HomeMy WebLinkAboutCAO-15-031 - Economic Development Strategy
REPORT TO: Committee of the whole
DATE OF MEETING: October 5, 2015
SUBMITTED BY: Rod Regier, Executive Director, Economic Development, 519-741-2200
ext. 7506
PREPARED BY: Janette MacDonald, Analyst, Economic Development, 519-741-2200
ext. 7760
WARD (S) INVOLVED: All
DATE OF REPORT: September 24, 2015
REPORT NO.: CAO-15-031
SUBJECT:
Kitchener Economic Development Strategy Update
___________________________________________________________________________
RECOMMENDATION:
For discussion.
EXECUTIVE SUMMARY:
Kitchener has economic strength in many areas including manufacturing, technology, financial
services and creative industries. There has been substantial growth in our local tech sector
since our last strategy, in small but growing startups like Vidyard and TribeHR/Netsuite, as well
as large firms like Google and Desire2Learn. As well, hardware is emerging as a new form of
manufacturing in companies like Thalmic Labs, Clearpath Robotics and Miovision. The
renewal of manufacturing and its’ convergence with tech presents a distinct competitive
advantage for Kitchener. As well, creative industries like music, film and digital media are
increasingly integrated with tech firms that develop content like Electronic Arts and Industry
Corp.
The growth of these clusters depends on our ability to attract, develop and retain talented
people. To be attractive to talent, the city must offer economic opportunities and a vibrant
lifestyle. Our economic development strategy is organized around these two key pillars of jobs
and lifestyle. To support job growth, we must support the full continuum of job creation from
experimentation/idea generation, to starting and growing a business. To build a vibrant
community, we must shape our city to create integrated, well-designed spaces in which people
share experiences. A vibrant city is home to festivals, live music, strong neighbourhoods and a
dynamic downtown. Finally, to make the most of our work, we must ensure alignment with our
regional partners, and build stronger connections along the innovation corridor to Toronto.
Kitchener’s Economic Development Strategy 2015-2019 identifies Kitchener’s priorities for
economic development in the current term of Council. It helps to direct investment of city
resources and support the partnerships needed to advance the city’s economy.
*This information is available in accessible formats upon request. Please call 519-741-2345 or TTY 1-866-969-
9994 for assistance.
1.b. - 1
BACKGROUND:
Kitchener’s Economic Development Strategy (KEDS) was created for implementation during
2011–2015. Therefore, in the fall of 2014 economic development staff began consultations
with advisory committees and staff groups to assess the need to update KEDS, and to
consider tactics for refreshing the strategy.
Based on discussions with the Economic Development Advisory Committee (EDAC) and
Downtown Action and Advisory Committee (DAAC), there is support for continuing the general
direction of KEDS with a refreshed strategy.
Since KEDS was approved in 2011, economic development absorbed two additional business
units: Arts & Culture and Special Events. As well, local municipalities (including Kitchener)
approved a new Waterloo Region Economic Development Strategy. Most recently, through the
corporate strategic planning process, the community has identified the economy as one of their
top priorities for the next four years, and the recently-approved Corporate Strategic Plan
outlines direction for economic development staff.
These developments, combined with the city’s recently approved Strategic Plan, provide a
timely opportunity to refresh Kitchener’s economic development strategy to better reflect
advancements in the regional economy, and to ensure alignment with the direction of a new
council and updated corporate structure.
REPORT:
Economic context
In the past four years, Kitchener has seen dramatic growth in technology companies ranging
from Google and Desire2Learn to hundreds of startups. Major projects under construction
include Google’s 200,000 square foot expansion into the Breithaupt Block and the 400-unit
residential condominium projects at City Centre and One Victoria. A list of high density projects
is also moving through the planning and building permit processes. Positive investment trends
include manufacturing where expansions to PWO, Fastenal, Miovision and Clearpath Robotics
demonstrate renewed strength in what has been a historically successful industry in the city of
Kitchener.
As well, regional investment in infrastructure — especially the ION Light Rail Transit — support
urbanization and affect the shape of our city. These investments align with social trends
including the rise of the social economy, a greater emphasis on community experiences (e.g.,
festivals, yoga in the park), and greater demand for downtown living. Infrastructure like light rail
and inter-city rail are more important than ever in attracting a mobile workforce.
These industry and infrastructure investments are driven by a common underlying force:
technology. The most powerful agent for change in our city is technology and innovation. It
affects our homes, our social experiences, our workplaces, all types of industry, and
infrastructure. Technology is seen as an independent business cluster, but it permeates
1.b. - 2
through industries, affecting insurance, manufacturing, music and retail. Technology is driving
investment in nearly all areas with one notable exception: retail.
The global phenomenon of online shopping has made the retail environment extremely
challenging. This is pervasive across our communities, and in cities around the world. From
independent operators to large global chains, challenges continue as competition increases.
Retailers will have to adapt and innovate to overcome.
Aside from retail, other local business clusters are showing signs of growth.
The local economy is still heavily invested in manufacturing, with 19 per cent of the local labour
force employed in this industry. In the past, local economic performance has been hinged to
the fluctuations of macroeconomic variables (like exchange rates) that affect the cost
competitiveness of manufacturers. Local manufacturers were forced to re-evaluate their
business models in the time period leading up until 2007, when $CDN-US exchange rate hit
parity. As a result, they made efforts to decouple their competitiveness from currency values
by adapting their business model to include R&D, customization, and after-sales support —
essentially to offer better value to their customers than competing cheap imports. As a result,
the Waterloo Region continues to have an exceptionally diverse and growing manufacturing
cluster, including support services and supply chains.
During this same period, the Waterloo Region has seen remarkable growth in hardware related
startups. Companies like Miovision, Clearpath Robotics and Thalmic Labs have emerged out
of the technology support system to become bona fide manufacturers of unique high value
products. At present, a large minority of startups incubated by the Velocity Foundry program
are working on new hardware projects and are potential future manufacturing employers. An
entirely new generation of manufacturing companies are now setting the stage for growth in
this sector.
The relationships among industries are more complex than ever. The importance of ideas,
knowledge, design and support systems means that Kitchener’s employment base now
requires a better blend of workers: from coders to machine operators, designers to bakers,
insurance advisors to artists. The right mix of services provides necessary supports for
industry growth across all sectors. Manufacturers depend on designers and communicators to
market their products, while tech companies depend on manufacturers to produce their
products. Tech, manufacturing and the arts are all converging in the ‘maker’ movement, which
combines a do-it-yourself approach to creative experimentation. It is necessary to support both
diversification and subsequently integration of these diversified industries to provide the best
opportunities for economic prosperity.
Kitchener’s future is promising even if our global economy is uncertain. The region has one of
the best employment rates in the country. Our biggest trading partner (the United States) is
finally growing. The low Canadian dollar and cheaper oil suggest that growth potential is
strong. But our entrepreneurial community has always known that our competitiveness has to
be driven by more than the dollar. Innovation has allowed local business clusters to remain
competitive on a global stage; it is the most important force in determining local economic
1.b. - 3
prosperity.
Consultation results
During 2015, economic development staff engaged in stakeholder consultations called “Ideas
of the Brave”. The intent of this program was to provide multiple types of consultation
opportunities that engaged a wide variety of stakeholders. These conversations enhanced our
understanding of research into current trends that are affecting our local economy.
Through our stakeholder consultations, key themes emerged including:
Continue to support Startup City, Innovation District, Downtown,
Leverage new opportunities like ION; transportation matters,
Extend support for other clusters like manufacturing, creative industries,
Connect it together (infrastructure, transit, fibre, neighbourhoods, people),
Support the development of the maker ecosystem as it supports art, technology,
engineering and industrial arts.
Stakeholders also articulated values that should be reflected in our work, including:
respect community diversity,
continue to diversify our economy to support different kinds of work,
support affordability in both a residential and business context,
deliver innovative solutions while challenging bureaucracy.
As well, it became apparent through consultation that “KEDS” is a name that is only
meaningful internally.
Strategic direction
The city’s revitalized economic development strategy is an opportunity to move from an
acronym to a story; from a single document (“KEDS”) to a full brand strategy that speaks to
and resonates with stakeholders.
To achieve this opportunity, the term KEDS will be retired, replaced by the proposed slogan:
“Make it Kitchener”. This slogan reflects the feedback heard during Ideas of the Brave; it is
both a call to action and a statement of fact. Simple and clear, it also acts as a unifying theme
to bring together all the different types of business and people making things happen in this
community — from bakeries to robots, from smartphone apps to aerospace components, from
music careers to festivals. It also suggests that you can make it and be successful here.
In “Make it Kitchener” talent is identified as a strategic imperative, as talent attraction and
retention will ultimately drive our economic growth. It is this drive to innovate that makes
Kitchener a global player. It is the ability to rise up based on the quality of our people — not the
downfall of our currency — that moves Kitchener ahead.
1.b. - 4
In order to be an attractive city for people, two key questions must be addressed:
a) How do we grow our economy to provide job opportunities?
b) How do we shape our city to attract and retain people?
Our project work in these areas is organized into areas of focus as follows.
A) How do we grow our economy to provide job opportunities?
Make it Spark
The purpose of this area of focus is to support pre-commercial activity including idea
generation, experimentation, talent/skill development, and to strengthen our innovation and
maker culture. In this sphere, the City of Kitchener has a clear role in supporting and mobilizing
pre-commercial activity. We see three key objectives:
Support creative experimentation.
Encourage industry cross over. (e.g., tech + art=User Experience Design)
Support creative clusters in music, film, performing arts, design, etc.
Make it Start
After the spark of an idea emerges, startups require support services to get off the ground.
This area of focus is the evolution of Startup City, which we will continue to develop as an
identity. As the startup community is evolving, new opportunities are emerging to provide
incubator/accelerator space in the critical hardware and manufacturing, life sciences, music,
digital media, and food sectors. A number of projects are currently in the planning process, but
need support. To continue to be the best place to start a business in Canada, we must extend
our services into new areas and industries. We see three key objectives:
Be agile in the provision of services for startups.
Continue to attract entrepreneurs — locally, nationally, and globally.
Become a magnet for investment.
Make it Grow
This area of focus is intended to support the competitiveness of established industries and
businesses, and to help our small and medium sized businesses to scale up locally. Through
our consultations, the idea of representing our community as a Global Maker Hub emerged.
This requires development of all the necessary resources and supports to make it possible for
businesses to fully develop locally.
Build our identity as a Global Maker Hub.
Work with existing businesses through partnerships (like the Manufacturing Innovation
Network) to support their needs.
Help develop cluster supports that make these systems work (e.g., industrial design,
marketing, finance, supply chains).
1.b. - 5
B) How do we shape our city to attract and retain people?
Make it Urban
This area of focus is the evolution of ‘Dynamic Downtown’ from KEDS.11, which has been split
into two areas of focus (see also ‘Vibrant’, below). Make it Urban better reflects the significant
urbanization opportunities that extend through the central transit corridor, while retaining the
development of downtown itself as an economic development priority. Much of this work
requires co-ordination with Planning staff, and must align with our Official Plan.
Continue on the path of building a dynamic downtown.
Continue to lead the way in the redevelopment of our own properties, and work with the
private sector to apply these same standards.
Facilitate the development of sought-after urban amenities, like dog parks and patios.
Make it Vibrant
This area of focus addresses the opportunities that we have to bring our city’s spaces to life.
This involves placemaking, especially in the urban spaces targeted through “Make it Urban”
(above). But, there are opportunities to deliver vitality outside the downtown core, through
support of Kitchener’s upcoming Neighbourhood Strategy, which requires co-ordination with
Community Services.
Build Kitchener’s identity as a festival city.
Encourage our creative community to use the city as a stage, invigorating the city
through new programs, and in unconventional spaces.
Support strong communities and neighbourhood identities through distinct events and
creative expression.
Make it Connect
This last area of focus reflects a need to connect into the larger regional economy, and build
up the innovation corridor to Toronto. This requires coordination with other levels of
government and stakeholders working in a regional context. There is some co-ordination
required with the upcoming Digital Strategy, as it relates to fibre and public wifi.
Champion the creation of the infrastructure to develop an innovation corridor between
Waterloo Region and Toronto (GO Trains, high-speed rail, fibre networks).
Build the partnerships needed to support it (WREDC, Communitech, Toronto clusters).
Develop the Innovation District as the heart of the system.
Each of these six areas of focus will have specific associated projects for implementation.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
During consultations for the corporate strategy plan, the community identified the economy as
one of the top priorities for the next four years. A refreshed economic development strategy will
align with the recently-approved corporate strategic plan. As well, alignment with the Waterloo
Region Economic Development Strategy is an important factor that has been considered in
identifying Kitchener’s role in implementing a regional agenda.
1.b. - 6
Corporate Strategic Plan Makeit Kitchener area of focus
2.1 Foster a business environment that stimulates Make it Spark, Start, Grow
innovation and job creation, helping startup entrepreneurs
establish and grow their business.
2.2 Support the attraction, retention and development of Make it Spark, Start, Grow
existing and new industries within the regional economy, Make it Connect
working in collaboration with the economic development
corporation for Waterloo Region.
2.3 Strengthen Kitchener’s connections within the GTA-Make it Connect
Waterloo Region corridor to support the development of a
globally-significant regional innovation economy.
2.4 Develop and nurture a high quality of life and a Make it Urban, Vibrant
powerful identity for the City of Kitchener to attract
investment and a talented creative workforce.
2.5 Facilitate the ongoing development of Downtown Make it Urban, Vibrant
Kitchener as the heart of the city.
FINANCIAL IMPLICATIONS:
Any disbursements will be funded through existing economic development operating budgets
and/or the economic development reserve fund, based on future approval of supporting
business cases where appropriate.
COMMUNITY ENGAGEMENT:
A targeted consultation strategy was implemented as presented to Council February 9, 2015.
There has already been broad community consultation as part of the corporate strategic
planning process and Waterloo Region Economic Development Strategy consultations.
During May to July 2015, economic development staff led a stakeholder consultation program
called “Ideas of the Brave”. This program included staff-led, citizen-led and council-led
conversations, with the most substantial idea generation achieved through the June 2
symposium held at THEMUSEUM.
Through this consultation program, staff structured our approach to ensure a balance between
open-ended brainstorming, and focused topical questions that helped frame specific issues or
opportunities.
The Ideas of the Brave conversations were open-ended to permit individuals or community
groups to address topics that they felt were relevant to our city’s economic future.
The Ideas of the Brave symposium challenged participants to address predetermined
questions on specific topics such as manufacturing, digital infrastructure, retail, and downtown.
The format of the event encouraged a cross-disciplinary approach to support idea generation.
1.b. - 7
In total, over 400 individuals participated in these consultations, including representatives of
our advisory committees, Communitech, The Working Centre, the Region of Waterloo, and
representatives of sectors including manufacturing, tech, music, film, visual arts, performing
arts, retail, food/culinary, education, entrepreneurs, real estate agents and developers.
After the conclusion of the stakeholder consultation, Economic Development staff has
continued to engage our core advisory committees in the formulation of our strategic direction.
CONCLUSION:
A final “Make it Kitchener” economic development strategy will be brought forward for
committee consideration on November 2, 2015.
ACKNOWLEDGED BY: Dan Chapman, acting CAO
1.b. - 8