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The “Northern Secret” of Canada’s Cities Revealed

Advanced technology companies are drawn by Canada’s overall cost and other advantages, while recognizing the synergism found in its urban centers.

Location Canada 2016
Prime Minister Justin Trudeau helps to open the Google offices in
the Waterloo region.
Prime Minister Justin Trudeau helps to open the Google offices in the Waterloo region.
The success of large U.S. suburban innovation centers like San Jose and Raleigh-Durham has created a hot-house effect of sky-high prices for rent and housing, extended commute times between disparate corporate campuses and research parks, and bidding wars on both talent and emerging companies. So while it’s easy to follow the path most travelled, there’s a northern secret being shared by global facility and workforce planning managers. Companies like Boeing, GE Aviation, Google, and Ubisoft are investing in Canada’s top 11 cities — Toronto, Montreal, Vancouver, Ottawa, Calgary, Waterloo Region, Quebec City, Winnipeg, London, Halifax, and Saskatoon. Let’s find out why.

Canada’s Overall Cost Advantages
When it comes to the cost of doing business, Canada’s value proposition shines. Canada offers a 14.6 percent cost advantage overall to the U.S. according to KPMG’s Competitive Alternatives 2016 report. In knowledge-based services, Canada’s cost advantage is even more pronounced; R&D costs are 27.7 percent less expensive and digital services delivery is 26 percent cheaper than the U.S. baseline, beating every other country in the G7 by 5 percent–15 percent.

Zooming out to the G20, Forbes rates Canada number one in the top-10 countries for business. And in a world of growing fiscal uncertainties, the financial infrastructure buttressing the cost advantages of Canadian cities is also rock solid. The World Economic Forum declared Canada’s banking system to be the soundest in the world for the eighth consecutive year running.

Canada is also the most tax-competitive country in the G7, where total business tax costs are a very meaningful 46 percent lower than those in the U.S. In fact, KPMG rates Toronto, Vancouver, and Montreal the top three cities for tax competitiveness among 51 major international cities with populations of two million or more.

Canada’s Success Stories

Companies that have found success in Canada’s cities
  1. Ubisoft, Montreal, QC

    Global game developer Ubisoft started investing in Montreal in 1997.
  2. Longtail Studios, Halifax, NS

    Last October, Ubisoft expanded into a fourth urban center with the acquisition of mobile gaming specialist Longtail Studios Halifax, with plans for another 40-plus staff in that location.
  3. Apple, Ottawa, ON

    Apple has announced it will open a 22,000-square-foot space in Ottawa.
  4. LinkedIn, Toronto, ON

    LinkedIn, the world’s most popular professional social network, opened a new office in Toronto’s Eaton Centre Towers.

    Amazon.com Inc., Toronto, ON

    Amazon.com Inc. moved into one of Toronto’s newest skyscrapers, taking enough office space for 800 employees.

    Facebook, Toronto, ON

    Facebook chose the MaRS Centre for its Canadian office.

    Salesforce Canada Corporation, Toronto, ON

    Salesforce's regional headquarters is located in Toronto.
  5. Boeing, Winnipeg, MB

    Boeing has just completed a 150,000-square-foot expansion of its Murray Park Road site in Winnipeg.

    GE Aviation, Winnipeg, MB

    GE Aviation has expanded its jet engine testing facility in Winnipeg.
Supporting Ecosystems In Canada’s Cities
A Financial Times article entitled “Cities Not Countries are the Keys to Tomorrow’s Economies” underlined the importance of cities. It states, “To make wise decisions, investors and policymakers need to view the world not so much as a collection of countries but a network of cities…City economies now matter far more than national ones.” Globally recognized Canadian prosperity experts like Richard Florida and Don Tapscott underscore the point that Canada’s traditional strengths in resources and agriculture are bolstered by city-based educational institutions, business ecosystems, and value-added innovation.

Let’s begin with education. Canada offers the most educated talent pool among OECD countries, with 54 percent of individuals aged 25–64 having attained tertiary level education, compared to 45 percent in the U.S. In an age of increasing globalization, these highly educated Canadians are linguistically diverse, with one out of five Canadians speaking one of over 200 languages in addition to the national languages of English and/or French.

The Canadian emphasis on education is long-term. In the “Learn Canada 2020” declaration, provincial ministers of education underlined “the direct link between a well-educated population and a vibrant knowledge-based economy in the 21st century; a socially progressive, sustainable society; and enhanced personal growth opportunities for all Canadians.”

The World Economic Forum declared Canada’s banking system to be the soundest in the world for the eighth consecutive year running. As to urbanization, Canada is known as a large and sparsely populated country, but many sophisticated location managers don’t realize that its vast land mass shelters a highly urbanized workforce concentrated along the country’s southern border with the U.S. Nearly 81 percent of the population is urban, making Canada surprisingly more city-centric than countries like the UK, Mexico, Taiwan, Germany and, remarkably, even China and India.

Toronto, Canada’s largest city, is projected to be the 52nd most populous city in the world by 2020.Therefore, one could reasonably expect big-city problems, from pollution to transportation issues. Yet Toronto’s 2.6 million residents (there are 6.05 million in the Greater Toronto Area) celebrate The Economist’s ranking in the top five best places to live in the world. Vancouver and Calgary join Toronto on that prestigious list, making Canada the world’s dominant country in the rankings of the world’s top five cities.

Another insight into Canada’s urban success stories is its ability to span its vast geography with what the Brookings Institution refers to as “networking assets,” or the relationships between entities — individuals, firms, and institutions — that have the potential to generate, sharpen, and accelerate the advancement of ideas. According to Brookings, strong ties occur between these assets when people or firms with a working or professional history that have higher levels of trust are willing to share more detailed information, and are more apt to participate in joint problem-solving.

Let’s look more closely at some of the companies that have found success in Canada’s cities.

Some Success Stories
Global game developer Ubisoft started investing in Montreal in 1997. The company’s outlook for 2020 foresees $373 million in additional Canadian investment and 500 new jobs. According to Francis Baillet, Ubisoft’s vice president of Corporate Affairs, “Other regions offer one or more of these key success factors, but Greater Montreal stands out because it has succeeded in combining them into a socio-economic model that is closely aligned with our needs.”

While Ubisoft’s Montreal operation holds the distinction of being the world’s single-largest game development studio, the company has discovered the advantages of Canada’s urban centers and branched out into Toronto and Quebec City. Last October, the company expanded into a fourth urban center with the acquisition of mobile gaming specialist Longtail Studios Halifax, with plans for another 40-plus staff in that location.

Canada is also the most tax-competitive country in the G7, where total business tax costs are a very meaningful 46 percent lower than those in the U.S. Google is another multi-city Canadian expansion success story. It was first drawn to the Waterloo Region’s famed institution for technology excellence with a 2007 purchase of a company there called Reqwireless. The University of Waterloo is now “one of our top three recruiting universities for Google as a whole, worldwide,” according to Steve Woods, the company’s senior engineering director in Canada. More than 350 engineers work on Google products in a 185,000-square-foot office. Google now has several offices in other Canadian cities including Toronto and Montreal, and other leading tech companies have followed its lead on discovering the advantages of Canada’s cities. Apple has announced it will open a 22,000-square-foot space in Ottawa, and LinkedIn, Amazon, Facebook, and Salesforce all also call one or more Canadian locations home.

More traditional industries have also found specific attributes in Canadian cities — Boeing and GE Aviation in Winnipeg, for example. Boeing has just completed a 150,000-square-foot expansion of its Murray Park Road site in Winnipeg. The building primarily houses additional work for the 737 MAX and the 787 Dreamliner.

“This expansion, which is about the size of 12 Olympic swimming pools, ensures our Winnipeg site has the space and technology needed to build complex composite parts,” says Kim Westenskow, general manager of Boeing Winnipeg. “Placing this work in Winnipeg takes advantage of the local team’s design and manufacturing expertise. We’re very proud to be a top Winnipeg employer with a strong commitment to our local workforce and to the community at large.”

“Winnipeg provides all of the benefits and advantages expected in large metropolitan centers,” confirms Daniel Verreault, GE Aviation’s Canadian director. Last year his company announced a $26 million investment into an existing $54 million aviation engine testing, research, and development center, with all upgrades expected to be completed by the fall of 2017.

From jet engines and aerospace components to advanced software and digital entertainment, and much more, the northern secret of Canadian cities is one worth exploring.

Michael Darch is the founding president of the Consider Canada City Alliance Inc., which was started in 2007 with seven cities and expanded to the current 11 cities. On a national basis, its member cities represent 52.5 percent of Canada’s population, 56.8 percent of its GDP and, most importantly, 63.8 percent of GDP growth. Its mandate recognizes the fact that businesses choose cities rather than countries.
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