Titan By The Lake

Dec. 21, 2004
Toronto offers manufacturers a nearly perfect home.

Toronto offers a lot for a little less. Canada's corporate city, a cultural mixing pot wrapped in an air of civility, draws manufacturers with its low costs, educated and wealthy workforce, and quality of life. Residents praise the metropolitan area's 516 miles of bike paths and, when snow and cold blanket the city, its sprawling maze of continuous underground pedestrian tunnels. Toronto became North America's fourth-largest city two years ago when 29 municipalities including Toronto, Scarborough, and Etobicoke joined under the greater Toronto umbrella. Today the expanded metropolitan area boasts a population of 4.8 million and a bustling economy thanks in no small part to demands from across the border. Close to 20% of the 2.5-million-person workforce is employed in manufacturing. The metropolitan area hosts administrative headquarters for multinational firms including IBM Canada Ltd., Mitsui & Co. (Canada) Ltd., and Nortel Networks Corp. The auto-producing suburbs that surround the city make it North America's second-largest vehicle manufacturing center after Detroit. Mississauga serves as the region's medicine chest. Astra Pharma Inc. and Glaxo Wellcome PLC are among the pharmaceutical companies producing drugs there. Indeed, the Toronto Labour Market Information service forecasts that drug making, as well as medical-equipment manufacturing and biotechnology, will increase in greater Toronto in the next few years. Low interest and inflation rates, inexpensive industrial land prices, and a low Canadian dollar lure manufacturers. So do competitive compensation structures. In the province of Ontario - of which Toronto is by far the largest metropolitan area - combined salaries and benefits in manufacturing are at least 50% lower than in the Great Lakes states. "The fact that we even have labor available" is attractive to foreign investors, remarks Brent Kearse, manager for international investment services, Ministry of Economic Development and Trade, Toronto. The region boasts unemployment rates of 6%, double what many U.S. regions count. (The exception is high-tech employment, thanks to poaching by U.S. companies starved for tech-savvy staff.) Overall, Canadians have a reputation for sticking to jobs longer than their U.S. counterparts. In the province of Ontario, the average job tenure is eight years. Helping to fuel the positive employment numbers is the constant influx of immigrants, especially from Asia. The United Nations calls Toronto the world's most ethnically diverse city. It is also a place that values education. The metropolitan area has nine colleges and universities. The University of Toronto is North America's third-largest with a student body of 51,000. The university hosts one of Canada's 10 top R&D organizations - the Information Technology Research Centre at the University of Toronto. Multinationals also choose to conduct R&D in Toronto for its educated workforce and healthy incentives. Torontonian businesses benefit from Ontario's provincial "super allowance" R&D incentive package as well as the federal government's tax cuts. The result? Companies pay $50 after taxes on an R&D expenditure of $100. These include IBM, which has announced a new software development center in Toronto. General Electric Co. and ABB Group also conduct research and development in the metropolitan area.

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