Is Toronto Falling Behind?

Is Hogtown losing its competitive edge? According to a new report by the Toronto Region Board of Trade and Institute for Competitiveness and Prosperity, the GTA lags behind its North American peers when it comes to productivity, with a 6% decline between 2000 and 2010, while Vancouver, Calgary and other large cities saw improvement; its figures put Toronto at the bottom of a dozen cities studied, including New York, LA, Seattle, Boston and San Fran. While wages have gone up slightly, the report says Toronto has fewer tax dollars and its residents fewer bucks in their pockets than those in its peer cities.

The report, “Toward a Toronto Region Economic Strategy,” says a low investment in infrastructure (ergo, traffic congestion and long commutes), a lacklustre education system that fails to equip its students with necessary business skills, and poor access to capital for new companies are factors holding us back.

Roger Martin, who heads up the Institute, says Canadian companies fail to understand the importance of, and as a result fail to invest in, finding new and better ways to compete. Martin says that while he has consulted with companies around the world on how to offer their services and goods in innovative ways, none have been Canadian.

“The U.S. companies say, ‘We have to [innovate] or bad things will happen to us.’ Canadian companies are more inclined to say if bad things happen to us, that is explainable by outside factors that were beyond our control,” Martin says in the Globe and Mail.

Toronto’s success is the province’s, and the country’s, success: Toronto generates 45% of Ontario’s GDP and 18% of the country’s. It’s not a matter of if we make improvements, it’s when — or else. But how?

The good news is, all is hardly lost. “Toronto proves itself each year to be one of the most successful city regions in the world, with roughly 120,000 choosing it as their new home annually, numerous global businesses choosing to locate within its borders, and consistently high rankings on quality of life. Toronto stands in an enviable position to promote economic progress,” according to the report. “Toronto can achieve greatness by making strategic investments and policy choices that enhance the region’s global competitiveness.”

The report’s recommendations centre on four pillars: 1) Economic Vision (establish shared goals and obstacles not just in Toronto, but throughout the region, something we historically do not do well); 2) Business-Led Cluster Initiatives (support the vision through competitiveness initiatives); 3) Foundation Initiatives (support the vision through key foundations); and 4) Organization & Implementation (work towards strong regional governance).

Typical of a business-based organization, the Board’s vision is concrete: increase real GDP per worker by 0.6 percent annually from 2010 level to achieve 15-year growth rate of 10 percent by 2025, and to boost wages to be competitive with North American peers.

In recently held e-brainstorming sessions with KPMG, the board and the institute found transportation to be the biggest issue facing the region. “Low productivity due to gridlock and long commutes was the most frequently cited concern among respondents and more people highlighted better transportation infrastructure as the most crucial thing needed to make the Toronto region more competitive than any other issue. This illustrates the importance of efficient infrastructure to the functioning of the region and the need for governments at all levels to make substantial investments.”

The sessions also found that there’s a disconnect between our education and business needs, and we need greater promotion of co-op, internship and apprenticeship training. “Many also argued that educators need to align students with work opportunities and in-demand skills to help them better integrate into the workplace.”

Toronto excels in access to business associations, and yet access to capital for start-ups and early-stage companies is limited. “Banks are less likely to take risks and are therefore less amenable to small businesses looking to grow,” says the report. Sure — offering mortgages comes with guaranteed returns. Offering entrepreneurs start-up loans is risky, and banks don’t like risk.

Finally, “The region needs to think and act like a region. Increased collaboration, coordination, and governance were raised as key requirements to establish a more competitive region for several respondents. It is clear that to succeed as a global city, Toronto needs to draw on the strength and economy of the entire region rather than any one player.”

We have to stop looking at success-at-all-costs types like Trump and O’Leary as role models for business. Yes, you can be empathetic and community-minded, and still want to be financially successful. It isn’t an all-or-nothing proposition. At least back when I was in school, we never even discussed the possibility of working for one’s self. School was all about stuffing you full of facts and encouraging you to get a job as soon as possible. The truth is, having a job is often the very worst way to make a great living. We have to stop telling our kids that competition is bad, and that everything and everyone, regardless of circumstance or merit, is equal. We have to stop telling our writers, artists and musicians that selling is the same as selling out. We worry more about coming out on top in a peewee hockey game than we do in life. Why don’t teach our kids vital business skills? Why aren’t they just as big a part of the public school curriculum as English lit or the War of 1812? Why don’t we at least show them how to balance a chequebook? How about we get our kids participating not just in track days and science fairs, but in business fairs as well? Let’s teach the young about product development and marketing, and not just about the capital cities of Canada.

The report is nearly 100 pages long, but its recommendations (and mine) boil down pretty simply: we need to produce products and services that global consumers want. We need to get the clowns out of local government. We need to stop reacting to changing infrastructure needs and start predicting them, and then proactively addressing them before crises hit.

The question is, can we do it?