Canadian Industry's Recipe for Success
Canada's pro-business policies, business incentives, and educational support will continue to drive growth in its key industrial sectors.
Location Canada 2010
In February, Canadian Plastics magazine released results of its annual injection molders survey. The bad news: 77 percent of respondents experienced a "significant" business slowdown in 2009. The good news: 66 percent expect "a recovery" in 2010.
Canada is the world's fourth-largest exporter of molds and eighth-largest exporter of plastics-processing machinery, according to its federal government. The nation's $33 billion, multifaceted plastics industry is renowned globally for its high-quality blown film extrusion systems, injection molding, thermoforming machinery, extruders for corrugated pipe, and other plastics activities. More than 3,400 firms employ 113,000 workers in a sector whose strengths include the production of plastics products, machinery and molds, and synthetic resins. End-use market data from 2008 indicates three major product lines for the vast assortment of plastic products: 34 percent, packaging; 26 percent, construction products; 18 percent, automotive components.
The sector is well represented in all the provinces with a major presence in four: Ontario (primary) and Quebec, followed by British Columbia and Alberta. Of its 14 clusters, four stand out: Toronto, Montreal, Vancouver, and Edmonton. Leading companies include ABC Group, Arclin, Camoplast, Compact Mould, Decoma International, Husky Injection Molding Systems, NOVA Chemicals Corp., StackTeck Systems, Weber Manufacturing, and Wentworth Mold.
A plastics project announced in March by the Bank of Canada will impact all Canadians. By next year, the institution will have begun printing new plastic bills made of polymer, which are expected to last up to three times longer than paper bills. Not only will their durability provide cost savings, but the high-tech currency will also offer new security features making it harder to counterfeit, and it will be recyclable too!
Aerospace and Defense
In January, research firm RNCOS released "Aerospace Industry Forecast to 2013," a report analyzing the global aerospace industry and predicting a recovery in 2010. This document posits the Canadian aerospace industry as the third largest in the world, with clear competitive advantages over many other nations (e.g., production costs in Canada are 7.1 percent lower than in the United States).
Canada's aerospace, defense, space, and security industries are major contributors to the national economy. In 2005, for example, the aerospace sector posted $21.8 billion in sales and employed 75,000 Canadians. According to Industry Canada, these firms produce 80 percent of simulators, 60 percent of landing gears, and 60 percent of aircraft environmental systems worldwide. Not surprisingly, these companies are engaged in 11 percent of Canada's industrial research and development - and together represent the third-largest "investor" in Canadian R&D.
Last September the federal government announced it would invest $200 million in two Canadian aerospace and defense firms through its Strategic Aerospace and Defence Initiative (SADI), which was established in 2007. This program exists to encourage more R&D and commercialization of sector products. One recipient, PCI Geomatics Group Inc., will use the monies to develop faster, less expensive "next-generation" Earth observation satellite technologies. Another recipient, AXYS Technologies Inc., will use the funds to create an interface between diverse data sources that will improve Canada's maritime security.
Montreal, the industry's epicenter, is globally renowned for its expertise in aircraft assembly, engine manufacturing, maintenance overhaul as well as repair, avionics, and landing gear. In 2007, Montreal's aerospace exports exceeded $9.8 billion. The Quebec area alone employs over 42,000 aerospace workers at companies like Pratt & Whitney Canada, CAE, Bombardier Aerospace, Bell Helicopter Textron Canada, and Rolls-Royce Canada.
In southwestern Ontario (in and around Toronto) more than 20,000 workers are employed by some 200 sector firms. Key employers here include Bombardier Aerospace, Pratt & Whitney Canada, Honeywell Canada, L-3 Electronic Systems, Magellan, and Northstar Aerospace.
The University of Toronto Institute for Aerospace Study and Ryerson University's Institute for Aerospace Design and Innovation perform cutting-edge R&D and train future skilled workers. Winnipeg, Western Canada's biggest aerospace cluster, employs 5,300 people in this sector and is dominated by four industry giants: Boeing Technology Canada, StandardAero, Magellan Aerospace, and Aveos.
According to the Canadian Association for Renewable Energies, Canada is a "global leader in the generation of clean energy, including the production of hydroelectricity. Hydro, solar, wind, and other clean and renewable energy technologies have the potential to significantly reduce [Canada's] emissions of greenhouse gases [while] creating new business opportunities as the global economy transitions towards lower emission pathways."
The federal government is investing in that vision. Its 2010 budget allocates $1 billion over five years to support carbon capture and storage technologies, plus $1 billion more over five years for investments in green infrastructure, including sustainable energy projects. For more information on federal and provincial renewable energy incentives, see the article in this issue entitled "Canada Makes Renewable Energy Investment Attractive."
By 2020, Canada hopes to source 90 percent of its electricity from non-CO2-emitting energy. Perhaps Hind High Vacuum (HHV), a Bangalore, India-based vacuum tech firm, may be part of the solution. This past March, HHV formed a joint venture with Solar Source Corporation, a Canadian renewable energy holding company. Together they will establish Canada's first thin-film amorphous silicon solar panel manufacturing plant. Due to its low capital cost, HHV claims it can produce modules competitively priced against coal-fired electricity (as low as $1.2 per watt). The plant, to be built on Prince Edward Island, will provide panels for a variety of markets. The two firms also plan a joint venture to build a 120-mw crystalline silicon solar panel manufacturing plant in Ontario. The total investment for both projects is estimated to be $240 million, according to newspaper DNA India.
Currently wind energy is the fastest-growing renewable energy source sector in Canada, thanks to the efforts of over 400 companies. However, Canada is also pushing forward with other clean energy alternatives and is a global leader in the commercialization of hydrogen and fuel cell technologies, according to the Canadian Hydrogen and Fuel Cell Association.
Canada's automotive industry - one of the world's top 10 - represents the nation's largest manufacturing base accounting for 900,000 direct and indirect jobs. In 2007, this industry posted revenues of $96.7 billion. This sector produces all types of light- and heavy-duty vehicles, as well as a wide range of components, parts, and systems used in those vehicles. In addition, its strong, well-connected vehicle dealer network supports a world-class distribution system.
Unfortunately, the recent troubles of the U.S. auto industry have had a tremendous impact here - yet optimism prevails. "Motor vehicle sales have hit bottom in the United States, but will remain weak well into 2012 as consumers retrench from the global financial crisis," according to economist Sabrina Browarski, author of a December 2009 report released by the Conference Board of Canada (CBC). Fortunately, the Canadian auto industry "appears to have turned a corner in the second half of 2009 and is expected to return to profitability in 2010," Browarski continues. "However, production will remain below historical levels. Manufacturers will have to make concerted and ongoing efforts to streamline product line-ups, control costs, and innovate to maintain profitability."
The report also notes that Canada's auto industry closed 2009 with a pre-tax loss of $2.3 billion, "but is expected to post a profit of $263 million in 2010."
As to the "greening" of the automotive sector, in late March (after two years of research), the "Electric Vehicle Technology Roadmap for Canada" report was released and published online. Funded by the federal government, the report was developed by a steering committee comprised of stakeholders from various industry, education, research, and government sectors. Its purpose is to provide "a strategic vision" for highway-capable battery-electric, plug-in, and other hybrid-electric vehicles for the nation. The major goal is to have 500,000 of these vehicles on the road by 2018. However to reach this target "we must transition from research to commercialization.from developing this roadmap to implementing it," says Project Chair Mike Elwood of Azure Dynamics Corporation. That means developing new high-voltage charging stations, distribution centers, and transformers on the utility/infrastructure side; creating new batteries, fuel cells, and other manufacturing processes and technology advancements; marketing the changes and rolling out financial incentives; and a whole host of other commercialization efforts. For more information, log onto https://bit.ly/csOIVF.
Medical Technology, Pharmaceuticals, and Genomics
MEDEC is the national association for - and voice of - the Canadian medical technology industry. It represents 150 small to large companies across the country associated with diverse medical devices and technologies. Among their ranks are Abbott Diagnostics, GE Healthcare Canada, Genzyme Canada, Johnson & Johnson Vision Care, Roche Diagnostics, Spartan Bioscience (DNA testing), Victhom Human Bionics, Systagenix Wound Management, and Bayer HealthCare.
Members have commercialized an abundance of innovative, life-changing ideas to improve the accuracy of diagnoses, advance disease treatments/cures, reduce long-term disabilities, and provide better medical care. For example, products include new high-tech surgical tools to seal and cut blood vessels, the world's first patient-friendly test for colon cancer, remote monitoring for cardiac devices, and advanced intra-ocular lenses for cataract surgery.
Canada is the fourth-fastest-growing market in the world for pharmaceuticals. Its thriving pharmaceutical industry is made up of both brand-name and generic drug companies; the former group is comprised of mainly foreign-owned multinationals that were responsible for 84 percent of the nation's total pharmaceutical sales in 2005. Toronto and Montreal, the two key clusters, boast an abundance of biosciences firms and R&D facilities. Government statistics report that in 2005 Canada's pharmaceutical manufacturing industry employed nearly 40,000 workers and supported 35,000 indirect jobs.
Additionally, DNA research is growing through Canada's genomics and proteomics sector, one of the world's most promising industries. Over 60 firms here are exploring how human genes and proteins can be used to help create new drugs to treat or cure diseases.
Canada's $3.5 billion digital media sector employs thousands of the most creative and imaginative people on the planet.
For example, the work of Canadian companies engaged in animation and special effects is both legendary and award-winning. Many recent films nominated for Academy Awards in special effects (e.g., The Lord of the Rings trilogy, Batman Returns, The Chronicles of Narnia) were produced with the help of Canadian brainpower.
On the gaming front, Canada's digital media firms have developed the world's most advanced, successful, and beloved video and computer game products of all time. These include console games ("Unreal Tournament" series), casual games (Webkinz toys/website), serious games (defense simulations and industrial training), and mobile games for smart phones. (The focus is on game development - not publishing.)
The two biggest gaming clusters are in Montreal and Vancouver. Significant urban clusters also are found in Toronto, Edmonton, and Winnipeg. Nearby these hot spots are five dozen universities offering gaming studies that keep the labor pipeline full of talent. These cities provide operational costs comfortably below those of European and Asian clusters and are home to a wide variety of creative companies. Leading Canadian players include Artificial Mind & Movement, Beenox, Bigware, Radical Entertainment, and Rainmaker Animation. Noted multinational firms include Activision, Electronic Arts, Koei, THQ, Ubisoft, and Disney Interactive.
In March, North America's eighth-largest video game company announced it would set up a gaming studio in Montreal, and promised to create 300 jobs there by 2015. Burbank, California-based Warner Bros. Interactive Entertainment will receive a 37.5 percent tax break on all jobs as well as a $7.5 million grant from Quebec. "This was the best offer on the table on both talent and financial incentives," said Martin Tremblay, company president. It's expected the Montreal facility will develop some of the firm's new DC Comics games.
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