Late Night Does Not A Reputation Make November 14, 2013Posted by investtoronto in Uncategorized.
Tags: Board of Trade, brand, citizenship, Civic Action, Economic Development, reputation, Toronto, Toronto Community Foundation
I wake up in Toronto, one of the foremost cities in the world in which people want to work and live. Yes, conservatively there are hundreds of millions, if not billions of people who will happily trade places with any citizen in Toronto right now: no conditions, no questions. These are global citizens whose hopeful view of a life for them and their children would look like life in Toronto on even its worst day. That probably is not the first thought of most of us in Toronto these days.
Toronto has definitely held much of North America’s and in fact the world’s attention these past few days. This is a situation normally someone in my role would find very enviable. Certainly we can all agree that the real story of how Toronto is a city of hope, opportunity and tolerance is getting drowned out by the drama unfolding at City Hall.
Up until a few days ago I would definitely say questions from potential investors about our situation have been more of “curiosity” than “concern”. As the attention of City Hall lasts well beyond the normal 24 hour news cycle obviously this is beginning to shift: but not for the reasons you would think.
Toronto, or any other city, from a business attraction perspective is judged on its merits of having great macro-economics, human resources, quality of place and governance to provide a stable environment conducive to allow risk of investment limited to execution risk (which the investor realizes and agrees they must handle). In other words, businesses are looking to have external risks mitigated wherever they can.
How a city/country/region is able to RESPOND to a crisis becomes more important than what crisis is actually transpiring. Most of the businesses we deal with are sophisticated enough to understand that the current crisis at City Hall is an outlier that is not the normal. They still value the great conditions that interested them in Toronto in the first place. However as citizens we have some work here to do to regain control of our city’s reputation.
The time for worrying about “what the world thinks about us” has to move to “what are we doing about it”. Here is my view on how each citizen can take an active role in seizing control of our reputation: 1) Be Informed 2) Be Proud 3) Be Active
We need to be informed and (re) learn about what makes Toronto great. On our website investtoronto.ca contains excellent information. We have data and information from third parties who have benchmarked, measured and ranked our city. We should know where we stand. We also should know what opportunities there are to improve our city and ensure it offers as much opportunity to current generations and future generations as it does to past generations. There are great sites like CivicAction and The Toronto Regional Board of Trade that help us understand what the focus areas should be. We have much to celebrate and much to work on as you can learn about from the Toronto Community Foundation Vital Signs report.
Next we need to be proud: we need to brag about the real important things. Our long-term reputation will be shaped by actual experiences that visitors have while here OR that they hear from our own citizens when we go abroad. Can we articulate proudly why we continue to live in Toronto? Certainly the barriers to leave are significantly lower than the barriers to come and live here. Yet, as I stated earlier we have millions if not billions of people willing to take on those high barriers for even a chance to live here. Thus for us citizens who live here (and admit it to yourself… you are where you want to be) do we act as ambassadors when we really tell people why we continue to live here? Hand wringing about what the world thinks of as will not help our reputation. Telling people why we chose to be here will indeed shape their opinion.
Finally, as many citizens already are, we need to be active. We need to continue building the city. We need to fight for transit, fight to close the income gap between the riches and poorest, fight to give every citizen opportunity, and fight to give sustained hope that any Torontonian can create a better future and a better present. So whether we coach our kids’ hockey team, run for office, take up a local cause or even just check in on our elderly neighbor, we all have to do SOMETHING that builds our city.
The reasons that make Toronto a great city have not been communicated through late night television or opportunistic CNN coverage that is only interested in a particular turbulent time in our governance. That is not how we created this city or how we got the real reputation we had before the current crisis emerged. Thus do not worry that our reputation will be besmirched in the long run by these outlets. We hold more power to change our fate. If we really are everything that we would believed last month or last year then be informed, be proud, and be active.
Why Weird is Good October 5, 2013Posted by investtoronto in Uncategorized.
Tags: Austin, creative class, economy, Invest Toronto, Music, music canada, Toronto
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Why Weird is Good
“Keep Austin Weird” all makes sense when you spend a few days exploring this creative-class city. Self proclaimed, but not overly challenged, “live music capital of the world” this city lives, breathes and sings music.
On our trade mission this week it is clear that the success of the moniker and the delivery of the value proposition is a combination of intent and luck, strategy and serendipity, art and science. Many cities have natural advantages and circumstances that do not seize the moment and continue to grow the opportunity as well as Austin has.
Our delegation met with civic officials from groups found in any city like the Chamber of Commerce, Economic Development, The Convention and Visitor Bureau. We also met with other groups not always found in all cities live Austin Music People, the Austin Music Foundation, Pachanga Latino Festival, C3 Partners and a host of other groups that supported the music industry. What was remarkable was not the existence of these groups but how integrated they were in the city’s strategy. Nearly everyone we met was very well versed with the roles of the other groups and spoke regularly to each other. From the city governance process to the specific event planning by the private sector it was clear these folks worked together often and by all accounts usually well.
We also learned very interesting lessons on the economic impact of music and creative industries on Austin. Now a “largish” city as the 11th largest in the US (through rapid growth from a mid-tier city) the impact of music and creative industries is disproportional to what is even experienced in many “cultural” megacities. In 2010 Austin experienced $4.35 billion in economic activity in these sectors of which $2 billion was value- add. The 2012 report that details this was reviewed with us by the city economist (now do all cities have economists?) Jon Hockenyos.
Beyond the pure economic output, the impact of the “liveability” and talent attraction factors was undeniable. Many of the under-40 set we met were transplants from all over the US and indeed the world. Almost unfailingly they mentioned the music scene as an important factor in their decision to locate in Austin. The fact that Google Fiber, who we also visited with, has chosen Austin as the next city to roll-out their metro fiber project was a strong endorsement of the attractiveness of this market. In fact this city now has seen AT&T enter the fray as well to install a second fiber network.
However Austin does face challenges now as they grow. The downtown core, formerly like a typical southern US city was almost a “daytime” only CBD. Only recently, of course attracted by the culture and music, has Austin seen a mini building-boom in downtown residential projects. Previously surface parking lots and 8 a.m. to 6 p.m. tenants were the norm. Tensions have started, albeit just mild now, between residents and the live performance venues. Also, currently Austin has city-wide councilors. They will be moving to district representation (similar to the ward representation we have in Toronto). Now an individual councilor will have the interest of a smaller district to balance against city-wide interests (and votes!). So Austin is hitting some scalability issues but that does not take away from their success and hopefully continued ability to grow.
So what does this “weirdness” all mean for Toronto? Well Toronto was identified, with envy by everyone we met as having a very vibrant music scene. The private sector folks like the “Charlies” of C3 were very well versed with Toronto and have been looking for an opportunity to “kick it” in our market. In fact they expect to export their successful Food and Wine Festival to Toronto next June. The opportunity to grow an organic music festival “like” ACL (but not a copy) was met with enthusiasm by all the Charlies.
Our own music sector folks have been the real heroes building up the music scene in Toronto. Guys like Mike Hollet and Mike Tanner from NXNE, Jeff Cohen from Collective Concerts, Jesse Kumagai from Massey Hall, Jacob Smid from LiveEnt and Elliot Lefko from Goldenvoice have been building a phenomenal industry. Of course Music Canada’s Graham Henderson and Amy Terrill have been advocating tirelessly on behalf of the industry.
Toronto has more than all the basics to be a top music destination especially for live music. We have most (some key outdoor ones need to be worked on) of the venues, the artists, the promoters, the indie labels (maybe the most for a city in North America). Also now we have City Hall’s attention. The Mayor’s trip along with the councilors clearly indicates they are ready to move ahead. The next step would be to establish a music facilitator right in city hall that would help connect industry to governance. Just as our filmed office has helped transform the industry in the city as an anchor for the economy, this role would help look for reason to say “yes” to more live performances and special events. Unlike Austin, we have a dense urban core so we need to balance resident interests against music goers’ interest. This is manageable but non-trivial.
Also we need to start building up our own iconic musical festivals even further. Festival like NXNE, Edgefest, Veld, Riotfest and others must be embraced as economic opportunities not nuisances. We also need to find a space and start experimenting with creating larger outdoor festivals in the mold of ACL or SXSE. Everything from permitting, city services, resident collaboration and economic development strategic planning need to integrate this sector into plans and programs. We even need to think about our city planning and built space and how it can create multi-use venues that allow the coexistence of festivals and great public spaces.
Austin will continue to keep its cool weirdness. Toronto can grow its own form of music expression that is unique, global and economically lucrative. This city has too much of the right stuff when it comes to culture and the arts, particularly the music scene not to develop our own uniqueness weirdness.
Chain Reaction Needed December 2, 2011Posted by investtoronto in Uncategorized.
Tags: Canada, China, Economic Development, economy, Foreign Direct Investment, Invest Toronto, Toronto, trade
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We need a better chain reaction in Canada in pursuing new investment. The world is changing fast and furiously but is our participation in global supply chains keeping pace? Are we part of a supply chain servicing a 2-3% growth market (North America) or a double-digit growth market (generally east and south of us)? We have been great at bringing international suppliers into the Canadian supply chain but how well have we done in becoming part of their supply chains? Yes, supply chains are not always two-way unless we work at them.
The world is flat, getter flatter and getting more intimate. I do not think any reasonable person needs more evidence to understand that. The logarithmic scale of change is seen in every thing from technology cycles to social cycles. The rate to bring critical mass of technology to a majority of the population went from decades in the case of cars, radios and TVs to years in the case of PCs. Cell phones critical mass is taking a few years. Apps like Facebook and Twitter are taking months to take root in critical markets. Information distributed to a billions of people is taking minutes and seconds through these platforms.
We have also seen the speed and interdependence of economic cycles go from months and years to days. Changes in fiscal policy in Europe these days provide almost daily swings and volatility in economic confidence. Policy that use to take years to develop and ratify is being developed in the daily headlines. There are many great books and articles on these topics. A couple of interesting examples are Why the West Rules–for Now: The Patterns of History, and What They Reveal About the Future by Ian Morris, Civilization: The West and the Rest by Niall Ferguson, and WikiLeaks and the Age of Transparency by Micah Sify are a few examples among many good books discussing the speed, scope and impact of these changes.
I recently participated in the Canada China Business Council (CCBC) AGM in Beijing. It was clear from the discussion and the networking that we are just starting to accelerate the level of engagement with this inevitable superpower. China is our second largest trading partner and the 3rd largest market for Canadian exports. In an increasing fast and flat world how much energy are we expending into becoming part of the Chinese supply chain? I am not talking merely of the obvious potential of the exploding Chinese consumer market, which is a prize for all global companies. I am talking about becoming an integral part of the growth of this country, which is now bemoaning its GDP is growing at “merely” 8-9% as opposed to its normal expectation in the double digits.
Certainly in the “stuff in the ground” category, resources, this is occurring. Many growing nations are enviously eyeing our vast natural resources that they need to grow. However becoming part of a supply chain growing at 10% requires more. It demands us bringing Chinese (and Indian and South American) multinationals to diversify investment in Canada. Our market size is never going to attract significant investment because of its revenue potential. For example our entire cell market, which took 15-20 years to build is about 26M subscribers, one-third of which are smartphone subscribers. In the 3rd quarter of this year, 23 million smart phones were sold in China. This is a market growing at 160% per year. In one-quarter they have sold 3x as many smart phones, never mind good old fashion regular cell phones, than we have in our market cumulatively. This is in a country where the internet is still very tightly controlled and access to social messaging platforms is tedious some days. What happens as the internet loosens up?
The point here is why would a Chinese company be interested in Canada? Well clearly the size of the market is not the big draw. However Canada can help international companies be better in their home markets. If we can inculcate ourselves into the intellectual, managerial, social and marketing supply chains of these companies we can help them attack their domestic markets better. Canada offers a great gateway in North America. Chinese, Indian, Brazilian and other types of companies can take advantage of learning about marketing, technology, management and other skills that North Americans have in spades. In some cases learning how to deploy these types of products and services will help them in their domestic market. Canada in particular offers an opportunity for Chinese companies not to be merely OEM suppliers of parts but brand-name consumer companies. Think about how made in Japan meant an OEM part for a car in the 1970s to becoming Lexus and Toyota today. Canada can be a gateway where they can develop their brands for North America faster at less cost. Using Toronto as a base they get the talent, NAFTA access and partnerships they need to grow their skills not to just attack the North American market, but to become better consumer and enterprise companies back home.
In particular, it would be a great time to take advantage of a wave of new protectionism in the US. Companies like Huawei can serve as great examples. In moving from an OEM supplier to becoming a brand these companies need to stand side-by-side with their partners. They cannot just remain anonymous OEM parts suppliers. In Canada Huawei partnered with Telus and Bell to build out their latest cellular networks. There were not merely hardware suppliers but true partners in designing and deploying these networks. In the US, Huawei has met significant resistance because of concerns that this company is really a Chinese trojan horse. They have had decent financial success supplying systems but have not reached the “legitimacy” in the eyes of government and some businesses as an Alcatel, Siemens, Cisco or others have. Canada can be the country to welcome them, get their brands developed and help these companies become multinationals with a name in North America.
By becoming part of the East and South supply chains we can help international companies be stronger in their more lucrative domestic markets. Only our participation will not be limited to the “stuff in the ground” category (which is still vital). It will extend to talent development, market development, technology transfer, managerial education and other key “exports’. The opportunity to be chained to a market, growing in a slow year at 6-8% should be enough of a prize for us to invest in the relationships to attract FDI to Canada. Our value is not the Canadian market place… it is the opportunity to make these companies stronger in a 1 billion plus person market by using our 32 million people, processes and experience. We need this chain reaction to kick in fast because the rest of the world has been at it for some time.
Building really deep, respectful partnerships will require more than cultural excurision but real deal making. The openess of China to do business with Canada has never been better. They have invited us in and are eager to make sure we invite them in. The great work by the CCBC and the support we are starting to see from the Provinces and the Feds needs to be leaped upon by cities and the private sector. We need to set off this chain reaction. The explosion of growth, the size of this prize, is something that should seize the imagnination of Canaidian private and public sector.
Foreign is really about Domestic September 21, 2011Posted by investtoronto in Uncategorized.
Tags: Economic Development, FDI, Invest Toronto, investment, Investment Attraction, jobs, Toronto
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In the FDI business much attention is always paid on the new investments and deals that result in companies coming into a market or jurisdiction. It is the photo-op opportunity of the company opening up its new plant, research centre or HQ that captures the attention. This is the “sexy” part of the business. I would imagine that most people even feel that the investment announcements are the final goal. I do not agree. FDI is pursued or should be pursued as a leveraging effect for the domestic economy not merely for the impact of the new investment, which always will be a fraction of the potential from the base.
While landing the investment is exhilarating and exciting, I submit that this activity is really the “means” and not the “end”. The end is to create a business environment that is relevant, contemporary and diverse. New investment really is the basis to trigger domestic and incumbent businesses to invest more in the market. New FDI is revitalization to an existing economy…rarely does it create a new economy from scratch. Even in the most aggressive jurisdictions, investing heavily in incentives and aggressively promoting the region, new FDI will only be a fraction of the GDP. Most growth will come from incumbents. When people measure FDI success looking at the number of the new jobs, rather than the quality of the jobs/companies is a common mistake. I submit you are better off with the right “reference” accounts that will leverage the base than with a large investment that does nothing to enhance the capability of the macro-economic environment. New FDI that extends the participation of your region in the global supply chain is better than FDI that serves only the domestic market.
If you recall from your high school science you can grow an entire structure of crystals just by introducing a single new “seed crystal” in a solution. However the condition precedent is that the solution already be supersaturated with the right elements that can grow onto the crystal. For FDI, this means that a few key select businesses can spur a renaissance of growth: but only if the environment has already been prepared by building up the right “super saturated solution”. The ingredients in this solution are talent, competitive costs, open policies, great legal systems, transparency and simplified government.
The other leveraging impact of new FDI is keeping “the neighbourhood” desirable. Here is the analogy I use to explain it to some of my colleagues:
Often, your sense of worth of your neighbourhood is triggered by how desirable it is to “outsiders”. If new potential owners are consistently looking for homes, bidding up the value of the homes and generally creating a buzz about your neighbourhood you get a high level ofsatisfaction and sense the “value” in your neighbourhood. You are more apt to stay in that neighbourhood and inject capital into your home in the form of additions or renovations when you want more from your property. Why? Because you understand that in addition to enjoying your home day-to-day your capital investment will appreciate over time. You are in the best neighbourhood and it is better to grow there with your needs than relocate.
However, what happens when your neighbourhood is no longer “desirable” to outsiders. You can argue that if the neighbourhood suits your needs why should you care about it? Well what if new buyers are now moving into that new development 5 kilometres away? What if some of you existing neighbours also start looking at that new neighbourhood? Is your decision to invest more, and increase your commitment to your existing neighbourhood as easy to make?Probably not.
Keeping new FDI coming in is making sure the business neighbourhood is healthy, vibrant and desirable. It keeps the “desirability” up and induces the incumbent neighbours to invest more commitment into their homes and neighbourhood.
New FDI is the seed crystal and catalyst to unleash the organic growth from the base. It provides the spice and refresh for the neighbourhood while at the
same time signalling to the existing neighbours that they are looking to already be there and should feel good about investing more.
So FDI should measure the new investment, but more dramatically grows the existing base… it is just harder to measure. It is easy to fall into the trap of not understanding the high leverage impact of creating a brand of desirability for your base. Think about that next time you think that 15-20 jobs of a firm establishing an international part of its supply chain in country is too small. It only takes a seed crystal to grow fast if the right crystal is selected for the right supersaturated solution. Also think about what the impact of building up domestic confidence in your jurisdiction means to your base of investors.
Stopping pursuing FDI is about stopping the growth of your base.
Chinese Companies Crossing the Confidence Chasm March 8, 2011Posted by investtoronto in Uncategorized.
Tags: Canada, China, Economic Development, FDI, Foreign Direct Investment, Invest Toronto, Investment Attraction, Toronto, trade
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I was fortunate to recently spend 2 weeks in China pitching Toronto as a gateway to North America. It was my first visit to China. I read everything I could on the business environment, the culture, the strategic goals of its government and almost anything that could give me a hint on the “corporate/state” mindset of business. This visit delivered for me on the “awe” factor of what China has accomplished and what it will accomplish. Visiting Beijing, Chongqing, Shenzhen and Shanghai was an education for me.
When thinking of China, and India for that matter, one particular concept that always is in my mind is that these two countries are not “emerging economies” rather they are “re-emerging economies” The economist has a great chart that looks at the last 2000 years of GDP. It is really interesting to note that China and India have dominated world GDP for about 1800 years out of the last 2000… and are now beginning to re-dominate global output. It is almost the height of hubris when we in the West think we are dealing with “backward” economies. There has been trade and commerce in these countries for centuries. In fact, we in the West are at the height of a relatively short period of dominance. So my first assumption going in to China was that we are not here to teach these people or their government how to succeed. They know what they want to do and have done it before.
However another set of information also sticks in my mind. Chinese investment in the west needs to cross a “confidence chasm”. The Asia Pacific Foundation released an insightful survey last December that discussed the intentions of Chinese enterprise, both state-owned and private, to invest in North America. Despite general enthusiasm to directly invest in North America and Canada, it identified three key impediments:
1) Lack of managerial competence and professional expertise.
2) Difficulty of finding business partners in Canada.
3) Lack of knowledge about legal and market risks in
It was clear after two weeks of meetings that these concerns are significant “confidence” issues for Chinese companies. No matter how much North America views with trepidation the rise of Chinese power globally there is also trepidation on the part of the Chinese. I saw the “fear” of the North American business environment in the eyes of some very competent managers and executives in China.
The Chinese government issues direct and detailed 5 year plans to guide the development of its country. In the latest plan, number 12, there is a significant emphasis on “Going Global”. Specific organizations and sectors are tapped by the government to go forth and plant flags around the world. Certainly China, both from a corporate and sovereign perspective, is capable of funding this work. Some countries and governments are very worried about the M&A focus China has on resources and technology in the west. They believe it is part of a master scheme to bring increased power to China. Well of course it is! Every country seeks to takes its best resources to expand abroad, enhance its influence and bring back cash, technology and resources back to the “mother country”. Great empires were/are built on this… Rome, Britain, the US and yes… even China.
The question becomes can the West gain from this inevitable (re) flexing of China’s strength? I firmly believe that we can. The business people I spoke with rely heavily on relationships to guide their decisions. They value advice and counsel. In Canada we can partner with them to help them understand how to navigate the western world of business. We can be their teachers and their mentors… and these Chinese partners can equally help us understand how to participate in the exploding growth in their country. Feeding, educating and (re) developing 1.3 billion people is a tall order and China is willing to partner with both countries and companies to do it. Canada, and Toronto specifically, has a strong multicultural society and key roots with many of our citizens (1 in 10 and growing in Toronto) coming from China. We have so much more to gain in terms of participating in the inevitable growth of China’s GDP. We can take a virtual share of it by welcoming Chinese investment here, so they will welcome us there.
Helping China navigate and cross the chasm of confidence will be an important factor in Canada leveraging its GDP growth by tapping China’s. We at Invest Toronto have made some strong connections and are working with key firms to welcome them to Canada and Toronto. We also know these partnerships will help build a conduit of trade that will help us tap into China’s consumer market. As history repeats itself, and the East regains its dominance, Canada will be a huge beneficiary. We are happy to be the guide across the confidence chasm.
The Morning After October 26, 2010Posted by investtoronto in Uncategorized.
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As I sit here in the airport lounge in Tel Aviv at the end of nearly 6 weeks of daily meetings with people from all over the world I am reading the different opinions, reports and editorials about our GTA elections. So first I want to congratulate everyone who has spent the gruelling weeks and months in giving of themselves to the most precious of social processes… The process of democracy. All who present themselves are doing what many of us do not… They are putting themselves “out there” to be judged and scrutinized. It reminds me of Garth Brook’s song, ” Standing outside the fire”. Some of us are in the fire and some of us enjoy the heat and comfort and then some of use gather wood, stoke it and fuel it. Tonight, across the GTA some candidates even ignited it!
I wish I could take every candidate and magically impart the hundreds of conversations I have had about Toronto… As seen by peopel who admire it, yearn for some of its attributes and shake their heads at ourlack ofunderstanding aboutwhat we have… About why people and businesses should view Toronto as a unique opportunity.
Toronto is not perfect… We have many things to work on. We all know our challenges and after weeks of debate I will not go over them today… In our hearts we know what they are. I wish I could magically impart to our newly elected officials and to us who elected them, what really matters… Canada, and specifically Toronto, represent to many who know of it or have experienced it, a last stand of hope. The people I talk to immediately point out our assets. They also have no problems telling me our shortcomings… ( the least important of it being our “polar bear winters”. … We will have to work on climate branding for sure!).
The net of it is, while we know what we have to work on we still are the envy of many. I have been to cities that have some things better and some things worse than what we have. However I have not visitied many cities that have our potential. Right now our GTA leaders need to focus on exttracting and building that potential. Outsiders understand better than us that we have the makings of a great… A really great city. They are not naive but they also see what we have as a base to build upon.
So now let us do the tough stuff.., the work of putting the plans to practice. Let’s however never forget that all these plans and intentions are always means to an end.. The end is to build a better, more vibrant, more inclusive and more harmonious society that welcomes all talents and all contributors. That is the potential of Toronto
Of Math and Mayors August 18, 2010Posted by investtoronto in Uncategorized.
Tags: Economic Development, Immigration, Invest Toronto, Productivity
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It’s all about the math!
Toronto needs both people and productivity to remain the kind of economy that can sustain our standard of living. I will take you some mathematical meanderings of mine to prove my point (I already apologize to economists living and dead for the inevitable oversimplification I am about to spew).
As I sat watching the Toronto’s Mayor debate the other night I could not help but get mesmerized by the whole discussion around whether or not Toronto should increase it immigration and growth or get things “under control” first and then deal with growth. As the next Mayor will be the Chair of my board you will be hard pressed to see me opine on a winner or a preferred outcome. It is a demanding job running a $9 billion corporation we call Toronto. So I think anyone willing to step up to that challenge deserves our ears at minimum and perhaps hopefully our respect.
So I started thinking of whether or not we could cope with growth. Putting my emotional bias aside that Toronto cannot be Toronto without allowing for the world’s global talent to come here and having new beginnings, I started thinking about the “spreadsheet” issues. Can Toronto afford to grow?
I was inspired by the recent “tipping point” event this week when China became the world’s second largest economy. I also was inspired by a recent graph (see below) in the Economist where it looks at 2,000 years of GDP growth.
So the first thing I note is that history does repeat itself. We talk about the “emerging” economies as if these countries just evolved into these power houses of GDP growth. We think the BRICS are a new phenomenon. Well look back a couple thousand years and you can see China and India were the big guns then. Look forward a few decades and you will see that China and India will be the big dogs again.
The emergence of the “developed” countries really was driven by the P factors: Population and Productivity. Either one of them drive GDP. Together they are incredible. So as Western economies grew in population and productivity (proxy innovation for productivity) the shifts are dramatic.
The example is clear with China’s milestone on Monday. On an absolute basis it is the world’s second largest economy. On a per capita basis it sits 99th (bracketed by Albania and El Salvador) yet it zoomed past Japan for the second spot of absolute output and will keep going. By the way, Canada is 18th, ironically just below Japan on the GDP per capita rankings.
China has 4 times the US population (the world’s largest economy at roughly $14.5 Trillion versus China at just under $5 Trillion). Let make all the math easy… and putting aside issues such as constant price comparison, fluctuating exchange, etc. At 4 times the population and about one-third the GDP how fast does China catch up to the US (and what does this mean to Toronto… I am getting there!).
So if China can get as productivity as its next nearest neighbour in GDP per capita rankings, Albania and add $150 per person of output it adds $200B to GDP. If it does not get more productive but just keeps growing its population at 0.6% (compared to the US just under 1%) then it adds $28 billion of GDP i n a year. If it get as productive as Lithuania, Latvia and Poland(ranked 49th, 50th and 51) then it surpasses the US as the biggest economy. As it increases its productivity and its population the compounded numbers are scary.
Certainly this is a bit oversimplified but the reality is population growth plus productivity has an amazing impact on net economic power and output. So now let’s think about the GTA.
Can we afford 100,000 new people (and let’s assume it is almost entirely immigration driven) per year? I ran some back of the envelope numbers…. the answer is pretty clearly we almost have to do this. Despite the practical argument that there is no tap to turn on or off on growth (we are going to get the vast proposition of immigration in Canada in Toronto no matter what we think we can do to slow it down).
Using 2009 as a base: If the GTA (I am consistently using CMA data to make life easier) were not to grow at all and remain around 5.6 million people and if we were to increase productivity a compounded rate of 1% per year, then by 2020 we go from about $265B to just under $300B of GDP. Now keep in mind that from 2000 through to 2008 Canadian productivity grew only at 0.8%. Our heyday of post-war productivity growth through to about the early 70s was around 4%.
If we grow through immigration at the projected rate of 100,000 people per year and did NOT increase productivity, by 2020 we end up at about $314B of GDP. So just adding people, of course adds more output. Now if we increased productivity at 1% per year AND grew as projected we go to $351B of GDP. That’s equivalent to almost a 3% compounded productivity improvement per year. This would require scaling up to almost post war boom levels!
I conclude we need population (so unless we go on a baby making spree we need people from other countries) and we need the productivity (which comes from ideas and innovation). Immigration will help us get both. It is all in the math. We need to welcome new Torontonians as is our legacy and get them productive. Yes I think it is part of our DNA and certainly part of our history. .. But it is also enlightened self-interest.
It’s about the math! We need to get back to what made us great… sustaining a welcoming city of hope and new beginnings.
:A Good Day for Toronto August 9, 2010Posted by investtoronto in Uncategorized.
Tags: City Building, Economic Development, Toronto, Transformation, Waterfront
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Today was a good day for Toronto.
I was at two interesting and related “openings”: Toronto’s new Sugarbeach and Corus’ new HQ both located on Toronto’s waterfront. Even though it was a bit gray and a bit muggy you can readily see the interesting opportunities. We have a new urban beach (sand, umbrellas and Muskoka chairs and all) colocated among a new hi-tech media headquarters, an industrial sugar processing and distribution facility (Redpath) and a new campus of George Brown (currently under construction). Recreation, public open space, broadcasting/new media and higher education standing where there was once only industrial waterfront.
As a former board member of Waterfront Toronto I have a very good idea of the challenges to implementing some of this. You have 3 levels of government, the public sector and the private sector all having to align interests. People get frustrated at the length of time it takes to get things done but there is such a large amount of up front planning, alignment and consensus necessary. I briefly chatted with Bob Fung who stood modestly in the background. He was one of the key folks doing heavy lifting on the groundwork for these projects. It was over a decade ago he started with this vision of doing something spectacular on Toronto’s waterfront. He and his early board engaged in a lot of the block and tackle, non sexy work of creating the plans and the vision and aligning the interests. I am glad he was there to see the fruits of his labour start to bloom.
There was a good representation of all levels of governments including Minister Jim Flaherty from the Feds, Minister Brad Duguid from the Province, MPP Glen Murray and Mayor David Miller. While all contributed in same way I can personally say I witnessed the relentless energy that Mayor Miller put in ensuring we did not compromise and we did indeed get a vibrant waterfront with jobs, great open spaces and creative influences. Certainly what you can see there today visibly demonstrates the promise .
The Waterfront project is a prime example of how we cannot trivialize city building to what can be done in one election term or in one budget cycle. It continues to be one of the most transformative projects Toronto (or any city) can undertake. People do not realize the tons of contaminated soil that will be remediated and properly contained. Industrial wasteland is turning into vibrant city assets. Not only will there be parks, jobs and homes but there will also be advanced green technologies employed to help usher in an era of true sustainable living. It is a leading “transit first” neighbourhood. This means putting in all the transit considerations BEFORE people move in. Once you have 2 cars and get use to commuting by car putting in the transit afterward makes change difficult. People will work in the neighborhood they live in. They will walk to work, walk to recreation and enjoy some amazing parks all within the shadow of the city’s distinctive skyline.
I am confident that with the plans starting to manifest themselves into physical assets the city will enjoy a spectacular waterfront. However there is an important lesson hereabout tenacity . Without the dedication of people like Bob Fung, dozens of volunteer board members over the years and dedicated champions like David Miller these type of changes would never occur. Given the amount of work that remains to be done patience is indeed a virtue in city building. But if you doubt the benefits, stroll down to the new waterfront just to sample the potential. You can sit in a Muskoka chair on a sandy beach and look across to the islands. A few years ago you would have stood on a mound of contaminated soil looking at a wasteland of shoreline.
We need to remember the size of the prize when city building gets tough or complex. Something to think about as you admire the view from Sugar Beach on a break from classes at George Brown, or waiting for the next cool event at Corus’ outdoor/indoor main lobby or resting from your bike ride along a new promenade.
It was a good day for Toronto and I know there will be many more.
City Selling, City Building: A Means Not an End May 31, 2010Posted by investtoronto in Uncategorized.
Tags: Board of Trade, Canada, Economic Development, G20, Globalization, Immigration, Investment Attraction, Toronto
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Anybody who has been in sales or marketing can tell you about the huge industry there is that supports sales people. Seminars, books, webinars, conferences and a myriad of gurus and experts will tell you how to sell that widget. In the case of Invest Toronto, we are selling not just a product, a place, a service or a concept but all the above. We are selling Toronto. The most apt and important advice on sales I ever received, (and I feel it is very relevant for Toronto) is: “If you do not believe in the product, you can’t sell it.”
As we come into Toronto’s summer season we kick off our peak time for visitors, both business people and tourists, which get initiated this year with the G20 summit. Now, no matter how anyone feels about the value of the summit from a political, social or economic perspective… it IS coming. The question for those involved in selling the city (read all of us) is now how to maximize this opportunity. Let’s forget about the delegates for a moment. Most of them will only see parts of the city through the tint of a rear seat in a security SUV or limo. Besides, even if we could have intimate tête-à-tête with any of these leaders I hardly think they would be interested in talking about how we could take investment from companies in their countries and bring it to Canada. The goal here is to get the media to be our story tellers. We need them to witness, hear and record what we in Toronto see as our value proposition. We need them to tell the world why doing Toronto is a place to invest their money and their time. However, to be successful, we need to believe. Can we be the ambassadors for this city?
Certainly in years when there are mayoral races we can easily become victim to the notion that nothing in the city works. The tendency is not to talk about how well we are doing as a city on the global scales. It is more interesting to talk about how badly we are doing. Our energy becomes focusing on what needs fixing. City building is not a finite act that happens every 4 years with election platforms. It is a continual work-in-progress. If you want to get a sense of the amount of collective effort and concern that it takes to run a region of over 6 million people look at the Toronto Board of Trade’s site and read the different perspectives and concerns of the guest bloggers. We need to work on transit, the waterfront, affordable housing, policing, budgets and a long list of important city building issues. There is also a huge army of talented people working in the public and private sector, volunteers and employees trying to build Toronto.
Our region will grow and we will continue to grow in a very different way than many parts of the world. The region in 2031, that is only one generation from now, will be bigger (almost 7.5 million people), newer to Canada (78% of GTA residents will be new immigrants or children of immigrants), and more diverse (more than 3 out of 5 residents will be from what has been traditionally termed “visible minority”). This makes the GTA a beacon of hope to millions of families and thousands of businesses. This region, our region, is one of the few places on earth where there is great hope and expectation for the co-existence of diversity and inclusivity (because they can be, and often are, mutually exclusive in other parts of the world). In building our city we need to understand that from a global perspective we are unique. In building our transit, in attracting new jobs, in setting city budgets and in selling the city we all have to keep in mind that these are all things we do not as “ends” but as “means”. These are means to providing better lives.
Bringing in new investment and new jobs for Invest Toronto is a means to help provide the opportunity for our incredible human talent to use their skills to show the world that Toronto is not just growing with newcomers but growing with very talented newcomers. Everything we do in city building should be brought back to the end purpose of providing tools for the realization of that hope.
So what does that mean in selling the city? While Invest Toronto is acting as the collective voice to ensure business people and influencers around the world understand the quantitative and qualitative facts about the City and the region, only individuals can relay their feelings and hopes about why they are here in Toronto. We must distinguish between our own day-in day-out frustration with changing and improving aspects of our region and the inescapable fact that most of us chose to plant our stakes here and fight for that better life. In fact, in a world of global mobility, we continually choose, implicitly or explicitly to be here. The barriers to come into Canada are probably more significant than the barriers to leave it. Yet we are here. This is what is important to think about when talking to that tourist you will meet this summer, that business person you bump into at the airport or that colleague you meet at an overseas convention. Toronto is the region of hope. We can sell it because we believe it.
Bossing around the Boss April 25, 2010Posted by investtoronto in Uncategorized.
Tags: Diversity, Economic Development, Globalization, Immigration, Invest Toronto, Labor, Productivity, Toronto, Unions
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Imagine you are a labour union and spend a year negotiating a new deal with the company. Imagine that after that year of hard-nosed, toe-to-toe, negotiations involving governors and celebrities you declare a great victory. What does victory look like? In the case of Workers United versus Hugo Boss in Ohio it looks like losing 1 in 5 jobs and almost 25 percent pay cut. Times have changed.
In this weekend’s Wall Street Journal we read a story outlining the level of intensity and struggle in retaining certain jobs in North america… never mind attracting them here. It took Ohio Governor Ted Strickland, Danny Glover, a celebrity boycott and extreme political pressure to get Hugo Boss to reverse its decision to close a Ohio plant. However that was not before reducing the job count to 300 from 375 and moving hourly wages from $13 to $10. Then a bizarre victory is declared when Bruce Raynor, president of Workers United states: “We stood up against a multinational corporation and reversed the trend of globalization.”
Workers United has worked diligently to improve the lives of hard-working folks. While I have a complex and at times conflicted view of labour unions, I do strongly support many of the targeted outcomes of unions which is providing jobs that allow a person to raise a family and allow hope for a better life. In fact if every blue-collar family can find a way to support their children in going to post-secondary school, whether it is for academic, professional or apprenticeship pursuits North America would be more competitive.
So it is a bit disappointing that the union believes that its goal is reversing the trend of globalization. Globalization is not a bad thing. It can be argued that flattening of the world is allowing emerging economies to … well… emerge! So denying the Ohio jobs to an emerging economy is not necessarily good for the world. The point is we cannot, nor should we , “reverse globalization”. What we need to do is tap the trend to help society.
I wanted to highlight this story because it is one of the very reasons I believe we need to attract more businesses globally here to Toronto. First, it just going through the exercise we are forced to benchmark ourselves against the rest of the world’s resources. We learn what is truly “competitive” against world standards. Our neighbour to the south is struggling with job creation, as are we. However the effort should be put into increasing the competitiveness of their country. If the new normal in victory is not to be job cuts and wage cuts we have to focus on creating goods or services that people are willing to pay good money for… at the risk of sounding cliché… it means creating value.
In Toronto our global and diverse talent needs to be engaged to ride the wave of globalization. We can uniquely take advantage of a world that demands global thinking. We have people educated here from literally every country in the world. They have business connections, personal relationships and cultural know-how from every corner of every continent. We should celebrate the need for multi-nationals to look around the world for the best solutions. Canada’s own domestic needs can never provide the standard of living for a growing population. Our ability to serve the emerging markets is the best hope for us to never have to take ourselves down the slippery slope of job cuts and salary cuts. By putting our Torontonians, all our Torontonians, born here or immigrated here, to work in the field in which they studied we can tap into globalization to improve our own lives as well as those in emerging countries.
The successful cities, regions, countries of the 21st century are not those who deride globalization but will be those who embrace it for the good it can produce: creating more connected, more informed, more productive citizens around the world. Globalization is about sharing knowledge and quality of life… not allocating it to the haves and have-nots. Toronto can be a city that becomes a role model in creating this wealth and sharing it by using our connectivity to the world.