Tech sector entrepreneurs whose Canadian cities were snubbed by Amazon in its search for a second corporate campus say they are disappointed, despite fears they would have seen increased competition for scarce skilled talent.
They say the American online giant’s promised contribution of $5 billion in construction and up to 50,000 high-paying jobs would have been good for their city’s economy and its technology sector in the longer term.
On Thursday, Amazon said Toronto was the only non-American city to make a list of 20 finalists.
Vancouver, Edmonton, Calgary, Winnipeg, Sault Ste. Marie, Ont., Windsor, Ont., Hamilton, Ottawa, Montreal and Halifax also made bids.
‘Another company competing for limited talent’
“In the short term, it’s another company competing for limited talent, that jumps to mind,” said Mike Johnston, founder and CEO of REDSpace, a designer of media software systems and corporate e-learning programs in Halifax, one of 238 cities to bid for the centre.
But, he added, “when a world-calibre company pays attention to this region, I think the trickle-down effects are valuable. It means more students come here to study, it means more people stay here.”
Johnston said his firm has nearly 200 staff members after adding 45 new hires last year.
He said he was part of a “brain drain” that left Nova Scotia for better opportunities in the United States after high school before returning in 2000 during the dot.com tech stock meltdown.
Like Johnston, Benevity Inc. CEO Bryan de Lottinville said he was disappointed but not surprised that his hometown of Calgary failed to win its bid for the Amazon HQ.
His company, which makes software for corporate charity programs, has nearly doubled employment in the past two years to 420, but he says he’s not worried that Amazon would have stolen his staff or driven up wage levels.
“You know, people don’t work for companies, they work for the employee experiences and leaders and things like that,” he said, adding that to be frightened of competition is “not how you build business, an identity and a brand.”
De Lottinville said he supports economic diversification initiatives to help Alberta’s economy evolve from a dependence on oil and gas production.
Landing Amazon would have been ‘a double-edged sword’
In Ottawa, CEO and co-founder Jason Flick of You.i TV, says Amazon would have been a disruptive force for employment, real estate and local cost inflation — but he still wished they had chosen his hometown.
“There would be a double-edged sword for sure,” he said. “The fight for talent would go higher. The U.S. dollar is stronger to pay more. Building space would be at a premium. But I was definitely looking forward to it.”
Flick said he wasn’t worried Amazon would steal his workforce, which has grown from about 35 to 200 in three years — because “we do really cool stuff.” The company has developed a multi-screen TV and media app platform.
He said another large employer could have sparked improvements like more flights at the airport.
Concerns over brain drain
Studies suggest a big Amazon presence in the Toronto area might accelerate a brain drain from Canada to the U.S. as the brightest Canadians are promoted to U.S. headquarters, said University of Waterloo assistant economics professor Joel Blit.
He added it could also drive up local costs for housing and wages.
But he said the potential positive impact of Amazon as one of the anchors in a Waterloo-Toronto technology hub similar to Silicon Valley in California would still outweigh the negatives for the tech industry.
“We took a big hit with BlackBerry where it is now,” he said, referring to job cuts and downsizing at the telecommunications firm over the past several years.
“It’s nice that Google is here. If we had Amazon and maybe a couple of others, truly it could be a world-leading cluster that could be driving a lot of wealth for Canada.”
He said potential positives include a larger labour pool, enhanced regional business relationships and the opportunity for informal shared knowledge between companies.
City reacts to Aurora Cannabis announcement
“I’ve been talking a lot about Aurora around Medicine Hat since April of 2018 and celebrating the fact that they came here, chose us over Quebec or anywhere else in Canada they could have gone, and what a great thing it is for the community and the jobs and just the optimism,” he said. “I’ve sensed an increase of optimism in the community.
“When I heard this news yesterday, it was a setback, and I’m disappointed. They’re a private company, this has nothing to do with the City of Medicine Hat. They’re free to make any decision they need to make.”
In its report, Aurora cited lower than expected revenue from cannabis as a reason for the decision.
The decision about the construction will save Aurora a total of $190 million dollars.
Lisa Kowalchuk, executive director of the Medicine Hat and District Chamber of Commerce, says she believes Aurora remains committed to Medicine Hat.
“Aurora has very much been committed to our community and very invested in our community,” she said. “They re very engaged within our community and with our chamber. So I don’t see them going away anytime soon.”
CHAT News attempted to speak with Aurora Cannabis on Friday, but were instead provided a statement, which clarified its position from Thursday.
“There has been no halt to construction at the facility,” wrote Michelle Lefler, VP Communications at Aurora, on Friday. “We are continuing to build with adjusted timelines that are more closely aligned with how cannabis markets develop.
The statement continues, “We expect to have at least six flower rooms completed and in operation in 2020, for a total of 238,000 square feet, which includes the mother room. As was done with Aurora Sky and is the case with all Sky-Class facilities, we will pursue a phased approach to bringing additional grow rooms online, and still intend to build 30 grow rooms at Sun.”
“Additional operations at the facility will be activated as global demand develops, with a target date for full operations in 2021. Previously, we had intended to build at an accelerated speed. This is a more normalized pace for a project of this size and is aligned with how markets are growing.”
The company adds they remain committed to investment in Medicine Hat, and still intends to hire around 800 people to work at the facility once its completed.
Clugston adds he remains optimistic about the facility being completed.
We remain committed to investment in the Medicine Hat community as planned. At this time, we still intend to hire a final staff complement of around 800 people upon facility completion. We want to make sure that all local and government partners continue to work with us to support our commitments to significant investment in Alberta’s economy.
“As an optimist, they’ve shown interest and invested obviously a lot of money in the facility, and I really do hope and believe that it will be up and running at 100 per cent,” he said.
Clugston says council will meet with Aurora executives in a closed-door session prior to Monday’s city council meeting. He adds the meeting was planned before Thursday’s announcement.
CN conductors union gives 72-hour strike notice
Canadian National Railways conductors, trainpersons and yardpersons have given strike notice ahead of a Tuesday deadline.
The union, which represents 3,200 workers, provided the 72-hour notice today as contract negotiations continue over the weekend.
The Teamsters Canada Rail Conference warned in October it was prepared to launch job action after over six months of unsuccessful talks.
A strike could begin at 12:01 a.m. on Nov. 19 now that the notice has been provided.
The company says its offer to enter into binding arbitration was declined by the union.
The workers, who are mostly located in major urban centres across Canada, have been without a contract since July 23.
CN Rail confirms layoffs
A spokesperson for CN said some employees would be placed on furlough and management and union job numbers would be cut “due to a weakening of many sectors of the economy.”
“These adjustments have already started to take place across the network,” senior media relations adviser Alexandre Boulé said in an emailed statement.
“CN would like to express gratitude to the employees who will be leaving the company and thank them for their service.”
He would not confirm how many jobs would be affected.
The news was first reported by the Globe and Mail on Friday afternoon, citing a source that was not authorized to speak publicly. The Globe reported that there would be roughly 1,600 job losses in North America.
According to its website, CN transports more than $250 billion worth of goods annually across its 32,000-kilometre rail network within Canada and the U.S.
The company says it has about 24,000 staff.
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