Direct Flights With Canadian Cities Become Pathways to Prosperity
by Peter Vanderlee
Montreal Next Target as Gateway to Aerospace and Life Sciences Opportunities
For Canadians looking to escape during the upcoming winter months, Arizona has become an increasingly attractive destination. By January, there will be more than 80 direct flights a week between Phoenix and most major Canadian cities. But one important destination – Montreal – still has no direct air service with Arizona, a situation state economic development officials, with support from the Canada Arizona Business Council and the Canadian Consulate in Phoenix, have been lobbying Air Canada to remedy.
At stake is much more than the convenience of a direct flight to a new destination. It is the development of another important tourism, trade and investment link with a Canadian region rich in opportunity for Arizona's changing economy.
Such a link will only add luster to a growing and vibrant web of Canada-Arizona connections that have a major influence on our local business landscape.
For example, last year, 517,000 Canadians visited Arizona, spending $549 million, and those numbers are increasing every year. Within the past decade, bilateral trade between Canada and Arizona has grown from less than $2 billion to more than $3 billion, and despite the severe recession, remains steady. An even more meaningful statistic is that, currently, 128,750 jobs in Arizona are sustained through cross-border trade with Canada.
The roots of trade and investment between Arizona and Canada are long and deep, starting well over a century ago in agriculture and livestock, and then expanding to include mining equipment, building materials, manufactured goods, energy, and real estate development and investment. In fact, for some time, Canada has been – and continues to be – a leading source of foreign investment in Arizona.
Until relatively recently, however, the cross-border flow of tourism, trade and investment had a mainly western hue, with most of Arizona's links to Canada focused on western provinces. But as new high technology economic ingredients such as aerospace, electronics and software became increasingly important, and as direct air travel links were established between Toronto and Phoenix in the 1990s, Canada-Arizona relationships became markedly more diverse and dynamic.
"There's no doubt direct flights become pathways for prosperity," says Glenn Williamson, founder and CEO of the Canada Arizona Business Council (CABC) and Chairman of Kinetx, a Tempe-based aerospace engineering and software development firm. "Since the advent of direct flights between Toronto and Phoenix, trade between Arizona and Ontario has grown to $1.3 billion, outpacing trade with Canada's western provinces that now totals $789 million."
In fact, the exponential growth of these tourism, trade and investment numbers caused Canada's federal government to take notice, establishing a Canadian Consulate in Phoenix and Trade Office in Tucson three years ago.
Since then, Canada has contributed substantially to the growth of high tech jobs in Arizona. Rick Stephenson, Canada's Senior Trade Commissioner in Phoenix, says, "In 2007 alone, Canadian corporate expansion into Arizona in ICT (information and communication technologies) and engineering exceeded $1 billion, and that does not include the very substantial corporate and private investment in real estate development and home ownership."
He adds, "There's a lot of joint Canada-Arizona activity that doesn't get noticed, but it is substantial and growing."
For instance, the University of Arizona joined forces with a team of Canadian researchers to study the polar ice cap on Mars. Carrying Canadian-made weather gathering equipment, the Phoenix Mars Mission broke new ground in studying the water content on Mars and captured worldwide attention through the summer of 2008 for this unique space mission, run from a control center in Tucson.
Another less technical, but growing, business joint venture was also established in 2008 between the successful Canadian coffee franchise, Oakville, Ontario-based Tim Hortons, and Scottsdale-based Cold Stone Creamery, blending ice cream outlets into existing Tim Hortons facilities. More than 30 co-branded stores have already opened in the U.S. and plans call for between 500 and 1,000 co-branded stores to open on both sides of the border, extending each company's market reach into both countries.
So what specific kind of trade and investment deals, compatible with Arizona economic goals, can we expect to evolve from direct air service between Phoenix and Montreal?
Already, there is a strong base to work from, with two-way trade between Arizona and Quebec totaling $635 million and involving the Arizona-based operations of companies such as Hamilton-Sundstrand, General Dynamics, Honeywell and Raytheon. It's also noteworthy that Laval, Quebec-based Couche-Tard, through its ownership of Circle K, and more recent purchase of 43 ExxonMobil stations in the Phoenix area, is the largest retailer of gasoline in Arizona and employs more than 4,500 people in the state.
One major area of opportunity is in advanced aerospace. The Montreal area is home to 240 companies in this sector generating annual revenue of $11.4 billion and more than 40,000 skilled jobs. Montreal is also home to the International Civil Aviation Organization, the International Air Transport Association, the International Business Aviation Council and CANEUS International, a non-profit organization serving the needs of the aeronautics, space and defense communities by fostering the coordinated, international development of micro and nano technologies for aerospace applications.
Ridgetop Group, a Tucson-based firm that has built a successful track record providing advanced prognostic tools for aerospace and semiconductor applications, took a step toward establishing a toehold in the region by joining a CANEUS project earlier this year.
Ridgetop is helping construct a "fly-by-wireless" test bed that will test various wireless frequencies and protocols for the purpose of selecting the optimum configuration to be used in aircraft to replace heavy cabling for non-critical sensing functions.
"If we're successful, we can take substantial cost out of constructing and operating aircraft while increasing safety and reliability," says Doug Goodman, Ridgetop's CEO. "This could lead to substantial growth for our firm and dramatic expansion of our Arizona facilities."
Another area of great potential is in life sciences and pharmaceuticals. Nearly half of the Canadian biopharmaceutical industry is based in Quebec, and the bulk of basic and clinical research in Canada is conducted in Montreal. Several international pharmaceutical companies operate private basic research centers in Montreal, together employing close to 1,000 researchers.
As well, Montreal is the hub for genomics in Canada. The list of world-class research centers based in Montreal includes the McGill University and Genome Quebec Innovation Centre project, the Biotechnology Research Institute (Canada's largest biotechnology R&D facility), the Centre Robert-Cedergren at Université de Montréal (a catalyst for advancing research in the fields of bioinformatics and genomics), and the Quebec Proteomics Centre (a centre for excellence in mass spectroscopy proteomics).
Montreal is already a key target for a co-operative effort between the Greater Phoenix Economic Council and the Canadian Consulate to connect the growing life sciences research base in Arizona with major research and development centers in Canada.
And the CABC's Williamson, who has been actively pursuing development and finance partners for Kinetx in Montreal, believes that both aerospace and life sciences are sectors ripe for cross-border collaboration with Arizona companies and institutions. He points out, "Once direct air service begins, so will the deals."
A former business journalist in Canada (Financial Times of Canada, Financial Post, Globe & Mail Report on Business and Canadian Business magazine), Peter Vanderlee is now a Tucson, AZ-based independent writer, marketing and corporate communications consultant. He is a founding director of the Canada Arizona Business Council and can be reached at pvanderlee@avinnovations.com or 520-906-3071.