Looking down from the balcony on Mount Royal – the extinct remains of volcanic activity that took place more than 125 million years ago – Montréal doesn’t strike you as a high-tech center. From the summit, you can see the skyscrapers of downtown – emblazoned with the logos of banks and civil consulting companies – and turn to the west to view the spectacular St. Joseph’s Oratory. Casting your eyes back to the river, you see the historical streets of Vieux Montréal and the port – birthplace of Cirque du Soleil. What you don’t see is the high-tech industry that is turning Montréal into a high-tech center to rival other major hubs on the continent such as the Bay Area.
Video gaming is just one of the industries that is fueling the high-tech explosion in Québec’s largest city. Since the Québec government put in place a favorable tax credit regime for video game companies back in 1997, Montréal has grown to be one of the global powerhouses of the industry. Over 7500 people work in video game development in Montréal, which is home to such industry leaders as Ubisoft – the French video games giant. Montréal development facilities have contributed to many well-known titles, including Assassin’s Creed and the Rainbow Six series. And, the industry continues to grow – Ubisoft recently announced a new $373 million investment that will create an additional 500 jobs in the sector, in addition to the 3000 that the company already employs in the Montréal area.
Aviation is also a major industry in Montréal. The city is the headquarters of Bombardier, manufacturer of the Canadair Regional Jet and one of the world’s largest aircraft companies – although you may recognize them better as the builders of the Ski-Doo. The city also plays host to CAE, one of the global leaders in flight simulation, supplying simulators to major airlines and military organizations around the world. These are not small companies – Bombardier has revenues of nearly $21 billion a year, and CAE turns over nearly $2 billion. This makes Montréal an aerospace and avionics hub to rival any city in the world.
Located close to the US border, and with a lower cost structure than many American cities, Montréal is also becoming a center for IT outsourcing. Being within North America, it provides many US companies with an attractive alternative to sending their IT business overseas to places such as India. While outsourcing services from somewhere like Montréal are more expensive than those from overseas destinations, this is more than made up for by proximity and skills. One example of Montréal’s IT outsourcing success is Mentel, a leading IT outsourcing company that provides a diverse range of services, from web development through to IT hardware procurement and network operation centers.
New startups are also flourishing in the city. While Montréal hasn’t seen any billion-dollar startups, the venture capital model is in full swing. There have been a number of smaller acquisitions, and others have shown that the city’s high-tech start-ups are perfectly capable of going it alone. For example, Frank & Oak, an e-commerce company that specializes in selling men’s apparel online, has grown from eight employees in early 2012 to over 100 today. The company has nearly one million registered users – about 70% of which come from the United States.
Telecommunications are also a strength for the city. While the demise of Nortel Networks left a hole in Montréal – the company had major facilities in the St. Laurent and Nun’s Island areas of the city – there is still a vibrant telecom community. Ericsson has had a major research and development center here for over two decades, and is scheduled to open a new 40,000 square meter facility in Vaudreuil-Dorion to the west of Montréal in 2015. Other telecommunications firms with a presence in the city include Alcatel-Lucent, Ciena, Fujitsu, Videotron and Bell Canada.
However, moving beyond electronics, software and the Internet, Montréal has been less well treated by the pharmaceutical industry in recent years. The city used to be one of the major centers in North America for pre-clinical research, hosting such companies as Astra Zeneca, Abbott, Merck, Perkin-Elmer and Boehringer-Ingelheim. Unfortunately, the industry has been pulling out of Montréal since 2011, leaving it with no major pharmaceutical research facilities. There is now renewed effort to bring big pharma back to the city, but so far there has been little success.
Montréal’s recent experience with pharmaceuticals should serve as a warning for the high-tech industry there. Leading-edge industries such as high-tech and pharmaceuticals can be incredibly fickle – so while the future looks bright for high-tech in the city today, Montréal needs to step up its efforts to grow high-tech investment even further.