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Firms take advantage of BlackBerry's woe by moving to Waterloo, Canada

Companies are moving into BlackBerry's home turf to take advantage of 4,500 laid-off staff

PUBLISHED : Monday, 23 December, 2013, 9:36pm
UPDATED : Tuesday, 24 December, 2013, 3:43am

BlackBerry is down, but its hometown is far from out.

On Friday, BlackBerry released another grim earnings report, posting US$4.4 billion in losses and a 56 per cent drop in revenue for its fiscal third quarter. The report was the latest in a string of cringeworthy quarters from the company, results that have forced BlackBerry to begin laying off 4,500 people, or 40 per cent of its workforce.

But unlike some cities that suffered when a big local technology business faltered, as Rochester in New York state did with Kodak and Xerox, BlackBerry's backyard of Waterloo still bubbles with energy. Technology companies large and small are coming to the city, about 115 kilometres southwest of Toronto, Canada, to recruit BlackBerry's talent - and several of the companies are setting up shop in town.

Google, a local presence for nearly a decade, was recently joined by its Motorola Mobility hardware subsidiary. Square, the mobile credit-card processing service started by Jack Dorsey, Twitter's co-founder and chairman, opened an office. Cisco announced this month that it would create 1,700 research and development jobs within commuting distance.

I’ve been in Waterloo for almost 20 years, and I really like the area
DEREK PHILLIPS OF MOTOROLA

And several start-ups that left Waterloo for the talent of Silicon Valley, including Thalmic Labs, a gesture-control computing company, have come home.

Because of these companies and the appetite for tech workers from the region's long-established insurance industry, several analysts suggest that most, if not all, former BlackBerry workers in Waterloo will find work without having to pack up their homes.

"The area has a really strong density of tech talent," said Bryan Power, the talent director for Square, which plans to have about 40 employees working in the region by the end of next year.

BlackBerry, which was originally known as Research in Motion (RIM), was not the first technology company in the city.

But the company's rise to global prominence turned Waterloo and its larger twin city, Kitchener, from being Canada's rubber goods, hot dog and furniture capital into the country's hi-tech centre.

BlackBerry's rise, and the relatively high salaries of its employees, drew unusual trappings for a Canadian urban area the size of Kitchener-Waterloo, which has about 320,000 people. Jaguar and BMW dealerships have thrived, as has an Apple store.

But BlackBerry's fall has been as nearly steep as its climb. Its earnings report on Friday underscored the problems facing the company, which only a few years ago was a smartphone leader. Still, no big downturn is evident in the area.

Karen Gallant, who runs a programme to find local work for jobless tech employees, estimates that from the current lay offs and an earlier round begun in 2012, about 3,500 BlackBerry workers have lost their jobs in the two cities. The regional unemployment rate last month was 6 per cent, down half a percentage point from a year ago.

Even before the latest round of lay offs at BlackBerry was announced in September, several top technology companies, including Apple and Facebook, held recruiting nights in the area. Some companies that have swooped in for workers have tried to woo people to distant head offices.

But Power said Square decided that an office in the area would improve the company's chances of hiring the best talent from the University of Waterloo, which has highly regarded computer science and engineering faculties and is a major part of the attraction for tech companies. Jesse Wilson, an Android programmer at Square, persuaded the company on the merits of Waterloo when he was hired.

It’s about building a community helping other companies grow
WATERLOO-BASED STACEY TOZER

Wilson studied at the University of Waterloo. Research in Motion grew out of a student project there, as did several other local companies. BlackBerry, whose engineering centre sits across a railway line from the campus, was once the main local attraction for graduates. But that quickly shifted as its fortunes waned.

The region has also tried to avoid a repeat of what happened in Ottawa, about 565 kilometres to the northeast, which experienced an exodus of skilled tech workers after the collapse of Nortel. A tech industry group in the area, Communitech, provides office space, mentoring and other services to start-ups and even large established firms. The group's founders include former BlackBerry chairman Jim Balsillie.

Gallant's job-placement programme is part of Communitech and financed by the province of Ontario. Her programme has worked with 1,506 laid-off employees since August 2012, about 650 of whom signed up over the last few weeks. As of last week, 707 people had been placed in new jobs in the area or, in a few cases, returned to school.

While the jobs are staying in the region, they are concentrating in a different location. BlackBerry's main office complex, just a couple of years old, sits on Waterloo's most suburban fringe. Little but farms lies beyond it.

But many of the newer technology companies in the area, including Google, Square, MappedIn and Motorola, are in former industrial buildings in the heart of downtown Kitchener.

For more than seven years, Derek Phillips worked for Google at a building downtown that was once a tannery. He then helped sell Motorola on the idea of opening an office in Canada. Motorola is slowly leasing more and more temporary offices in a sprawling brick factory downtown that first made rubber boots at the beginning of the 20th century and later produced car parts.

Phillips said the blend of workers in the area was a major draw for the company.

"We were interested in having a good mix of senior experienced people who could do things in the area and also a lot of new and up-and-coming people," said Phillips, who is now the engineering director for Motorola Mobility Canada. "That has been very successful for Google, so I was interested in the same kind of balance for Motorola."

For employers, he said, the competition to hire the best talent is less intense in Kitchener-Waterloo than in many other places, including California, and employee turnover is much lower and the community offers services like Communitech to help with recruiting. And because Canada's immigration laws are more flexible than those of the United States, tech companies are also able to add talented foreign workers to the mix.

For employees, Phillips said, the area offers reasonable housing prices, good schools and other attractions.

"I've been in Waterloo for almost 20 years now, and I really like the area," he said.

Some of the former BlackBerry workers have gone to great lengths to stay in Kitchener-Waterloo. After she graduated from Wilfrid Laurier University, another Waterloo college known for its business school, Stacey Tozer took a sales job with BlackBerry in 2006. She eventually transferred to Seattle, working with retailers, wireless carriers and distributors along the US west coast and in Hawaii.

Her initial excitement with BlackBerry had turned to frustration by June 2012, when an initial wave of lay offs hit the company. "There was a day everybody was disappearing from BBM," she said, referring to BlackBerry Messenger, the texting service. Called to a meeting, she gathered up her company-issued laptop and other equipment to prepare to turn it in and receive her lay off notice.

Instead, Tozer was offered a job in Miami. After a couple of days of reflection, she quit the company because she said she was "losing my faith in RIM." But she also turned down job offers in the Seattle area so she could return to Waterloo.

While friends and relatives were sceptical about her plan to return, Tozer had several job offers. In the end, she took a 75 per cent pay cut to become director of marketing at MappedIn, a start-up that creates online interior maps of large buildings like airports and shopping malls. At 30, Tozer is her new company's oldest employee. She believes that she will ultimately surpass her old salary, but that will depend on MappedIn prospering.

"In Seattle, I was very connected and I'd been headhunted by a number of major companies," she said. "As much as I love Seattle, it was an individualistic, career-driven situation. Here it's not about competition. It's about building a community helping other companies grow."

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