For many in the advanced manufacturing sector, locating in Canada has long been the answer to competing in a global economy. From aerospace to automotive and from microelectronics to photonics, thousands of companies across Canada are competing with new manufacturing techniques, innovative applications of information technology, and easy access to global markets. Indeed, with a strong, stable, and dynamic economy, world-class infrastructure, and leading-edge research and development capabilities, Canada is attracting the attention of global businesses and investors alike.

Foreign and domestic companies established in Canada at this time can expect to profit from the lower Canadian dollar relative to its U.S. counterpart, and the consequent stronger demand for Canadian-produced goods and services. Moreover, by 2010, Canada will have set the lowest overall tax rate on new business investment among the G7, and by 2012, the lowest statutory tax rate.

Canada will also reduce the general corporate income tax rate to 19 percent this year and to 15 percent by 2012. Additionally, the 2009 Budget includes significant financial support aimed at long-term recovery in specific sectors, including $7.5 billion to be directed to foreign and domestic companies in the manufacturing, clean energy, agri-food, forestry, fishing, and financial services sectors.

Aerospace Industry Flying High
Canada’s aerospace industry boasts more than 400 companies — including Bombardier, Pratt & Whitney Canada, and CAE — that employ more than 82,000 people. Canada offers numerous incentives and exemptions to companies in this sector. In 2008, the Canadian government announced a $900 million Strategic Aerospace and Defense Initiative.

Canadian universities equip about 3,000 aerospace graduates each year to design and manufacture corporate aircraft, flight simulation gear, avionics, and space applications. And Canada offers a sophisticated R&D infrastructure supported by government tax. Pratt & Whitney Canada is headquartered in Longueuil, Québec, just outside of Montréal. The company works with 20 Canadian universities to keep its labor pipeline full.

“Pratt & Whitney Canada is the number one R&D investor in the Canadian aerospace sector,” says Alain Bellemare, company president. “Our company ranks Canada first internationally for access to well-educated workers. We get great people — graduates from first-rate engineering courses offered by Canadian universities.”

And Canada is also a world leader in space robotics: the Canadarm2 is critical to the construction of the International Space Station. Importantly, the 2009 Budget provides for $110 million over three years to the Canadian Space Agency to support the development of advanced robotics and space technologies.

Auto Sector Stays on Course
Given the effects of the global economic downturn on Canadian-based auto manufacturers, the government — in conjunction with stakeholders — will support adjustments to Canada’s automotive sector. Specifically, $2.7 billion in repayable loans will be made available to auto manufacturers, over and above the support offered by the governments of Ontario and the United States.

Nonetheless, Canada’s proven, global reputation for innovation, R&D, expertise, quality, and productivity has been growing for the last 100 years. As one of the largest auto producers in the world, Canada’s vehicle shipments rose from $47.6 billion in 1996 to $59.8 billion in 2006.

Canada continues to attract new investment in automotive manufacturing R&D. Capital investment has averaged $3.5 billion annually over the past 10 years. One reason is the work force. Clustered in central Canada, the nation’s automotive industry employs more than 168,000 people in assembly and component manufacturing and offers readily available, skilled workers.

Canada’s automotive industry is known for consistently delivering world-class quality and productivity. The 2007 Harbor Report concluded that Canada is 7.9 percent more productive than the United States and 82.2 percent more productive than Mexico for assembly. Canada also has bilateral free-trade agreements with countries like Chile and Israel and multilateral agreements through the World Trade Organization.

On the innovation front, Canada is expanding its capacity for automotive R&D, and is investing heavily in skills and qualified labor. Canada is a world leader in fuel cell technology, lightweight materials, metal forming, and 3D industrial design. The Economist rates Canada’s business environment as the best among all automotive countries because of its openness to foreign trade and capital, high-quality infrastructure, and great market opportunities in North America.

Honda’s investment in Canada is over $2.6 billion. According to Jim Miller, executive vice president of Honda Canada, the engine plant allows the automaker to be more self-reliant, while at the same time respecting the environment. Honda is also building a head office campus in Markham, Ontario, which will offer it strategic access to the North American market.

“The new space allows for greater economic and operational efficiencies, while expanding our economic contribution to Canada,” Miller says. “Honda considered many options and decided on a municipality that complemented our business philosophy — speed to market, focus on customer service, and driven by innovative solutions.”

Getting in on the Game
Video game developers are also making strategic investments across Canada. In fact, more than 3,200 electronic gaming and multimedia industry companies employ 52,000 there. Industry revenues top $5.1 billion with annual growth of more than 20 percent. Electronic Arts, Ubisoft, and Radical Entertainment are among the leaders.

Canada’s government offers various programs for gaming and other companies. British Columbia, Québec, and Ontario also offer production incentives, while the National Research Council’s Industrial Research Assistance Program offers financial support to commercialize technologies.

“The core building blocks of a game are programming, art, and audio, and the schools in British Columbia are strong in these areas,” says Rory Armes, group general manager with Electronic Arts. “New grads come into our studios with a good skill set and base of knowledge.”

Applying Enterprise Software Expertise
Global Enterprise Application Software (EAS) developers are also settling down in Canada, including IBM, SAP, Sage, Adobe, Oracle, Microsoft, and Sun Systems. The country’s EAS market is worth nearly $1 billion. Skills innovation and proximity to the United States make Canada the world’s number-two market (after India) for business process outsourcing.

“Microsoft is committed to investing in Canada, and we hope that other Canadian and multinational companies recognize the opportunities here as well,” says Phil Sorgen, president of Microsoft Canada. “Microsoft is a global company, and our greatest asset is smart, talented, and highly skilled people. Our goal as a company is to attract the next generation of leading software developers from all parts of the world, and Canada is a beacon for some of that talent.”

Leading Llife Sciences Innovation
Canada’s life sciences sector — which includes biotechnology, biopharmaceuticals, and medical devices — is booming. There are more than 500 biotech companies, 500 biopharmaceutical companies, and 1,500 medical devices companies in the nation. Government assistance at all levels is driving significant growth.

According to Ernst & Young’s Global Biotechnology Report, venture financing reached an all-time high in 2007 with investment totaling about US$7.5 billion, fueled by a record total of US$5.5 billion in the United States and 72 percent growth in Canada. Meanwhile, Canada is the fourth-fastest-growing market in the world for pharmaceutical products. On the medical devices front, major players include Abbot Laboratories, 3M, and Siemens.

The Canadian government supports R&D by assisting investors from development to startup and through discovery. The government also boasts a generous R&D incentive program and offers 20-year patent protection for brand-name products. The work force is highly skilled and the market is ripe. These are some of the reasons Sandoz, the generic arm of Swiss pharmaceutical firm Novartis, located to Boucherville, Québec in 2004.

“The existing local core competencies ensure on-time completion of complex projects,” says Sandoz Canada President and CEO Pierre Fréchette. “The success of the local Canadian operations is based on the talented, qualified, and stable work force. The track record of delivering our commitments and flexibility in adapting to diverse market requirements are also critical success factors.”

Pitching Photonics
Photonics accounts for revenues of roughly $4.3 billion, employing approximately 20,000 people at nearly 400 companies in Canada. These workers are highly skilled, with 40 percent engaging in R&D. The federal government is reinvesting $22.3 million in the Ottawa photonics cluster from 2008 through 2010. Clusters including Ottawa, Montréal and Québec City, southwestern Ontario, British Columbia, and Edmonton have strong showings in this sector.

Since the 1970s, the Québec City area has been a leader in photonic applications markets, from instrumentation (test and measurement, analytical) to imagery, vision systems, optical communications, and high-performance fiber optics. Québec City’s optics-photonics sector numbers 35 companies and eight research centers.

“In Québec City, I had access not only to the very best optics experts, but also to a large pool of skilled and dedicated workers,” says Germain Lamonde, chairman and CEO of Québec City-based Exfo, a leader in the telecommunications test and measurement market. “We also had a high enough profile to launch a successful recruitment campaign. In fact, Exfo received support from the whole community — it was truly amazing! Québec City really is a great business incubator.”

Winning with Wireless Manufacturing
Canada’s wireless industry offers leadership in four key areas: cellular equipment, data centric mobile devices, WiMAX equipment, and Software Defined Radios. Research in Motion, the maker of BlackBerry® phones, manufactures its popular devices in Canada. And Nokia, Ericsson, and Siemens, among others, have set up R&D units in Canada. Canada’s wireless industry generates $18 billion in annual revenues. Canada’s wireless clusters are located in Ottawa, Waterloo, Toronto, Calgary, Montréal, and Vancouver.

“Nokia chose Vancouver for its Product Creation Center because of the deep pool of talent in the multimedia and gaming segments of the market,” says William Serman, vice president of multimedia design at Nokia. “Vancouver was also a great place to locate Nokia’s multimedia group given its location on the Pacific West Coast between our offices in Tokyo and Helsinki. From Vancouver, we also have complete access to content developers across the U.S. West Coast.”