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ur government is very proud of the international trade success stories we have here in our own backyard,” says Ted Chudleigh, parliamentary assistant to the Ontario minister of economic development and trade.
Ontario has a great deal to boast about. The Canadian province is the powerful engine behind Canada’s trade and industry machine, and NAFTA acts as fuel to sustain the province and Canada’s forward economic growth. Ontario’s exports account for more than 50 percent of the province’s GDP, sustaining 1.6 million jobs.
The NAFTA agreement has encouraged trade between Canada and the States. Last year the U.S. shipped US $178.8 billion in goods to its neighbor to the north, the largest volume of exports to any nation. Surprisingly, the value of Canadian imports is even higher, accounting for $229.2 billion. The exchange of goods between the U.S. and Canada has become an integral part of both countries’ economies. Auto parts factories and assembly plants dot the Canadian landscape, allowing for the tariff-free importation of parts and the exportation of assembled automobiles back across the U.S. border. This trade benefits both nations and offers unique opportunities for site selections on both sides of the border.
In February of this year, the Canadian-U.S. Auto Pact became obsolete. The Canadian agreement gave preferential treatment to U.S. automakers by imposing a 6.1 percent import tariff on Asian and European auto manufacturers. With the demise of this agreement and the integration of the NAFTA agreement, Asian and European auto manufacturers now have access to both Canadian and U.S. markets with limited tariff restrictions.
The automobile business is a vital part of the NAFTA trade equation between the States and Canada. The manufacture of parts and autos on both sides of the border serves 25 percent of world production.
“Auto manufacturing is a big deal in this part of Canada,” says George Mallay of the Sarnia-Lambton Office of Economic Development. “There are 29 assembly plants within an hour and a half of here. Our border crossing has six lanes of traffic, and we use every one.” UBE Automotive will build a 250,000-sq.-ft. (23,213- sq.-m) manufacturing facility in Sarnia. The company will produce aluminum automobile wheels.
Toyota has selected Cambridge, Ontario, as the exclusive site of the North American producer of the 2003 Matrix. General Motors has announced a new $440 million plant in the same area at St. Catharines. Cambridge is northwest of the U.S. crossing at Niagara Falls.
“We are committed to ensure Ontario’s economy is competitive,” said Ontario’s Minister of Economic Development and Trade Al Palladini of the Toyota announcement. “We are also committed to make the province the preferred location for North American automotive investment.”
The province of Ontario has a population of nearly 12 million with an unemployment rate of 5.7 percent. Ontario offers site selectors an available pool of educated labor, plus with the exchange rate, Canadian labor is considerably less expensive than their U.S. counterparts. OAO Technology Solutions (NASDAQ:OAOT; www.oao.com ) announced in March the construction of its new e-business center in Toronto. The firm specializes in computer system designs. The company mentions lower costs of doing business as well as the favorable exchange rate as part of its decision to locate in Ontario. Officials also cite the availability of skilled labor due to a decreased demand in Canada. “The relative cost as compared to U.S. of software programmers and developers was our key attraction,” says Shiraz Patel, senior vice president of the e-business solutions division of OAO Technology Solutions.
Patel says the company is looking ahead to the opening of all borders by 2005 and how that will effect OAO’s marketing. “In the future, there will be an increasing shift of our software services strategy to be delivered from Mexico into the USA and Canada. We are already aligned with a local Mexican firm to respond to this shift.”
Ontario has also been the location of several recent high-tech investments. Hemosol is building a $50 million biopharmaceutical facility in Mississauga. Zenastra Photonics will employ 500 workers at its $40 million manufacturing/headquarters plant in Ottawa.
Quebec has a population of nearly 6 million people, but offers to new facility investors a commodity not easy available in North America, available labor. Quebec has a current unemployment rate of 8.4 percent. While Quebec City is home to the largest French speaking population in the Americas, Quebec can also boast of an educated work force. There are multiple universities within Quebec City, including McGill University, an English language school.
IBM announced in February the construction of a semiconductor facility in Quebec City. The $98 million plant will employ 400. Last June two large high-tech facilities were announced in the province. Mosel is building a chip manufacturing plant in Montreal and expects to hire 1,500. Interquisa/Societe General de Fina will build a $500 million petrochemical facility in Montreal.
British Columbia exports the U.S. nearly $19 billion annually in goods, particularly lumber. In 1999, 46 percent of total U.S. lumber imports were shipped from B.C. This lumber trade has produced some stumbling blocks in the Canadian-U.S. NAFTA trade picture. A group of U.S. lumber companies have petitioned the U.S. government for import taxes on Canadian softwood lumber.
“Considering the amount of trade our nations share, it is not surprising we seem to trip on specific goods. With B.C. it is lumber; with another province it might be fish,” says Mike Carter of the Ministry of Employment and Investment for British Columbia.
British Columbia has begun to quietly market itself as a low-cost alternative to the north. In recent months many call centers have located in the province, as well as many support centers for high-tech firms in the Silicon Valley area of California. In April, Excell Agent Services announced a 500-employee customer call center in Penticton. RMH Teleservices and Growthexperts.com opened call centers within the province last year.
“We offer a ready work force,” says Carter, “as well as low costs for reliable and available power, lower operating costs due to the favorable exchange rate, and a West Coast location with good telecom access and easy west coast entrance to the U.S. markets.”
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