By Renato Discenza, President and CEO of Invest Toronto
I am sure in 1901, when US Steel in Pittsburgh accounted for somewhere up to two-thirds of all steel produced in the US, the future for economic prosperity looked like a never-ending upward growth cycle. Certainly, we would always need steel?
Perhaps nobody was betting on the inevitable cycle of technological shift and globalization that would see new production markets in places like India, and new technologies like plastics and composites that would challenge a city like Pittsburgh to reinvent itself.
On a recent visit to Taipei, where 80 per cent to 90 per cent of the world’s laptops are made, I heard senior business people express their concern about losing their economic growth momentum. Software, innovation, and mobile application development are turning their devices into commodities. There was genuine concern that if they did not keep looking at new capabilities, they might become a Silicon Rust Belt: a place where their key exports might be in danger of being produced anywhere else in the world at larger volumes, or that technology might leap frog their competencies. Rather, the key was to focus on their capabilities as opposed to their sectors.
When asked to describe Toronto’s business sectors, I like to describe them as “collisions.” We are great at making sure we are never defined by one sector alone. Our advantage to the investor is to make sure he is in a better position to create a new business here than in many other modern cities on the planet. While sector specialization can have a place in some cities that require concentration of resources to create global scale, I believe larger, more mature cities are defined by their strength in the collisions and ideas of many sectors.
If you were asked in the 1980s to recruit an investor for a company we call “Apple” that looks like it does in 2014, what would you position as your relative advantage? Would you say you are great at semi-conductors? Great at design? Great at e-commerce (hey, what’s e-commerce?)? Great at marketing? Exactly what kind of “sector” does Apple fall into? Or Google for that matter? It depends on their particular need in their strategy development.
Chasing companies based on what sector they represent is yesterday’s strategy. Companies today may take the form of a retailer looking to expand financial operations. They may be heavy goods manufacturers looking for an industrial design centre of excellence. They may be coal companies looking for advanced R&D into better burning technologies. None of these pursuits would likely end up in regions that were “the usual suspects.”
I argue that this competency in ensuring people, ideas, and businesses can collide to make new business models is characteristic of Toronto. Certainly, we have a global-scale financial system that underpins the economy. I see it as the ether that binds together business. Toronto’s strong financial sector is the oil that lubricates the innovation business. We are the de-facto home to the world’s safest and most secure banking system. The TMX group, with its star asset of the TSX, is the world’s largest exchange for mining, and oil and gas, but it is also the leader in clean-tech listings. The TMX ranks second overall globally in the number of companies listed, and second in North America on the number of technology companies listed.
However, Toronto is also strong in almost every other main sector. We are one of the top technology clusters in North America, with over 200,000 people working in over 13,000 companies. We are home to one of the largest biomedical and biotech clusters in North America with over 160,000 people working in over 800 companies. We are also home to one of the largest food processing centres in North America. Toronto has a large ethnic and specialty foods market generated by the city's multicultural population. Of course, we also have large-scale manufacturing, materials, automotive, and aerospace clusters. We are fortunate to be in the middle of one of the world’s most advanced supply chains for these industries. The list goes on… screen-based industries, cultural industries, education, health-care, and so on. The magic is that these industries form the opportunity to collide together to create the new industries of tomorrow — businesses we could not even anticipate, just as our predecessors could not imagine the Apples and Googles of today.
I believe the secret ingredients to Toronto’s success are our diversity, our urban concentration, and our freedoms. We are a city where over 50 per cent of our population was born outside of Canada. This is the basis for having a workforce that can easily embrace global trends and cultural nuances. We also have a city with a vibrant urban core. Over one quarter of Toronto’s population lives in what we might call the Central Business District. We call it our “Central Living District,” as more and more people choose to live and work in the downtown core. When architects can interact with bankers, when artists can interact with mechanics, and when film directors can interact with coding experts, you can create new business models. You can develop non-linear evolutions of commerce.
Great public open spaces are important. I am in Europe at the time of writing this and I cannot help but notice that the great public spaces that tourists love were really created for the residents, and not the tourists. The period of Europe’s greatest innovation also was coupled with a time when interaction amongst guild, citizens, artists, and financiers happened in great public and open spaces.
Finally, what we enjoy in Toronto, and in Canada as a whole, is an unprecedented level of freedom. Innovators thrive when political, economic, and social freedoms exist. When artists can express their thoughts, when designers can create whatever comes to mind, when people can associate with whomever they choose, that is when innovation takes place. As long as creators are free to create, whether it is financial instruments or traditional widgets, prosperity will reign.
Toronto allows for the ultimate collisions to take place so that your investment can be evergreen. It allows for collisions between sectors, people, and ideas. We are not defined solely by one industry, but by a rich collection of all the key sectors, which become the vital ingredients to creating new industries. Coupled with our strong, diverse, urban lifestyle, which provides for the collision of ideas, money, intellectual property and global perspectives, I would say we have the right ingredients to avoid becoming a Silicon Rust Belt. We can and will continue to adapt to global trends and create new pathways to prosperity.
Renato Discenza, President and CEO, Invest Toronto
 World Economic Forum, Moody’s Rankings