To Ontario - For Site Selection Advisors

We in and around the direct investment business in Ontario, Canada have long expected to (unhappily) see that day when the place would de-industrialize. After all, with the strength of the manufacturing sector over the last many years, there was no place to go but down.
Canada’s largest provincial economy has been the country’s powerhouse for virtually all of the nation’s life span of 140 years. And it has been, defacto, the dominant recipient of FDI in Canada in manufacturing, financial services and creative industries.
But then, for reasons best left for commentary by those expert in the sciences of the brain, the globe’s population decided that they would not, and never would again, buy large motor vehicles and Ontario was sunk. Sort of.
While we observers didn’t receive this news happily, many thought it was about time. There were a few big trends that were obvious and that could not fail to change the happy North American economy of which Ontario was a major part.
One was the sweeping trend to move away from moving around in large internal combustion vehicles. Ontario, in the last decade, roared past Michigan in completing final assembly of vehicles. And the vehicles made here – as in Michigan – were based on the internal combustion paradigm.
And whether it was the peak in oil prices last year, or by (as it has been proven) inaccurate speculation on the price of oil, or the desire by the consuming public to greenify, or for that matter just a general gloominess, Ontario’s magnificent manufacturing capacity all of a sudden became excess.
Combine this with the amount of effort made by manufacturers to offshore as much of their demand as possible in Thailand, Vietnam, and China, and Ontario’s Auto Sector was in trouble.
At any rate, with all that water under the bridge, somewhere north of 200,000 manufacturing jobs have been lost in the economy in the last year or two. This means that on average about one of every 10 families has been directly affected with a loss of household employment. The carnage becomes even more serious when the downstream effect of this dislocation is considered; about 80% of Ontario’s export trade is to the USA and about 60% of this is in automotive products. Entire towns, built around one or a small cluster of manufacturing plants were emptied out of industrial employment.
But with all this bad news, and the terrible prospects that local media reminds us of daily, Ontario continues to be a place of many blessings, to wit:
- There is a tremendous legacy of skilled employees in all disciplines of modern manufacturing.
- There is a very large available supply of modern and fully functional real estate, in all sizes, and with excellent connections to transportation infrastructure.
- The Province of Ontario has programs in place that will offer significant financial support to new Direct Investors.
- The currency rate of exchange is currently favourable for U.S. dollar investors.
- Operating costs for manufacturers are competitive, particularly with the effect of Ontario Health Insurance.
- Ontario’s producers have deep history and relationships throughout the North American industrial ecosystem as far as logistics, engineering, operations, and other factors of production.
- The City of Toronto, in the middle of Ontario’s industrial areas, is one of the world’s largest financial centres which offers considerable convenience for global companies.
- There are no legal constraints on the transfer of profits, royalties or fees from Ontario or on the repatriation of invested capital.
- Ontario has a large and established R&D capability in all areas of industrial application.
- Ontario graduates about 60,000 two year college students and almost 70,000 university students annually.
- Almost all industrial operations in Ontario are within two hours of at least one U.S. border crossing.
- Ontario is very politically stable when compared to emerging economies. It has a non-exotic operating, legal and financial environment and is comfortable to European and American companies.
- Ontario’s cultural diversity will be a big advantage in attracting new investment from emerging economies.
So while the news for now is negative, site selectors – always with an eye out for the “next best place” can again look at Ontario with a gleam in their eye. When things in the global economy come around again, they will come around Ontario.


Brian French is Principal Advisor of Realciprocity Advisors Inc. a facilities strategy consulting firm based in Toronto. Previous to co-founding RAI he was Managing Director, Canada for NAI Global and helped build a services delivery platform of a dozen offices and over 200 people. He founded NAI Global’s Contact Centre site location practice. From 1995 to 1998 he was a site selection and economic development consultant who completed assignments for every province in Canada and several jurisdictions in the USA. While acting as Senior Development Officer Investment for Metropolitan Toronto he worked on dozens of inward investment projects. He also founded IDRC Canada (CoreNet Global) and built Toronto into a name brand player in site selection circles. He also was a co-founder of CREOPoint.
brianfrench@realciprocity.com
+1 416 803 5301