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Canada’s America-sized perception problem

A survey indicates most U.S. executives don’t look far beyond Ontario when setting up shop in Canada.

David P. Lewis/Getty Images/iStockphoto

U.S. executives, including those responsible for choosing sites for corporate expansion, think their own country ranks higher than Canada on almost every measure of business climate.

A new survey from Development Counsellors International – a New York-based economic development consultant – also shows that U.S. executives are woefully ignorant of the virtues of setting up shop anywhere outside of Canada's biggest provinces and their largest cities.

The study, to be released Monday, contacted 105 executives and site-selection consultants in the United States and asked them about their perceptions and understanding of Canada. On 14 business-climate criteria – ranging from labour costs to transport systems to tax burden to quality of life – the United States was ranked on par or better on every one, except for "business-friendly government," where Canada was rated superior.

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In some categories, such as the proximity to customers, the presence of research institutions and the quality of sites and buildings, the United States came out overwhelmingly on top.

This reflects a view of Canada that is not always based on facts, DCI president Andrew Levine said. He noted that U.S. executives say the United States is superior when it comes to utility costs, for example, while Canada clearly has lower power prices.

"Almost consistently across the board the U.S. is considered more favourable," he said. "But a lot of this is just perception, not reality."

The survey also showed that few U.S. executives look much beyond Ontario if they do consider locating a new operation in Canada.

Among those who had pondered expansion north of the border, 80 per cent considered Ontario, with just 30 per cent looking at British Columbia, 29 per cent at Quebec and 20 per cent at Alberta. The other provinces were all in the single digits.

Ontario was also considered to have the best business climate among the provinces. Toronto, Vancouver, Calgary and Edmonton got the best ratings for business climate among the big cities.

Essentially, much of Canada outside the big cities is a "blank slate" in the minds of U.S. executives, the study suggests.

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Indeed, Canadian stereotypes prevailed when U.S. executives were asked what words come to mind when they think of Canada. "Cold" and "hockey" were the top two.

Surprisingly, "high-quality work force" ranked No. 3, just ahead of "natural resources," "friendly" and "socialized medicine."

Still, it is very positive that U.S. executives think so highly of the quality of Canadian workers, Mr. Levine said, and this likely reflects the experience of those who have operations in Canada or are familiar with other companies' operations.

When companies look to set up shop in a new location, the two factors they consider most important are operating costs and workforce quality, he said, so the fact that Canada scores so well on the latter is a good sign.

Mr. Levine, whose organization has a Canadian office in Toronto, said economic development officers in Canadian provinces and cities clearly have a lot of work to do to raise the profile of their locations and clear up misconceptions.

While some cities and provinces focus on "soft" factors such as the quality of life they can offer, these should not be overemphasized, he said. "Most of these [location] decisions are data-driven," Mr. Levine said. "Companies basically want to know: 'Can I be profitable here?'"

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The survey suggested that the best way for Canadians to get the word out is to hold one-on-one meetings with prospective companies, or to hold familiarization tours to take people to see their communities. But advertising – a common way for cities and provinces to promote themselves as a good place to set up shop – was ranked as a relatively ineffective way of influencing executives making location decisions.

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