Tech triangle launches business on fast track
An area of Canada has emerged as an incubator of creativity for industry, writes Markus Gaertner in Toronto
Michele Mosca is drawing hieroglyphs on his chalkboard like a madman. While his fingers are flying, the young scientist explains that it requires only time to break a code with 14 digits.
Mr Mosca is one of the world's top researchers in quantum physics. Instead of accepting a lucrative offer from Boston, he chose to sign a 10-year contract at the university in Waterloo, a hi-tech city with distinct small-town character in southern Ontario.
'I need to break a lot of boundaries,' he said. 'Here, it is possible, people are very receptive.'
Mr Mosca is not alone. At a rate of 1,000 per month, talented students, top researchers and skilled labourers are pouring into Canada's dynamic tech triangle straddling Waterloo, Kitchener and Cambridge, 70km west of Toronto.
The area, with almost 500,000 people, has become Canada's most dynamic technology region.
In the 18th century, German-speaking Mennonites from Pennsylvania imported a culture with a strong work ethic. The absence of an upper class 'allowed a high upward mobility and created an entrepreneurial spirit', said Ken Seiling, regional chairman of the Municipality of Waterloo.
Prior to the hi-tech boom, the region was a leading centre in the manufacturing of rubber, buttons and furniture.
It now produces the highest national readings in population and employment growth. The latest economic activity index by CIBC World Markets in Toronto put Kitchener on top of Canada's 25 largest cities.
Toyota has chosen the location for its only plant that produces the Lexus outside Japan.
'This area's cost advantage over the US in manufacturing is 6 per cent and 8 per cent,' said John Tennant, chief executive of Canada's Technology Triangle, a body that promotes the hi-tech region.
One reason behind this technology rush is Canada's most prominent success story, Blackberry-producer Research in Motion (RIM).
The meteoric rise of the Waterloo-based juggernaut that has doubled its sales every year since 1998, has helped to propel the region into an even higher gear.
RIM founder Mike Lazaridis personifies one of the secrets of this success - the intense exchange between the four universities and the corporate sector in the region.
Mr Lazaridis studied at the University of Waterloo and is now its chancellor. He donated more than US$120 million to fund local academic institutions and built RIM's headquarters right next to the university to use it as a 'mine', he said.
Each year, 600 students from the university opt for RIM as the company for the mandatory four-month practical term.
At job fairs, more than 100 companies pick students on campus.
Graduates from Waterloo, which boasts the biggest maths faculty in North America, 'are the backbone in many start-up companies in the region', said Dieter Hensler, president and chief executive at Handshake, a company that spun out of the university in 2001 and produces software for the remote guidance of robotic arms, a technology that helps train surgeons or helps handicapped children write via the internet.
Half of the researchers in Handshake's research and development department are graduates from the University of Waterloo.
This exchange is only one explanation for the phenomenal success of the local university that produces 22 per cent of all spin-off-companies in Canada.
'In Waterloo, the intellectual property is owned by students and professors, not by the university,' said Mr Tennant.
At the Wilfrid Laurier University, students write business plans and present them in competitions.
A programme called 'Launch Pad 50K' provides funding for the best concept in each competition - US$41,000 in start-up capital.
The tech boom in Waterloo has created waves in the US.
'Already, four of my staff come from Silicon Valley,' said Dave Caputo, chief executive of Sandvine, a company started by University of Waterloo graduates that is the leading global provider of intelligence on internet traffic.
The lure of the tech region even extends into China. Yang Wang, a graduate from Beijing's Qinghua University, and Andrew Wong, who studied in Hong Kong, co-founded Pattern Discovery, another Waterloo spin-off, in 1997. The company is a leading global player in production-related data mining for complex industrial processes.
Mr Wong and Yang are analysing massive data from a Sinopec coking refinery in Hebei.
'We think we have a 32 per cent rate to improve their operation,' said Pattern Discovery's chief executive, Paul Sheremeto.
The company is now helping a Shell Canada subsidiary in a US$6.5 billion investment in Alberta's oil sands to optimise the company's extraction process.
'If we improve their yield by 1 per cent, they can save US$410,000 every day,' said Mr Wong.