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.