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Table of Contents
Ontario's sophisticated chemical industry
Strategic location offers easy market access
Skilled, knowledgeable workforce, from the plant floor to the executive suite
Business environment for high-value production
Incentives for research and development
A great place to work and live
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Ontario is a very profitable place for chemical companies.
That's why Ontario is Canada's largest chemical producer, leading petroleum-refining region and the hub of the nation's plastics industry.
Operating costs for chemical companies are lower in Ontario than in leading U.S. production regions.
Excellent transportation links provide easy access to North America's $12.3 trillion marketplace.
Ontario's knowledge infrastructure is among the best in the world. Our research and development (R&D) incentives are very generous.
Global leaders and niche market innovators thrive in Ontario
Of the 10 largest chemical companies in the world, eight have operations in Ontario. It's our third-largest manufacturing industry in terms of shipments. In 2004, our chemical industry had:
We're the third-largest plastics producer in North America (after California and Ohio) and the home to almost 50% of all Canadian plastics firms.
Ontario's plastics industry encompasses the full length of the value chain, from resin and materials suppliers to mould makers and processors that feed into a spectrum of end-user markets including automotive, pharmaceuticals, consumer electronics, packaging and construction. In 2004, the industry had:
Ontario's chemical and plastics industries have a track record of successful innovation. North America's first commercial oil well was drilled near Sarnia in 1858. Responsible Care®, the chemical industry's worldwide initiative to ensure the safe and environmentally sound management of its products and processes, was born in Ontario in 1987 and has been adopted by 52 countries.
Today, Ontario's chemical workers are pushing the boundaries of new product development in areas ranging from specialized polymers to advanced ceramics and alternative fuels.
Our chemical companies are concentrated mostly in three regions—Sarnia, the Greater Toronto Area and Ontario East. Within these clusters, some companies have developed mutually beneficial alliances.
They exchange co-products and by-products and share support services such as utilities, co-generation, storage, emergency services and waste disposal.
Colleges in the clusters provide industry-specific training courses to help chemical companies maintain the skilled workforce they need.
Sarnia
Sarnia is Canada's largest cluster of chemical, allied manufacturing and R&D facilities. It includes companies such as Basell Canada Inc., Dow Chemical Canada Inc., INVISTA, Imperial Oil Limited, LANXESS (formerly Bayer Inc.), NOVA Chemicals Corporation, Praxair Canada Inc., Shell Canada Products, Air Products Canada Ltd., Terra International (Canada) Inc. and SCU Nitrogen Inc.
Greater Toronto Area
Chemical companies in the Greater Toronto Area (GTA) produce lubricants, paints, medical gases for home and hospital use, laundry detergent, adhesives and more. As Canada's business centre and financial capital, Toronto is also a prime location for corporate headquarters. Bayer, BASF, DuPont Canada, Unilever and many other industry leaders have their Canadian head offices in the GTA.
Ontario East
Chemicals from Ontario East—from Belleville to Brockville—go into fleece jackets, seatbelts, airbags and many other high-tech fabrics and products. Industry leaders in the cluster include 3M, Air Products Canada Ltd., BASF, DuPont Canada (R&D), INVISTA, Lilly Industries, Nitrochem and Procter & Gamble.
| Ontario's Chemical Manufacturing Sector | Percentage |
| Basic chemicals and resins | 45% |
| Pharmaceuticals | 19% |
| Soaps | 7.5% |
| Paints | 5.5% |
| Toiletries | 4% |
| Agri-chemicals | 2% |
| Adhesives | 2% |
| Inks | 1% |
| Other | 14% |
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Ontario stands near the centre of the North American industrial and consumer marketplace. Our pipelines and transportation infrastructure can move chemical and plastics products from the plant to the customer quickly and efficiently.
Ontario is an integral part of North America's $12.3 trillion market. Within a day's drive of Sarnia, the Greater Toronto Area and Ontario East you will find:
In 2003, we exported more than $155 billion worth of products, technologies and services—almost 50% of the Canadian total—most of it to U.S. customers.
The North American Free Trade Agreement (NAFTA) ensures that products containing at least 62.5% Canadian content have duty-free access to the U.S. and Mexican markets. The joint U.S.–Canada Free and Secure Trade (FAST) program can make processing at the border almost instantaneous.
Export-oriented domestic markets
As Canada's manufacturing heartland and a world leader in natural resource processing, we have strong, export-oriented domestic markets for chemicals—autos and auto parts, construction materials, biotech, electronics, pulp and paper, mining and more.
Automotive
Ontario's auto industry (assembly and parts) produced 2.7 million vehicles in 2004. That's more than any state in the U.S. including Michigan. Some 400+ companies, including seven of the world's largest vehicle manufacturers, employ 135,000 highly skilled workers. Ontario companies are leaders in "in-sequence" manufacturing, injection and blow moulding, hydroforming, ferrous and non-ferrous casting, powder metal coating and fabrication.
Information and communications technologies
Ontario is a global centre for the design and manufacture of voice, data and video telecommunications, as well as, the development of digital microwave transmission, satellite communications services and data distribution networks. More than 6,000 companies generate $38 billion+ in annual sales.
Life Sciences
Ontario has one of the largest regional concentrations of biotech firms in North America. Nearly all the global pharmaceutical and biotech giants have facilities here including Apotex, AstraZeneca, sanofi pasteur, Bayer, Baxter Corporation, Boehringer Ingelheim, Eli Lilly, Genzyme, GlaxoSmithKline, Roche, Johnson & Johnson Medical Products, MDS, Patheon and Pfizer. World-leading Ontario biofuels R&D companies such as Iogen, BIOX, Rothsay, Dynamotive and Ensyn are introducing industrial bioproducts that will increase the sustainable use of renewable resources.
Mining and forestry
Ontario is among the world's top 10 producers of nickel, gold, cobalt and platinum group metals, with mineral production in 2003 valued at almost $3.9 billion. Exports of our forestry products—mainly newsprint, market pulp, lumber and composite panels—topped $6 billion in 2003.
Consumer products
Consumer products from Ontario's chemical companies and their industrial customers supply Canadian, U.S. and international markets. Ontario's population alone—at 12+ million, is more than a third of the Canadian total—requires vast amounts of fuel, soaps, detergents, paints, packaging materials and textiles.
The Economist Intelligence Unit ranks Canada's transportation infrastructure ahead of all G7 countries.
An extensive pipeline grid brings natural gas, petrochemical liquids, chemical intermediates and crude oil from western Canada, the U.S., the Maritimes and offshore sources to Ontario for processing and upgrading.
Our highway network—part of the grid of interprovincial and interstate highways, expressways and turnpikes—links Ontario companies to U.S. and Mexicancustomers and suppliers.
Our rail lines connect with the U.S. at five commercial crossings. A double-track tunnel under the St. Clair River, capable of handling double-stacked container cars, links Sarnia to Michigan.
The Great Lakes–St. Lawrence Seaway system offers marine access to markets in the U.S. and around the world.
We have three international and 61 regional airports. The largest is Toronto's Pearson International, where 65+ airlines provide same-plane service to 43 cities in the U.S. and 42 cities abroad.
The data-intensive chemical industry needs top-of-the-line, secure telecommunications. Ontario's network is among the best in the world: local and long-distance lines are 100% digitally switched; long-distance trunk lines are 100% fibre optic. The service is unsurpassed in terms of reliability and "self-healing" network recovery.
Ontario's chemical industry leaders recognize our knowledge infrastructure as a major competitive advantage. Leading researchers from around the world have been drawn to our specialized university research labs.
These include:
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The availability and quality of Ontario's large pool of knowledge workers provides a major competitive advantage for our chemical companies.
Almost three out of 10 employees in our chemical industry have a university degree. Overall, 56% of all Ontarians aged 25–64 have completed their post-secondary education. That's a higher percentage than in any other industrialized country, according to the Paris-based Organisation for Economic Co-operation and Development (OECD).
Our chemical workers are loyal. The average length of employment for chemical workers is 11 years in the Greater Toronto Area, more than 19 years in Sarnia and more than 20 years in Ontario East.
Our workforce is ethnically diverse. We speak more than 100 languages. Multilingual staff can make global sourcing, service and sales flow more smoothly.
Ontario's 20 universities generate more than 29,000 graduates a year in math, engineering and sciences, providing a constant supply of new talent for growing chemical companies.
Seventeen of Canada's top 50 research universities are located in Ontario. Our universities are widely recognized for excellence, particularly in programs related to the chemical industry.
The influential Gourman Report rates two Ontario universities (McMaster and Toronto) among North America's top 10 for chemical engineering.
BusinessWeek ranks the MBA program at Queen's University as the best in the world outside the U.S. The Financial Times ranks the business schools at four Ontario universities—Queen's, York, the University of Toronto and the University of Western Ontario—among the world's top 40 for MBA programs.
Apotex Pharmachem
Ontario's 24 colleges of applied arts and technology are designed to meet the needs of both students and industry.
Colleges in the Sarnia, Toronto and Ontario East chemical clusters offer two- and three-year technology programs such as Chemical Laboratory Technology, Chemical Production Engineering Technology, Environmental Science Technician and Materials Engineering Technology. For example, students at Sarnia's Lambton College Centre of Excellence for Process Manufacturing work in labs using state-of-the-art equipment to learn the specialized skills that are needed by the processing industry.
Many Ontario colleges also offer specialized training developed collaboratively with industry associations or individual companies.
The Ontario government recognizes that knowledge-intensive industries like the chemical sector depend on the imagination and skill of their workers to produce the high-value, innovative products that underlie economic growth.
That's why the province has launched the largest capital investment in colleges and universities since the 1960s. Ontario and its partners are spending Cdn $2.6 billion to create more than 135,000 new student spaces at colleges and universities throughout the province.
A total of 74 new post-secondary capital projects, many in the rapidly growing fields of science and high technology, are being built on campuses across Ontario.
On-the-job training for skilled trades people is also critically important to industry. The new Apprenticeship Training Tax Credit gives companies a 25% refundable tax credit on salaries and wages for new apprentices. By 2007–08, about 26,000 young people will be entering apprentice positions each year.
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Ontario is one of the most dynamic and profitable business centres in the world. For chemical companies, this means an excellent return on investment.
During the past decade, the average annual profits of industrial chemical companies in Canada have been double those of companies in the U.S.
The Conference Board of Canada's Performance and Potential 2004–05 report shows that productivity in Canadian chemical manufacturing continues to exceed that of its U.S. competitors, largely due to the Canadian industry's greater focus on innovation. The recent Canadian productivity growth rate for basic chemicals is more than 5% a year, almost four times that of its U.S. counterparts.
Ontario's economy, with a GDP of $408.5 billion (42% of the Canadian total), is larger than that of Belgium, Sweden, Switzerland or Austria. Toronto is Canada's financial centre, home of the country's largest banks, stock market and venture capital firms.
Business confidence in Ontario is high. Corporate profits are growing, inflation remains low and our dollar has a favourable exchange rate in relation to the US dollar.
As an export-oriented manufacturing economy, we recognize the importance of being internationally competitive and maintaining our strong business climate.
Ontario's combined (provincial and federal) general corporate income tax rate is 4 percentage points below the U.S. average.
The regulatory environment is streamlined. Site permits are processed more quickly than in the U.S.
Provincial capital taxes are being eliminated.
Ontario has eliminated all fuel taxes on ethanol and biodiesel products.
The Ontario New Technology Tax Incentive provides a 100% deduction for the eligible costs of acquiring intellectual property.
Ontario offers a range of tax incentives that can increase the potential savings under the federal government's generous R&D incentives program.
Intellectual property rights are respected, our legal environment is much less litigious than in the U.S. and there are caps on awards for damages.
Ontario–U.S. cross-border project management and collaborations are made easier by shared time zones and similar business cultures.
KPMG's comprehensive Competitive Alternatives 2004 confirmed that Canada's business costs for specialty chemical manufacturing are the lowest among the 11 countries studied in the report. Costs in Canada are 6.1% below the U.S. average.
This has a huge impact on the bottom line. According to KPMG, a "typical" specialty chemical operation is three times as profitable in Canada than in the United States.
Average labour costs for chemical workers are 25% lower in Ontario than the U.S. average.
Manufacturers in Ontario pay about half as much as their U.S. counterparts for employee health care costs.
Telecommunications costs in Canada are also low. In 2004, the Conference Board of Canada compared telecom costs in 10 leading OECD countries.
Their key findings?
| Specialty Chemicals Manufacturing Costs and profit | Percentage |
| Labour costs | -23% |
| Effective tax rate | -18% |
| After-tax profit | +202% |
| Location | Cost advantage (index) |
| Chatham-Kent | 93.2 |
| Belleville | 93.6 |
| Canada (average) | 93.9 |
| Toronto | 95.3 |
| U.S. (average) | 100.0 |
| Newark, N.J | 102.6 |
| Houston | 103.3 |
| Location | Cost advantage (index) |
| Ontario | 34.1% |
| Michigan | 35.2% |
| Texas | 36.8% |
| North Carolina | 38.6% |
| Illinois | 38.7% |
| California | 39.8% |
| New Jersey | 39.9% |
| Massachusetts | 40.3% |
Dow Automotive Centre of Excellence, Sarnia
In 2002, Dow Automotive established a Centre of Excellence for Reaction Polymers R&D in Sarnia, Ontario.
Why Sarnia? According to Dow Automotive, the decision was based on the favourable cost of R&D, ease of access to its North American customer base, as well as, proximity to corporate and R&D headquarters in Midland and Auburn Hills, Michigan respectively.
Dow Automotive, with offices and application development centres worldwide, is a leading supplier to the global automotive industry, serving Tier 1, OEM (original equipment manufacturers) and aftermarket customers.
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In the global chemical industry, today's research and development (R&D) generates tomorrow's new products, processes and profits.
Canada is one of the most cost-effective countries in the world for industrial R&D. KPMG's Competitive Alternatives 2004 reported that R&D costs in Canada were the lowest among 11 nations studied—21% lower than in the U.S.
When you conduct R&D in Ontario, you're in good company. More R&D is performed here—both industrial and sponsored research at universities and public research institutions—than anywhere else in Canada.
Among Canada's corporate R&D leaders, 50 of the top 100 companies are headquartered in Ontario. Together, they spent $4.9 billion on R&D in Ontario in 2002 alone.
Seventeen of Canada's top 50 research universities are located in Ontario. During 2002, they attracted 39% of all sponsored research funding in Canada.
Who's doing R&D in Ontario? Apotex, Bayer, DaimlerChrysler Canada, DuPont Canada, Ford, GM, Husky Injection Molding Systems, IBM, Imperial Oil, Magna International, Nortel, LANXESS, Crompton, INVISTA, Xerox and many, many others.
Although chemical breakthroughs may sometimes occur when a lone researcher burns the midnight oil in a quiet lab, discoveries more often emerge from the collaborations and cross-fertilization of ideas that come from being part of a vibrant network of people pushing the boundaries of knowledge.
Our R&D community includes more than 150 university and college research centres, dozens of public research institutes and researchers at hundreds of companies. Eight universities have state-of-the-art capabilities in materials science and manufacturing technologies. Ontario's leading chemical companies are collaborating with scientists at Queen's, Toronto, McMaster, Waterloo, Windsor and other institutions to develop advanced materials, new processes and clean/green technologies.
Recognizing that innovation drives economic growth, the Ontario government has invested more than $1.8 billion in public research during the past 10 years and has committed a further $1.4 billion to accelerate research commercialization in the province.
Additionally, Ontario Centres of Excellence Inc. connects university researchers with industry partners on an on-going basis to move discoveries from the lab to the marketplace as quickly as possible.
Canada's R&D tax incentive program ranks among the most generous of the G7 countries. Businesses of any size can make a claim, the range of eligible costs is broader than in many countries and there is no cap on the program.
Ontario provides additional tax incentives for R&D activities conducted directly by companies in Ontario or through eligible research institutes. When tax credits are factored in, the real cost of $100 in R&D spending can be $40.24 or less.
Savings vary by the type of corporation. The following chart illustrates the after-tax costs of $100 in R&D expenditures for a large manufacturer, based on the 2004 tax rates.
| More R&D Costs Qualify for Tax Credits in Ontario | ||
|---|---|---|
| Ontario | US | |
| Wages and salaries | x | x |
| Capital equipment | x | |
| Materials | x | x |
| Overhead | x | |
| Consulting fees | x | 65-75% |
| R&D Savings in OntarioLarge manufacturers(public, private or foreign-owned) | R&D expenditures | R&D expenditures at eligible Ontario research institutes1 | Non-R&D expenditures | |
|---|---|---|---|---|
| Gross expenditure | $100.00 | $100.00 | $100.00 | |
| Ontario - 20% OBRI tax credit 2 | ($20.00) | |||
| federal investment tax credit - 20% | ($20.00) | ($16.00) | ||
| Tax deduction 3 | ||||
| $80 x 34.12% | ($27.30) | |||
| $64 x 34.12% | ($21.84) | |||
| $100 x 34.12% | ($34.12) | |||
| Ontario exemption of federal investment tax credit | ||||
| $20 x 12.0% | ($2.40) | |||
| $16 x 12.0% | ($1.92) | |||
| After-tax cost of $100 expenditures | $50.30 | $40.24 | $65.88 | |
1 Eligible Ontario research institutes include universities, colleges of applied arts and technology, research hospitals and other entities in Ontario
2 The 20% refundable Ontario Business Research institute tax credit
3 Tax rates for manufacturers (2004): Federal 22.12% plus Ontario 12.0% = Total 34.12%.
Commercial Alcohols
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No matter where you come from, you'll find a community in Ontario where you'll feel comfortable. One in four of us was born outside Canada. One in five of us is a member of a visible minority. We are the home to people from 170 different ethnic backgrounds who speak more than 100 languages.
No matter where you go in Ontario, you will find:
Education in Ontario—high quality and affordable
Canadian teens have scored some of the highest marks in mathematics, science and reading among OECD countries.
Tuition costs for arts and science undergraduates at Ontario universities are 40% lower than those at the state universities in the Great Lakes region.
It's all at your doorstep. Whatever your after-hours pursuit, you'll find it in Ontario.
Special thanks to the following organizations for providing photos:Canadian Chemical Producers' AssociationThe Conference Board of CanadaThe Dow Chemical CompanyEnergenius Centre for Advanced Nanotechnology, University of TorontoImperial Oil LimitedNOVA Chemicals
For more information about investment opportunities in Ontario, please call us at:
1-800-819-8701 (North America)
00-800-46-68-27-46 (U. K. and Europe)
Email:
info@2ontario.com
Or visit us at:
www.2ontario.com
Ontario Investment and Trade Centre
250 Yonge Street, 35th Floor
Toronto, Ontario, CANADA M5B 2L7
Phone: (416) 313-3400
Fax: (416) 360-1817
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