Adam Chowaniec is among the legions of entrepreneurs who cut their teeth in the now depleted training grounds of Nortel Networks Corp.
At 58, the Ottawa-based Mr. Chowaniec is chairman and an investor in five high-tech companies.
As a younger man, he designed a ground-breaking personal computer, the Amiga, while working for U.S. technology pioneer Commodore Systems.
But it all started with Nortel – or, at least, with its former Ottawa subsidiary Bell-Northern Research, where Mr. Chowaniec worked as a technology researcher 30 years ago.
“In those days, Bell-Northern offered a tremendous opportunity in technical and management learning,” says Mr. Chowaniec, who left the research unit because he wanted to branch out in business.
The days of Nortel as an entrepreneurial breeding ground are fast coming to an end in the aftermath of the company's bankruptcy protection filing, which will probably see the former high flier broken up and pieces sold off.
Nortel's recent history has been a saga of scandal, missteps and a cratered stock price. So why bemoan the potential dismemberment of a company that has been on a spectacular downward spiral since the year 2000?
For the Canadian technology industry, Nortel's disappearance would be a catastrophe. At the moment, there are no new Nortels – companies able to serve as role models, funding sources and training academies – in the pipeline.
Canada's technology sector spawns thousands of small companies with great ideas, but not enough contenders that can make the leap to large, international players. They become targets for foreign acquirers – Cognos ULC and ATI Technologies are recent examples – they blow themselves up in the quest for growth, or they sell the technology to outsiders because they can't fund their growth plans.
The harsh truth is that as Nortel shrinks, there is only one company, Research In Motion Inc., that could even dream of replacing it as Canada's globally active technology champion. And no other company has been able to spin the intricate ecosystems that Nortel has fostered through its spinoffs and supply chains.
The problem is compounded by the fact that taxation, training and business practices in the industry have been directed at generating lots of small players, rather than pushing companies to the next stages of development.
“You can't build a knowledge economy without significant anchor companies like Nortel,” Mr. Chowaniec says. “Like anchor tenants in a mall, they're the ones that make the little guys able to be there.”
Nortel has the benefit of a long history with roots as a technology bulwark reaching back to the early 20th century. The company's alumni have thus spawned hundreds of Canadian companies. Estimates vary, with the Information Technology Association of Canada (ITAC) putting the number at 260 existing firms; technology veteran Denzil Doyle says it is closer to 450 in the Ottawa area alone.
Nortel has been a huge factor in building an information technology industry that, on the surface, sports an impressive wingspan. The sector employs almost 600,000 people – not counting those who run IT systems for banks and other institutions. That's higher employment than in the auto sector, whose major players are being bailed out as vital components of Canada's economy.
Technology people are well educated – 43 per cent have a university degree, according to ITAC – and the average 2007 earnings of $58,600 were 47 per cent higher than the average wage in the economy. In all, the sector makes up about 4.7 per cent of the economy.
But only Nortel, and to some degree, RIM, qualify as landmark companies that provide the supply chains, know-how and investment to sustain many smaller players in the industry, says Lynda Leonard, senior vice-president of ITAC.
“It's the power of Nortel's supply chain – the entry they give to large customers in global markets that mid-sized companies would be hugely challenged to do on their own.”
