Why U.S. companies from all industries are flocking to Canada

At a time when multinationals face increasingly restrictive access to some markets, Canada remains an open and progressive global player and an optimal ecosystem in which to quickly scale up and innovate for the future.

In 2017, Salesforce announced that it would invest $2 billion in its Canadian companies over the following five years. The next year, it additionally rolled out its Canada Trailblazer Fund, a $100 million investment in Canadian entrepreneurs to fuel innovation in the country.

The Salesforce announcements were massive; however, in many ways, they were only a microcosm of what’s happening across Canada. Amazon, Tesla and Uber are among the many other U.S. companies expanding into their northern neighbor.

What’s propelling so much American activity up north?

Canada has the most educated workforce in the world. It also has several federal immigration programs ensuring that if select skilled workers aren’t available in the Canadian market, they can be enticed to the country very quickly. (Canada’s affordability and excellent quality of life help with that.)

For global companies, disruption is the name of the growth game these days. Whether innovating with automation, blockchain, machine learning, natural language processing backed by AI software, or developing new services and ways of living for consumers, companies are doing more of their innovating in Canada. Facebook, for example, launched its artificial intelligence research lab in Montréal in 2017—and expanded it in 2018. Only a few months later, Microsoft announced that it would double the size of its own AI research lab in Montréal.

Here’s why:

Unmatched industry and government collaboration

The federal government has ensured that Canada is particularly ready and ripe to support innovation-led economic growth. It hosted a series of 34 meetings across the country from October 2017 through July 2018 among 90 CEOs and federal deputy ministers. An ambitious long-term business growth plan emerged, and the resulting Economic Strategy Tables outlined a new model for collaboration between the government and six interconnected sectors: advanced manufacturing, clean food, clean technology, digital technology, health and biosciences, and clean resources.

Building on this strategy, the government also partnered with companies, academic institutions and nonprofits to create its five Innovation Superclusters. Announced in February 2018, along with a $950 million investment that’s being matched dollar-for-dollar by the private sector, the Superclusters will create more than 50,000 jobs over the next decade:

• The Ocean Supercluster is based in Atlantic Canada and is using innovation to improve competitiveness in fisheries, oil and gas, and clean energy.
• The SCALE.AI Supercluster is based in Quebec and is making Canada a world-leading exporter by building intelligent supply chains through AI and robotics.
• The Advanced Manufacturing Supercluster is based in Ontario and aims to connect Canada’s technology strengths to its manufacturing industry.
• The Protein Industries Supercluster is based in the Prairies and is making Canada a leading source for plant proteins that will help feed the world.
• The Digital Technology Supercluster is based in British Columbia and is using Big Data and digital technologies to unlock new potential in sectors like healthcare, forestry and manufacturing.

Talent, talent and more talent

Historically, Canada has been valued for what it has in the ground, as it’s a mineral-rich country and world leader in mining. But people are also beginning to focus on what’s above the ground in Canada—and that’s an extraordinary number of highly skilled workers. American companies are finding that they can access top talent in Canada that would be much more expensive and difficult to find stateside.

Sixty-two percent of 25 to 34-year-olds in the country have completed the highest level of education, compared with 44 percent on average across OECD countries and 49.4 percent in the U.S. And in 2017, Canada attracted about 210,000 international tertiary students, having increased its share of international students at tertiary level by 5 percentage points from 2012 and 2017, compared with only 1 percentage point improvement on average across OECD countries.

Importantly, in contrast to the increasingly restrictive immigration system in the United States, Canada has an Express Entry program, and high-skilled workers are eligible for two-week visa processing through the country’s Global Skills Strategy. In 2018, the program facilitated the entry of more than 10,000 workers, with 96 percent of applicants approved. 

Government-backed incentives

Readily available major funding from Canada’s federal government has clinched the decision of many U.S. companies, including some multinationals, to advance northward. Canada offers many tax incentives at the federal, provincial and territorial levels for various industries and activities, including those related to research and development; film, media, computer animation and special effects; interactive digital media and multimedia productions; manufacturing and processing; liquefied natural gas development; and environmental sustainability.

One such incentive, Canada’s Strategic Innovation Fund, launched in 2017, provides funding for companies with large projects such as firm expansion and growth, investment attraction, R&D and commercialization, and more. To date, $2 billion in Strategic Innovation Fund contributions have been made to 64 projects.

And Canada’s Scientific Research and Experimental Development (SR&ED) program uses tax incentives to encourage Canadian businesses—and international companies investing in Canada—of all sizes and in all sectors to conduct research and development.

Preferential market access

Finally, for many American companies, Canada is a gateway for them to do business with the world, as it’s the only G7 country to have free-trade agreements with all other G7 countries and preferential access to almost two-thirds of the global economy. Fifteen free trade agreements have been ratified by the Canadian government and are currently in force. Fourteen of these agreements represent $507.8 billion in imports and $533.7 billion in exports in 2018, for a net export surplus of $25.9 billion.

All these factors make Canada one of the smartest places in the world to do business. And Invest in Canada makes it even easier for your business to expand into this country so rich with talent and opportunity. We invite you to connect with us to learn how to take the next steps: https://www.investcanada.ca/contact.