You’ve all heard of Silicon Valley, that dynamic part of the San Francisco Bay Area in Northern California that serves as a global center for high technology and innovation, but perhaps you are less aware of Silicon Valley North.

It’s the region centered along and around the Kitchener–Waterloo–Cambridge (KWC) axis through to the Greater Toronto Hamilton area and the Ottawa capital region that is home to a dynamic and rapidly expanding group of exceptional high-tech businesses. 

Those businesses, many commentators believe, are capable of giving their Californian counterparts some serious competition. This is not hyperbole.

The FOCAL Initiative report Automotive Industry Labour Market Analysis – Regional Automotive Technology Clusters: Kitchener – Waterloo – Cambridge Cluster observes that:

“The KWC automotive technology cluster is home to two formally separate but increasingly interwoven segments: an information and communication technologies (ICT) cluster and one that is oriented around traditional automotive manufacturing.

The ICT industry in the area is one of Canada’s largest technology clusters and hosts several major companies, including Blackberry, OpenText, D2L, IBM, Google, Oracle, and SAP. The region is also a significant hub for high-tech employment, currently holding the 2nd highest share in North America.”

From 2013 to 2019, 80,000 tech jobs were created in the Toronto-Waterloo Corridor

Explaining this growth in a recent article in The Globe and Mail, a successful Silicon Valley (California version) venture capitalist commented: 

“From 2013 to 2019, 80,000 tech jobs were created in the Toronto-Waterloo Corridor alone – more than in San Francisco, Seattle and Washington, D.C., combined. That’s pretty compelling evidence that Canada is winning the hearts and minds of the world’s best and brightest for the first time in a generation.

When you throw in our strong advantage in the next wave of technology (think artificial intelligence, machine learning, quantum computing, 5G, med-tech, advanced manufacturing), our relative cost advantage, and parity in access to markets and capital, it’s easy to see why Canada is poised to dominate.” 

Blackberry QNX® software embedded in 175 million+ cars

Bumping shoulders with such high-profile, high-tech majors as IBM, Google and Oracle is Blackberry and its QNX Automotive Software Division. In an announcement last year (2020) Blackberry noted that:

“Its QNX® software is now embedded in more than 175 million cars on the road today. This is an increase of 25 million cars since the company last reported its automotive footprint in June 2019.”

The announcement went on to state: “BlackBerry has a broad portfolio of functional safety-certified and secure software including its QNX operating system, development tools and middleware for autonomous and connected vehicles.

Automakers and Tier 1s use BlackBerry® QNX® software in their advanced driver assistance, digital instrument clusters, connectivity modules, handsfree, and infotainment systems that appear in car brands, including Audi, BMW, Ford, GM, Honda, Hyundai, Jaguar Land Rover, KIA, Maserati, Mercedes-Benz, Porsche, Toyota, and Volkswagen.”

Translated this means that the company is poised to become, in the words of John Chen, Blackberry’s Executive Chairman and CEO: “The premier foundational software platform provider for the current and the next generation of connected and autonomous vehicles.”

Tech companies see auto sector as rich in opportunities

Export Development Canada (EDC) continues to be an important and influential champion of our automotive industry, and with good reason. In a recent report Christian Bertrand, EDC Automotive Sector Specialist stated: “We’re seeing information communication technologies (ICT) and the automotive sector coming together. Tech companies are starting to see the auto sector as rich in opportunities.” 

That same report quoted Steve Carlisle, President and Managing Director of General Motors Canada, who commented: “A decade ago, the big advances were found inside the car and under the hood. Now innovation extends well beyond the car through mobile connectivity and business model transformation. We see the future of the automobile as increasingly electric, connected, autonomous (or self-driving) and an integral part of the sharing economy.”

These Canadian automotive industry innovations are not confined to the KWC cluster. According to EDC, several additional Canadian companies operating elsewhere in Ontario, in BC and Quebec, “are driving the innovation agenda in the new-age automotive space.”  

Example 1: Electrovaya

Electrovaya, the Mississauga-based lithium-ion battery manufacturer became a global player in early 2016 when it bought European Union’s largest existing Li-ion battery plant, Litarion. Litarion supplied about 20,000 power cells for Daimler’s electric Smart Car line.

Electrovaya founder and CEO Sankar Des Gupta was quoted as saying: “The future is all about energy storage and electro-mobility, and whoever wins this battery race will be the next major global technology company. My goal is to make Electrovaya that next global technology company from Canada.”  

Example 2: Phantom Intelligence

Another Canadian technology company breaking into the automotive space is Quebec’s Phantom Intelligence – whose assets were recently acquired by LeddarTech – which is focused on using laser-based sensors to help avoid accidents. The company got its start with a consulting contract looking at assisted driving with a Korean Tier 1 automotive manufacturer.

“During the two-year contract, we saw a lot of existing technology and noticed that laser-based technology was not well represented,” says Jean-Yves Deschênes, Phantom Intelligence co-founder. “We decided to tap into that niche where laser-based systems can be made affordable. We started our company based on that.”

The following graphic highlights the impact these and many other high-tech innovators are having on employment in the KWC region:

Distribution of employees and associated individuals (by percentage) in the KWC region by technology

The FOCAL Initiative report quoted earlier also stated:

“The region is also a significant hub for high-tech employment, currently holding the 2nd highest share in North America (Waterloo EDC, 2020). The formation of the KWC ICT cluster can be attributed to the establishment of the University of Waterloo in the region. Since its founding in 1957, the university has sought to forge linkages with industry and encourage development in the region. In doing so, it has emphasized science, technology, engineering and mathematics (STEM) in its curriculum and established Canada’s largest co-operative education program.”

The impact of this activity on start-ups, spin-offs and jobs has been exceptionally positive, as the following summary points prove:

• 250+ spin-off companies founded in KWC by the early 2000s
• Toyota Motor Manufacturing Canada (TMMC) established and subsequently expanded its Cambridge facility during the same time period
• In 2019, Ford Motor Company established its Waterloo Connectivity and Innovation Centre to work on vehicle communications and infotainment infrastructure
• General Motors of Canada established an office in the region’s Communitech Hub with engineers and experts focusing on urban mobility, car sharing and mobile app innovation
• The University of Waterloo’s Waterloo Centre for Automotive Research (WatCAR) is among Canada’s largest automotive research and technology development centres. It houses more than 125 faculty members from different disciplines and engineering departments

The University of Waterloo’s Waterloo Centre for Automotive Research (WatCAR)

Elaborating on the formidable WatCAR presence, our report explains:

“WatCAR maintains six major automotive focus areas, including vehicle connectivity, cybersecurity, advanced powertrains, artificial intelligence, autonomous driving, and structural light-weighting. The University of Waterloo also hosts the Velocity and Concept incubator programs, as well as the David Johnston Research + Innovation Park.

Within the KWC region, Conestoga College offers additional research labs and centres dedicated to advancing automotive production technologies. For example, the college’s Centre for Smart Manufacturing and the Magna Centre for Supply Chain Excellence focus on improving productivity, technology, and sustainable manufacturing processes.”

According to WATERLOOEDC, a concierge service for companies wishing to locate their operations in the area, the Toronto – Waterloo corridor is the second largest technology cluster in North America and one of the world’s top tech hubs supporting:

• 9,700 tech companies
• 2,000 + start-ups
• Approximately 300,000 tech workers
• 17 post-secondary institutions
• Over 423,000 students

Reports WATERLOOEDC: “These universities and colleges include Canada’s largest engineering school, two of Canada’s top-3 computer science programs and six business schools (including three of the top-5 in Canada).”

The foregoing summary of corporate and research activity, not to mention the hard-core supporting numbers, hardly scratches the surface of potential occupational opportunities in the KWC area.

For a detailed opportunity analysis, simply consult the FOCAL Initiative Labour Market Forecasts covering – in addition to KWC – Canada’s eight key automotive sector regions: Windsor/Sarnia; London/Stratford-Bruce Peninsula; Kitchener-Waterloo/Barrie; the Golden Horseshoe; Eastern Ontario; the Greater Montreal Region; Winnipeg; and Vancouver.  

Conclusion: does talent follow capital, or does capital follow talent?

The astonishing and continuing growth in the KWC region is testing one of the fundamental principles of economics: namely that talent follows capital. 

This proposition may have been true 20 years ago but it is increasingly dubious now, if the KWC experience is anything to go by. Today, capital is increasingly following talent.

Canada has several automotive technology clusters, but the KWC region is defined by a unique automotive innovation ecosystem. It’s not built around a singular technology (e.g., Hydrogen Fuel Cell Vehicles (HFCVs) in the Greater Vancouver Metropolitan Area) or industry (e.g., automobile manufacturing in Windsor).

The KWC cluster hosts companies and organizations that specialize in a variety of products, services and sectors – all hungry for new talent. The KWC automotive technology cluster is distinguished by its abundance of advanced skills related to, among other disciplines, software design and development.

And Ottawa is right up there with KWC. As reported by Invest Ottawa: “For the second time in three years, Ottawa took the top spot for the highest concentration of tech talent in North America, outperforming high-profile tech hubs such as San Francisco/Silicon Valley, New York City, Boston, Seattle, Toronto and Montreal.

Considering that both Blackberry and Ford have significant presences there, it’s hardly surprising that, again in the words of Invest Ottawa: “Overall, Ottawa’s Tech Talent ranking saw one of the highest year-over-year jumps to number 14, higher than Montreal, Salt Lake City and Chicago.”

Fair enough. So while KWC continues to set the pace, other regional high tech clusters are in hot pursuit.

The University of Waterloo and the region’s established ICT industry are two powerful parts of the KWC attraction. The automotive R&D centres in the region, including Ford Canada’s Waterloo Connectivity and Innovation Centre and General Motors’s Innovation Research Zone are others.

The KWC region is an incubator for an abundance of skills and engineering expertise, especially in software engineering and development. Those attributes place the KWC region, and other areas of the country enjoying comparable (though smaller) talent pools, in a competitive position to design and develop Canada’s vehicles of the future.

In KWC, Ottawa and elsewhere in Canada, capital follows talent.

Find out more from FOCAL

The Future of Canadian Automotive Labourforce (FOCAL) Initiative is a collaboration of the Canadian Skills Training and Employment Coalition (CSTEC), the Automotive Policy Research Centre and Prism Economics and Analysis. 

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