Time for Ottawa to trumpet tech successes

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There were once two business communities in Ottawa that were almost equals: the federal government and the tech sector.

Chairman's View adviser Jeffrey Dale. (Photo by Mark Holleron)

By Jeffrey Dale

That was more than a decade ago when names such as Nortel, JDS Uniphase, Newbridge, Cognos and Mitel drove the city’s economic growth and put Ottawa on the world stage.

Collectively, the tech sector employed tens of thousands of local residents and attracted billions of dollars in foreign direct investment to the city. At the same time, the federal government had recovered from the downsizing of the late 1990s and was elso expanding its payrolls.

Ottawa’s economy was the envy of the rest of Canada and the world.

Fast-forward a decade, and many of our tech titans are gone after being sold to larger U.S.-based firms or simply closing up shop. The startups of the early 2000s failed to take their place. According to Statistics Canada, the sector still employs some 68,000 individuals but lacks the head offices where key decisions are made.

The federal government experienced unprecedented growth between 2000 and 2009, growing locally from slightly more than 100,000 employees to 150,000. But in the aftermath of the financial crisis, the Conservatives began to aggressively tackle the deficit. This meant laying off 4,800 civil servants in the National Capital Region and freezing departmental budgets, which in turn reduced federal spending on goods and services supplied by hundreds of local firms.

These cuts had a direct impact on Ottawa’s economy, leaving the city a shadow of its former self. Many key indicators are moving in the wrong direction. For example, vacancy rates in the city’s hotels and downtown office buildings are rising as passenger traffic at the airport declines.

For many years, tech and government meant Ottawa’s economy was the tale of two cities. Today, it’s the tail of our two cities.

Because the downturn has been slow, the negative economic results have slowly crept up. As a result, many have the false sense that this is a temporary phenomenon that will pass. In fact, unless we realize our economy has significant challenges and work collaboratively to fix the situation, the point may be reached where a turnaround is impossible.

The federal government may not be the sole reason for the city’s declining economy, but it has the potential to play a key role in turning the situation around.

Forty years ago, local federal research labs helped create the city’s tech sector. But today, organizations such as the National Research Council, Communications Research Centre, Natural Resources Canada, Health Canada and others are struggling with reduced budgets.

Meanwhile, public-sector contracts helped companies such as Nortel, CGI, Mitel, Bell and hundreds of smaller local companies grow as they supplied high-tech equipment and services to modernize the federal government. But procurement officials have moved to ever-larger projects, which means most of the technology they buy comes from foreign multinationals.

Canada is one of the few countries in the world without a domestic procurement philosophy. Many local companies find themselves effectively shut out of most opportunities to have the federal government as a lead customer.

Another partner that needs to play its role is the local media. Publications and shows that used to focus on the city’s tech industry, such as CFRA’s Business at Night, CJOH’s Tech Now and Rogers’ Business TV are all gone. If we don’t talk about our achievements, nobody else will. Ottawa needs its media organizations to highlight the city’s successes and tell our stories to local and international audiences.

Our economic challenges are real. Our economy is in a slow decline. It will take the realization of this fact by everyone in Ottawa before we can begin to chart our turnaround.

I don’t like calling “wolf,” but the animals are restless.

Jeffrey Dale is the director and co-founder of the Odawa Group as well as the former president of the Ottawa Centre for Research and Innovation.

Organizations: Nortel, Mitel, JDS Uniphase Cognos Statistics Canada Conservatives National Research Council Communications Research Centre Natural Resources Canada Health Canada CGI Odawa Group Ottawa Centre for Research

Geographic location: Ottawa, Canada, U.S. National Capital Region

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Recent comments

  • Greg Sienkiewicz
    August 12, 2014 - 12:31

    The hotel & airport revenues might be a miss-guided statistic/KPI as a method by which to track the business activity within a city. More likely causes for these reductions are (a) the evolution of remote communication tools such as WebEx, Skype, etc. and (b) a shift to software based technologies that do not require as much in person contact. With that in mind the reduction in hospitality revenues likely do not directly collate to stagnation in business activity. In regards to the lack of promotion and support via local media of Ottawa businesses that might be true, however if you look at the broader shifts in the media industry that is on-par with the rest of the world. The focus has shifted towards social media, and frankly from where I stand local companies are doing a darn good job at marketing globally via this new channel. The actual news story, I think, is that the times are a changing. The days of the multi-functional behemoths such as Nortel are behind us, as are the methods & practices of the Generation X. Local businesses are strategically responding to the new business environment/demographics, and frankly based on market reaction are doing so successfully. There is no better example of this than the recent IPO(s) by Halogen and Kinaxis as well as the round of funding obtained by Shopify; not to mention the Technical Emmy Awards recently handed out to Signiant. The future for Technology in Ottawa is bright and exciting; certainly for me as a millennial I could not think of a better place to be at the moment.

  • jayme
    August 01, 2014 - 09:55

    Jeffery Ottawa's high tech sector is doing better then it was a few years ago now as for Ottawa's unemployment its what about 6.8% while you look down at Toronto its close to 10% my point is its still very low.

    • Richard
      September 08, 2014 - 12:06

      Jayme, what allows you to affirm that Ottawa's high tech sector is doing better? I have moved to Ottawa in early 2000 and since 2005 I noticed a consistent decline in the sector year over year. As far as looking only at unemployment numbers to assert the tech sector is doing better, needless to say that is far from accurate. I find way more real opportunities in Toronto that in Ottawa.

  • George
    July 21, 2014 - 12:25

    The shift in Ottawa's tech market is very similar to that of Austin, Boston, and other regional tech hubs that waned over the past decade. While it has fared worse than San Jose, it has fared much better than RTP or Galway, both of which have lost their critical mass of high tech companies. However, proposing government handouts and contract rule rigging is a terrible solution. In the early 1990's, Ottawa had a predictable tech industry that made a predictable living off government contracts. In the mid 90's, the landscape changed, and companies began to compete on the global market and grew out of cottage businesses. Many of those were acquired at a premium in the last 10 years as the electronics industry matured and consolidated. Meanwhile, with government procurement rules in place (and military contracts being the most notable) simply created local subsidiary shell corporations. Once those contracts expired, the subsidies disappeared or shut down. Ottawa's high tech sector is faring okay, and competes well without the need for a rigged game.

    • Jeffrey Dale
      July 31, 2014 - 09:40

      George, thank you for your comment. My article was attempting to point out that Ottawa has two important components of its economy the federal gov't and the tech sector. Both of these sectors have reduced their local economic contributions. Tech Sector about a decade ago and the Fed's about 3 years ago. We are starting to see the signs that our local economy is suffering with higher than normal unemployment, commercial property and hotel vacancies, and other indicators. If this was happening in any other city in Canada, the business community and community leaders would be actively looking for solutions. It is my opinion that we need to recognize that our economy has changed and as a community we need to look at what we can do to get our export oriented local economy working again.

    • Jayme
      September 22, 2014 - 07:20

      Richard Many reports have stated its on he rebound since the public sector lay started a couple years ago the high tech sector has added something like 15,000-20,000 jobs and the total workers is now around 65,000. As for there are way more opportunities in Toronto now really and proof of this is you have the Ontario Liberals offering companys a ton of cash to keep jobs in Toronto and to a degree it has worked but at what cost. Now as for the unemployment numbers yes in part you right but the same about Toronto first take Ottawa the reported numbers are 6.8% while many thing is closer to 7.1% while Toronto its 7.2% but many think its closer to 9%.