The State of Waterloo's Economy

I enjoyed yesterday’s Bloggers Hotstove talking about the Joe Volpe saga, Liberal leadership results and whether we’re going to see a majority government by anybody anytime soon. It was a great time with conservative commentator Damian Penny, New Democrat Mike Park and moderated by the ever even-handed Greg Staples. No podcast next week for Thanksgiving (all the more time to prepare for Doctor Who), but we’ll be back the week after to discuss the latest goings on in Canadian politics.

And speaking of links, Robert McLelland is once again running the Canadian Blog Awards. He has done an exceptional job these past two years running this contest in a non-partisan and impartial manner, and it has contributed significantly to the overall sense of community within the Canadian blogosphere (although the non-political blogs still have some ways to go before they get the attention they are due).

Nominations are now open, so go on over there and make your suggestions. The first round of voting takes place this November.

Finally, I’m also glad to report that my latest Business Edge article is out in the latest edition. It’s about สัตว์ใต้ท้องทะเลthe state of the Waterloo economy. Everybody knows that the region is a high-tech hotbed, but did you realize that its manufacturing sector is still going strong? Or that our high tech companies are taking up locations in Cambridge as well as the city of Waterloo? It was a challenging article to write because of the number of people I had to talk to. I received so much material, I had a hard time trimming things down. Fortunately, my editors allowed me some leeway in terms of length.

One of the interviews I conducted was with John Tennant, the CEO of Canada Technology Triangle Inc.,. Like Michael Denman before him, John was a good example of an interview subject who was knowledgeable and passionate about the subject. In other words, a joy to talk to. Here he is about the state of the Waterloo economy, in his own words.

The Waterloo Economy: What’s its Secret?

“The Waterloo Region economy has had a history of reinventing itself and emerging on the edge of new technologies. At one time, the area was known as Canada’s button capital, at other times as Canada’s furniture capital. In the heyday of rubber, in the 1920s, it was known as the Akron of Canada. Cambridge was called the Manchester of Canada because of the concentration of textile industries. Whiskey was even important at one time, with Seagrams being closely identified with Waterloo in the past.

“This area’s resilience and adaptability has helped our economy remain strong. As industries come into more challenging times competitively as the economy and the world changes, we’ve been able to adjust and move onto the next leading edge in terms of industry.

“Within the last year and a half, there have been closures announced in the Waterloo region, including BF Goodrich, but these have been in our older industries, in textiles and rubber, and areas of the auto sector. But there are a number of manufacturing companies that are growing; many are in high tech, including Christie Digital, which grew out of Electrohome, and Babcock and Wilcox, which is growing thanks to the refitting of the Bruce nuclear power plant.”

“So, regrettable as these closures are, they have been concentrated in industries that were once more important to this area than they are now, and the area has learned over time to make adjustments and emerge stronger than before. In an economy as diverse as Waterloo Region, there are closures in certain areas, but at the same time there are other companies whose prospects are bright. Overall, employment has remained stronger than in most other parts of Ontario and Canada.”

The Pillars of the Waterloo Economy

“We tend to speak simplistically of three pillars: manufacturing, high tech and financial and business services, anchored by insurance, but there is a fourth pillar materializing. Health sciences and areas like nanotechnology and maybe quantum computing are factors for the future.

“I say simplistically because the manufacturing sector incorporates a portion of the high tech sector, so drawing distinct lines is difficult. Both the high tech and the manufacturing sectors are enhanced by our area’s outstanding post-secondary institutions as well as a strong tradition of innovation and entrepreneurship. What distinguishes the high tech sector is the adoption of newer technologies and the emergence of many new companies from a start-up phase with rapid growth and a need for capital. In today’s age, we’re developing strategies to nurture the rapid growth that goes with capitalizing on these new technologies as opposed to applying new technology to what might be regarded as better-established or long-established companies to keep things on the leading edge.

“What is clear is that the future success of manufacturing will depend on manufacturers being able to adopt the latest technologies. The latest transformation that has occurred has been driven by IT and computerization. What needs to follow is the ability to work with advanced electronics, communications, biotechnology and even nanotechnology. What’s reassuring is that our post secondary institutions are already paying close attention to these areas, while at the same time fueling new start-up companies which are developing these technologies.”

What Fuels the Waterloo Economy?

“Innovation. In the sense that technology itself and research in itself does not bring technology to the market. Innovation is the ability to take technology and fashion it to answer the real needs that will build a business case and a long-term future for a company.”

What Are Waterloo’s Best Kept Secrets?

“Many do not recognize that this area has grown into an urban region of half a million people, the tenth largest urban area in Canada. Too often people think of Cambridge separately from Kitchener and Waterloo, possibly because K-W has been hyphenated for so long. But the Region of Waterloo constitutes a regional economy just outside of the Greater Toronto Area that has achieved a critical mass in terms of skill, talent and an educated workforce. That’s a very important driver for our future: that we have a broad spectrum of people.

“The diversity of our economy is not always apparent to people because they don’t see the whole; because they think of Waterloo for high tech and Kitchener/Cambridge for manufacturing. High tech companies are not all concentrated in Waterloo; there are the same number in Kitchener as in Waterloo and a significant number in Cambridge.

“And the diversity of this economy has a big influence in fueling companies within it. A lot of the region’s businesses are supplying other businesses in the region, and this diversity of potential customers locally drives companies to understand the needs of potential customers worldwide and to develop applications that cater to those needs. Working with a customer close at hand helps you build your sales over a wider area.”

What Does Each Community Within Waterloo Bring to the Table?

“The area’s urban character, the fact that it’s three cities which have grown together, with a fourth city (Guelph) nearby, means that there is a significant number of employees who live in one community and work in another. There’s little identity in terms of where employment is and where people choose to live. People can look outside the borders. And yet the history and the character of these communities contributes choice, options, to people who wish to live here. People can choose to live in different areas: urban, rural, big downtown, small downtown, suburb, et cetera.”

The Challenges Ahead

“We have to continue to attract skilled, educated workers. This means we are increasingly dependent on bringing in immigrants who are a match for our needs. We have a long history of having a steady inflow of talent, because we’ve long had a reputation of being an area with good jobs. Our ability to attract immigrants in the future will be greatly helped by the fact that we already have a significant immigrant component to our population — twenty-two percent — as high as any area our size in Canada.

“We also have to be careful in managing growth. Projections from the province suggest that we’ll grow from half a million to 730,000 by 2031. To support this will require improved public transit, rapid transit, brownfield redevelopment and downtown revitalization as well as good management of our water, sewage and other essential services. We’re fortunate to have a regional growth management strategy that we adopted three years ago that’s well aligned with the province’s strategy, which will help coordinate investments from the local and provincial governments.

“The regional growth management strategy also looks to future land needs. This is already being implemented, with new employment land authorized for the northern part of Cambridge, at the intersection of Highways 401 and 97, and in Baden. This needs to be balanced with brownfield redevelopment initiatives, of course, and the investments by the municipalities, especially with university partners in setting up city core campuses — the School of Architecture in Cambridge and the schools of Pharmacy and Social Work in Kitchener — are all vital parts of the mix.

“Finally, to continue to attract skilled, educated workers to the region, we need to deliver a livable environment that appeals to knowledge workers. This means we need to maintain a strong sense of community, a thriving arts and culture scene, a wide range of recreational opportunities, wi-fi hotspots and more. The fact that the City of Waterloo was named one of the world’s seven most intelligent communities is an important part of that strategy. We already boast global class think tanks and institutions, like the Perimeter Institute. Attracting the world’s best minds means offering them a sophisticated and lively environment in which they can live. These are the challenges the Region is undertaking.”

All of this was typed madly on my keyboard while Mr. Tennant spoke. I cleaned it up, of course. It helps that I can type at eighty-five words per minute, but I was still fortunate that Mr. Tennant didn’t speak much faster than that.

Be sure to check out the Business Edge article!

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