ochen Drewniok and his colleagues at Roth Industries Inc. like what they see in Watertown, N.Y., especially when they gaze 30 miles (48 km.) up the road and across the border into Canada.
   Access to growing markets in both the U.S. and Canada was a principal driver behind the company's decision to relocate from North Kingstown, R.I., to Watertown in Upstate New York's Jefferson County.
   In January, the German- owned firm began production at a new 40,000- sq.- ft. (3,716- sq.- m.) factory in the Watertown Industrial Park. The US$10- million investment created 20 new jobs in the manufacturing of double- wall, fuel- oil storage tanks.
   "Our factory was put here because the 300- mile [483- kilometer] region includes key markets in Canada," Drewniok, CEO of Roth Industries, tells Site Selection. "We have quite a strong business in Québec and Ontario. This location is very close to the Canadian border."
   According to a review of the Conway New Plant Database, many executives agree with Drewniok. Since January 2006, some 265 facility projects have been announced in a U.S. or Canadian city along the 6,000- mile (10,000- kilometer) U.S.- Canada border.
   SHE American/Shin- Etsu Chemical Co. announced a $350- million silicon wafer plant expansion in Vancouver, B.C.; Chrysler LLC announced three projects – in Wayne, St. Clair and Macomb counties around Detroit – totaling $1.7 billion; Pactiv Corp. announced a $73- million packaging plant expansion in Rochester, N.Y.; Ford Motor Co. announced a $214- million expansion in Hamburg, N.Y., near Buffalo; and Noble Energy announced a $300- million wind- turbine factory in Ellenburg, N.Y., near Plattsburgh.
   What keeps them coming? The most important factor, according to company executives and government officials, is the appeal of cross- border commerce. Canada and the U.S. have the world's largest trade partnership, accounting for $710 billion annually in trade, about $1.2 million a minute.
   Brian Villeneuve, senior business consultant for the Ontario Ministry of Economic Development & Trade, says he has seen a surge in border projects over the past 18 months as companies seek access to Canadian and American markets.
   "The Windsor- Detroit crossing is the busiest trade gateway in North America – 9,000 trucks cross that bridge every day. That's one quarter of all truck traffic across the border," he says. "They carry more than $300 million [US$283 million] in just- in- time inventory on a daily basis. In 2006, about 86.5 percent of Ontario's manufactured goods and services were exported to the U.S., and it's growing."
   U.S. foreign direct investment into Canada in 2006 totaled $273.7 billion, up from $258.9 billion in 2005 and $246.7 billion in 2004. "That figure has been rising every year since 2002," Villeneuve said. "Most of that is flowing into cities close to the border. They contain the majority of corporate headquarters in Canada. Business will continue to flow into these cities."    Drewniok says the logistical advantages of locating close to the Canadian border made Roth's decision to relocate from the East Coast of the U.S. an easy one.
   "We decided to move everything from Rhode Island to Watertown," he says. "In Upstate New York, we were able to locate in an Empire Zone in a very good location that offered an existing building that we could purchase and expand. New York has a very good work force."
   Drewniok says incentives were important, "but they were not key to our decision – the key was logistics."
   Roth is a leading manufacturer of hydronic radiant heating, plumbing and storage systems, manufactured by blow molding and extrusion. The firm's parent, Roth Industries Gmbh, CoKG, was founded in 1947 and has operations throughout Europe, the Far East, South America, the U.S. and Canada.
   Drewniok says Watertown's location on Interstate 81, which runs north and south through New York, enables Roth to save significant costs on freight. "We can go north or south and ship right into Canada from here," he said. "There is a very good network of highways right here, and New York City is still only five hours away."
   Drewniok says his company's early success in Watertown sets the firm up for future expansions. "It is still true today that we will expand," he said. "We have already added the warehousing component here, and our goal is to expand into extrusion for tubing and assembling for solar collectors. We are a major player in Europe for solar collectors."
   Roth's warehouse is only 25,000 sq. ft. (2,322 sq. m.), but could expand as the company grows its product line and customer base in North America. The firm employs 70 people in Watertown but expects to add up to 30 more workers soon, says Drewniok.
   According to a report by the New York State Economic Development Corp., Watertown beat out four competing sites in Canada and the U.S. to land Roth. The site search moved quickly, as Roth officials made the final decision public only seven months after contacting Watertown leaders.
   "Location to their markets, a suitable building and infrastructure, work force availability, New York State Empire Zone benefits, as well as the area's ability to respond quickly, were the key factors that put us a step above our competitors," says Donald Rutherford, executive director of the Watertown Local Development Corp.
   By locating in an Empire Zone, companies can operate virtually tax- free for up to 10 years if they meet state qualifications. Roth also received assistance from the Jefferson County Job Development Corp. and the City of Watertown.    Canada's increasing competitiveness is forcing U.S. states to be more generous to employers like Roth. The land of the Maple Leaf already has a corporate tax rate that is 5 percentage points lower than America's, and Canada is known for offering high- tech firms generous R&D tax incentives. Through a system of tax credits and accelerated deductions, the real cost of investing a dollar in R&D in Canada is slightly more than 44 cents.
   One of Canada's best- known incentives is the Scientific Research and Experimental Development Program (SR&ED). It provides more than $2.5 billion in support of Canadian private- sector innovation.
   Canada also benefits from lower inflation, averaging 2.2 percent over the past five years, compared to 2.6 percent in the U.S. Simple geography plays a role too. Of Canada's 20 largest cities, 17 are within a 90- minute drive of the U.S.
   As a result, Canada is reaping a harvest of big projects. Toyota Motor Manufacturing last year announced a US$950- million investment to build a new plant in Cambridge, Ont., and a $31.6- million expansion of Canadian Autoparts Toyota in Delta, B.C. Last July, Toyota said it would build a parts plant in Woodstock to supply the new assembly plant in Cambridge. And Honda Motor Co. announced recently that it will build a new engine plant near Alliston, Ont.
   Waterloo, recently named the Intelligent Community of the Year by the Intelligent Community Forum, secured a 244- job expansion from Research In Motion (RIM), the Canadian company that makes the Blackberry. RIM is doubling its plant size to 250,000 sq. ft. (23,225 sq. m.).
   Canadian officials are working hard to make sure this flow of capital does not subside. Specifically, they are tackling rising concern in Canada over foreign business ownership and new passport regulations being imposed by the U.S.
   Canadian Liberal Leader Stephane Dion wants the federal Conservative government to impose tough new roadblocks on foreign takeovers of Canadian companies, but Villeneuve says that will never happen.
   "I would say a freeze on foreign ownership has no chance at all. It is purely political grandstanding by Dion," says Villeneuve. "They are desperately looking for wedge issues."    On the passport issue – Americans traveling to Canada by air are now required to show their passports to gain re- entry into the U.S., and Canadians must show their passport when flying into the U.S. – the two national governments are working on measures to expedite the flow of people and commerce.
   Two such programs are FAST and NEXUS. FAST allows the rapid movement of pre- approved eligible goods by truck across the border. FAST lanes are now open at all major border crossings from Québec to British Columbia. NEXUS is a special joint customs and immigration initiative that expedites border crossings for certain pre- approved, low- risk travelers.
   On Jan. 1, 2008, the passport requirement will apply to everyone traveling by automobile. The Business Council of New York State recently estimated that there would be 7.7 million fewer trips from the U.S. into Canada over the next three years because of the new passport rules, resulting in a loss of $1.7 billion in cross- border business. Cross- border trips from Canada into the U.S. would drop by 3.5 million, the council said, causing a loss of $785 million.
   The Washington- based National Association of Manufacturers takes the passport issue seriously. "We have a very close and special relationship with Canada," said John Engler, president of NAM and former governor of Michigan. "Manufacturing in North America is highly integrated, particularly in the auto industry, and this requires a smooth flow of products and business personnel across the northern and southern borders."