Companies may be hesitant to grow in today's uncertain economy, but in Canada long-term signs are still good for profitability - especially in the high-tech arena.

Canada has the combination of quality workers and a quality of life that technology companies crave. And while some cities in Canada are better equipped to foster high-tech companies than others, the country as a whole has a solid technology infrastructure to support growth.

The current economic condition in Canada hasn't come without some hard work. Leading the economic recovery of the late 1990s has been the phenomenal turnaround in the state of the country's public finances.

When the current Liberal government took office in 1993, Canada was racking up annual budget deficits in the order of $40 billion, and observers in the international financial community were raising serious questions about the country's prospects for long-term solvency.

By the end of the last fiscal year, thanks to a combination of aggressive cost cutting and soaring tax revenues from a buoyant economy, the Canadian government reported a healthy $19.8 billion surplus.

Transformation takes time

Over the past 25 years, Canada's economy has undergone a profound transformation. For much of its history, the country was heavily dependent upon traditional industries such as agriculture, forest products, mining, and resource industries.

While these sectors continue to be important, the new face of the Canadian economic landscape also features impressive strengths in knowledge-based sectors like software, life sciences, information technology, and telecommunications.

Many of the 90 universities in Canada have earned international renown for their breakthroughs in various scientific fields, and major cities like Toronto, Montreal, Calgary and Vancouver are now home to thriving clusters of "new economy" companies.

Trade agreement with United States opens doors

Anther key factor that influenced the Canadian economy is the Free Trade Agreement with the United States that was signed into law a decade ago. The United States and Canada have long been each other's most important trading partners, and the Free Trade Agreement dramatically accelerated the integration of the two economies.

A look at recent trade statistics quickly tells the story on this matter. Between 1995 and 2000 Canadian imports from the United States increased from $230 billion to $364 billion. During the same period, Canadian exports to the United States grew at an even more impressive rate, rising from $265 billion to $423 billion.

For the 31 million residents of Canada, all of these developments are encouraging news that points the way toward a bright and prosperous future.

Montreal a key component

One of Canada's most impressive collections of high-tech expertise can be found in Montreal, the focal point for business activity in the province of Quebec. With approximately 4 million inhabitants, Montreal is Canada's second most populous metropolitan region, and it's growth is powered by rapid expansion of knowledge-based industries.

A leading example is Montreal's biotechnology industry, which benefited from more than $750 million in capital investment between 1992 and 2000.

Montreal is home to over 160 biopharmaceutical companies, which exported $2.3 billion to the United States in 1997. Biotech companies have discovered that Montreal offers them a gold mine of top talent: the city has four highly regarded universities with a total of 16,000 students enrolled in health sciences programs.

The city is also the base of operations for the National Research Council's Biotechnology Institute, which employs 500 scientists and is now incubating 16 new companies.

A high-tech dynamo on Canada's West Coast

As the third most populous city in Canada, Vancouver has long enjoyed an enviable reputation for its spectacular scenery and temperate climate. In recent years, the Vancouver region has also begun to emerge as an important focal point for many knowledge-based industries, in particular biotechnology.

Electronic Arts, headquartered in Redwood City, Calif., is growing rapidly in Vancouver. A leading marketer of interactive video games, Electronic Arts maintains its largest innovation center in the Vancouver suburb of Burnaby.

Opened in 1999, the company now employs 550 people, and staff numbers continue to grow. One of the products developed at the Burnaby studio is now sold in over 70 countries and generates nearly $1 billion in sales for the company.

According to Paul Lee, vice president of Electronic Arts, the company's decision to invest in British Columbia was one of the most astute strategic moves it has ever made.

"With the dramatic changes over the last few years, Canada has become a great place in which to invest and work," said Lee. "Coupled with the strength of the people and the strong quality of life that exists, I can't think of a better place in the world in which to grow our operations."

Bilingual New Brunswick beckons companies

With just 750,000 people, New Brunswick has a population smaller than that of many major American cities. But that hasn't stopped the province on the Atlantic Coast from transforming itself into a thriving hotbed of new business growth.

A competitive advantage for companies in New Brunswick is that it is Canada's only officially bilingual province. Approximately one-third of residents claim French as their mother tongue, and large numbers of New Brunswickers speak Canada's two official languages with ease.

In March 2001 the Spiegel Group, one of North America's largest direct marketers, opened a new call center in Saint John, New Brunswick, that will eventually employ nearly 800 people.

"We have been extremely pleased with our experience in Saint John," said Michael Bomba, vice president of Spiegel Group Teleservices Inc. "Opening this facility provides us with the flexibility to manage growth and the seasonality of our business while broadening our recruitment opportunities in a new geographic location."

Mike Kennedy is president of Kennedy Management Services, a consulting firm based in Toronto, Canada.

Mississauga a Hidden Gem

Located a short drive from downtown Toronto, the city of Mississauga has enjoyed spectacular growth over the last 25 years. With 600,000 residents, it's the seventh-largest city in Canada, and home to the Canadian head offices of over 40 Fortune 500 companies, including such international heavyweights as Hewlett-Packard,

GlaxoSmith-Kline, Microsoft and Oracle.

Though it's right next door to Canada's largest city, Mississauga nevertheless offers a competitive cost environment. The city boasts some 50 high quality

business parks and has over 4,000 acres of land available for commercial development.

Lease rates and land prices in Mississauga are both very affordable, and electric power rates are the lowest in the Greater Toronto Area. What's more, a strong focus over the years on prudent fiscal management by the city council has left Mississauga debt-free and with a $350 million reserve

in the bank.

Mississauga has had no local tax increases in the last 10 years and currently offers the lowest property taxes in Ontario.

Funding Program Spurs Growth in Cape Breton

Located in the Atlantic Ocean at the northern end of the province of Nova Scotia, Cape Breton Island has a rugged natural beauty that attracts thousands of visitors each year. Historically, Cape Breton's 120,000 residents made their living from fishing, farming and heavy industries like coal mining and steel.

A promising new initiative for companies is the Cape Breton Growth Fund (CBGF). Incorporated in August 2000, the CBGF was established with $61 million contributed by the Government of Canada, and another $12 million from the Nova Scotia Government.

The mandate of the fund is to promote sustainable economic growth in the Cape Breton region by targeting strategic investments in five key sectors: knowledge-based industries, oil and gas, environmental industries, culture and tourism.

A board of directors, comprised of local business leaders, administers the CBGF. When it was first established, consultations with members of the Cape Breton community quickly determined that a key priority for the fund would be to ensure that it was locally managed.

EDS Canada, the Canadian subsidiary of U.S.-based EDS, has already benefited from the fund. Over the past 18 months the company has opened two major call centers in Cape Breton, the first in Sydney and the second in nearby Port Hawkesbury. The company employs 1,100 people at the two facilities.

"It makes good business sense to grow our company on Cape Breton Island," said Sheelagh Whittaker, president and CEO of EDS Canada. "Our expansion in Cape Breton is an indication of the quality and the talent of the labor force we have found here."

Toronto Stands Apart

Situated on the northern shore of Lake Ontario, directly across from upstate New York, the city of Toronto, Ontario, has solidly established itself as the preeminent center for business and financial activity in Canada.

Several Toronto-based organizations are making their impact felt in the computer graphics industry, and one of the most important is Alias\Wavefront. The world's leader in developing 3-D graphics technology for use in applications such as film and video games, interactive media, and industrial design, Alias\Wavefront develops the software used to create special effects in numerous Academy Award-nominated films.

"Schools like the University of Toronto and the University of Waterloo are known for producing very good computer graphics engineers, and on the creative side, colleges like Sheridan and Seneca are exceptional sources of talent," said Doug Walker.

Ottawa's High-Tech Roots Run Deep

When Canada was created in 1867, the founding fathers chose Ottawa to be the new nation's capital. At that time a relatively obscure lumber town located on the eastern Ontario border next to Quebec, today Ottawa has some 1.2 million inhabitants and is the fourth-largest metropolitan area in the country.

Ottawa's high-tech sector traces its roots back to World War II, at which time the Canadian government established several research establishments in the region to conduct work for various military applications. As time went by, Ottawa continued to develop a critical mass of scientific expertise at the various research centers and universities located in its environs.

The first indigenous high-tech companies in the area began to appear in the early 1980s, and the technology sector really began to gain momentum as the 1990s unfolded.

Today, over 1,000 technology-oriented companies operate in the Ottawa region, and the cast of characters includes everything from multinational heavyweights like Alcatel and Nortel Networks right down tiny startup firms seeking to make their mark.

Over 75,000 Ottawa residents work for technology companies in the region, and last year Ottawa-based companies attracted $800 million in venture capital funding.