Tech giant Cisco getting millions from government to expand Ontario workforce

Wednesday, December 18, 2013

TORONTO — Ontario's Liberals are handing up to $220 million to Cisco Canada as part of a deal that could see the high-tech giant invest as much as $4 billion and create thousands of jobs in the province over the next decade.

The news comes amid a rash of pending plant closures by companies that received provincial government subsidies.

Cisco, which sells computer hardware, software and services, said the 10-year deal includes a framework with the potential to grow its Ontario workforce by up to 5,000 by 2024, "reflecting a potential total investment of up to $4 billion."

Premier Kathleen Wynne said the agreement will add up to 1,700 jobs with a focus on research and development over the next six years, but there will be other benefits.

"It's very important to understand that jobs like these spawn other jobs," she said Friday from Cisco's downtown Toronto offices. "There are other jobs that are required to support this kind of high tech, so I believe that we have a bright future because of creating hubs like this."

Both Kellogg and Novartis, which also received government help, are shuttering factories in the province, resulting in the loss of more than 800 jobs.

It's a big blow to Ontario's hard-hit manufacturing industry, which also saw Heinz announce it would close its plant in Leamington, costing another 740 jobs.

There are provisions within the Cisco agreement that "tie job creating and retention to performance measures," Wynne said. "It's very clear to everyone that the expectation is that that money is contingent on the jobs being created and maintained."

Cisco Canada president Nitin Kawale said it will create high-value jobs that will stimulate Ontario's economy.

"We invest in Ontario because the province produces smart young graduates," he said. "Ontario has a stable economy and Ontario has talented, innovative and hard-working people."

Waterloo Region, a hot spot for technology development, isn't slated to get any of the new jobs, at least not in the near future.

"While we have no plans to create jobs in Waterloo at present, we will continue to keep our options open should circumstances change," Karin Scott, the company's public relations director, said in an email.

"Waterloo is undoubtedly a hotbed of innovation and talent and we look to continue to work and expand our relationships and activities there," she said.

Last year, Cisco opened an incubation centre in Waterloo that gives startups and university students access to the company's technology, including its TelePresence video conferencing products.

The centre, located in the University of Waterloo's David Johnston Research and Technology Park, is staffed by 10 Cisco employees.

Cisco had a large presence in Waterloo for a brief time more than 10 years ago. It purchased PixStream, a video networking technology startup, for $554 million in December 2000, but shut down the business four months later.

Key personnel from PixStream went on to found other local tech companies, including Sandvine and Avvasi Inc.

The Progressive Conservatives blasted the government for giving the money to Cisco, saying they oppose such "corporate welfare."

"This is nothing more than another photo op for Kathleen Wynne and the Liberals," said Tory finance critic Vic Fedeli. "Spending about $130,000 a job is no way to create employment in Ontario. Buying jobs is not the way."

Wynne defended the government cash to Cisco, whose U.S.-based parent company earned $2 billion in the last quarter.

"(Heinz) is a company that was in a different kind of transition and had made a business decision," Wynne said. "This is a situation where there was an opportunity to move forward and a company that was interested in taking advantage of the business climate in the province.

"It pains me when we lose jobs, but the reality is there are businesses that are in transition," she added. "We are moving from a different kind of manufacturing base to advanced manufacturing."

Investments should be made, but the Liberals have a poor track record when it comes to ensuring the jobs stay in Ontario, said New Democrat Gilles Bisson.

Two years ago, former premier Dalton McGuinty gave $4 million to Novartis, he said. Now the pharmaceutical company has announced it's closing its Mississauga plant.

"How many times have we seen this government say there are guarantees in this agreement that are ironclad, we're going to make sure that we have the jobs," Bisson said. "And the jobs end up leaving at one point."

It’s a different story than the Heinz processing plant in Leamington, where entire families worked, she said.

The Canadian Press with files from Record staff

View the whole story here

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