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Ontario 2006: In Front of the Pack

If North American vehicle manufacturing were an auto race, the Canadian province of Ontario would be pulling out in front of the pack. Though the state of Michigan has for generations been seen as the car capital, Ontario's auto industry has fairly quietly emerged in recent years as the leader.

Jun/Jul 06
"Last year, 2.7 million vehicles were made here, which is a larger number than any other jurisdiction in North America," says John Langley, director of the investment branch at the Ontario Ministry of Economic Development and Trade. Expect that figure to grow in the coming years, as more assembly capacity comes online, and watch for the industry's impact to compound as an increasing number of suppliers also choose Ontario locations.

One announcement with especially significant impact came last year from Toyota, which chose the province for a brand-new factory to build its RAV4 sport-utility vehicle. "Any announcement of a greenfield plant is big news in general, and it's going to bring a number of Toyota suppliers to Ontario," Langley says. "It has brought attention from people not just in the automotive industry but even from industries as diverse as pharmaceuticals. They feel that if a company as good as Toyota is building in Ontario, it's worth looking at the province."

The fact that the ripple effect extends beyond the automotive sector is good news for Ontario's leaders, who know better than to put all of their economic eggs in one basket. Indeed, the province has many other stories to tell, success stories in industries ranging from the life sciences to call centers to IT.

Wheeling Into the Future
"The biggest development in the past year is the announcement of the Toyota plant in Woodstock," Langley says. "They announced it last June, and in February they announced that it's going to be expanded even further." The plant will take an investment of about a billion Canadian dollars, and will employ some 2,000 people who will turn out 150,000 RAV4 vehicles a year, up from the 100,000 capacity originally planned.

The Woodstock operation will be Toyota's first greenfield assembly plant in Canada in two decades. It will be operated by Toyota Motor Manufacturing Canada Inc., based in nearby Cambridge, where some 4,300 employees build the Toyota Corolla and Matrix and the Lexus RX330. According to Toyota Motor Manufacturing Canada President Ray Tanguay, "It is recognition of almost 17 years of manufacturing success in Cambridge, and opens the page to a whole new chapter for Toyota in Canada."

In making the initial announcement last year, Toyota Motor Corp. Senior Managing Director Atsushi Niimi said the Woodstock location will allow the company to capitalize on its Cambridge operation: "Its proximity to suppliers on both sides of the border will benefit both countries, and it will mean new opportunities for those suppliers." Jobs will be created not just in Ontario but also across North America, he said.

Can one get too much of a good thing? Apparently not when it's a Toyota plant. Initial plant construction was only a few months old when Toyota earlier this year announced an expansion. Ontario Economic Development and Trade Minister Joe Cordiano says it's a recognition of Ontario's manufacturing environment. "Toyota's continued investment in Woodstock is a strong vote of confidence in Ontario's highly skilled work force."

As always is the case, the big fish is being followed by schools of smaller fish - suppliers that are intent on building upon Toyota's success. One such development came in March, when Toyotetsu Canada announced the construction of its first plant in Ontario. Toyotetsu will provide stamped and assembled parts to the Toyota assembly plants in Cambridge and Woodstock. Its C$50 million startup plant in Simcoe will employ about 250 associates during the first year.

A smaller, nearby automotive venture was disclosed in March, when Hino Motor Sales Canada announced a new diesel truck manufacturing facility in Woodstock. The company already operated a sales office in Mississauga and sold more than a thousand trucks in Canada last year. The manufacturing operation required an investment of C$3 million worth of equipment and is creating about four- dozen jobs.

And the good automotive news keeps on coming. In mid-May, Honda Canada announced a C$154 million greenfield investment that will build fuel-efficient four-liter engines for Honda Civics beginning in 2008. The project will bring another 340 jobs to Alliston, where Honda first built an assembly plant 20 years ago, then added a truck plant 10 years ago. Those two plants employ 4,300 people and together made 385,000 vehicles last year. According to Cordiano, "Honda's project is the latest in an unprecedented line of new automotive investments worth more than C$7 billion for our province that have brought thousands of jobs."

In announcing the Honda plant, Ontario Premier Dalton McGuinty noted that the victory has a lot to do with the province's labor pool and the fact that companies locating there aren't saddled with the kinds of healthcare expenses that have hobbled such companies as General Motors in the United States. "Honda knows that Ontario's work force is among the most productive in the world, and our Medicare system gives investors the stable business costs they're looking for."

The effort to boost the auto industry continues. In May, a group of Italian auto-industry executives took a weeklong tour of Ontario to learn more about manufacturing opportunities.

A Trip to MaRS to Boost Technology
No, the red planet is not a hot spot for science and technology innovation, not outside of science fiction, anyway. In real life, though, there's a technology magnet known as MaRS - this one much closer, in Toronto. MaRS is short for "medical and related sciences," and the MaRS Discovery District is a not-for-profit corporation, a public-private collaboration created to improve commercial outcomes from Canadian science and technology innovation.

The term "Discovery District" refers to Toronto's downtown research cluster that includes the prestigious University of Toronto, seven teaching hospitals, and more than 30 research centers. More than $400 million worth of research and development takes place in the district every year. Less than a mile away is the country's largest concentration of financial enterprises and corporate head offices.

"The proximity to this kind of capacity in research, finance, and the broad mix of established and growing technology companies in the region - along with direct subway access to a thriving, creative, multicultural, urban community - is a truly unique advantage for MaRS in the global marketplace," says Dr. Ilse Treurnicht, the CEO of MaRS.

A major focus of the MaRS collaboration is a state-of-the-art facility called the MaRS Centre. Its first phase totals 700,000 square feet and is fully leased. Tenants include startup, mid-sized, and multinational high-technology companies, researchers from the University Health Network and The Hospital for Sick Children, venture-capital firms, and a wide range of services such as technology-transfer groups, accountants, lawyers, networking organizations, and funding agencies. A million-square-foot second phase has a target completion date of 2008 and is expected to attract a wide range of multinational technology businesses and leading research organizations.

"Toronto's vibrant medical and research institutions have demonstrated a strong track record for clinical trials initiatives with several of the world's leading pharmaceutical entities," according to Dr. Mansoor Mohammed, chief scientific officer and vice president of CombiMatrix Molecular Diagnostics. The producer of gene-based diagnostic products and services established a new facility this spring in the MaRS Discovery District. "We anticipate drawing heavily from the researchers trained within the greater Toronto medical research community."

"Life sciences is certainly an industry that we're focusing on where we have some big advantages," says Langley. "We have an excellent work force. About 57 percent have postsecondary education - about 25 percent have university degrees and the balance have college diplomas or full-time apprenticeships. Toronto is one of the major life-sciences locations in North America."

Along with strong research operations and facilities, plus the highly skilled workers required to take advantage of them, Ontario boasts strong advantages in research costs, Langley says. "We're considerably less expensive than the United States and Europe.We have an excellent R&D tax credit that effectively gives you roughly 50 cents on the dollar of costs. This is one of the most attractive tax credits in the industrialized world."

Nearly every jurisdiction on the planet wants a piece of the life-sciences pie, but economic development officials in Ontario know that competition is not the only route to success. They recently found common ground with their counterparts in the state of Illinois, signing a five-year agreement to collaborate on biotechnology research and trade. Among other things, the memorandum of understanding covers:

• Development of bio-products networks to take advantage of trends and opportunities;
• Information and technology exchanges across business and research institutions with the goal of developing and commercializing biomaterials, bio-fuels, agricultural sciences, plant and animal genomics, environmental sustainability, food science, and nutrition;

Trade development and business partnership opportunities; and
• Identification of issues that Ontario and Illinois might bring to the attention of their respective federal governments.

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