Quebec is Canada's second most populous province and its second most popular FDI destination, but when it comes to highlighting its differences to the rest of the country, the region is second to none. However, there is much more to the province than its French heritage.

“The unemployment rate [in our city] is currently 5.1%. This means we practically have full employment. We need everyone, from people working in the catering industry to engineers and physicians,” says Regis Labeaume, the mayor of Quebec City, the province's capital. “We live in a bubble here, but we need manpower.” 

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IQ's intelligent thinking

“We have money and we have enough staff to make things happen,” says Eric Dequenne, director of international subsidiaries at Invest Quebec (IQ), the province's economic development entity. Not many of Mr Dequenne's peers are able to make such statement. But then again, with 400 staff, 13 offices around the world and financing tools ranging from non-refundable grants to equity investments, Invest Quebec is hardly a typical investment and trade promotion entity.

“We think we have one of the best models in the world,” says Mr Dequenne with enthusiasm. The model to which Mr Dequenne refers concerns not only IQ's human resources and network of offices, but also to its data-driven aftercare. “We have a team of 11 people employed solely to focus on aftercare,"he says. "Whenever heads of international subsidiaries need to make a business case in the head office, we help them to be more prepared.” 

That came in handy in securing the deals for expansions by US conglomerate General Electric and Japanese automotive company Bridgestone. Both companies were already present in Quebec, but they also had a string of locations across the world that were vying to secure the expansions. “We aim to find angles that will make a difference in a speech at the head office. We use the help of our foreign offices to lobby for the company,” says Mr Dequenne.

Both corporate giants decided to expand in Quebec, with Bridgestone investing $37m to expand its plant located in Joliette in 2009, and General Electric spending $52m on its new research and development centre in Bromont in 2013. The province contributed a respective $4.5m and $7.8m towards these operations.

Quebec's novel approach

Carl Viel, president and CEO of Quebec International (QI), the economic development agency for the Quebec City metropolitan region, says that the city leaves little to chance when it comes to attracting both investment and labour. “Other locations and their economic development bodies focus on attracting investments. We do that too, of course, but on the top of that we regularly organise overseas missions aiming at attracting talent to the region,” he says. Typically during such missions, companies meet between 150 and 200 candidates pre-selected by QI. The agency says that so far 200 employees have been recruited by local companies through these outward recruitment missions.

“When you look at our city, you see beautiful and historical buildings. What you do not see is that within these old walls are high-tech laboratories and the space for many skilled people,” says Mr Labeaume.

Quebec City's 'old walls', a reminder of its history as one of the first and most important French settlements in North America, draw more than 4 million tourists a year, worth an estimated $1.3bn. Away from tourism, the city's economy revolves around information and communications technology and electronics, life sciences, financial services and the food processing industry, which collectively employ more than 100,000 people and, according to QI, are worth in excess of $10bn annually.

This was not always the case, however, as historically the city's economy has tended to rely upon jobs provided by the public administration. “About 20 years ago we decided that our provincial government should not be the top employer in the city. We could see that we have labs here, we have scientists, but not enough revenue coming out of our research and development activity. We decided to change it,” says Mr Labeaume.

When in 2007 Mr Labeaume assumed the role of mayor of Quebec City, he also decided to change the image of the city. “We were seen as a boring governmental city. I decided to swing things a little, and with a lot of money invested in culture and big events coming to the city, we keep on swinging,” he says.

Montreal moves on

The city leaders of Montreal, the province's best known and biggest city, do not have as much freedom as Mr Labeaume. In fact, 'freedom' is a word that has had different connotations in Montreal's corridors of power of late. In 2012, Gérard Tremblay, the mayor of Montreal for nearly a decade, resigned from the office after his party was accused of collecting contributions from Mafia-linked construction firms in return for municipal infrastructure contracts, though Mr Tremblay denies any personal involvement. His successor, Michael Applebaum, survived in office for only seven months before he was arrested in June 2013 under 14 charges including fraud, conspiracy and corruption. The case is set for the courts in October. Mr Applebaum claims that the allegations against him are unfounded.

Montreal may have struggled with its mayors, but it fares much better when it comes to attracting FDI. Between 2002 and 2012, the city brought in more than $4bn in greenfield ventures, according to investment research monitor fDi Markets. Montreal's economy has been traditionally dominated by financial services and manufacturing. However, much of the FDI attracted in this period has been in sectors that are relatively new, such as pharmaceuticals, aerospace and software and IT.

“It is not just about local authorities deciding they want to have innovative industries. It is also about having the right human and cultural capital,” says Stephan D'Astous, general manager of Eidos Montreal, a video game development company owned by Japanese game publisher Square Enix.

Playing the right game

It is also about being clever when it comes to investment promotion strategies, as the case of Eidos Montreal and Mr D'Astous demonstrates. When in 2006 Eidos International, then a London-based video game firm that was taken over by Square Enix in 2009, created a shortlist of potential locations for its new studio, Montreal found itself competing with Austin in Texas and Vancouver on Canada's west coast. At that point, Montreal International, the city's economic development agency, decided to ask Mr D'Astous, an IT industry expert with experience working at Ubisoft, Eidos's main competitor, to get involved.

“Montreal International looked at its local network and called me to check whether I would be interested in going to London and talking to the guys from Eidos,” says Mr D'Astous. He was more than interested. “At Ubisoft I saw the growth of the operation from 450 to 1450 people. But I was at the point of my career where I wanted to build something from scratch,” he adds.

After his pitch in London, at the beginning of 2007 Eidos made its final decision, picking Montreal as the winning location and Mr D'Astous as the caretaker manager. “Now we have more than 550 employees and we are growing very fast. Montreal has a critical mass of talent to make things happen for companies specialising in video games, visual effects and animation,” says Mr D'Astous. Since Eidos picked Montreal, 35 companies, among them US news provider Huffington Post, have invested nearly $400m in greenfield investments in the city. “The rationale for investing here is simple: our pool of talent is growing and so companies are growing. Montreal delivers,” says Mr D'Astous.