Ontario 2007: Going Global
Ontario is leveraging its global strengths to form ties with international markets as it competes for auto manufacturing supremacy, world-renowned scientists, and biotech breakthroughs.
Jennifer LeClaire (Jun/Jul 07)
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Diversity Wins the Race
Although Ontario has made a name for itself in automobile manufacturing and is moving full steam ahead with its life science initiatives, the McGuinty government is still making strategic investments in Ontario's advanced manufacturing sector, which employs about 1 million people and accounts for 16 percent of Ontario's total employment. To that end, the province also boasts an advanced manufacturing investment strategy, or AMIS. Ontario launched AMIS in 2005 to encourage companies to invest in leading technologies and processes that will boost productivity and competitiveness.
The $500 million strategy provides repayable loans, interest free for up to five years, to support investments in technology and innovation. The strategy is working. To date, Ontario has announced six AMIS projects that will generate $245 million in new investments. "We're working very aggressively to generate more `made-in-Ontario' companies that stay here, create jobs here, and compete in the international marketplace," says Pupatello. "And we've established a clear presence for Ontario in key global markets that are important to our exporters."
Of course, Ontario industry is not limited to manufacturing, ICT, and life sciences. The province boasts a diverse industrial base that also includes call centers, alternative energies, plastics, food products, aerospace companies, and forestry.
Canada has the fifth-largest aerospace industry in the world, and Ontario is one of its powerhouses, with more than 350 Ontario aerospace firms that produce aircraft such as the Airbus A380, Boeing 787 Dreamliner, and U.S.-led Joint Strike Fighter. And in 2005, Canada's plastics cluster shipped more than US$43 billion in goods ranging from processors, resins, machinery, and tool die and mold. About 65 percent of the shipments originated in Ontario.
On the food processing front, Ontario produces more than 200 agricultural commodities, a diversity unmatched in most parts of the world. The province is a world leader in food technology R&D, and the agri-food sector has a proven track record in successful export marketing with exports worth $8.5 billion annually, and accounts for 28 percent of Canada's total annual agri-food exports. The value of food shipments for 2005 was $32.5 billion.
Call centers is an area in which Ontario shines, thanks to its multiculturalism. According to the 2006 KPMG Competitive Alternatives study, Canada is second only to Singapore in terms of annual call-center costs, and Ontario's language and cultural diversity pays off for companies that set up shop there. Twenty percent of Ontario's work force speaks at least one language besides English, including Chinese, French, German, Greek, Italian, Japanese, Portuguese, and Spanish. "There are about 100 different languages spoken in the greater Toronto area," says Langley. "That's a tremendous advantage with globalization."
Competing on Price
Ontario's global, educated work force is also a cost-effective one. In fact, the KPMG study found that Canada's business costs are the lowest of the G8 countries - on average, 5.5 percent lower than the United States. For software development, contact centers, and back-office operations, costs in Ontario are 5 percent to 20 percent lower than the U.S. average. Lower wage rates, including employer healthcare costs, are a key contributor to this advantage. And Ontario's tax rates are also highly competitive. The province's corporate tax rate is 4 percent lower than the U.S. average.
"The advantage seen for many of the Canadian cities relative to the U.S. is generally the result of combination of lower labor costs - including lower employer costs for private medical coverage - lower real estate costs, and lower electricity costs in Canada than in the United States, where deregulation has seen electric costs soar in many regions," says KPMG's Mark MacDonald. Various federal and provincial tax cuts over the last decade, he says, have also made Canada's tax system more competitive with the United States, and have contributed to the positive position of the Canadian cities.
Pupatello is optimistic about the future as the government continues to reach out to international markets in an increasingly knowledge-based economy. The focus now is on attracting new research developments and commercializing discoveries to boost the manufacturing sector in life sciences and biomaterials. That, she says, is the world's future, and Ontario plans to be smack-dab in the center of that future with world-renowned research institutions. To be sure, the short- and long-term prospects of investing in Ontario look bright.
"Economists continue to predict good economic growth in Ontario this year and even stronger growth in 2008," says Pupatello. "Since we took office in October 2003, Ontario has gained 327,000 jobs with more than 70 percent of those full-time, high-value positions. We are making the right strategic investments that strengthen our position and generate more wealth and prosperity for the people of Ontario."