World-Class Communities -- Greater Than Sum Of Its Parts

Dec. 21, 2004
Toronto's government, business, and schools combine to create a manufacturing powerhouse.

In 1914 the 50-acre site of Aventis Pasteur Ltd. -- then Connaught Laboratories -- was called "The Farm" because it sat on the outskirts of the city. Today, it seems out of place, surrounded as it is by apartments, houses, and neighborhoods -- except that it's within the Toronto metro area. Unlike most other major North American cities, Toronto's manufacturing is part and parcel of the city, visible for all to see. Greater Toronto isn't a world-class manufacturing region simply because its industries have produced goods valued at over $100 billion each of the last four years, or because manufacturing directly accounts for 19% of all jobs in the region. Nor is it in the top ranks only because it boasts a skilled workforce of 2.4 million people, exceptional universities, solid infrastructure of suppliers, and strategic location. (Toronto's proximity to the U.S. has been critical to the metro area's growth. The area's exports to the U.S. have increased by more than 100% since 1990, and today they account for more than 55% of all Canadian manufacturing production, compared with only 37% in 1987.) What really sets Toronto apart is that as a manufacturing community its whole is decidedly greater than the sum of its parts. Credit for that goes to the desire of governments, businesses, schools, and people of different cultures -- over half of the people living in greater Toronto were born outside Canada -- to work together. "Maybe it's the diversity" of cultures in the region, speculates Bill Wolf, plant manager for DaimlerChrysler AG's Bramalea auto assembly plant in Brampton, Ont. "People here seem to find avenues to working out problems, and the government seems to understand what's needed to have a balance between corporate and residential needs." In the workplace there is clearly strength in diversity. "You have people with different backgrounds and thought processes who have different ways of thinking about how to solve a problem," says Wolf, who notes he wouldn't be able to speak in all of the workers' native tongues even if he were fluent in eight languages. It's much the same at Celestica Inc., a US$10 billion global electronics contract manufacturer based in Toronto. "When people come from different experiences, the ways they approach problems can be totally different . . . ," says Donald McCreesh, senior vice president of human resources. "Yet they have a way of working together [that yields] a good innovation approach. That is a real positive." Since its 1994 spin-off from IBM Corp., Celestica has grown tenfold and has recently opened a third manufacturing location in metro Toronto. McCreesh also cites government's positive attitude toward manufacturing. "If it's the right thing, the government will do it," he says. "There is no antimanufacturing bent. The government is there to be helpful" regardless of a manufacturer's size. A case in point: As a result of support from the provincial government and its suppliers, in only 10 years Accord Plastics Corp., which began as a metal-polishing firm, has become a leading supplier of extruded plastic parts to the office furniture industry. "It has truly made a difference," says Robert Ciancio, Accord's president and CEO, who started the now-$10 million company with his brother-in-law in 1991. Accord got help from the Ontario Development Corp. to buy its first piece of equipment and has benefited from a jobs program that trains the unemployed. "Government officials are very receptive to helping you grow," he notes. In addition, Ciancio says Accord, whose sales have increased by more than 50% each of the last three years, has benefited from the region's sizable plastics industry, which is "always ready to help us," he says. "We learned by asking them questions. And, if you need to solve a problem or to explain the properties of new materials to a customer, they are at your disposal. That has helped us to grow. That is the advantage here -- all the support. It is better than being in a region with a lot of people who can work -- but [where there is] no support . . . ." Education Needs Met Similarly, companies in Toronto say the relationship between manufacturers and the academic community is as good as it gets in North America. "Colleges and universities here aggressively go out and . . . ask how they can meet your needs," says Wolf. "They want to know what they can do to make the cities and the businesses better. They adapt to your needs." For example, when it's about to begin producing new models, DaimlerChrysler works with local colleges to train workers in statistical process control, quality principles, and assembly. Likewise, Celestica, which builds its most technically complex products in Toronto, hires many of its full-time manufacturing workers from community colleges "because they can go straight into manufacturing," says McCreesh. "They have the technical know-how and [understand] how to work in teams and solve problems." That bond is equally strong with universities. They "are more than willing" to work with manufacturers to design programs around the needs of industry, says Mag Iskander, vice president of human resources and plant manager in Brampton, Ont., for MacDonald Dettwiler Space & Advanced Robotics Ltd. To develop the company's space-robotics products, "we get first-quality engineers with a very strong business sense," he reports. Such praise for the universities and the workers they produce is repeated by other manufacturers, both large and small, in industries ranging from electronics, plastics, pharmaceuticals, computers, and biotechnology. "The infrastructure around knowledge in Canada compared with the rest of the world [is] superb," says J. Mark Lievonen, president, Aventis Pasteur, which hires the lion's share of its 250-person vaccine research staff from nearby universities. Indeed, the knowledge infrastructure enabled the Toronto region to adapt -- and thrive -- in the last decade as manufacturing shifted from labor-intensive work to capital-intensive operations that require individuals with higher education levels and more training. It also has been the impetus for job-creating manufacturing investments. The pharmaceutical industry, for example, has invested more than $1 billion in research and development and $900 million in manufacturing expansions in the Toronto area in the last five years, including a $100 million expansion by Apotex Inc., which created the world's third largest pharmaceutical plant, and a 10-year, $350 million investment by Aventis Pasteur for an international vaccine research center. After considering expansion into the U.S., Toronto-based IPEX Inc., a leading manufacturer of plastic piping whose workforce has more than doubled to 1,800 since 1992, decided instead to expand each of its 10 manufacturing sites in the Toronto area. Similarly, in 1996 and 1997 auto companies spent $5.3 billion to retool and expand their central Ontario assembly plants -- making the region's vehicle production a narrow second to Detroit's. Even though Canada's economy has slowed, the Toronto area's manufacturing base remains solid. Manufacturing employment in greater Toronto, for example, increased by 35% between 1994 and the end of 2000 to nearly 480,000 jobs -- paralleling its peak levels of the late '80s, says Statistics Canada. And in certain industries job growth during that six-year span was even more spectacular: increases of 58% in computers and electronics, 69% in plastics, 47% in machinery, and 58% in chemicals and pharmaceuticals. The only negative manufacturers mention about Toronto is that the Canadian currency exchange rate -- which benefits exports -- can work against attracting and retaining some people. "We need to address the compensation issue" because of the higher salaries that researchers, engineers, and top-management talent can command in the U.S., says Aventis Pasteur's Lievonen. "We will have to continue to be creative." But even in that regard there's a positive, he notes. "Once we persuade someone to come, everything else works. A few years here and they don't want to leave."

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