By the BF Staff
From the May/June 2018 Issue
Situated on both sides of the beautiful Saint John River in the west central province of New Brunswick, Canada, the City of Fredericton is a veritable hub of economic activity with a diversification most often associated with more sizable metropolitan areas. The city is renowned for its cultural festivals, a thriving arts scene, two universities, the seat of provincial government and an emerging startup and tech sector.
The Canadian Business Journal recently spoke with Fredericton Mayor Mike O’Brien and two executives from Ignite Fredericton, Knowledge Park and Planet Hatch—CEO Larry Shaw and Economic Development & Marketing Specialist Laurie Guthrie—about some of the exciting new developments within the Fredericton, Oromocto, New Maryland partnership as it relates to business development.
“In the last census that came out in 2011 we had the largest growth in the province percentage wise and in numbers. A lot of businesses are growing through our startup sector and organically. We’re excited to see what the growth will be when the next census comes out,” Mayor O’Brien says.
The Fredericton-Oromocto Region, with a population of 109,800 (as of the 2011 census), is the center for the Canadian Forces base Gagetown. The interdependencies of the communities within close proximity of 50 km results in a lot of economic development activity and services that cross boundaries. Oromocto has a very significant economic driver with CFB Gagetown, one of the largest military bases in Canada and a staging area for most global activities when the military is mobilized abroad.
Fredericton also is widely acknowledged as being the knowledge-based capital of New Brunswick. The most recent statistical data indicates about 70 percent of the knowledge-based and IT-based industries in New Brunswick are located in the Fredericton-Oromocto Region. “It’s really become the bedrock of our community,” O’Brien says.
For a number of years, the City of Fredericton, the community of Oromocto and New Maryland had been making investments in economic development, which was part of a province-wide infrastructure referred to as the Enterprise Network. It was part of a provincial network before Investment NB and Opportunities NB were created.
“Nearly four years ago, the province and the federal government changed direction in the way they wanted to support economic development and that did away with the Enterprise Network. The larger cities in the province, namely Fredericton, St. John and Moncton, had enough depth of strength within their local organizations that they were able to forge ahead with their own economic development units,” Shaw says.
Ignite Fredericton is responsible for helping potential entrepreneurs get a foothold in business as well as assisting existing businesses with their growth pattern and being a catalyst for foreign direct investment attraction. It is also responsible for talent or workforce development, which is accomplished through immigration, retention and repatriation strategies.
Knowledge Park is the infrastructure, the physical buildings and space for companies to operate from. About 800 people call it their work home within 37 different companies. Planet Hatch is the organization that deals with everything to do with startup. Just recently Ignite Fredericton, Knowledge Park and Planet Hatch were integrated as a method of improving efficiencies.
In addition to the integration of three organizations into one, Ignite Fredericton also has developed what they refer to as their entrepreneurial hub or single point of contact for entrepreneurs and for the clients. “At our organization here in Knowledge Park, we also have Opportunities NB, which is the economic development arm of the provincial government. When we have clients who come in to access programming and support, we can walk them down the hall so that they can access financial programs the province offers,” Guthrie says.
Also available is the City of Fredericton’s arm of GoFred through F6 Networks, which is the fiber optics network and digital infrastructure as well as The Chamber of Commerce’s incubator for newcomers.
In early June, Ignite Fredericton launched an entirely new investment traction strategy focused on knowledge-based information and communications technology (ICT) and integral subsector components. There already has been tremendous growth and cluster development in cybersecurity, GPS, avionic and big data. Guthrie says the primary goal now is to focus efforts on developing those subsectors.
The team at Ignite Fredericton aims to assist the local business community in benefitting from the supply chain and procurement opportunities and thus move projects along with a continuous flow through advocacy, communications and engineering.
“We’ll help any potential businesses that are looking at expansion and relocation but we see a lot of growth potential in those particular sectors, so our strategy has been to do the asset mapping, identifying what the value propositions are and then how we can position ourselves to grow those sectors,” Guthrie says.
The time and investment devoted to startups is clearly paying off with prodigious dividends. Since January, 2015, 55 new startups have taken hold in Fredericton, creating 410 direct jobs and another 156 indirect jobs. Some of the successful emergent enterprises include: Wear Your Label, Resson, Mycodev, Hot Spot Parking, Red Rover, Real Food Connections, Simptek, Smartskin and Introhive.
“We culled out the specific startups over the last couple of years and we have an 86 percent success factor after two years of operation of those companies, which is quite different than you’ll find in any jurisdiction,” Shaw proudly says. “Oftentimes failure rates in these kinds of accelerators can be as high as 90 percent.”
More than $26 million of GDP associated with the extended business success translates into 35,000 restaurant visits on an annual basis, so every restaurant owner in this community knows that the startup community alone is driving 35,000 different meals inside their restaurants in the scope of a year. There are 60,000 movie visits that are the result of that activity from those startups.
“Each community, from a tax base, will receive about $1,500 per job that is created in the startup arena. The capital investments in 55 startups, which end up being 49 long-term operating companies, is over $5 million, and that ends up being spent in the community,” Shaw says.
Ignite Fredericton lobbies both the federal and provincial governments on the need to have an immigration policy that is much more open and opportunistic-driven than it is today.
“You can’t sustain the workforce or the economic development initiatives without having immigration at the core of what you’re doing,” Shaw says. “We’re doing everything we can to add programs, we’ve dedicated resources and we partner with the various agencies in the city to make sure that we have settlement processes in place.
With the help of federal funding, Ignite Fredericton has developed a plan for the Region that addresses the retention and capabilities standards necessary for success in the community. Fredericton has continued to consistently lead the province in attracting newcomers. “It’s our job to ensure they stay here. We want them to feel welcome and well integrated in our community,” Guthrie adds.
The economic development team in Fredericton has placed enormous emphasis on international student retention as well as domestic student retention. It’s all part of an assertive effort to partner with the business sector and keep the young people engaged and excited to be part of the community. There is tight collaboration between the city’s economic development team and the business agencies within the community, including the Fredericton Chamber of Commerce and Opportunities NB.
Through Planet Hatch, Fredericton is the only Accelerator in New Brunswick to offer Canada’s new startup VISA program. Guthrie says it will serve as a vital resource tool in terms of attracting and retaining international talent.
Ignite Fredericton recently launched a brand new export acceleration program called Export Igniter. The Igniter is scheduled to begin in January 2017 and run as a 12-week program enabling export-ready companies to develop their export strategy to expand to new markets. The initiative is being executed in collaboration with UNB, Fredericton Chamber of Commerce, Canadian Manufacturers & Exporters and Opportunities NB. Guthrie is excited about the potential that the new program will bring.
“Nobody else is doing it in Atlantic Canada to the best of our knowledge,” she says. “We are going to use our business acceleration model. It will involve export-ready companies that don’t know how to export. Export Igniter will wrap services around those companies so they know how to develop their market entry export plan and properly identify their export markets.”
There also is an investment attraction toolkit, based on a detailed research analysis and strategy undertaken in 2015. The strategy focuses on four sectors, which is poised for exponential growth including: ICT, biotechnology, natural resources and engineering.
Ignite Fredericton has been working to make sure that the ecosystem around entrepreneurs has a holistic view and that there are no duplication of services. A priority for Shaw has been a closer relationship with the University of New Brunswick.
“What we did was to go in to UNB and talk about how we can collaborate and bring our infrastructure together and start to share service,” Shaw says. “It really came together around the export initiative. The Activator program in the business faculty runs literally hundreds of students through their program over a number of years.”
There also is a substantial bioscience and biotechnology sector in the community as well as continued natural resources development with the presence of such corporations as Irving Oil and Enbridge Gas in the community.
“We have approximately $7.2 billion worth of projected investment for some major natural resource development projects in the coming years, which will result in huge job creation,” Shaw says.
“Ignite Fredericton has put a lot of resources behind mobilizing the community, bringing stakeholders together through a natural resources development task force. Essentially we’ve been focused on how we can ‘skill up’ and be proactive, so we’re ready when these projects get the green light,” Guthrie says.
There are 5,000 citizens from Fredericton, Oromocto and New Maryland who make their primary income from natural resources. Statistics reveal 25 percent of graduates coming out of university find themselves working either directly or indirectly within the industry at some point.
Despite the fact the Energy East pipeline does not travel directly through Fredericton, some business enterprises located within the city are extremely significant logistical suppliers to the essential project, whether it is engineering, manufacturing or mechanical design.
According to a recent KPMG report, Fredericton is also one of the most cost-effective cities to conduct business anywhere in Canada, with the lowest municipal tax rate of major cities in New Brunswick.
TOURISM AT AN ALL-TIME HIGH
Tourism revenue for Fredericton hit an all-time high of $241.5 million in 2015, up 3.7 percent from last year. It is the fourth consecutive year of increases and the first time in nine years that revenues increased more than three percent. It is an important cultural center of the region featuring art galleries, museums and theaters and, in 2009, the federal government named Fredericton the ‘Cultural Capital of Canada’.
“We’re doing a lot of cultural activities here and have invested in new recreational facilities as well as promoting sports tourism, bringing national tournaments into the city so we’re doing everything we can to make the city as vibrant as possible,” O’Brien says. “My focus as mayor is to use all those amenities combined with the hard work done by Ignite Fredericton and to keep the three levels of government and the business sector focused on economic development.”
Fredericton’s City Centre Plan—which lays out the foundation for future development in the downtown core—earned an Award of Merit from the Canadian Institute of Planners (CIP) in the category of City and Regional Planning.
“It was a huge effort with lots of community engagement,” says O’Brien. “We want to attract more tourists to our downtown. A few years ago, our main street in downtown Fredericton, which is called Queen Street, was voted the No.1 street in Canada by the Urban Planners of Canada for its uniqueness and historic character.”
A sector of the downtown core called the Garrison District was at one time the headquarters for the soldiers’ barracks back in the 1800s. O’Brien notes there is still a lot of space available in the area and that a secondary plan has been developed to make that a primary tourism magnet for the town, which borders onto the river.
“The Garrison District Plan is a 10-year vision but I’m hoping to expedite that much faster. The City Centre Plan is obviously generational where we have to wait for some infrastructure improvements to be done but we started on it this year,” he says.
When O’Brien was still serving as a city counselor he and another colleague were instrumental in pursuing the idea of expanding sports tourism in the community. The concept was to take advantage of some of the national-classed facilities in the city. “Seed money was put towards our tourism department to focus on that in an effort to bring in regional and national tournaments, and that’s been paying great dividends,” he says.
The Harvest Jazz & Blues Festival is an annual event that continues to expand each year. Often described as ‘the best international festival experience on Canada’s east coast’, it attracts more than 400 musicians and 150 performances covering six downtown city blocks and now runs for six days in September. This year’s festival runs from Tuesday, Sept. 13 through Sunday, Sept. 18.
“It’s one of the premier events in Eastern Canada,” O’Brien proudly says. “The visitors and ticket sales for that event is about 80,000 people.”
“We’re planning two conference-type events for the week of the Harvest Jazz & Blues Festival,” Guthrie adds. “It attracts a lot of conferences and conventions to the community, which has had a big economic impact with Fredericton building its new convention center a few years ago. A new hotel is going up next to the convention center and the Beaverbrook Art Gallery is undergoing a major, multi-million dollar expansion. There’s a lot happening in the downtown, including expansion of the festival circuit, as we call it.”
In the past few years Fredericton launched a winter festival called FROSTival, which includes more than 100 outdoor events over four weekends in late January and February.
A BRIGHT ECONOMIC FUTURE
The widespread diversification of business development within the city puts Fredericton in an enviable position for the future. There also is a robust cross-section of very large, mid-sized and small enterprises doing trading within the community, including very well-known international brands. Siemens has both a smart grid center of competence (COC) and a research & development (R&D) center, the latter of which is a milestone in Siemens’ multi-year partnership with NB Power. IBM also is located in the city, producing their entire global network level security protocol management in Fredericton.
“The advantages coalesce around the availability of labor and the skill of that labor in relative terms to our general marketplace,” Shaw mentions. “By the mere fact that we have the university, which produces about 3,000 graduates a year, and 60 research organizations within our community, there are many great opportunities.”
In Fredericton there is the precise combination of forward thinking and small-town intimacy to achieve economic objectives. There is the ability to reach out and touch anybody that you need, yet the ecosystem is all about developing the economy and thinking ahead about what the next big breakthrough will be for the community.
“I’m not satisfied unless we achieve big results. In the next few years we will become the cybersecurity center of Canada,” Shaw firmly states. “We will be delivering products and services both in natural resources and IT through cybersecurity and Big Data. We will create a billion dollar industry in the province, to which Fredericton will be the leader in knowledge-based activity around cybersecurity. Fundamentally, we are going to have a place where young people growing up will have a place to work and our population will grow and that growth will be combined through population retention and immigration.”