The Canadian ICT industry is heavily weighted towards leading-edge
technologies. Canada has a notable edge in telecommunications and networks and
optical technologies with niche strengths in software development, wireless
technologies and EMS. Canada's strengths in
advanced microelectronics design and embedded technologies have emerged from
telecommunications and computer systems development. This has fuelled
specialised integration and convergence capabilities.
About half of the industry is concentrated in Eastern Canada's
Toronto/Ottawa/Montreal triangle and on a scale with Silicon Valley. The
balance is
distributed in Western Canada's Vancouver, Calgary and Edmonton triangle
and in regional clusters across the country that is home to significant
university and college communities. Included are Halifax, Winnipeg, St.
John, Victoria, Saskatoon, Sherbrooke, Kingston, London, Waterloo, Hamilton
and St. John's.
Canada's ICT sector has grown to include more than 40,000 companies,
employing 583,000 workers and generating annual revenues approaching $140
billion.
Development of the Critical Mass
IBM Canada and Nortel Networks are the two original corporate pillars of
Canadian ICT R&D.
IBM
In Canada since 1917, and IBM's first non-U.S. operation, IBM Canada now
employs 19 000 people. The company's manufacturing and product
development establishments include: a semiconductor test and assembly plant
in Bromont near Montreal, a large software development lab in the Toronto
area, and three e-business development centres, one each in Montreal,
Vancouver and Toronto. As well, Celestica, now the third largest electronics
contract manufacturer in the world, was created through the spin off of IBM
Canada's Toronto factory and remains headquartered in Toronto. IBM
Canada also operates one of its leading call centres in Toronto.
Over the years', IBM has drawn heavily on the country's university
complex, not only the large complex in the Toronto area, but across the
country as well. This has contributed to IBM's Software Solutions
Laboratory growing to be recognised as one of the global company's principal
R&D assets. It was this lab that IBM identified for additional
investment of $125 million and expansion in 1999. The new lab, which employs 2
500
people, has global software mandates in database management, application
development tools, electronic commerce and e-business application components.
It develops products for 300 000 customers and generates one third of IBM
software sales.
The early success of the IBM lab coupled with Canada's R&D value
proposition encouraged other global ICT companies, including those with
Canadian headquarters in the Toronto area, to establish software R&D
labs to access this growing talent pool and the increasingly sophisticated
university system. A number of large Canadian universities adapted their
course offerings to feed the talent-hungry firms. As these firms grew
familiar with Canadian software development capabilities, they looked
outward to other Canadian cities and university complexes.
In November, 1999, IBM announced an investment of $150 million in its
Bromont semiconductor assembly facility. Bromont, IBM's largest microchip
assembly facility world-wide, is a high technology facility specialising in
electronic component assembly and functional testing. It competes with
other IBM plants around the world as well as non-IBM assembly and test
facilities located in North America, Europe and Asia. It performs the majority
of IBM's value-added internal assembly and test operations for its most
technologically complex products and also performs customised packaging
for a variety of Original Equipment Manufacturers (OEM) technology
customers. Bromont components are found in most IBM products and increasingly in
many OEM customer products.
Nortel Networks
Nortel is a world leading supplier of communications equipment and a market
leader in optical networking. It is also a global leader in infrastructure
equipment for digital cellular network operators, and in enterprise voice
and data communications systems.
Nortel is particularly dependent on Canada as its principal base for
technology development. A large contingent of Nortel's engineering staff is
located in Canada. The Ottawa-Montreal region is a principal base for
development of optical transmission equipment, optical components, and switching
technology. Calgary is the company's main base for wireless technology.
Nortel's R&D presence in the Ottawa-Montreal region has been
steadily built up since the late 1950's. Nortel's Calgary operations
trace back to the mid-1970s. During this period, Nortel made a strategic
decision to establish its global R&D headquarters in Ottawa and to
develop its core R&D capabilities in Canada. This decision was driven by
Canada's system of R&D tax credits and by access to Canada's
superior university talent pool. This, in turn, created further demand on
the Canadian university system, which responded by dramatically expanding
course content and enrolment capabilities in engineering and computer
science programs. The creation of one of the world's great pools of telecom
R&D expertise led to the inevitable creation of new R&D-based
telecom companies, spun off or incubated by this critical mass of talent.
A New Wave
IBM Canada and Nortel Networks are not the only companies aware of our
R&D advantage; others such as Motorola, Harris, and Lucent Technologies are
among the many multinational ICT companies that have established
large-scale, long-term, high-payback R&D programs in Canada which are
proving
integral to their global success. As well, a large number of smaller,
pioneering Canadian ICT companies created the critical R&D mass that has
attracted further R&D investments from around the world. And it is not
only telecommunications companies that have taken advantage of the R&D
initiatives, but a wide variety of companies in other ICT sectors. In
software, for example, Crystal Decisions (formerly Seagate Software) and Sybase,
have acquired software companies in Canada, and are using them as the base
for their global R&D operations.
Canada's leadership in optoelectronics and wireless technologies is
attracting European companies to establish significant Canadian R&D
operations. These include Ericsson, Nokia, and Alcatel that acquired
Ottawa-based Newbridge Networks.
Small and medium U.S.-based ICT companies, many in the start-up phase, have
relocated some or all of their key R&D functions into Canada, while
maintaining executive and sales offices in the U.S. They all represent a
successful new model of how to structure a North American IT company.
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