Canada: the economic outperformer - Deloitte & Touche and Siemens Canada
With growth rates of 2-3%, strong demand and a well-balanced economy, Canada has become one of the most attractive destinations for business and investment. Finance Director Europe takes stock with Natan Aronshtam, global MD of R&D and government incentives at Deloitte & Touche, and Robert Hardt, CEO of Siemens Canada.
In 2010, as most of the major industrialised countries struggled through the fallout of the global financial crisis, a BBC journalist knew exactly the right place to be:
"In this economy," she declared, "we all want to be Canadian."
Fast-forward three years and the message remains on point. Compared with most Western countries, Canada has managed to avoid the worst of the 2008 financial crisis, with none of its banks failing and without recourse to extensive quantitative easing.
Today, Canada's economy continues to outperform almost every other developed country, with Q3 growth forecast at 3.8% by the central bank. According to The Economist Intelligence Unit, Canada will be, for the next five years at least, the most attractive place to do business of all the G7 countries.
A country upon which businesses can rely
Behind this success lies a combination of good macroeconomic decision-making and a long-term reputation as a country that is both receptive and supportive of industry.
Although Canada may not be the cheapest or most cost-competitive place to operate, on a range of metrics, it performs extremely well. The country has a well-educated, well-balanced workforce, is far less expensive than other developed markets, and has good free-trade agreements and a solid tax policy.
"Most of my clients are very happy in Canada at the moment," says Natan Aronshtam, global managing director of R&D and government incentives at Deloitte & Touche. "There's high confidence right now; the economy is doing well and lots of investment is being made; this consistency shows that businesses really can rely on Canada. There are lots of criteria that the country wouldn't win on its own, but if you look across different criteria, Canada is about as balanced as you can find."
A uniquely stable economy
Siemens is one of the most successful companies currently operating out of Canada. The group is present in all four of its core sectors: in industry (providing automation systems, software and services for the manufacturing and mining industries); in infrastructure and cities (focusing on infrastructure projects and the needs of municipalities and towns); in energy and in healthcare.
"The economy in Canada is very stable," says Robert Hardt, CEO of Siemens Canada. "The market is always in a moderate growth pattern with growing markets and strong demand. You also have a unique combination of strong manufacturing - with industries like oil and gas, and mining - and a good service-related industry. This makes the country a strong fit with Siemens."
Siemens employs close to 5,000 employees in Canada and, with growing market share, the company is now hiring across all four of the markets in which it operates. Just recently, it was able to add more than 250 permanent jobs in the manufacturing industry - one of the few areas most heavily affected by the 2008 downturn.
"Of course, the labour market is challenging because of the skilled labour gap," Hardt acknowledges. "But we address that by heavily investing in our own people, and training them in our products and what our customers need."
A tax-cutting, business-minded government
A large part of Canada's attraction is the generous incentive structure on offer. Its research and development scheme is currently worth up to 82% of the total development costs accrued in the process of product improvement and innovation. It's a scheme that has wide-ranging consequences - all manufacturers and technology-based companies are entitled to make a claim.
Tax cuts have also been introduced as a way of improving productivity and creating jobs. The Government of Canada has reduced the federal corporate tax rate from 21% in 2006 to 15% in 2012.
"Canada has a very competitive tax environment," Hardt says. "You see that in company taxes, but also when you invest in new equipment and machinery. It's very competitive compared with other jurisdictions and the US. In Canada, you have a very stable business environment as well: once you start a business, you can be sure that the environment will not change.
"You have a very business-minded government that includes the federal government, but also the provincial government and municipalities. They are all focused on supporting business and job creation, driving prosperity and wealth creation for the nation," he adds.
A manufacturing renaissance
Canada is ideally poised to capture what business leaders are calling a manufacturing renaissance in developed economies.
"We think that Canada has a very good base from which to benefit because new manufacturing is knowledge-based," Hardt explains. "You need a strong R&D infrastructure, a strong link to universities and colleges, and a well-educated workforce.
"We think Canada can be a part of the new wave of industrialisation. We can see a lot of investment going on across the country in oil and gas, and mining in particular. We are working on liquefied natural gas, oil and mining projects, and we see lots of potential for European companies to invest in those projects, either as suppliers or as partners."
With the Canadian economy projected to grow 2-3% over the next few years, and Siemens experiencing double-digit growth across the territory, the future looks positive, for the country and the companies that decide to invest in it.