Ottawa's tech billionaire and the man who has backed about 80 tech firms is warning that Canada's tech industry is taking a "nosedive." Terry Matthews says problems in Ottawa are a warning sign of a potential collapse.
"It is very bad. And you know, I often think of life a little bit like a balance sheet," Matthews told CTV Ottawa. "And on balance, there are too many negative line items that are driving the industry down."
Matthews has said this before, but he now feels that things are getting worse a lot faster than he expected. Matthews outlined some of the problems and also about 20 suggested solutions in a report produced in co-operation with the Canadian Advanced Technology Alliance, a technology lobby group.
Matthews' first warning came in the spring of 2007. He said then that Canada was losing its lead in the tech sector and that Ottawa was losing the drive, innovation and spark that made it a tech capital.
Now, his report calls Ottawa the worst hit tech centre in Canada. He labels the city as the "canary in the coal mine" that is alerting us to an industry falling faster than he ever expected.
"The industry has lost its growth. I'm very sad to say it's in trouble and it's a very serious situation," Matthews said. "You can't attract a foreign company, and you can't hold onto your own. There's not a lot in between. I think that, more than anything else, characterizes a very, very disappointing situation that we have in Ottawa, Toronto, Montreal and other cities."
The report looks at Ottawa companies being bought or sold before they get a chance to be a success. Matthews says that after 50 years as a leader in telecommunications, Ottawa is in "rapid decline" and "no longer has critical mass" to draw in both people and companies. Examples of the problem are Nortel shifting research to China and Dell closing its Ottawa call centre.
Why the decline? The report points to several issues, including the high Canadian dollar, a shortage of investment money, tax rules that prevent more investment money and a shortage of skilled workers. It also points the finger at Canadian governments that don't do enough to buy Canadian products or encourage small tech firms.
Bruce Linton is part of that new economy as his firm Clearford is involved in clean-tech. He agrees that new companies like his face the pressures Matthews talks about.
"When you get into more desperate times, you say it more loudly, and more specifically, and from higher up, and certainly that seems to be what's going on now," Linton told CTV Ottawa.
Matthews says the federal government has not made any real changes to help tech firms. He thinks a possible election will just add delay, and in this situation, time is precious.
Not everyone agrees with Matthews and he calls himself a bit of a lone wolf on the issue. But there are executives who do.
"When times are bad, Terry is also our energizer bunny, to make sure everybody knows what the problems are," said head of the Ottawa Economic Development Agency Jeffrey Dale. "We have to rebuild the companies from scratch and that's where I think Terry has it got it dead on. Unless we pay attention to this and unless we raise the awareness now, I think we are going to have real significant problems in the years to come."
Matthews warning comes with a bleak forecast. "In 10 years time we'll say, 'There used to be a great industry here.'"
With a report from CTV's Paul Brent
