Advanced Manufacturing - September 2001 - Industry... -
[Cached Version]
Published on: 9/1/2001
Last Visited: 2/9/2002
"We are a North America-centric company, as opposed to a Canadian-centric company," explains Doug Brownridge, director of product marketing for PMC Sierra in their Burnaby, B.C. head office."To be successful in the IT industry means you must be globally oriented," he adds.
The company sells a small portion of its products in Canada, partly because the market here is much smaller than in the U.S.But still, Canadian firms like Nortel are so prominent in telecommunications internationally that you'd expect more sales here.But Brownridge says that Canadian firms aren't on a level playing field with the U.S. Canadian firms have to pay federal and provincial sales taxes on much of their capital equipment, which tends to slow upgrading of capital equipment here; U.S. firms don't pay the same tax rates.
This is one reason that Canadian manufacturers in several industries lag their U.S. competitors when it comes to equipment investment.Also, U.S. Companies tend to access equity market relatively early in their growth, compared to Canadian companies."Canadian manufacturers have relied on the decline in the Canadian dollar against the U.S. for an apparent reduction in costs," Brownridge says."But long-term profits and growth come from increased productivity."Harmonization of tax rates and investment guidelines, even between provinces, would make Canadian firms better able to compete internationally, he says.
Still, PMC Sierra has not let these considerations hamper it.While R&D levels as a proportion of gross domestic product may be lower in Canada than in the U.S., PMC Sierra is one of the 10 largest investors in research and development in Canada, and number one worldwide in research and development in broadband integrated circuits: in fiscal years 1999 and 2000, PMC Sierra spent $230 million in R&D, and its investment in 2001 alone will reach some $220 million US."We've spent close to a half-billion dollars over three years on R&D," says Brownridge.
Even with their success and growth, and the fact that PMC Sierra offers its technical staff and researchers some of the most interesting work in telecommunications development in the world, Brownridge admits that occasionally they have trouble attracting the talent they need.U.S.-based firms offer top Canadian university graduates 20 to 30 percent more in salaries than the Canadian average.PMC Sierra counters with an "aggressive" salary scale, paying competitively with U.S. standards.
Even so, Canadians pay significantly more in personal income taxes than do American residents.This is another factor that discourages qualified people from moving to B.C., when there are many other career opportunities in California or Washington."If you want to compete globally, you do need, from time to time, to bring in people from the U.S. or other areas," says Brownridge.The tax premium is a disincentive, as are "problems for spouses to get working visas in Canada."
These problems can be solved if there's enough money, but Brownridge says PMC Sierra has encountered a significant image problem for the whole country: there is a perception in the U.S. that Canada's health care and education systems are close to collapse."We could do a better job in getting comparative information out about the quality of life in Canada," says Brownridge.
SIDEBAR - Expert Analysis
Electronics firms turn to more outsourcing
39 online sources [ view sources ]
