by David Napier ONTARIO C a n a d a

After setting up shop in Vancouver, the Seattle-based coffee-shop giant Starbucks Corp. set its sights on Ontario. Why? Because that province's residents consume caffeine like they do U.S. sitcoms -- in copious amounts.

But for every company that pours Java, sells novels or distributes computers to consumption-crazed Canucks, there are another three firms that have moved to Ontario because the labor force is well-educated, the quality of life is excellent, and R&D benefits abound. In fact, more and more foreign firms are relocating and expanding operations in the province because they want a slice of the good life, and that includes the economic benefits.

The galleria of BCE Place in downtown Toronto sparkles like the architectural gem it is. As even the brief visitor will attest, Toronto has a vibrant urban center. (Photo courtesy of Robert Burley Design Archive)

Take the case of Simple Technology Canada Ltd., which chose to set up a 13,000-sq.-ft. (1,170-sq.-m.) sales and manufacturing facility in Mississauga, Ont., (adjacent to Toronto). It did so for a variety of reasons. Topping the list was the fact that the maker of computer memory products could be close to 75 percent of its Canadian customer base. Add to this a healthy business climate and the promise of incentives from the provincial government (in the form of job training), and Steve McCarthy, general manager of the Santa Ana, Calif.-based firm, says Mississauga was the obvious choice for a second home.

"Other areas were too far from metro [Toronto] or too congested or did not have the access to banks, stores and restaurants," he says, adding that low property taxes was a strong drawing card, as well.

While recent government cutbacks curtailed the job training program, conditions for many companies got better in Ontario. The newly elected Progressive Conservative government's radical reforms -- Premier Mike Harris has dubbed it "The Common Sense Revolution" -- repealed the pro-labor Bill 40, which forbade hiring replacement labor and assisted unionization. Favorable R&D incentives and a government that says it is big-business friendly makes Ontario a welcome environment in which to set up or expand operations. A consistently low Canadian dollar (versus the U.S. dollar) has also been a major factor in attracting business to the province.

But that's not all Ontario has to offer.

With more than a third of Canada's population (more than 11 million), 40 percent of Canada's gross domestic product and prime position (within a day's drive of more than 130 million consumers), it's little wonder that Ontario is the third largest trading partner of the United States. The province did a total of US$89 billion worth of business with the states in 1994 alone; Canada and the USA form the largest trading partnership in the world with two-way trade that exceeded $242 billion in 1994.

Impressive numbers, but the picture is far more complex. More than half of the province's work force (52 percent) boasts some post-secondary education; 23 percent of the population was born outside of Canada; manufacturing labor costs rival U.S. rates and are lower than that of both Germany and Japan, and Ontario has an infrastructure based on digital switches and fiber-optic cabling that is technologically advanced, to say the least. Toss in some impressive quality of life statistics -- Ontario is home to 95 professional theater companies, 57 symphony orchestras, 16 professional dance troupes and more than 400 museums, art galleries and archives -- and the province clearly has a story to tell.

But even a centrally located province with little inflation (only 1.3 percent in 1995) and lots of exports (42 percent of which are motor vehicles, parts and accessories), has its challenges. The new Ontario government has committed to a three-year, $4.4 billion expenditure reduction program that is designed to eliminate the provincial deficit by the turn of the century.

Numbers notwithstanding, the business climate is ready for reform, as well. Although corporate income tax rates for manufacturers are generally competitive, individual tax is high compared to that of the USA.

The need for improvement is echoed by Saad Rafi, director of the Investment Branch of the Ontario government's Economic Development and Trade department: "We have an image to improve upon," he says. "There's a feeling that Ontario is highly unionized ... and there is the image of Ontario as a high-cost jurisdiction."

Instead, Rafi focuses on the fact that "no other province has the industrial base and profile of Ontario." This foundation is built around Ontario's 11 million-strong population, and capitalizes on the province's prime location, its competitive cost for office space, low utility rates and highly skilled work force.

All of which make it easy to see why Simple Technologies opened its doors in Mississauga, Ont., why Ford Canada recently announced a $500 million expansion in Oakville, Ont., and why numerous other companies are happy to do business there as well.

Nowhere is this can-do atmosphere more prevalent than Toronto.

The eighth largest urban center in North America, the Greater Toronto Area (GTA) is home to many big businesses, including 91 percent of Canada's foreign banks, 90 percent of Canada's top advertising agencies, 90 percent of Canada's top public accountants, 80 percent of Canada's top law firms, 58 percent of Canada's top foreign-owned firms and half of the Canadian firms listed in Fortune's Global 500.

The city is indeed at the heart of the action -- a place where business and pleasure mix so well with the new economy that Fortune magazine ranked Toronto as one of the top 10 cities in the world for business.

Canada's cities are the engines that drive the provincial, and in many respects, the national economy. But it is the smaller centers that are Ontario's real treasures. These are the places where auto parts are manufactured, where films are made (although they are not always the cities with the most lights, cameras and action) and where tourists flock. In fact, for every financial wunderkind in Toronto, there's a leading-edge software developer in Waterloo, and for every Cicero-inspired parliamentarian in Ottawa, there's a world-class, bio-tech researcher in London.

Ottawa: The ceremonial changing of the guard is a sure sign that tourists have found the headquarters of Canada's constitutional monarchy. (Photo courtesy of Ontario Ministry of Economic Development, Trade and Tourism)

What's the attraction to these small cities and towns? A high quality of life, for one thing. Chatelaine magazine's 1995 survey of Canada's healthiest cities placed London, Kitchener and Sudbury in the top 10 places to live (based on findings in nine categories, including doctors per capita, crime rate, air quality, and mortality). Toronto ranked 11th.

Another reason smaller centers are so popular is the availability of inexpensive property. "Vast land masses at affordable prices" is how Dawn Durant, development officer for the County of Renfrew, explains it. "Take a look at the 401 [highway]," she says, referring to industrial development along the province's main thoroughfare. "There's not a lot of land left."

Green acres and plenty of commercial space combined with a focus on eco- and agri-tourism to make Renfrew, Ont. (located just west of Ottawa), a popular spot with investors from Switzerland, Germany, Austria and Asia. Among the firms that have operations in Renfrew are Boeing, Pfizer and BASF. "We've become the golden child of the '90s," says Durant with a chuckle.

There is, however, room for new businesses in the downtown sections of some of the province's biggest cities. In fact, municipal real estate markets favor buyers of office space. In downtown Toronto, for instance, the overall vacancy rate in downtown deflated to 13.8 percent, reported Colliers' Canadian Real Estate Review. Industrial property in the city was a different story with 10.4 million square feet of net space absorption. As a result, the overall vacancy rate dropped to 9.3 percent.

Eastward, in the nation's capital of Ottawa, the office market was static -- in the 13 percent range -- while absorption was minimal. The industrial market "flat-lined at 8.5 percent and rental rates held steady at $3.47 per square foot," according to Colliers.

Thanks to a boom of superstores in Toronto and a host of downtown developments in Ottawa, both cities' retail markets were strong in 1995.

While buildings, construction and vacancy rates used to be the tell-tale sign of a region's economic well-being, it is not the only wellness indicator. This is especially true in the high-tech '90s, where many key business developments are taking place out of sight, as hanging cranes and jack hammers give way to fiber-optic hook-ups and Internet connections. Supporting this type of growth are knowledge workers with a knack for computing.

Near the northern Ontario city of Sudbury, where nickel mining and other natural resources have long been the economic mainstay, tourists get a glimpse of mining operations. (Photo courtesy of Ontario Ministry of Economic Development, Trade and Tourism)

At every turn, it seems, there is talk of an ISDN link, a fiber-optic route or an information superhighway on-ramp. It's no exaggeration to say there's a microchip on every corner and a Cyberspace voyageur (or is it voyeur?) in every office. This is not to imply that quality of life, vacancy rates and hard economic indicators have fallen by the wayside. Rather, this information has been overshadowed by the country's determination to compete in a world where modems have replaced Mack trucks as the preferred mode of transportation. Kingston, Ont. is doing it. Halifax, N.S. is hooked up. And Winnipeg, Man., is on the infobahn. Every municipality, town and region worth its salt either boasts new technology or has committed to getting some -- soon.

Kingston: When the Canadian alliance of telecommunications companies known as Stentor decided to extend its ISDN (Integrated Services Digital Network) to Greater Kingston, the move made headlines. The connection (made by Bell Canada), is part of Stentor's $3.9-billion, 10-year national investment program known as Beacon and will allow residents to work from their homes via computer-to-computer telephone-line connections, take part in video conferences and have quick access to the Internet.

In 1995, Kingston also broke ground on its Technology Transfer Centre (TTC), part of Queen's University's new BioSciences Complex. According to the Kingston Area Economic Development Commission, the TTC is basically a high-tech incubator "designed to ensure transfer of technology from research to commercial enterprise."

Located near the shores of Lake Ontario almost half-way between Toronto and Montreal, Kingston is appealing for more than its technology. The population of more than 141,000 live at a beautiful junction of the St. Lawrence River and Lake Ontario, aptly called the gateway to cottage country because of the nearby, tranquil Thousand Islands.

Fresh air and water are only slightly more plentiful than space in Greater Kingston's five industrial parks; nearly 780 acres are available for development. As for industrial, commercial and institutional development, enough activity has taken place in the last year that the total value of building construction -- more than $94.9 million -- is at its highest level since 1991.

As for the quality of life, residents are bounded on all sides by boutiques, bookstores and other beautiful buildings, including those on the Queen's campus.

London: Equally far from maddening crowds is London, Ont. (pop. 303,165). Long known for its medical and research sectors (the area boasts 15 hospitals), London has also made its mark in the telecommunications business. The greatest impression has been made by LARG*net, a high-speed digital network used by the health care industry to exchange information.

The Thousand Islands region near Kingston, half-way between Toronto and Montreal, also is known as prime "cottage country." (Photo courtesy of Ontario Ministry of Economic Development, Trade and Tourism)

Even more impressive is the city's phenomenal growth in the call center sector. With more than 1,500 such centers already in place and Ontario Hydro planning to open yet another call center in 1996, it's no wonder the city has been touted as the province's telephone hub. Helped along by a 17-week training program at local Fanshawe College, the telephone service industry created more than 400 new jobs in 1994.

Among the companies that decided to set up shop in London was Millward Brown Inc., of Naperville, Ill., which opened its Canadian call-center headquarters and data collection facility in September 1995. But the marketing research company didn't settle on London without first testing the waters in the form of an advertisement for potential job applicants. The results were impressive enough that the company is going ahead with plans to close its Toronto office and move its operations to London. "We were very pleased with both the quantity and the quality of the people who applied," said Melanie Barbanera of Millward Brown in Chicago. "It seemed to us that London people ... are friendly and take pride in their work."

High but well-deserved praise for a city whose average household income was $51,721 (second highest in the country), and whose taxes were the least (24 percent below the national average). In fact, London has been praised as the country's best-run city.

Cambridge: Occupying nearly 45 sq. miles (117 sq. km.) at one corner of Canada's "Technology Triangle," Cambridge lies in the southwestern part of the province where it shares the spotlight with the municipalities of Kitchener-Waterloo and Guelph. With slightly less than 100,000 people, Cambridge has been an overachiever in a period of otherwise tame economic activity.

A recent analysis by the Randolph Group, Management Consultants Inc. and Essential Economics Corp. revealed that the local economy had grown to $1.9 billion, an increase of nearly 32 percent in the past decade. An impressive jump of 21 percent was recorded for employment. This growth is due in part to the strength of the manufacturing sector, arguably the city's greatest asset. However this is a double-edge sword of opportunity, since the educational attainment level of Cambridge residents is below the regional average and work force retraining becomes important.

Cambridge: A bucolic setting belies the fact that the nearby city of Cambridge has been a modest economic overachiever. (Photo courtesy of Ontario Ministry of Economic Development, Trade and Tourism)

Among the companies that have already launched major training programs are Toyota Manufacturing Canada, Coutice Steel Inc. and the John Forsythe Co. In fact, all three firms have received awards for their efforts in this area.

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