Remote working has forced corporate decision-makers to shift their modus operandi. The Waterloo region of southern Ontario, which is home to Google’s Canadian engineering headquarters, has witnessed this first hand.
Tony LaMantia, the CEO of Waterloo EDC, the region’s investment promotion agency (IPA), sat down with fDi to discuss how economic developers should respond to remote working and the demands of knowledge-based industries.
Q: How do you think remote working has changed corporate expansion?
A: In the global hunt for talent, the real challenge for corporates expanding to a new jurisdiction is finding a locally based leader who can build out a team, is familiar with the ecosystem and can very quickly hit the ground running.
That’s different to the traditional foreign direct investment (FDI) model, where they send somebody from another location to build a team locally. Since Covid-19, a lot of that front-end work is done virtually. But front-end flexibility has to be built in with the ability to transition remote recruiting to a physical space.
Google is a really good example of that. It has its Canadian engineering headquarters in Waterloo, with about 1500 employees right now. Even though they’re working remotely, Google has placed a large bet on a campus and has expanded physically. The long game is still collaboration, physical space and a community brand presence. The bottom line is you can’t really take advantage of an ecosystem and what it offers if you’re 100% remote.
Q: How then should economic developers respond to these new circumstances?
A: I think the metrics need to change. The traditional metrics that drive success have to be expanded to include talent attraction. The focus on ‘local’ has caused a lot of economic development organisations to pivot. Unlike most IPAs in Canada and North America, Waterloo EDC has a dual mandate to support not only net new greenfield FDI, but also working to help existing companies scale and expand.
That has become really important during the pandemic. There’s a tried and true expression in economic development that I think people have forgotten about: “you never walk past an old friend to greet a new one”. It’s always great to meet new friends, but we have some anchor companies that are existing subsidiaries of global multinationals, in addition to homegrown scaling companies that are having their own challenges.
Our pivot to supporting local about 20 months ago has actually been very good for business. We would not have achieved our corporate targets had we not made that pivot.
Q: What did it take to convince Google to expand their operations in Waterloo?
A: Google has already designated the Waterloo Region as their Canadian engineering headquarters. The decision to expand and triple in size across the country, with Waterloo region being the largest beneficiary of new jobs, was made literally a couple of weeks before the Covid-19 lockdowns.
The main reason was the quality of engineering talent and finding local leaders. Google had already been hiring engineering talent from the University of Waterloo in large numbers. The local leadership was also able to successfully tackle globally significant development projects for Google. For instance, the nuts and bolts of Google Chrome was worked on here in Kitchener.
The reason for Google expanding their headquarters here was primarily the ecosystem, which is very strong with incubators, accelerators and quality talent. The last thing is Waterloo Region straddles the west end of the Toronto–Waterloo corridor. That 100 kilometres from Toronto to Waterloo represents something close to 300,000 tech workers, tens of thousands of tech firms, and great academic institutions with strength in robotics, artificial intelligence (AI) and machine learning (ML).
Q: What is required to create an ecosystem for leading technology verticals like artificial intelligence, cybersecurity or quantum computing?
A: It starts with really strong research and academic institutions. We have globally significant research work that is done in lockstep with the private sector so it can be easily commercialised.
For instance, we have this area in the city of Waterloo that is known as Quantum Valley. It’s anchored by the University of Waterloo Institute of Quantum Computing, but it also has one of the largest centres for theoretical physics in the world — the Perimeter Institute.
You often think that when companies come to a region, it’s typically in response to some targeted outreach. But very often, the suggestions come from the research community itself.
One example of this was when Bosch, the German engineering and technology firm, hit a wall with their Escrypt subsidiary, which was working on quantum cryptography. Bosch’s leadership was advised by a researcher at the University of Bochum, an engineering school in Germany, to seek help in the Waterloo ecosystem.
Bosch then invested here, going from a cost centre to a research centre and eventually to the profit centre, which is the goal of several companies. When you talk about these hot areas like quantum, AI and ML, it’s in large part because of the quality of the talent and the knowledge-based industries.
Tony LaMantia is the CEO of Waterloo EDC, the investment promotion agency of the Waterloo regional municipality in Ontario, Canada.
If you are a member of the economic development and investment promotion community and would like to be part of the next iteration of the fDi Diaries series, please reach out to fDi@ft.com