Manufacturing

In 2007, Canada’s aerospace output ranked fifth in the world, as civil manufacturers generated revenues of over $17.5 billion. In the same year, investment in research and development (R&D) amounted to $1.2 billion in aerospace and defence.

Many Canadian cities are home to a large number of establishments producing aerospace products and parts, forming important clusters. Among leading North American aerospace clusters, Canadian cities also represent some of the most financially attractive locations.

The automotive industry is Canada’s largest manufacturing sector and accounts for 16.7 percent of North American vehicle production, or 2.6 million units produced. With key clusters in Southern Ontario—Oshawa, Windsor, London, Waterloo and Toronto—and Montréal, Quebec, Canadian locations combine financially attractive propositions with high quality operating environments, surpassing many other North American and Asian competitors.

Canada is also home to nine of the ten largest chemical companies in the world, with the chemical industry representing Canada’s third-largest manufacturing industry in terms of exports. Canada’s industrial chemicals sector provides a diverse manufacturing base that offers important cross-sector advantages, supplying critical components for use in a broad range of industries, including the automotive and aerospace industries. Canadian locations offer a cost advantage over U.S. alternatives thanks to lower labour costs, low corporate tax rates and low utility costs.

Life Sciences

Canada plays a key role in the global biopharmaceutical industry, with particular strengths in R&D, clinical trials and manufacturing. All of the top 10 revenue-generating global pharmaceutical companies such as Johnson and Johnson, Pfizer, Bayer, and GlaxoSmithKline, have operations in Canada, several with R&D and manufacturing mandates.

A significant player on the international biopharmaceuticals scene, Canada’s global presence continues to grow steadily thanks to leading-edge research programs and strong financing and venture capital programs. Canada provides the Scientific Research and Experimental Development (SR&ED) tax incentive, as well as provincial tax credits to help firms reduce the cost of R&D expenditures and to foster innovation. Tax reduction initiatives announced by the federal government in 2007 are set to give Canada the lowest statutory tax rate in the G7 by 2012, and the lowest marginal effective tax rate in the G7 by 2010.

The Canadian medical device industry is also a leader in R&D, with strengths in a range of specialties including cardiovascular devices, medical imaging, in vitro diagnostics and assistive devices/home healthcare products. Consisting of approximately 1,000 firms and employing about 26,000 people, the industry, which is primarily composed of small and medium-sized enterprises, generated total revenues of approximately $4 billion and exports of $2.4 billion in 2007.

Information and Communications Technology

Information and communications technology (ICT) is one of Canada’s most innovative sectors, representing almost 40 percent of the country’s private investment in R&D, worth an estimated $5.7 billion in 2006. A major contributor of that R&D is the Canadian software industry, consisting of approximately 52,926 firms and employing over 262,000 people. The Canadian software industry, including software publishing, computer systems design and related services, generated revenues in excess of $32.2 billion in 2007 and is expected to continue to grow over the next five years.

Canada is also home to thriving digital media clusters with large pools of employees who possess the specialized skills needed for designing games and related products. More than 500 companies throughout the country are part of the game industry value chain, from hardware, development tools and enablers, to support services, developers and publishers. Canada’s high quality of life and affordable cost of living position it as a top location for attracting the creative talent essential to the success of games firms.

Another Canadian R&D intensive industry is photonics, which consists of approximately 370 companies that generate roughly $4.5 billion annually in revenues. The sector employs a highly skilled workforce of some 20,000 people, 40 percent of which are involved in R&D.

Canada’s wireless industry is strategically poised to leverage the R&D taking place in the photonics and nanotechnology clusters. Canada’s wireless companies excel in many market segments, notably cellular equipment, mobile devices and CPEs, WiMax, and software-defined radios. Low corporate tax rates, R&D incentives and competitive labour costs make Canadian locations very financially attractive North American options for foreign investors.

Services

The Canadian financial services sector is among the world’s most highly developed and offers many examples of best practice. Canada’s banking system is ranked the soundest in the world according to the World Economic Forum Global Competitiveness Report 2008-2009, indicating that Canada’s banks are generally healthy with sound balance sheets. Canada’s mature financial sector has produced such global leaders as the Royal Bank of Canada and Manulife Financial. Further, the sector continues to attract foreign investment, with more than $54 billion in 2006. [Note 1] Many major international financial services firms such as BNP Paribas and CITCO maintain nearshore business-processing operations in Canada.

Heavily intertwined with the financial services sector is Canada’s business services industry. It accounted for $57 billion of the 2007 national GDP and employs more than 1.1 million Canadians, representing nearly 7 percent of the total labour force. [Note 2] Canada boasts some of the largest business services clusters in North America, with many Canadian cities having a higher proportion of business support-related companies, in comparison to other North American locations. Strong clusters of shared services companies allow close linkages with buyers, suppliers and other institutions to offer advantages that lead to greater efficiency, accelerated improvement and innovation.

Renewable energies

With 417 million hectares of forestland in Canada, the Canadian forest sector is well-developed and is one of the world’s largest exporters of wood products. Canada’s biomass cogeneration industry is able to leverage these resources, with the pulp and paper sector currently accounting for 88 percent of the biomass cogeneration output.

Committed to sustainable forest management and investing in renewable energy, the Government of Canada unveiled the ecoEnergy Renewable Initiative, in 2007, providing incentives for low impact, renewable electricity projects. Potential investors can also benefit from the presence of a large workforce in manufacturing as well as in the forestry industry.

The rapid growth of Canada’s wind energy industry, due in part to several recent foreign direct investments, has resulted in an increasing number of manufacturing firms entering the market Canada is one of the world’s leading exporters of electricity, and neighbours the world’s largest electricity consumer, which has a strong and increasing appetite for green power. Canadian locations offer highly appealing, cost competitive options combined with some of the best operating environments for the manufacturing of wind farm turbines and components.

Food Processing

In 2007, Canada’s food- and beverage-processing industry, with a workforce of 286,000 employees, produced shipments worth $83.7 billion. Each year, Canadian mills grind some 3.5 million tonnes of wheat, oats, corn and barley and export commodities such as wheat flour, semolina, and other milled grain products to over 30 countries worldwide.

Canada invests billions of dollars in R&D annually to help drive innovation and to ensure that companies have access to the best talent and infrastructure in the world. Canada’s grain processing industry produces innovative food ingredients, natural health products, general and performance animal feed, flour, ethanol, as well as increasingly popular end-product ingredients such as wheat gluten, bioactive compounds, and bio-based industrial applications.