Exploiting our Canadian commonalities

Government officials here and in Canada are stressing the business opportunities between the two countries on their first formal trade mission in20 years, writes Karlin Lillington

It has a diverse, competitive economy, a well-educated workforce with thousands of technology and business graduates, lower corporate taxes than nearby competing states, a supportive government and a huge base of technology companies that choose it as an international base. Ireland? No - Canada.

This week, the eerie similarity in national industrial sales spiels between the two states - both continuously in the shadow of, while tied economically to, a much larger neighbour - will no doubt strike Tánaiste and Minister for Enterprise, Trade and Employment Ms Harney as she leads a trade mission to the huge North American state.

She might also note that Canada has a few things the Republic sorely lacks - low inflation, inexpensive housing, low wage costs (paying about two-thirds the cost of a programmer's salary in Silicon Valley), excellent telecommunications services (with universal broadband provision policy for the entire country), good roads and public transport infrastructure, a supportive, multi-ethnic immigration policy - especially for high technology workers - and the best e-government services in the world.

But government officials on both sides will be stressing the commonalities and the opportunities for business between the two states in the first formal trade mission to Canada in two decades.

Focused on financial services and technology - especially biotechnology, photonics and digital media - companies travelling on the mission will be looking at partnerships, business deals, and perhaps considering Canada as a North American base, rather then opting for the US.

"On economic issues, we see eye to eye in many ways," says Ottawa-based Irish Ambassador Mr Martin Burke. "I think this visit will offer us the opportunity to develop this relationship further and look at new ideas."

He notes that Canada is already the third-largest presence in the Irish market after the US and Britain, with an annual spend of 8.4 billion Canadian dollars (€5.36 billion).

Not that Canada has always been a stellar economic performer. The 1990s saw a deep recession and a precipitous fall in the value of the Canadian dollar. Taxes were high and the North American Free Trade Agreement (NAFTA) hit competitiveness.

More recently, there's been SARS - which Canadian Ministry of Finance economist Mr Patrick Deutscher says will cost the country C$1 billion "in spending pressures" and the summer blackout, which took a serious toll on the economy as well.

But the Canadian economy overall has been looking up since the late 1990s, outperforming other G7 countries, and even managing a respectable 3.8 per cent growth last year.

As in the Republic, the Canadian government saw a huge opportunity in technology in the 1990s, particularly in the province of Ontario, which had growing centres of tech expertise around its cities of Ottawa, Toronto and Waterloo, which have a combined population of around six million.

The region also had a strong network of universities and research facilities to build on - including the leading school in the world for computer animation - and the presence of significant Canadian tech players like Nortel, JDS Uniphase, Corel, Research in Motion (RIM, which produces the Blackberry), SoftImage, Cognos and Open Text, plus the major multinationals like Cisco, IBM, Dell, Alcatel.

Today, technology-based industries provide close to 40 per cent of the jobs in Ontario, and generate more than two-thirds of new jobs.

According to both industry and government spokespersons in Canada, key drivers behind continuing growth are the nation's broadband infrastructure - Canada consistently ranks in first or second place for broadband penetration, both on an industrial and home use level - its educated workforce, a welcoming immigration policy towards skilled technology employees and the support given to research and development (Canada has had a national research council since 1912).

"The R&D tax credits here are the most progressive in the world," notes Mr Brian Harvey, ICT specialist with Ontario Investment Services.

The strength of R&D support, which includes a strong network of well-funded university research programmes, has provided direct competition to the Republic in the past, as when IBM decided a few years ago to base a significant R&D laboratory in Toronto rather than Dublin.

Toronto is also the base for Ontario's new broadband research network, Orion, which weaves around the technology hubs in Ontario. The 3,700 km fibre network will link 43 third-level institutions and more than 50 publicly funded research organisations.

"What we're really about is trying to make the network sing. We want to facilitate new research opportunities, and that's all about collaboration," says Orion chief executive Mr Phil Baker.

Toronto may be Orion's home, but the Ottawa region in particular "has the highest concentration of R&D in Canada, as well as the highest concentration of engineers and PhDs", says Mr Michael Darch, director of Ottawa Centre for Research and Innovation, an industrial development organisation.

Ottawa and Toronto can be vigorously competitive with each other in promoting the industrial attractions of their areas but it is always in a typically good-natured, polite Canadian way.

For both, the first priority is getting people even to notice Canada. "Our biggest challenge with investors is convincing them that they should locate here rather than in the US," admits Mr John Klassen, executive director of government organisation Investment Partnerships Canada.

The Ottawa Centre for Research and Innovation is big on cluster-based development - focusing on technology sectors it believes promise real growth in the future and encouraging a network of growth across companies and facilities within or supporting the sector.

As in the Republic, the clusters of interest include photonics, call centres, digital media, biotechnology, medical devices and e-business. But Canada's larger concentration of computer, microelectronics and telecommunications companies mean these areas are also top of the investment list.

That breadth may seem intimidating to Irish companies looking for business opportunities but Canada is not necessarily the market for Irish companies, says Ms Ruth Rayman, director of the Canadian Photonics Consortium.

"Canada is not the market. Canada is the opportunity for creating business opportunities for creating the market," she says. "This is why we're interested in this mission. And hopefully, for Irish people that blob at the top of the North American map will start to have some clarity."

The Centre for Research and Innovation's offices are based just outside Ottawa in a technology park set in the rolling countryside and built by Welsh industrial entrepreneur Mr Terry Matthews.

The impressive sweep of the park reveals some of the challenges Canada faces following the tech downturn, which businesses themselves are quicker to acknowledge than the government and the promotional agencies.

Some of the buildings lie empty - including a huge facility built by Nokia, and space intended for Alcatel - and the vast expanse of empty car park around them testifies to jobs that didn't materialise.

Likewise, in Toronto's digital media district centred around funky Spadina Street, many companies closed down or downsized, says Ms Kathleen Smale Crosby, director of digital media company D-Code and networking organisation Spadina Bus. "It's like, who broke all the mirrors? It's been a bad, bad year."

But some tentative stirrings indicate an economic thaw is happening, she says - in a few months' time, they'll know whether they're into recovery mode in an industry that, overall, she has great confidence in, or continuing to stand still.

Both industry and businesses are, as always, looking south to the US.

Though they subtly pitch the benefits of Canada versusthe US - lower costs, more R&D and state support, more IT graduates, a more flexible immigration policy - they rely on the massive US market, and its economic engines must fire first before Canada's kick in.

On the bright side, Canada also wasn't hit as hard as its southern neighbour in the downturn.

Mr Deutscher says economists are "optimistic" on future growth, albeit predicting a flat year ahead. And Canadians are natural optimists. "We have a quiet pride," says Ms Smale Crosby.