Toronto is no stranger to foreign invaders. Lured by the plentiful fur supply to the North and the emerging American market to the south in the early 17th century, French Fur Traders and English colonists plundered the resource-rich market. Toronto unravelled as fierce competition and quest for control of Ontario’s rich wilderness erupted.
Business deals were cut and power changed hands through war, but no transaction was more remarkable than the 1787 purchase of 250,880 acres of swamp land bordering Lake Ontario where the city stands today.
Lord Dorchester, then Governor-in-Chief of Canada, offered the Mississauga chiefs £1,700, a few barrels of cloth and some axes. Go figure. Deals have been going down in Toronto ever since, and in one form or another, the city has always been a place for savvy newcomers to reap ample reward.
In centuries since, the Toronto Passage has evolved into the national hub of virtually every imaginable industry operating in Canada. The numbers say it all.
According to Canada’s national daily The Globe and Mail, 72 per cent of the country’s 25 largest employers have located their head offices in the Greater Toronto Area. Toronto is headquarters to five of Canada’s largest domestic banks, and home to 90 per cent of foreign banks operating in Canada. Toronto’s medical and biotech cluster is the largest of any metropolitan area in North America.
Furthermore, the city is home to seven of the top 10 manufacturers in the country, six of the country’s top 10 IT companies, and 10 software multinationals have chosen Toronto as their Canadian launch pad. It’s no surprise that decisions made in this city’s boardrooms drive business activity across the entire country.
According to Ron Wandel, Manager, Investment Attraction at Toronto Economic Development, Culture & Tourism, “The city is a profit centre and if you’re not here, you’ll simply miss out.”
Although Wandel is an obvious cheerleader for Toronto investment, his enthusiasm by virtue of his experience is authentic. Wandel arrived from Los Angeles to study at Queen’s University; afterwards he moved to Toronto, raised a family and hasn’t looked back.
Toronto’s new investment gatekeeper, Wandel is the man many companies meet when initiating site selection in Toronto. By travelling and meeting with various North American business decision makers, he has developed intimate knowledge of corporate needs, and in response has carefully highlighted what Toronto has to offer.Wandel lists the exchange rate, Toronto’s diverse population and the city’s unmatched quality of life. The favorable exchange rate helps minimize the total cost of doing business in Toronto—placing it lower than all of the nine other largest markets in North America.
According to a MMK Consulting study conducted in May 2004 dissecting the costs of doing business in various North American markets, it costs over 20 per cent more to do business in Boston, 25 per cent more in Chicago and over 30 per cent more to be in New York, than it does in Toronto. What does this mean?
For businesses that have already chosen to locate in Toronto, the direct benefit of lower operational costs have translated into freed-up capital for reinvestment into R&D or business development to ensure their continued competitiveness.
In 2004, RI3K, a UK-based IT company responsible for building the technology infrastructure for the global reinsurance industry, was looking for a North American headquarter to service clients located mainly on the Eastern Seaboard of the U.S.
During the site selection process, Simon Bell, one of the company’s Senior Vice-Presidents, travelled to London, New York, Indianapolis and other U.S. cities to investigate traditionally viable locations. Besides being impressed by the savings afforded by the exchange rate when evaluating Toronto, Bell found occupancy costs to be significantly lower than the U.S. alternatives.
Today for example, including exchange rate savings, office net rental rates in New York City run 25 per cent more than comparable office space in Toronto.
Occupancy costs are not the only expenses that undercut U.S. counterparts. The effect of the labour shortage in the U.S. during the 1980’s drove American employee salaries through the roof, increasing wages and inflating corporate costs while cutting into corporate bottom lines. Inversely, during the same period, Canada’s relatively high unemployment rate kept wages down. The effects of which are evident today where, according to the MMK Study, an IT support manager in Boston costs a company (USD) $97,265 a year compared to (USD) $68,540 in Toronto.
What’s more, not only is the labour force less expensive, it’s a natural bisection of global diversity, a quality ranking Toronto as a highly recognized international competitor—garnering claims from the Economist Intelligence Unit, who favours Canada as the best country in the world to conduct business.
If you really want to take advantage of this market, you need to understand its population.
Home to one-sixth of Canada’s total labour force, Toronto consists of a concentrated, multi-ethnic population who, when combined, communicate in more than 100 different languages. According to Toronto Economic Development, 50 per cent of the GTA’s 5.4 million residents were born outside of Toronto and represent more than 90 different ethnic groups.
In 1975 Hari Panday arrived in Toronto from India with less than $5 to his name. To earn a living he hung wallpaper and loaded trucks, eventually working his way through the ranks of the financial world beginning at Price Waterhouse. Panday’s comprehension and experience paid off. Today he is President and CEO of ICICI Bank Canada, a subsidiary of ICICI Bank Ltd., the second largest bank in India.
Panday’s perspective and market knowledge has helped spearhead ICICI’s success in Toronto. Since its penetration into the GTA in December 2003, the bank has attracted more than 11,000 clients. ICICI saw an opportunity to capitalize on what traditional banks ignored: the enormous, new, and growing ethnic population.
New immigrants encountering the unaccommodating financial system that can require newcomers to put up as much as $2,000 just to obtain a credit card with a $1,000 limit, was an unnecessary obstacle according to ICICI. In response, the bank delivered a service whereby Indians could arrange their banking in India before landing in Canada.
At ICICI’s four branches, strategically located in ethnically dense communities around the GTA, clients can at any time be serviced in one of six languages. Not to mention the banking machines that provide operating instructions in Hindi, Tamil, Punjabi, Chinese, French, and English.
Daily conversation with Icelandic colleagues and Russian pals at the United Nations fuelled Shellianne Bedder’s success. In 1980, after eight years at the UN she returned to Toronto, tapping into the city’s furious real estate boom.
Today as the marketing and sales director for The Regency—a New York art deco style luxury condominium project under construction in Toronto’s upscale Yorkville neighbourhood, her predominantly foreign clients derive from such remote locations as Singapore, Taipei, Dubai and Grand Cayman.
“I feel comfortable talking to anyone” she confesses.
The luxury condos attract mostly international clients who are looking for a home in Toronto where they’ll likely live six weeks a year at maximum, as an alternative to staying in hotels. One of the major concerns her clients have is if the location will meet their needs and accommodate their upscale lifestyle. Invariably Shellianne responds by rattling off a few names of the over 700 designer retailers and shops located in Yorkville: Gucci, Prada, and Tiffany’s.
Quality of life can take on many forms but generally remains immeasurable. One of Ron Wadell favourite tactics to promote Toronto is to take clients for a walk. Once he lures prospective head’s of corporations to Toronto he takes them for dinners and entertainment followed by a walk downtown at night.
The simple pleasure of an evening stroll remains a virtually unheard of practice in many large American cities where, he feels, crime and insecurity make urban centres dangerous after dark. The exercise proves surprisingly refreshing to those who would elsewhere feel concerned for their safety.
“Once we get them here, the place sells itself.” boasts Wandel .—Tim McKeague