customers and partners. In the last year, more than 67 firms from across the region, many in the IT sector, have taken part in two missions to the southeastern U.S. One jaunt to Atlanta, Ga., netted $25 million in sales and led to the creation of 74 jobs.
“Because of the contacts and the preparation done by the organizers, we were able to do in a week what would have taken a month on our own,” said Alan MacArthur, owner of 4Eversports in Sydney, N.S.
Despite such achievements, more is needed to keep the region’s IT sector from going the way of three-masted vessels and once-abundant fish stocks.
GHP’s Dempsey said one critical component to the sector’s success will be clustering—bringing together industry players both virtually and actually. Government, he said, can play a pivotal role here, although so far this hasn’t happened. What’s needed are provincial strategies—and ideally a regional strategy—that will identify critical factors to growth and obstacles to overcome.
Research dollars also need to increase significantly. A new report released by the Economic Council noted that in 1999, research and development (R&D) spending in Atlantic Canada was $656 million, less than four per cent of Canada’s total.
Part of the gap between Atlantic Canada and the rest of the nation is explained by the small share of R&D undertaken by the private sector. In1999, businesses in the region initiated about 17 per cent of total R&D, compared with 58 per cent nationally.
But these figures need to be put into context, Brannon said. Unlike other parts of Canada that have been IT savvy for years, the East Coast is a relative newcomer, and so it is creating a modern tech sector—something that will work in its favour for years to come.
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