American investment in Quebec has had more than a modest up tick recently. A closer look at the majority of the cross-border deals still finds most of the money is heading to technology and life sciences ventures, while a number of aerospace initiatives promoted by the provincial government are also in the works.
The United States is Quebec’s No. 1 commercial partner, with more than 80 percent of the province’s exports sold to its neighbors south of the border, said Louis Arseneault, director of communications for Montreal International.
“During the past several years, Montreal’s economy has spiked considerably as a result of the emergence of the knowledge economy,” he said. “The information and communications technology, aerospace, and life sciences sectors have spurred almost all of the growth.”
U.S.-based companies are responsible for 60 percent of jobs created by foreign establishments — more than 80,000 jobs — and represent 52 percent of the total number of foreign companies established in Greater Montreal, Arseneault said.
In June, pharmaceutical giant GlaxoSmithKline’s (GSK) invested heavily in its Laval, Quebec, operations. The $50 million (Canadian) investment will be used to develop a new North American head office for vaccine research and development.
“By banking on research and innovation, GSK supports the Quebec cluster’s efforts to make the region an area that is recognized on the world stage for the quality of its researchers and the excellence of its innovative businesses and institutions in the life sciences field,” said Carl Viel, general manager of Montreal InVivo, Greater Montreal’s life sciences cluster.
IBM, Compuware Expand Operations
Back in 2005, IBM Canada got the ball rolling when it announced the creation of a major international Product Lifecycle Management (PLM) Center of Excellence in Montreal, with Bombardier Aerospace as its first customer.
The center supports manufacturing companies of all sizes throughout their product development processes, from design to maintenance. The center has a global mission with a North American focus spanning a range of industries.
“We are strengthening Montreal’s strategic position as a technology hub, and we are helping to further strengthen the Canadian, and more specifically the Quebec, aerospace sector,” said Denis Desbiens, vice president of IBM Quebec.
Following in IBM’s footsteps was Compuware’s announcement that its Montreal-based operations, including the company’s NearShore Development Center, received a $5 million, three-year grant from the government of Quebec for the company’s training program for technology employees.
The joint training project supports the growth of Compuware’s Montreal facility, including the addition of a substantial number of employees, expected by 2008.
The Compuware NearShore Development Center provides organizations with the talent and expertise to develop and test enterprise applications across a range of industries and technologies.
The partnership will bring more high-quality jobs to Montreal, said Tommi White, chief operating officer of Compuware.
Quebec’s corporate tax system promotes business growth and offers measures conducive to investment, particularly in R&D-intensive industries and sectors, said Robert Davidson, director of strategic information for Investment Quebec. Also, nearshore options are increasingly attractive as Quebec is constantly improving its capacity to successfully attract and grow international subsidiaries.
Formal measures, such as a five-year provincial income tax holiday for foreign researchers and a move to eliminate tax on capital by year 2011, have complemented efforts to graduate quality talent and provide customized financing options, Davidson said.
“The provincial government offers investors a series of incentives and financial solutions that are among the most generous in North America,” he pointed out. “And the combination of tax measures offered by the Canadian federal government enables businesses to reduce the cost of their R&D work by up to 75 percent.”
Through its Strategic Aerospace and Defense Initiative (SADI), the Canadian government will invest nearly $900 million (Canadian) during the next five years to support strategic projects in industrial research and precompetitive development R&D in the aerospace, defense, and space and security industries.
“Quebec offers businesses a productive set of competitive advantages, including low operating costs and stable, wage-competitive talent,’’ Davidson said. “International businesses, especially those in innovation and R&D-rich sectors, such as life sciences, aerospace and IT, will find dynamic clusters in their fields, a critical mass of businesses and universities, plus attractive tax and fiscal incentives.
“Start up companies benefit from an industrious and entrepreneurial environment and constructive links with colleges, universities and various institutions to help in R&D and work force recruitment and training,” he added.
