StockGuru Canada

Wednesday, Feb 22, 2012
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Industry Sectors

Aerospace

Canada’s aerospace industry is winging its way to unprecedented profitability. Canadian firms have earned loyal customers around the world for delivering leading-edge and advanced technology solutions on time and at a competitive cost. Canada’s aerospace leaders are renowned for civil and military aircraft, flight simulators, airborne defence systems and aftermarket services. The country’s global share of aerospace activity has tripled in the last 20 years, making Canada the world’s 5th largest aerospace producer.

The future looks equally bright thanks to Canada’s low business costs and sophisticated R&D infrastructure, including rich tax credits and a national Institute for Aerospace Research. Canada also enjoys a knowledge advantage, with one of the best educated workforces in the world. Throw in a business friendly regulatory environment, 20-year patent protection and industry clusters in cosmopolitan urban centres offering an exceptionally high quality of life, and the sky is the limit for the next generation of aerospace innovation.

400 firms employ a highly skilled workforce of 82,000 people
80% of domestic production is exported – 60% of it to the U.S.
80% of industry output is non- military
20 universities offer advanced degrees in aerospace and aerospace engineering
3,000 aerospace graduates stream out of Canadian universities and colleges each year

Ag-Biotech

Canada is a global leader in the agro-food sector, with one of the highest activity rates for firms in agro-food applications among the OECD countries (28%). Canadian firms’ revenues exceed those of US agro-based companies and are more than double those of Japan and the UK.

The results are not surprising given that:

Between 2002 and 2005, the number of hectares planted with genetically-modified (GM) crops increased by 53% in Canada , compared with 28% in the US.
Canada has the highest intensity for field trials of specific traits of new GM plant varieties.
The share of all domestic field trials for agronomic traits has increased the most in Canada at 22% vs. 17% in the US in 2005.

Plant Biotechnology: tissue culture, embryogenesis, genetic markers, genetic engineering
Animal Biotechnology: diagnostics, therapeutics, embryo transplantation, genetic markers, genetic engineering
Non-food Agriculture: fuels, lubricants, commodity and fine chemical feedstocks, cosmetics

Agri-food

Investors with an appetite for high-quality products and matching profitability will satisfy their craving in Canada’s highly competitive food processing and bio-industrial sectors. Canadian advances in science, technology and government policy have spearheaded advanced food processing, organics, health and wellness, innovations in nanotechnology, genetic engineering, and the development of environmentally friendly, industrial products. It all starts with Canada’s vast agricultural land base that provides ready access to a rich supply of raw materials and fresh ingredients. Add in abundant energy, water and natural resources, streamlined corporate taxes and regulations, internationally-respected inspection systems and an integrated transportation network that assures rapid distribution across the continent and around the globe. Put them all together and you have the ingredients for a vibrant agri-food manufacturing industry that offers investors rewards as tantalizing as the safe, delicious, nutritious foods it produces.

Canada’s business environment is ranked 1st among G7 countries
Lower R&D costs than other OECD countries – 0.4% vs. 1.1% in the U.S. and 2% in Japan
2nd among OECD countries in tax relief per R&D dollars spent
World-class product testing/pilot facilities, with flexibility for small trials and production runs
Canada’s geographic and ethnic diversity offers opportunities for test marketing and clinical trials
Intermodal freight transport connected to all points on the continent, unique access to Asia-Pacific with the closest port to Shanghai and the closest port to Europe
Agri-food clusters closer to major U.S. border cities than the nearest U.S. hubs

Automotive

It’s no wonder that the Economist Intelligence Unit rates Canada’s business environment as the best in the world among auto-producing nations. Canadian assembly plants enjoy a 6.4% cost advantage over the U.S. and stronger labour productivity scores than American or Mexican facilities. Canadian plants have won one-third of all J.D. Power plant quality awards for North America, double Canada’s share of continental production, and Toyota and GM plants in Canada were rated the best in the hemisphere for five of the last six years.

Canada also has the second lowest corporate tax rate among the world’s Top 10 automotive countries – falling from 19% to 15% by 2012, less than half the U.S. rate – and recent federal budgets provided over $1 billion in tax cuts for the sector. Then there’s the smart factor. R&D spending in the motor vehicle and parts industries has more than doubled in the last decade, thanks to rich federal tax credits. And Canada’s highly-educated population ensures skilled workers, with many universities and colleges offering auto-related programs.

3rd largest exporter of automotive products after Japan and the U.S., accounting for 16.7% of North American vehicle production
168,730 employed in manufacturing and 343,300 in distribution and aftermarket

84% of Canadian-built vehicles are exported, primarily to the U.S.

Annual capital investment in auto manufacturing has averaged $3.5 billion over the past 10 years
Among the world’s Top 10 automotive countries, Canada is ranked:
2nd for percentage of the population with post-secondary education within the OECD;
2nd for availability of qualified engineers;
2nd for knowledge transfer and commercialization systems between companies and universities; and,
3rd for technological infrastructure

Bio-Products

There is growing global awareness and concern about the adverse environmental impacts of traditional industrial development. Canada’s bio-products sector makes investing virtuous by doing the right thing for the environment. Cutting-edge Canadian firms are converting energy crops and other agricultural residues into bio-fibres, bio-fuels and bio-industrial oils – environmentally beneficial alternatives to conventional products that are as healthy for the pocket book as they are for the planet. Canada’s value-added doesn’t end there. Canadian advances in the biological sciences, informatics and process engineering are also using renewable resources such as crops and livestock to create nutritious foods, nutraceuticals and other health-helpful innovations. Add to these advantages Canada’s $2.2 B investment to develop bio fuels, 20-year patent protection, exceptional R&D tax advantages, large pool of post-graduate and post-doctoral researchers, and it is obvious why going green in Canada is good for the bottom line.

Federal mandate to produce 5% biofuel and gasoline by 2010 and 2% biofuel and diesel and heating oil by 2012
Producers of ethanol eligible for incentives of up to 10 cents per litre of production and up to 20 cents for biodiesel producers
19 world class research centres conduct agriculture- and agri-food research
2nd largest country in the world, with massive agricultural land providing feed crops
Highly-educated population – #2 in the OECD for percentage with post-secondary education
Rich research tax advantages – worth up to 65% of companies’ total R&D investment
A progressive regulatory regime and robust patent and trademark protection

Biotechnology

Canada’s position as a biotechnology leader—one of the top five countries in the world—is a reflection of the country’s world-class credentials.

The biotech industry also benefits from powerful partnerships that strengthen government research dollars through collaboration with universities and industry, as well as progressive financing and venture capital programs for Canadian biotech enterprises.

Business Services

Businesses looking for better ways to manage their finances, employees and technology need look no further than Canada. Canada’s business services sector is a critical node in today’s multinational, multi-value chain model, generating over $57 billion in 2007 and employing 1.1 million – nearly 7% of the labour force. Canada is the world’s third largest exporter of engineering services with world-class firms that develop new approaches and materials to many design challenges. Canada is also a favoured destination for complex and high-value-added information technology/business process outsourcing.

2nd most attractive global centre for BPO, KPO and ITO
Highly-educated, multilingual population
7 of the top 10 locations internationally for low operating costs
In the top 10% for global broadband penetration rates
1st in the G7 for quality of life

Chemicals

Searching for the perfect formula for profitability? Canada has all the key ingredients, as global leaders in the chemicals industry already know. Nine of the top 10 chemical companies in the world have production facilities in Canada to take advantage of its dynamic business environment, low tax rates and business costs, skilled workforce and ready reserves of competitively-priced feedstock. Large and efficient extracting plants, modern ethylene crackers and some of the world’s largest derivative plants that enable Canada to achieve economies of scale are further enticements for investment.

The Canadian chemical industry is one of the largest manufacturing sectors in the country – the third largest manufacturing exporter in the country – employing 78,000 workers at almost 3,000 firms. With northern natural gas pipelines and off-shore resource development in the offing, the sector’s future promises even greater rewards for savvy investors who get in on the ground floor.

Chemicals shipments worth $50.6 billion in 2008, with exports of $32 billion – 76% to the U.S.
Chemicals exports more than doubled in the last decade
R&D expenditures in the sector were $197 million in 2007
Highly-productive, highly-educated workforce
#1 in the G7 for quality of life

Digital Media

It takes serious brainpower to produce next-generation games and Canada boasts both brainy game creators and governments that make smart investments to nurture innovation and cultivate partnerships.

Canadian companies are global leaders across the entire digital media value chain – from tools development to casual games and serious games, to both mobile games and gameware development.

14,000 skilled digital media workers
60 universities with digital media studies
260+ digital media companies
Internationally renowned urban centres
1st in the G7 for quality of life

Canadian developers are responsible for creating some of the most-loved franchises in the console games sector. Bioware created the Neverwinter Nights Role-Playing franchise and Digital Extreme’s Unreal and Unreal Tournament series of games, which are universally known and successful.

Canadian companies are important players in the rapidly growing casual games market. Calgary-based, Games Café, created a game which was the top seller on Real Network’s “RealGames” network. Toronto-based Ganz, is the creator of the wildly popular Webkinz toys and website for children.

Canada is also developing significant expertise in serious games. Defense simulations are being undertaken by CMLabs and CFB Gagetown, industrial training by Coole Immersive, Artifact, and Xpan Interactive. Spongelab and Project Whitecard are working on math and science games.

Canada is home to numerous mobile developers. Ubisoft has a substantial presence in Montréal through their Gameloft division which focuses on mobile games and content. Research in Motion (RIM), creator of the blockbuster Blackberry, is also developing free Java games for its smartphones.

Canadian companies are recognized leaders in the development of innovative animation tools, digital models and artificial intelligence. Game developers increasingly turn to Canada for graphics software developed by Autodesk’s Alias and Softimage to make their games more life-like. Companies such as Side Effects and Rainmaker are also making 3D animation and visual effects that are customized and integrated into their games to provide a more exciting digital media experience.

Financial Services

Amidst the global financial turbulence, Canada stands out as a safe – and financially sound – destination for investors. From the World Economic Forum to the International Monetary Fund, Canada earns top marks for having the strongest banking system and has one of the most highly developed financial services sectors on the planet.

Canada’s financial services industry is world-class and globally oriented, with over $60 billion in acquisitions outside Canada since 2000. This dynamic sector is an equally powerful force on the domestic front, employing 750,000+ people and generating over 6% of national GDP of $78 billion in 2007. A highly-skilled workforce, advanced telecommunications infrastructure and conducive business environment create fertile ground for future growth. Investors looking for high yields can bank on it.

Canada’s banks are ranked #1 globally by the World Economic Forum
2nd most attractive global centre for information technology/business process outsourcing
3rd largest financial centre in North America
Highly-educated population and some of the best business schools in the world
7 of the top 10 locations internationally for low operating costs

Life Sciences

From the identification of the muscular dystrophy gene, to discovering new ways of creating stem cells, Canada’s life sciences innovators are at the very forefront of discovery. Industry leaders are carving out global niches in biopharmaceuticals, medical devices and contract services—all thanks to Canada’s world-renowned research institutes and biotechnology clusters. Add on Canada’s 20-year patent protection, alongside its large pool of post-graduate and post-doctoral researchers, and the potential for innovation is limited only by our imagination.

With a significant and profitable healthcare market, Canada has become very attractive to life sciences companies. It is home to more than 390 pharmaceutical and 400 biotech companies that employed nearly 29,000 highly-skilled workers in 2007, making Canada the country with the third-largest number of biopharma firms in the world.

Pharmaceuticals

With an 9% annual growth rate, Canada is the third fastest growing market in the world for pharmaceuticals . The sector benefits from Canada’s thriving biotechnology industry, which also fuels pharmaceutical companies’ growth. Add to these advantages a well-educated workforce with highly-trained scientists and technicians, as well as business-friendly government policies, and it’s not surprising that nearly every major pharmaceutical company has manufacturing and/or R&D operations in Canada.

Plastics

With over 3,400 companies employing 113,000 workers, Canada’s $33-billion plastics industry is a sophisticated, multi-faceted sector encompassing plastics products, machinery and moulds, and synthetic resins. Canadian machinery manufacturers have gained an international reputation for high quality injection moulding, thermoforming machinery, blown film extrusion systems, extruders for corrugated pipe and other plastic profiles.

Canada’s plastics industry is closely integrated with other advanced manufacturing sectors such as aerospace, automotive, medical devices and telecommunications. Most companies are Canadian-owned small- and medium-sized firms seeking partnerships and alliances to grow their business and share the rewards of investing in Canada.

The top 3-and 6 of the top 10-North American mould makers in 2008 were Canadian companies
6th largest global exporter of moulds in 2007
85% of plastics exports are bound for the U.S.
Lowest production costs for the plastics sector among G7 countries
#1 in the G7 for quality of life

Renewable Energy

Canada benefits from a wealth of renewable energy riches. The country is endowed with vast and varied natural resources including massive supplies of water, solar, wind and biomass – the raw materials to produce green energy. Canada has one-fifth of the world’s fresh water and is surrounded by three oceans, providing nearly endless water resources. Its long coast lines and huge land mass give it some of the best wind resources on the planet. The land of the midnight sun is a natural for solar power. And forests cover 35% of Canada’s land mass, the largest forested area on earth, providing a steady supply of feedstock for bio-energy.

Canada has the added advantages of excellent infrastructure, an integrated transportation network, advanced manufacturing expertise, a highly-skilled workforce and low labour costs. Progressive regulatory systems and long-term ‘green’ government policies, along with generous R&D and tax incentives, make investing in the renewable energy industry a breeze. The sector is poised for spectacular growth, creating unparalleled opportunities for strategic partnerships and investment to develop and commercialize competitive technologies, manufacture products or provide services to this fast-growing industry.

The world’s biggest producer of hydropower, generating 353 TWh/year, and exports 60% of its electricity
Access to more biomass resources, per capita, than any other country in the world
Canada’s wind energy sector grew at an unprecedented rate of 51% between 2000 and 2006
World leader in solar air collector development and commercialization
Most highly educated population on the face of the earth: 150 colleges and universities educate 1.5 million students annually
Leading G7 countries with the lowest overall business costs

Software

With the highest levels of broadband penetration and the lowest overall communications costs of almost any country in the world, it’s not surprising that Canada has an edge over its competitors when it comes to software development. Canada’s software advantage starts with its world renowned work force and mature, technologically advanced telecommunications infrastructure that provides the backbone for all technology businesses. Canada boasts CA*net 4 – the world’s premier, advanced, all-optical, research network. Add to this a culture of innovation fostered through rich R&D tax credits and industry clusters. Factor in a progressive regulatory regime, the lowest operating costs in the G7 and Canada’s multi-cultural population that can tailor software applications and solutions to customers’ needs, and it is clear to see why Canada is the place to be for software investors.

32,000 ICT companies, 79% in software and computer services
+575,000 highly skilled ICT workers – over 262,000 in the software sector alone
92 universities produce 50,000 math, computer science and engineering graduates
ICT is Canada’s largest private investor in R&D – $5.7B annually, $650M in software alone
of the Top 500 global software companies, the second highest number after the U.S.
1st in the G7 for quality of life
2nd Business Process Outsourcing market in the world
9th in the world for ICT competitiveness

Wireless

Canada’s world class wireless companies have built a reputation for excellence in infrastructure, data-centric devices, enablers, middleware and applications. With its high-talent, low-cost labour force, R&D advantages, smart regulations and centres of research excellence, Canada remains a rewarding location for enterprising investors.