A New Beacon in Downtown Los Angeles: The California Market Center

Reinvented

Since its inception over 50 years ago, the 1.8 million square foot California Market Center complex has stood as a cornerstone of Los Angeles’ wholesale apparel industry. Drawing manufacturers, distributors, buyers, and industry events from across the region, CMC has a long and respected history as the West Coast’s industry hub. 

Today, that promise still holds true as CMC is at the epicenter of Downtown Los Angeles’ renaissance. Located in the heart of the Fashion District, CMC boasts large floor plates and an airy indoor-outdoor design unlike anything else in the region. It is steps from a large concentration of new residential developments, top hotels, lauded culinary and cultural institutions, public transit, and freeway access. The near-complete mixed-use complex has been reinvented to appeal to the rising influx of technology, entertainment, media, and fashion industries heading downtown LA.  

Where Ideas Take Space 

Today’s DTLA is more than just a place to work and commute home for the night. It’s arrived as a global neighborhood with a local vibe, replete with the best offerings in entertainment, arts, and culinary spheres, attracting over 500,000 visitors daily. From Lakers games and headliners at its historic theaters to renowned exhibitions at the Museum of Contemporary Art, downtown commuters, residents, and visitors have access to it all.

The neighborhood surrounding CMC is studded with the best of LA restaurants, ideal for lunch with colleagues or dinner with clients. Helmed by established chefs and industry-darling newcomers, current spots at the top of everyone’s lists include Cara Cara, Orsa & Winston, Rossoblu, and Otium, to name a few.

LA’s most buzzed-about hotels are walking distance from CMC, or just a short scooter ride away. While the ACE Hotel really set the tone for the new wave of hotels, downtown LA recently welcomed The Hoxton, Proper Hotel, and the Freehand to the neighborhood. Exclusive partnerships with many DTLA hotels offer CMC visitors significant discounts to boot.

 Surrounding CMC are some of downtown’s newest places to live. With over 80,000 residents living in DTLA, the concentration of locals living in and visiting the Fashion District and its businesses create a dynamic community of professionals, entrepreneurs, and creatives in a compact urban radius.

A Space for Creation and Innovation

THE BUILDINGS. Encompassing an entire city block and bounded by 9th, Main, Olympic and Los Angeles, CMC currently consists of three interconnected 13-story buildings (Buildings A, B, and C). 

THE REPOSITIONING PLAN. As part of its multi-million-dollar plan to reimagine the complex, Brookfield Properties, supported by world-recognized architecture and design firm Gensler, completely modernized and reworked the entire brutalist-style building complex. 

To create greater synergy and connectivity among the long-time fashion tenancy at CMC, Brookfield consolidated fashion tenants and fashion activity from the collective CMC complex in Building C, creating a vibrant, modern destination for fashion commerce and creativity. 

The sleek, contemporary fashion-focused building is the exclusive new home for a carefully curated selection of fashion showrooms and events. Currently, the building hosts many of the top brands representing the cross-section of fashion’s diverse markets, including Paige Denim, DL 1961 Premium Denim, Claire DesJardins, Frank Lyman, FILA Heritage, Timex, eS Skateboarding, Splendid Kids, and Little Marc Jacobs to name just a few.

Buildings A and B were entirely modernized and renovated to appeal to companies looking for large, open floor plates interconnected by airy outdoor sky bridges and meeting nooks. The new design also boasts an exclusive tenant-only fitness studio and an unmatched 5,000 square foot rooftop deck with sweeping views of the LA Basin.

CREATION OF PUBLIC SPACE. Brookfield demolished a former bank building, which blocked site lines from the surrounding community. In removing this structure, which was not original to the complex, Brookfield has unlocked a prime street corner to the public and will deliver an inviting, contemporary landscaped public space to the vibrant DTLA community.

AN ACTIVE STREETSCAPE. The heart of the site is an expansive pavilion offering clear programmatic areas for café seating, casual gatherings, performance space, and accessible pedestrian pathways. 

The ground-level plan introduces 150,000 square feet of local and regional street-level retailers, cultural activations, and amplified connectivity to the surrounding neighborhood. 

Urbanspace, a national developer of immersive public markets, will open a curated food and beverage experience on the ground level of the complex. The 15,000 square foot space will be the first Urbanspace to open in Los Angeles. In total, the new downtown Urbanspace location is expected to feature a mix of 19 food and beverage offerings curated locally from Los Angeles and iconic concepts from Urbanspace food halls across the country. 

Transformation Delivered

CMC is where history meets innovation. This icon of the West Coast fashion industry is evolving into L.A.’s new hub for visionary leaders and forward-thinking entrepreneurs influencing the global business and creative communities.

Imagine an aesthetically elevated and creative business environment that inspires ingenuity… a place where diverse industries intersect, cross-pollinate, and spring forth unexpected opportunities… a stimulating and experiential place where the convergence of commerce, creativity, and events enable serendipitous connections and nurturing of relationships. 

CMC will be the place where this vision manifests reality and ideas take space. Learn more about the new CMC by visiting:  www.cmcdtla.com

Find Out Why Green Battery Production Will Be All Powered by Québec

Dolbeau-Mistassini, Québec, Canada. Photo courtesy of Céline Chamiot-Poncet.

Québec is all set to become the North American leader in the manufacture and assembly of lithium-ion batteries. An economic powerhouse in its own right in Canada, Québec is strategically located to tap the U.S. market and its enormous potential for electric transportation. The province is primed to make a sizeable investment to develop a battery industry and accelerate the transition to electrified transportation. 

“This is a booming global market that offers tremendous opportunity. Québec already has everything in place to create a full value chain for lithium and become an industry leader,” said Guy Leblanc, President and CEO of Investissement Québec. 

Competitive edge 

Québec has got what it takes to successfully roll out its strategy and create a true ecosystem—from ore extraction to battery production and recycling. What’s more, the largest city in the province, Montréal, is an intermodal transport hub for goods destined to the North American and international markets. But that’s not all. Québec also has: 

• Critical and strategic minerals: The province has huge mining potential, boasting significant reserves of key mineral resources such as lithium, nickel, cobalt, graphite, silicon and manganese—all of which are essential for manufacturing batteries. These ore-bearing minerals can be extracted and processed locally. 

•  Clean, low-cost renewable energy: Hydropower provides green, renewable energy with a small environmental footprint. Basically, Québec can produce the cleanest battery in North America.

• Top-notch R&D capabilities: With leading researchers, a portfolio of more than 850 patents, and world-class universities that feed the pipeline with highly skilled talent, Québec is a battery R&D force to be reckoned with.

• Manufacturing expertise: The province has over 60 companies operating in the smart electric transportation industry. They include big players like Lion Electric—North America’s leading electric school bus supplier, Novabus, AddÉnergie, and BRP.

•  Access to 1.5 billion consumers: Trade agreements with over 50 countries open up the market to 1.5 billion consumers.

• One of the lowest operating costs in North America: Québec has the most competitive electricity rates and one of the lowest office space rental costs in North America, combined with a favourable tax treatment for businesses.

•  Equipment manufacturers within easy reach: Québec is close to major automakers that are investing more and more in EVs. In the past year, Ford, General Motors and Fiat Chrysler each injected $1 billion in the manufacture of green vehicles. Add to that over 700 auto parts manufacturers, and all is set. More than 2 million vehicles are manufactured in Canada every year. 

Plus, Québec is a step ahead when it comes to adopting EVs. According to recent data from the Québec Electric Vehicle Association, the province accounts for almost half of the country’s plug-in vehicles. Québec also has the largest network of EV charging stations in the country.  

Big government investments, big advantages, big opportunities

 The Government of Québec is committed to developing the EV industry to meet its climate targets. Along with California, Québec makes its mark as a North America leader in the electrification of transport. To make sure the province stays on track, major investments in both the public and private sector are planned, and could reach $7 billion within 10 years.  

 Investissement Québec, the investment arm of the provincial government, plays a key role in the province’s strategy to develop the industry by providing financing, and strategic and technological support. The investment agency supports the growth of businesses that are already established in Québec and welcomes international manufacturers of battery assembly components by helping them locate to the province. 

 To help move forward with the government’s vision, the agency brought in Dr. Karim Zaghib, a world-renowned researcher and lithium-ion battery expert who has been working in the field for 35 years and whose work has resulted in more than 600 patents and 62 licences. Dr. Zaghib plans to encourage new players to join this major endeavour: “Considering its abundant mineral resources, Québec is a prime location for potential international investors engaging in mineral mining and processing,” he said. 

“Québec is laying the groundwork to become a global leader in the electrification of transport. It has one of the most favourable environments for doing business, and the financial and tax incentives are very attractive.” 

 “Furthermore, recent events, such as global political tensions and the COVID pandemic, have shown how important it is to have a stable, reliable and resilient supply chain. This is a real opportunity we need to seize right here,” Dr. Zaghib added. 

 Innovation and technology are crucial in this field. “Investissement Québec International’s mandate is to meet with global investors to discuss innovative and impactful international projects that will drive the sustainable growth of the global lithium-ion battery industry. By working together, we can create a one of its kind North American hub in Québec,” explained Daniel Silverman, Vice President, Foreign Direct Investment at Investissement Québec.

 “As one of the top economic development and financing corporations in North America, and with our regional partners, IQI is a foreign investors’ one stop shop to help them invest, establish, connect, expand, innovate, export, recruit and finance their business operations in Québec,” Silverman added.

 Considering that every step of the process can be carried out in Québec, from exploration to mining, processing and, ultimately, recycling, the province is best positioned to produce batteries with a small environmental footprint while creating a stable and secure global supply chain. 

For more information on Quebec's green battery expertise, please visit their website at https://www.investquebec.com/international/en.

Minimizing Supply Chain Risk in Uncertain Times

Author: Paul Tessy, Senior Vice President, Purolator International

The global pandemic continues to drive uncertainty throughout supply chains, resulting in trade restrictions, supply shortages, logistics capacity constraints, and fluctuating demand for companies. These trends will continue to plague manufacturers and retailers as they struggle to secure raw materials, transport finished goods to customers and consumers, and manage unpredictability in the marketplace. The ability to leverage logistics partners that can deliver your time critical shipments will be an important element to combat that uncertainty.

There are many examples of the challenges that manufacturers face when sourcing raw materials and base components during the pandemic.  With numerous companies relying on just-in-time processes to build efficiencies in their supply chain, missing one part of that puzzle can have significant consequences. The most obvious example is the lack of microprocessors available to industries such as auto manufacturing and consumer electronics, which has exposed critical vulnerabilities in their supply chains. 

Currently there are record backlogs at several US ports, especially the ports of Los Angeles and Long Beach, California, due to surging demand for imports. These two ports alone are responsible for 40% of imports into the US so there has been a bottleneck effect on rail transportation which extends transit times on top of a stressed network. The knock-on effects of these situations extended lead times which directly impacts pricing and customer satisfaction.

Maintaining strong relationships with suppliers and managing expectations with customers in a proactive way can be an important step to handling this uncertainty. Understanding operational processes and having flexibility in the supply chain to acquire certain elements of production considered mission critical can also be a boon for companies. In fact, a survey conducted by Bain & Company found that 53% of companies are “planning to increase investments in flexible operations.” Meanwhile, 56% say they expect to increase investments in predictive planning and demand forecasting.

Like acquiring raw materials, getting finished goods out to customers and consumers can be challenging these days. Getting goods to market requires that same flexibility in the supply chain, including partnering with solution providers that can adapt quickly.

An outcome of these trends is a clear need for more premium, rapid transportation service options to minimize the impact of business disruptions. Companies are increasing their use of expedited services and incorporating them into existing supply chains as a planned feature and not just an emergency tool. Services like Purolator Mission Critical, which combines existing networks as well as off-network resources, provide ultra-flexible ultra-fast solutions that can be adjusted as conditions warrant. These options include bypassing congested regional hubs and going directly to an end destination using the fastest available air routings. The dedicated Mission Critical teams use state of the art technology to ensure maximum visibility 24 hours a day, including weekends and holidays. For industries like healthcare and industrial product manufacturing and distribution, there is no substitute for the efficiency and peace of mind provided by this level of service.

This uncertainty we are seeing in current market dynamics isn’t going away any time soon; companies are quickly learning and adapting to value flexibility and partners who can adjust with them. Selecting a logistics partner that can reliably provide a broad range of express services is vital for success, no matter what new disruption awaits us. 

For more information, please visit https://www.purolatorinternational.com.

To Hike or not to Hike? Central banks in the Pandemic Recovery Era

Author: Jay Brahach , Account Executive & Currency Analyst , AFEX 

Since the onset of the pandemic in early 2020, policy makers globally have been grappling with the dichotomy of keeping both the population and the economy healthy. Although preventing the spread of the virus has taken precedence overall, the world’s central bankers have had eyes firmly locked on their respective key policy goals. In most instances this involves a target inflation rate of around 2%, at least in the developed world, as well as a goal of full employment (albeit with less of a mandate to dictate policy). 

 Global economic activity declined by 6% in 2020, whilst unemployment across OECD countries rose from 5.4% to 9.2%. Lockdowns have resulted in labour force disruptions, particularly within the services sector leading to approximately 30 million workers being displaced across 2 months in the US alone. Supply chain disruptions on the other hand, have lead to soaring commodity prices and stunted delivery times. Lumber for example reached a high of $1,611 USD per tonne in May 2021 compared to around $350 USD in early March 2020. 

 At the onset of the Pandemic, both the Bank of Canada and the Federal Reserve slashed rates from 1.25% down to 0.25% in order to stimulate economic activity as much as possible. In addition to rate cuts, central banks responded by increasing their respective asset purchasing programmes, aimed at encouraging lending and investment. The European Central Bank introduced the Pandemic Emergency Purchase Programme (PEPP), in which it initially pledged €750 billion in asset purchases, which was increased to €1.85 trillion by the end of 2020.  

Almost two years on, as vaccination rates continue to rise and economic activity begins to heat up, central bankers are shifting from a mindset of damage control, to pandemic recovery mode. It is a precarious path, riddled with shifting public policy and a virus which is still causing havoc across large segments of the global community. The question is, what is the best path forward, and who will set the precedent for the next round of policy changes? 

 In August 2021, South Korea (i.e., via the Bank of Korea) was the first major economy to make the decision to raise interest rates. This may in some part be due to the nation’s decisive action in dealing with the pandemic, which has led to a comparatively faster recovery. The Bank indicated that it was ready to raise rates to 0.75% back in May of this year, however a partial lockdown had delayed this by a few months. The need for this increase was largely down to rapidly increasing household debt, with the bank aiming to curb inflation. This is an interesting move as it may cause other central banks in the Asia-Pacific region to bring forward its rate increases, with the Reserve Bank of New Zealand expected to act next month (provided the economy remains open). 

The ultimate barometer for global sentiment tends to be the USA’s Federal Reserve. As USD is the global reserve currency, the denomination in which 70% of world trade is conducted, policy which impacts the USD will almost certainly leads to implications for most of the world’s major economies. At the end of August 2021, the Fed Chairman Jerome Powell delivered the most anticipated Fed speech of the year at the annual Jackson Hole Symposium. When observing these comments, market participants tend to look for two things. When will asset purchases begin to taper, and when are interest rates expected to rise? 

 Powell expressed that although inflation was a worry in certain sectors of the US economy, it was a phenomenon which was vastly uneven. Durable goods and energy prices alone contributed 1.8% to headline inflation rates with the overall rate at 4.2% as of July. By the same token, prices for services such as hotel rooms and flights have fallen dramatically in that same time period. Powell referred to the inflation experienced as “transitory”, and as a phenomenon which is not an accurate depiction of economic health. Monetary policy takes around 18 months to filter through to the economy, so an ill-timed reactionary rate hike may have negative implications for the labour force in the longer term. Until the US economy reaches maximum employment, and long-term inflation has settled at around 2%, interest rates are unlikely to rise. Market participants have priced in a rate hike by the beginning of 2023, although inflation will be closely monitored in the interim. 

 From a Quantitative Easing perspective, Powell indicated that asset purchases may be reduced much sooner, potentially by the end of 2021 given strong employment data in July. This could however be hampered if the Delta variant continues to spread and should not necessarily be taken as an indication that interest rates will closely follow suit. 

 The Bank of Canada has almost echoed the Fed sentiment, taking a largely similar stance as of September 2021. At the beginning of the crisis, the Bank not only cut rates to 0.25%, but introduced an economic stimulus programme committed to purchasing around $5 billion of assets per week. This was cut to $2 billion in October 2020 as the economy had recovered somewhat, but GDP growth in the second quarter of 2021 was lower than expected, with the economy contracting around 1%. Because of the unpredictable nature of this crisis, forward guidance from central banks across the board has been vague, with no firm timeframe given for the ultimate reduction in this asset purchasing programme. The Governor of the Bank of Canada, Tiff Macklem, indicated that depending  on economic data and inflation measures, Canada is moving toward a point at which the Quantitative easing measure will no longer be necessary, at which time interest rates will start to rise to combat inflation. 

 Canada is in a unique position, however, given that 75% of Canada’s exports are sold into the US. The Bank of Canada may not be willing to increase interest rates prior to the US, given the implications for Foreign Exchange markets. A rate hike would most likely make the Canadian Dollar stronger in relation to the US dollar, in turn making Canadian exports more expensive to US customers, not the most ideal outcome in the midst of a recovery. 

The European Central Bank (ECB) has indicated as of September 2021 that it will start to taper its PEPP programme, with most market participants expecting it to end by mid 2022. This does not, however, negate its regular asset purchasing programme which was restarted in November 2019. Interestingly, within the European Union, there is an added constraint to this programme, as ECB holdings cannot be greater than a third of each member country’s debt. For Germany, the value currently sits at 30% of overall debt, leaving little room for policy manoeuvre. Moving forward the ECB has indicated that until the QE programme has been reduced to a comfortable threshold, rates will not begin to rise. As with the other banks, there is still ambiguity as to the timeframes evolved, falling back to the mantra of following economic data releases. 

The Bank of England has been hit, not only by the effects of the pandemic, but also the economic implications of the Brexit vote. For example, supply chain disruptions experienced across the globe have been amplified by the added frictions caused by Britain’s exit from the EU. In September 2021, the Monetary Policy Committee was evenly split on whether minimum economic conditions had been met in order to consider interest rate hikes. The Governor of the Bank of England, Andrew Bailey, went as far as to say that he was one of the members in favour, although he did not yet think the economy had recovered enough to justify a rate hike. These comments have led market participants to believe that the UK may even precede the Fed in increasing rates, as early as Q4 2022. The bank expects inflation to jump to around 4% and seems willing to pull the trigger on any policy response. This is in conjunction with the reduction in asset purchase programme outlined in August of this year. 

 The discussion thus far has been focused on policy responses across developed economies. Developing and emerging markets have witnessed even more devastating impacts from the events of the last two years. Price increases have led to soaring annualized inflation rates with Brazil expecting 10.3% by the end of this quarter, 6.7% in Russia and 5.59% in India.  

 Whilst much of this inflation is similarly transitory in these countries, in practice, market participants do not behave in the same way. This is because in the real economy, inflation expectations are just as important as realised inflation. In G7 countries, it is generally assumed that despite high inflation during the pandemic, as the economy recovers, we will get back to normal inflation levels and price stability. In emerging markets however, there is a more recent history of high inflation leading to lower confidence, and in turn higher inflation expectations. As a result of this public perception, there is greater impetus for these economies to raise rates sooner. Brazil has already raised rates four times this year, whilst Russia, Mexico and Peru have also implemented rate hikes. Whilst these hikes are important to rein in inflation, there is a concern that it may slow down economic recovery in these regions. Price increases in these countries would also filter through to developed economies given the global nature of world trade, so they should not be ignored by the G7.  

 As we enter into the latter stages of 2021, it is clear that the majority of Central Banks across the world are pursuing a policy of asset purchase reduction and are signalling eventual interest rate hikes. The nuances arise when we consider the order in which these policies happen, as well as the timing for implementation. It appears there is reluctance from many bankers to commit to solid timeframes, as there is a consensus that the pandemic could yet throw up a number of curve balls. Compared to a pre-pandemic world, central banks have been less committed to long dated forward guidance and are more willing to change course based on current economic data, and the shifting winds of pandemic recovery.

For more information on the products and services of AFEX - Corpay, please visit https://www.afex.com/unitedstates/ 

Sources used in researching this article available on request.

What Are Total Rewards?

A total rewards strategy is essential in attracting, motivating, and retaining top talent within your organization.  They deliver more targeted value to the various employee populations and enhance the overall employee experience, while providing the employer with the ability to attract and retain top tier talent.

 Top priorities for 2021 Total Rewards include:

·       Optimize while reducing costs of existing programs

·       Ensuring compensation plans are competitive

·       Wellness programs

·       Supporting & educating employees on financial wellness such as retirement plans, stock options etc.

·       Group benefit plans including Life Insurance, AD&D, Health, Dental and Vision care

·       Paid time off/Personal Day/Flex Time

·       Flexible work hours/ Work Life Balance

·       Remote work

·       Company sponsored training/development 

Start by reviewing your current compensation package as salary alone won’t allow you to compete for and retain top talent these days.  Reframing your plans as a total rewards compensation including other perks can support you in becoming an employer of choice.  Once you have defined your total rewards package, you can use it to illustrate the value while talking with employees and candidates.

Employees must be aware that the benefits exist and be knowledgeable about them to use them properly and to gain their full value.  Outlining your program, providing employee education sessions and highlights of benefits and perks will support your education of both current and future employees.

When employees see the value and what you are willing to invest in them, above their pay, it can lead to a positive work culture, improved morale and engagement and higher retention.  Employee satisfaction has been shown to lead to better performance, fewer sick days, and higher productivity.

Finally, you’ll need to measure the success of your program and how well received it is by employees. Job satisfaction questionnaires given prior to rewards changes and 1 year following are a good way to measure your results.

Implementing a Total Rewards Strategy is not an easy task, but the rewards far outweigh the risk.  You may want to implement a Total Rewards Strategy, but not be sure where to start, who to reach out to, or what the benchmarking is in your area, or industry.  Sterling Capital Brokers can support you and your team in defining what Total Rewards means to you and your team.  We can provide the insight and expertise required to design a benefit strategy within budget, while supporting all your team’s needs.

For more information, please visit the Sterling Capital Brokers website at https://sterlingcapitalbrokers.com

Northern Nearshoring: Why Canada is well-placed to help diversify U.S. Supply Chains

Jill Hurley
Director, Global Trade Consulting
Livingston International

For several years, relying heavily on production in China has represented a certain degree of risk to American businesses. Significant challenges with red tape, as well as concerns about government corruption, intellectual property theft, and forced knowledge transfer have hounded U.S. businesses for more than a decade.

The risk of relying on China for production became even more evident with the outbreak of COVID-19, when lockdowns forced the closure of factories and stopped service at key ports, creating massive delays in the production and transport of goods destined for U.S. shores.  

While businesses had already been exploring the idea of diversifying manufacturing operations away from China in recent years, the global pandemic has put pressure on companies to speed up the process. In recent weeks, similar closures and supply chain disruption have emerged out of China and Vietnam—the latter of which has captured about half of the capital flight from China due to the U.S.-China trade war—and have served as a reminder that global supply chains have not yet reached a true post-pandemic “new normal.”

What manufacturing destination alternatives to China exist? There are a multitude of manufacturing centers across the globe; yet, for U.S. businesses, their northern neighbor might just be their best bet.

Challenges in Offshoring to China 

Since becoming a member of the World Trade Organization in 2001, China has become the world’s factory. Loosened state regulations and access to an enormous, young, and inexpensive workforce made it the perfect destination for manufacturing operations. Over the years, China was able to adapt to new technological changes and manufacture complex products such as electronics and printed circuit boards. 

However, China’s rapid growth wasn’t sustainable. The speed and value by which China was able to manufacture products declined as its population grew. As China’s workforce became more skilled, employees demanded higher wages. In addition, and as noted above, the omnipresence of cybersecurity threats, forced knowledge transfer, and intellectual property theft increased the risk of doing business in China.  

The ongoing trade war between Beijing and Washington and its widespread tariff barriers further disincentivized sourcing from China. The trade war (and its collateral damage) led businesses in the U.S. and elsewhere to start considering relocating their manufacturing. 

Post-Pandemic Offshoring Challenges

As China began recovering from the COVID-19 pandemic in mid-2020, factories reopened and orders began making their way to customers. However, disruptions related to backlogged inland transport and congested ports impeded shipments; a purchasing boom (especially through e-commerce) exacerbated the container shortage. That caused delays in the arrival of goods coming from China to Europe and the U.S. 

To mitigate the effect of the container shortage, shippers began investigating the option of air freight only to find it impractical for bulk goods and a costly means of transport. 

Ports in the U.S. (especially those in California, which handle half of the ocean traffic from Asia) have witnessed massive backlogs throughout 2021. The National Retail Federation called on President Biden in June to address the logjam at ports. 

The container shortage wasn’t the end of the disruption, though. A grounded container ship blocking vessels in the Suez Canal (a vital trade route) in March 2021 further held up shipments. In June 2021, the Delta variant of COVID-19 struck China’s Guangdong, a major shipping hub. To halt the spread, authorities in China shut down manufacturing, once again creating delays in the arrival of goods on U.S. shores.

Experts predict it will take at least a year to recover from the cumulative effect of shutdowns, increased demand for goods, shipping delays, and an exponential increase in the price of shipping. Building a sustainable, efficient, effective supply chain means overcoming these challenges. For many companies, nearshoring manufacturing operations reduces these obstacles. 

Nearshoring Considerations 

Moving manufacturing operations out of China (or, reducing dependency on China for manufacturing services) is a major step towards improving the resiliency of a supply chain. 

Before the pandemic, many U.S. businesses made use of the just-in-time model, which saw goods moved with great precision and punctuality to ensure business continuity while reducing the burden and cost of storage. However, the global pandemic gave businesses pause. “Just in time” became impossible with varying lockdowns around the world. In response, many have begun shifting all or part of their supply chains to a just-in-case model, with built-in redundancies and contingencies to maintain business continuity in the event of production shutdowns or transport delays. 

A critical component of the just-in-case model is the use of nearshoring or bringing core production closer to home to ensure greater access to and reliability of suppliers while also reducing time in transit. 

However, for businesses investigating nearshoring, it’s critical to consider whether the infrastructure in the new sourcing country supports a just-in-case model. 

Many U.S. companies have recognized the importance of the just-in-case model, and have begun investing in Canada, their neighbor to the north. Statistics Canada noted that in the last quarter of 2020, U.S. investment in Canada (including mergers and acquisitions and reinvested earnings) reached $4.8 billion—a major increase from Q4 2019, in which U.S. companies invested $656 million.

These investment trends reflect sentiments among U.S. executives. Research from PwC shows a growing number of U.S. business leaders see Canada as crucial to their growth; between 2019 and 2020, the number of decision makers who believe Canada represents an excellent investment opportunity doubled. During that same time period, the number of executives who see China as critical to corporate growth decreased by 30%. 

While Canada offers a number of obvious advantages, such as close geographic proximity, seamless transit and comparable business culture, there are other, often overlooked, benefits behind Canada’s attractiveness as a supply source. 

 Canada As a Nearshoring Destination 

Labor 

One of the critical factors for businesses looking to supplement or supplant production in Asia will be labor. This will be particularly true for industries that rely heavily on highly skilled labor. Canada boasts a highly educated workforce, more than one-third of which is made up of professional, scientific and tech-related jobs. The high skills of the Canadian workforce have allowed the country’s manufacturing sector to flourish and become integral to global value chains. 

This has not been lost on U.S. businesses, who have been using Canada as a rallying point for value-add production. In fact, prior to the pandemic, the U.S. was the destination for more than half of Canada’s intermedia-goods exports, demonstrating the degree to which America’s northern neighbor had become integral to U.S. supply chains. 

Reduced Barriers to Trade

The U.S.-China trade war has resulted in increased landed costs to U.S. businesses (the total cost of importing goods, including duties, taxes, shipping and customs administration). Today, there are few products from China for which tariffs do not apply, resulting in increased cost of goods and reducing market competitiveness. In addition, soaring freight rates have added to the overall cost of moving goods across the Pacific. Then there’s the ever-present risk of sudden and unanticipated shifts in trade policy that could result in the embargo of select goods or goods from certain origins, or an increase in tariff rates. 

Conversely, the recent implementation of the United States-Mexico-Canada Agreement (USMCA) ensures goods can move through the Canada-U.S. border seamlessly and duty free (for almost all goods). Moreover, the trade agreement, which was an update to the North American Free Trade Agreement (NAFTA), established greater harmonization of regulatory requirements, reducing the administrative and legal burden associated with moving goods into Canada from the U.S. and vice-versa. 

Infrastructure

One of the key challenges for U.S. businesses looking to diversify their supply chains will be finding sourcing markets that offer comparable trade and transport infrastructure to China. Beijing has invested heavily in upgrading China’s seaports, airports, railways and roadways to facilitate its export-driven economy. While many U.S. businesses have shifted production to other parts of Asia, they have discovered the infrastructure in those countries is often inadequate to support the recent surge in trade activity.

Similarly, Canada has put significant emphasis on creating fluidity of transport across the country and across the Canada-U.S. border. Exports account for one-third of Canada’s GDP and imports another third, meaning the facilitation of trade is a cornerstone of the Canadian economy. The Canada-U.S. border, which remained uninterrupted during the pandemic, is the most porous international border in the world. 

Moreover, the potential for a merger of Kansas City Southern and one of Canada’s two major rail lines presents the possibility that a truly continental railway network could be in place in the near term, establishing even greater ease of transport. In addition, Canada’s port infrastructure may also be a source of relief for B2B businesses looking to move goods from Asia-Pacific to customers in the U.S. Using a recently introduced program by U.S. Customs and Border Protection, businesses can make use of the more generous threshold for low-value goods incorporated into the new USMCA to ship items from Asia to Canada, before transporting them by ground—and duty free—across the Canada-U.S. border.

Growth Sectors for Canada 

A recent report from Invest in Canada, an arms-length Government of Canada organization dedicated to promoting investment in Canada, showed that for foreign businesses, Canada presents particularly advantageous opportunities for firms in advanced manufacturing and clean technologies.

There is a symbiotic relationship between advanced manufacturing and clean tech in Canada. The latter has seen widespread growth and innovation throughout the country, particularly in the energy and resource sector. These emerging technologies will become increasingly in demand amongst U.S. businesses as they move to reduce their carbon footprint and adopt an ESG model (environmental, social and governance). 

This is already occurring in the automotive sector. U.S. automakers are now in the process of retooling Canadian production facilities to manufacture electric-powered vehicles. Additional investment is being made by foreign automakers in fuel-cell products in response to Canada’s focus on becoming a leader in hydrogen and fuel-cell technologies.

An editorial in the May 2021 issue of Manufacturing Automation points out that Canada’s advanced manufacturing sector is ripe for investment: 40% of manufacturers use advanced technologies in their processes, and GDP growth in this field rose 3.7% between 2017 and 2019.

Cleantech Group, a San Francisco-based consulting firm in the industry, ranked Canada as second in the world for clean tech innovation. While cleantech is an emerging technology, the robust infrastructure in Canada proves these innovations makes an excellent nearshoring investment. 

In short, investment in clean tech is fuelling investment in the manufacturing of eco-friendly products, making Canada a particularly strong locale from which to develop products of the future.

The events of 2020 have shown it’s time for U.S. businesses to build contingencies and redundancies into their supply chains to minimize the risk of disruptions. While China remains a critical sourcing market for many firms, investment in regionalization will create long-term benefits in the form of improved business continuity and sustainability. 

Canada’s skilled labor, investment in infrastructure and liberalized trade regime, in combination with its flourishing clean tech and advanced manufacturing sectors and its proximity to the U.S. makes it an ideal nearshoring option for firms looking to diversify their global supply chains. 

Jill Hurley brings a wealth of expertise in the development and implementation of import/export compliance programs, compliance audits, export licensing requirements, supply-chain security, the preparation, submission and oversight of penalty mitigation projects and assistance with U.S. trade remedies, such as anti-dumping and countervailing duties, and intellectual property orders.

For more information on Livingtston International and their cross-border services, please visit their website at www.livingstonintl.com. The website includes a 2021 Trade Landscape portal - a resource for businesses looking to better understand the global trade environment (issues, trends, policies, etc.).

Tackling Wicked Problems in Higher Education

Dr. Jessica Riddell
Stephen A. Jarislowsky Chair of Undergraduate Teaching Excellence
Executive Director, The Maple League of Universities
Full Professor, Department of English, Bishop's University
3M National Teaching Fellow (2015)
Bishop's University
Sherbrooke, Québec, Canada
Traditional Territory of the Abenaki, members of the Wabenaki Confederacy

Former US Secretary of State George Shultz once drew a distinction between “problems you can solve and problems you can only work at.”

These two types of problems have names: they are tame or wicked.

Wicked problems are messy, confusing, unstable, ill-structured, and ambiguous.

The Maple League of Universities was originally created to solve a wicked problem. The wicked problem was a lack of awareness or understanding of quality undergraduate education in Canada.

Prospective students, parents, and policymakers were not, for the most part, able to articulate the differences in student experience between a large, comprehensive university compared to a small, primarily undergraduate, rural and residential university.

In contrast, the United States values diverse models of student experience, from small liberal arts colleges to large, state-funded universities. Furthermore, American universities have long recognized the value of collaboration through a consortia approach, whether that is driven by sports, like the Ivy League, regional interests and joint programming like the Five College Consortium, or through the delivery of innovative online courses like the newly founded League for Innovation in the Community College.

Canada tops the list as the most educated country in the world, according to the Organization for Economic Co-operation and Development (OECD). Universities Canada (2019) estimates that there were ~1.4 million students in Canadian universities in 2018: 77% were at the undergraduate level (CAUT, 4.8, 2019). Furthermore, undergraduate enrollment has increased 24% over the past decade (CAUT, 4.2, 2019). For the vast majority of students studying at Canadian universities, undergraduate education is the terminal degree.

Although recent polling by CAUT reveals that “most Canadians believe that it has never been more important to get a post-secondary education,” only 68% of first-year undergraduate students believe that university is worth the financial investment (CUSC 2019).

The cost of higher education, the future of work, and pressing social issues (climate change, poverty, income inequality, food instability, racism, gendered violence) exposes the need to deliver high quality, accessible 21st century education: we must equip new generations of thinkers to tackle wicked problems. The pressure has never been higher, and yet the wicked problem persists.

Students interested in studying at Canadian universities should be able to make informed choices about their undergraduate experience.

"Therefore, in 2012, four Canadian universities – Bishop’s, Acadia, Mount Allison, and St. Francis Xavier – decided to collaborate on this wicked problem. The first Canadian consortium of its kind, in 2016 they formed The Maple League of Universities with a mission to raise the profile of small, primarily undergraduate universities committed to quality 21st century liberal education."

When I assumed my role as Executive Director in 2018, I was inspired by the tremendous potential this collaboration could have on the higher education sector. As I write elsewhere, inter-institutional collaboration is no easy ask: universities are wired to compete when they recruit prospective students, compete against one another in athletics, and compete for funding in capital campaigns and external fundraising. Students compete for grades, academics compete for grants, and departments compete for resources.

In addressing one wicked problem – raising the profile of small, liberal education universities – the consortium created a new wicked problem, which was: how do we rewire our mindsets in order to think carefully and critically about how collaboration makes us all better than the sum of our individual parts?

Over the past three years we’ve made tremendous strides, including attracting over $1 million in funding for high-impact practices and experiential learning, building integrated hubs and innovation networks (across research, teaching, and professional clusters), mentoring students and faculty with national recognitions for educational leadership, and more.

Maple League Teaching and Learning Committee Retreat (top) and Registrars' Retreat (bottom).

However, innovation and institutional change present tremendous challenges. The most disruptive interventions require us, as philosopher Ira Shor urges, to “challenge the actual in the name of the possible.” Disruption, therefore, does not occur without dissonance. The more disruptive the idea, the more likely it is “wicked,” complex, and creates significant disturbance.

To harness disruption in generative ways, I curated a series of wicked problem design principles to guide a new strategic visioning process for 2021 and beyond. These design principles help illuminate some of the challenges and opportunities we face. The concept of wicked problems is not new: Rittel and Webber coined the term in the context of problems of social policy in 1973. And yet, a renewed commitment to solving wicked social problems is essential to fulfilling the moral contract universities have to the broader society.

In the strategic visioning process I have distilled five design principles drawn from a broad range of theorists that I hope are flexible enough for diverse sectors and industries:

1. “A wicked problem is a problem that is difficult or impossible to solve because of incomplete, contradictory, and changing requirements that are often difficult to recognize.” In other words, a wicked problem like climate change or income inequality is overwhelming and hard to even get into focus because the edges are blurry and the shape is constantly changing.

2. A wicked problem “refers to an idea or problem that cannot be fixed, where there is no single solution to the problem.”

This is a frustrating one for those of us who identify as “fixers” because there is no singular approach or narrow intervention. Instead, deep and meaningful impact can only be brought about when engagement is multi-pronged, distributed, combining a grassroots + top-down-supported approach. This means fostering integrated hubs and convergences across disciplinary and professional lines.

"We need individuals with different perspectives and experiences and expertise working collaboratively – including rethinking what counts as expertise and authority outside of traditional paradigms and structures. There are very few organizations who take this approach because co-design is messy and difficult and demands that we break open in order to transform."

3. "Wicked" denotes resistance to resolution, rather than evil.

While it is easier for us to dismiss something as evil, it is much harder to look at where the points of resistance lie and why resolution is difficult. As a Shakespearean, I love this formulation of “wicked”. In Act 4 of Macbeth the 2nd Witch says:
By the pricking of my thumbs,/Something wicked this way comes.
[Knocking] Open locks,/ Whoever knocks!”
[Enter Macbeth]

Macbeth is a truly catastrophic leader guilty of regicide, infanticide, civil war – but he starts off as a husband, a subject, a friend. Macbeth presents us with the wicked problem of tyranny and power and authority; by giving us the shape of the wicked problem Shakespeare helps us navigate our own current political landscapes at home and abroad.

4. Wicked problems are also characterized as having "social complexity [which] means that it has no determinable stopping point".

This means we are never going to get to a point where we can say, “we figured it out!” Instead, hope lies in the “ethical quality of the struggle” (Paolo Freire, author of Pedagogy of the Oppressed). Tackling wicked problems demands that work is ongoing and ever evolving. Furthermore, progress is often really difficult to see – especially in the shorter term. When tackling wicked problems, we have to appreciate that change takes time, but that the hope lies in appreciating (not merely acknowledging) the complexity and the struggle.

5. If those four design principles aren’t challenging enough, a defining feature is that wicked problems beget more wicked problems: because of complex interdependencies, the effort to solve one aspect of a wicked problem may reveal or create other problems.”

This certainly has been the case in the Maple League, whereby the consortium was forged to tackle one wicked problem and exposed a series of other wicked problems in the delivery of accessible, inclusive, and high-quality undergraduate education.

One of the biggest wicked problems we did not anticipate was the global pandemic that shut down the world in March 2020. The rapid changes to our working and learning spaces challenged us to think about how we to live our fundamental values - of wonder and curiosity, respect for human dignity, knowledge and insight - in a world that has been radically disrupted.

COVID has moved our thinking forward in the use of technology, teaching and learning, equity, diversity, inclusion, and accessibility. We have had to harness technology to enhance what we do well – community, collaboration and transformative learning – in virtual, hybrid, and adaptable spaces.

In the midst of this disruption we’ve also returned to the fundamentals: we have come to appreciate, now more than ever, the value of face-to-face and immersive learning environments, the importance of peer-to-peer interactions amongst students, and the necessity of community-building and strong relationships to the citizen towns within which we are situated. We’ve had a stark reminder to value our time together because we know this time is precious.

Online Learning and Technology Consultants program at Mount Allison University (2021).

We’ve also learned that we can go farther together than we can on our own. The universities of the Maple League (Acadia and St. Francis Xavier in Nova Scotia, Mt. Allison in New Brunswick and Bishop’s in Quebec) – all rural, residential, primarily undergraduate, liberal education universities – doubled down on the collaborative approach in COVID, which has fostered resilience across our communities. By engaging with thought partners with similar challenges and hopes, we’ve been able to muster the energy to imagine a sustainable and resilient society.

Some pundits have predicted that the post-secondary sector will be predominantly online or virtual by 2030 – that it will never be the same. They are right that post-secondary education will not be the same after COVID-19, but not in the sense they imagine.

"If there is one basic conclusion that we should draw from our experiences managing the wicked problems the pandemic posed – from self-isolation to working from home, and hours of conference calls – it is that human beings need personal contact and direct interactions with others. Technology and effective pedagogical techniques have the potential to enhance post-secondary learning. We live in a global village which can be much more accessible through technology, even as technology also exposes the wealth gap and growing digital divide."

However, COVID-19 does not foretell the death of the classroom or the physical campus experience in Canadian universities; rather, it reminds us that direct personal interaction is a key component of education and the human experience.

Materials for visioning work at Mount Allison University (2021).

This model of collaborative engagement – in the classroom, within the university, and amongst the four institutions – represents values that are essential to maintaining a civil and just society.

John Dewey, American philosopher and educator, coined the term “creative democracy” in a speech he delivered in 1939 in response to the rise of fascism.

He posits that democracy is a moral ideal continually constructed through actual effort by people; he argues that “the present crisis is due in considerable part to the fact that for a long period we acted as if our democracy were something that perpetuated itself automatically.” Writing in 1939, Dewey’s insights are shockingly relevant to our current global climate.

Dewey concludes, “Since it is one that can have no end till experience itself comes to an end, the task of democracy is forever that of creation of a freer and more humane experience in which all share and to which all contribute.” Democracy itself is a wicked problem, always in perpetual motion and co-created through individual effort and collaborative spirit.

As I grapple with wicked problems, organizations like the Maple League that model collaboration over competition, and value complexity over singularity do not just show us what to do but rather how to be in the world.

The heart of this consortium is to encourage “inventive effort and creative activity” that Dewey believes is required to tackle the “critical and complex conditions of today.” I hope that the next time your thumbs prick because “something wicked this way comes,” you will have a framework for tackling some of our most pressing wicked problems.

For more information on the Maple League of Universities, please visit their website at www.mapleleague.ca .

A Cross-Border Community Fortified by Insight

Image from past MAPLE Conversations episode with Debra Lewis-Mahon, Managing Director of Vancouver-based Westmark Tax in Orange County, California.

One of the founding tenets of MAPLE Business Council® is that our members’ and partners’ experience and expertise represent tremendous opportunities for our members to share and learn from one another in service of their strategic planning and business growth. There is strength in community and opportunity in connecting across sectors.  

At our in-person and online events we set the table for meaningful networking conversations to occur. And our events, together with our digital content platforms, represent opportunities for knowledge-sharing through presentations, articles and video conversations. 

A growing library of expert content

Now as we begin our sixth year, we continue to curate a wonderful breadth of insights to share in our content libraries. We maintain access to the most current 30 articles from our monthly MOMENTUM e-newsletter on our website. Recent articles have addressed northbound private M&A deal considerations, the Southern California innovation ecosystem, the Canadian federal budget, resilient leadership in uncertain times, controlling the speed of patent examination, breaking down the world of SPACs and the internet of medical things. 

 In addition, we interview our partners. Recent interviews include Khawar Nasim, Acting Consul General of Canada in New York and Nigel Neale, Senior Trade Commissioner at the Consulate General of Canada in New York, U.S. Consul General in Vancouver Ambassador Brent Hardt and John Keisler, Economic Development Director at the City of Long Beach. 

 We are also grateful for the many members and partners who contributed to our special June issue on Diversity, Equity and inclusion which we published last month. Because of the amount of content we received and our single-minded focus on DEI, we’ve archived these articles on a dedicated DEI Insights page of our website for ongoing reference.

 Just push ‘play’…

 It’s perhaps even easier to access the content collected in our library of past MAPLE Conversations videoswhich now contains more than 40 episodes of perspectives on an equally broad set of topics with more to be released this summer. With a  click,  watch targeted 2-minute videos introducing you to a topic and an expert.

 And as we all temporarily pivoted away from in-person events because of the pandemic, our webinars have not only connected members and guests from all across Canada and the U.S., something that is simply not possible with an in-person program, but these events have become our latest on-demand content on a wide-range of topics based on webinars we have hosted in Southern California, British Columbia and New York. You can access event recordings on the MAPLE website. 

 We’re social

 While a shared interest in Canada-U.S. economic ties, be it focused on trade, investment or innovation, connects us to one another, our social media channels provide daily updates to inform our work. 

 We share market and industry news daily on our Twitter channels (@maplesocal and @mapleNewYork) as well as on our Facebook site. Be sure to follow MAPLE on LinkedIn on our Corporate and Group pages for the latest membership and event news. 

 Subscribing to our Vimeo and YouTube channels ensures you won’t miss any of our Conversations episodes and our on-demand videos of our events. 

 And earlier this year, we launched a new MAPLE member community channel on Mighty Networks which is a dedicated channel/forum for our members to connect with one another working like our own LinkedIn community channel.

Market resources

 You might not be aware of the resources on Canadian markets that are accessible directly from our website. On our Canadian Markets page, you can link to dedicated content on every province and territory in Canada as well as 20 metro markets. Similarly, we have links to major economic development agencies in Southern California. 

 Together all these platforms keep us connected between our events adding value through information and insight and providing our members with a growing and targeted executive audience to share their work and their perspectives. 

 So, while your summer reading list may already be filled with the latest thrillers and biographies, I encourage you to tap into the many content channels listed below that are an important dimension of the MAPLE Business Council community and network.

Website

https://www.maplecouncil.org

Articles

https://www.maplecouncil.org/momentum

 Videos

https://www.maplecouncil.org/maple-conversations

 On Demand Events

https://www.maplecouncil.org/webinars

 Daily Cross-Border News

Twitter SoCal: https://twitter.com/MapleSoCal

 Twitter New York: https://twitter.com/MAPLENewYork

 Facebook: https://www.facebook.com/maplesocal

 MAPLE News 

Instagram: https://www.instagram.com/maplesocal/

 Linkedin Company: https://www.linkedin.com/company/3574334/admin/

 LinkedIn Group: https://www.linkedin.com/groups/6965520/

 Videos

Vimeo: https://vimeo.com/maplesocal

 YouTube: https://www.youtube.com/channel/UCgDinVFuD_Jfhqndg-BV4-Q

How Canadian startups can expand internationally by hiring locally in new markets

Azhar Janjua
Managing Director
Communitech Outposts

Hiring local talent in international locations is one of the best ways for Canadian companies to accelerate global expansion, especially in a time of restricted international travel. After all, locals know best how to engage clients in their specific markets.

Still, hiring in other countries comes with a lot of red tape, unforeseen complications and potential risks. 

Enter Communitech Outposts.

Communitech Outposts was first introduced in 2019 to help Canadian companies hire sales employees and foster revenue growth in international markets. Since then, the COVID-19 pandemic has accelerated the trend to remote work, prompting companies to consider hiring a broader range of talent – not just sales people – outside Canada.

Through this program, startup and scaleup organizations can work with Communitech to get the expert, cost-effective help they need to hire top international talent in-market, whether it’s in sales, marketing or R&D.

“COVID-19 has brought the future of work into the present, prompting many companies to take a proximity-optional approach to hiring for the foreseeable future,” said Azhar Janjua, Head of Communitech Outposts. “Communitech Outposts offers a comprehensive level of support for Canadian companies looking to employ remote talent internationally or conduct business virtually, across borders.”

 For companies working on their own, the amount of work and risk associated with setting up an international entity to hire talent can be prohibitive. Communitech Outposts removes those obstacles by managing all aspects of employing people in foreign jurisdictions – such as payroll, benefits and statutory filings – enabling companies to access previously out-of-reach talent and enter new markets more quickly, with minimal regulatory risk.

 Communitech Outposts grew out of an idea from Dave Caputo, Chair of Communitech’s Board of Directors. Through his previous leadership of Waterloo-based company PixStream, Caputo experienced the headaches that come with international employment. PixStream was able to quickly expand internationally with help from a major investor, who had offices around the world to handle hiring for them. Other companies that Dave worked with did not have such access and had to handle international hiring on their own, resulting in long delays and complications.

“Having a trusted partner who can handle the back-office headaches of international personnel is a huge time and cost saver,” Caputo said. “Communitech Outposts – which can get boots on the ground in weeks – saves companies at least nine months in set-up time while lowering the risks associated with managing employment in foreign countries.” 

Communitech has worked with a number of its customers through the Outposts program including Aterlo Networks, an innovative networking products and solutions company. 

 "We’re a Canadian company, but we have a lot of customers in the United States. Through the Communitech Outposts program, we were able to execute on a strategic US-based hire at a pivotal moment for our business. When we found out the program was run by Communitech, we knew we were in the right hands,” said Gerrit Nagelhout, CEO at Aterlo Networks. “The expertise of the Communitech Outposts team has been tremendously valuable in helping us navigate the costs of health benefits, taxes, regulatory filings and more. In a proximity-optional world, Communitech Outposts is highly recommended for companies looking to hire and expand internationally.”

 Through partnerships with business development organizations across the country, such as the Business Development Bank of Canada and Export Development Canada, Communitech Outposts is a one-stop-shop for international expansion that gives customers preferred access to incentive grant and loan programs to facilitate global growth. With this expansion, Outposts is now operational in more than 160 countries including key international markets such as the U.S., U.K., Germany, India, Netherlands, Ireland, France, Australia, China and more.

Interested in learning more about Communitech Outposts? Reach out to outposts@communitech.ca to discuss how this program can help your organization hire and expand internationally.

Northbound Private M&A-Deal Considerations and Opportunities

Authors: Gesta Abols and Neil Kravitz U.S. Practice Co-Leaders, Fasken

Introduction

Northbound M&A activity from the United States to Canada remains robust, fueled largely by optimism for strong economic growth as we emerge from the COVID-19 pandemic, historic levels of government stimulus and incredibly low borrowing costs.  Canada resembles the US in its market-oriented economic system, diverse economy and high living standards and the revamped U.S. – Mexico – Canada Agreement (USMCA), which replaced the North American Free Trade Agreement (NAFTA), should facilitate further economic ties going forward. This brief article reviews certain key legal considerations for Americans thinking of buying a Canadian company by way of a private M&A transaction. For public M&A deals, please see: https://www.fasken.com/en/knowledge/2020/07/ma-guide-acquiring-a-canadian-public-company.

 Key Considerations

Private M&A transactions in Canada closely resemble those in the United States and the same key deal points often arise in negotiations. Areas where there are important legal differences include: 

·      restrictive covenants (which generally must be narrower in scope and time and will not be modified by a court (no so-called ``blue pencil``) to an acceptable level if too broad), 

·      employment matters (where employment law differs in a number of ways including Canadian protections for workers being much stronger in terms of severance entitlements, among other things), and

·      stock based compensation (where options are preferred over profit interests or restricted stock grants in terms of the tax treatment for holders).

In addition, tax considerations can drive transaction structures and often result in a Canadian acquisition vehicle being used to mitigate Canadian withholding taxes and to facilitate a potential tax deferral for management or other Canadian resident sellers. While certain corporate statutes in Canada require Canadian resident directors, options are available to avoid the need to find Canadian resident directors. 

Additionally, while the United States and Canada are deeply interdependent in matters of defence and security, the past year has tested the outer limits of the ties which bind our two countries. A short-lived but significant dust-up over personal protective equipment galvanized our understanding that even close cousins will, at times, see to their own essential interests before the good of the other. This reality should not have come as a surprise and will drive the examination of foreign investment approval for some time, with Canada weighing carefully the impact of inbound US dollars on the ability of Canadians to be masters in our own house – especially when times are very tough and critical resources scare. Nevertheless, and without doubt, foreign direct investment will be a key component in Canada’s economic recovery from COVID-19 and even with enhanced scrutiny, US-Canada deals will get done, with proponents working just a little bit harder to convince regulators of the down-stream benefits to Canada — or at least the absence of unmitigated risk.   

 At a granular level, deal studies reveal some differences between deals in Canada and the United States. The most widely cited deal study is the American Bar Association’s (ABA) Canadian Private Mergers & Acquisitions Deal Points Study, the most recent study having been released just prior to the COVID-19 outbreak in North America. A number of members of the Fasken team were involved in the preparation of the study. Certain differences are set out below.

MAC Definition

Although Canadian definitions largely track those in US agreements, there are some notable differences. First, there are still a surprising number of Canadian deals where what constitutes a material adverse change (MAC) is not defined (down to 10% from 13% in the 2016 study, but still in sharp contrast to the US where it is essentially 0%). Where there is a definition, Canadians are still open to including “prospects” (up to 35% from 30% in the 2016 study, whereas US deals included “prospects” in only 15% of deals). Negotiating “prospects” can get fairly animated, as the seller will want to exclude on the basis that it is too vague and forward looking, giving the buyer an unreasonable right to walk away from a transaction. On the other hand, the buyer wants the definition to capture events or circumstances that have not yet, but may in the future, result in a materially adverse change. Some of the explanation for the difference can be found in the inclusion of more specific forward-looking language in the definition, which is only found in 69% of Canadian deals but 96% in US deals. Forward looking language generally takes the form of including “could reasonably be expected to be” a MAC. Canadians are less concerned about war and terrorism than Americans; a carve-out for such events was included in only 51% of Canadian deals (down from 74% in the 2016 study). Finally, Canadians include changes in accounting as a carve-out from MAC clauses in 41% of deals while Americans include it in 89% of their deals.

 Representations and Warranties

The practice in Canada and the US with respect to representations and warranties is largely the same and steady, but there remain some notable differences. It is less common in Canada to include a “no undisclosed liability” representation compared to the US as it is included in only 79% of deals compared to 97%. In addition, where such a representation is included, it is qualified by knowledge in 12% of deals in Canada and only 4% in the US. Oddly, the inclusion of a representation related to compliance with laws fell to 89% from 96% in the 2016 study. It is included in virtually every deal in the US and that was the case in Canada in prior studies. Finally, a Canadian deal is more likely than an American deal to include a full disclosure representation (38% in Canada and 26% in the US, largely unchanged from prior studies).

 While still not as prevalent in Canada, the representation and warranty insurance market is catching up to that of the United States. Similar coverage at comparable premiums is available for Canadian M&A transactions with limited exclusions from coverage. The result is that strategic decisions for auction processes in terms of continuing liability of sellers can be quite similar to US deals.

 Closing Conditions

There are two notable differences between Canada and the US in terms of closing conditions. First, Canadian agreements are far less likely to include a “double materiality” carve-out in the bring down condition that representations and warranties are true (such a provision is included in only 39% of Canadian deals compared to 87% in the US). Could it be that Canadians agree with noted drafting scholar Ken Adams that double materiality is a figment of practitioner imagination? See https://www.adamsdrafting.com/double-materiality-is-a-figment-of-practitioner-imagination-qed/. The other major difference is that Canadian deals are more likely to require opinions from counsel compared to US deals (18% compared to 7%). That said, Canadian practice would appear to be moving toward US practice as the number of deals requiring opinions dropped in half since the 2016 study.

Sandbagging

Sandbagging in the M&A context refers to closing a deal knowing that a representation is untrue and then suing after closing on that basis. This is a very thorny issue to negotiate, as the parties need to consider suing each other and that one might not be truthful in their representations. As a result, the inclusion of sandbagging provisions (pro or anti) fell in Canada to 34% from 46% in the 2016 study. A notable difference in Canada and the US is that “pro” sandbagging provisions are found in only 22% of deals with sandbagging provisions in Canada, compared to 42% of deals in the US. While beyond the scope of this post, it is important to consider the jurisdiction of the agreement in terms of if a court will take a contract-or tort-based approach to considering a sandbagging claim and how that could impact the drafting of an agreement.

Indemnity Caps

Indemnity provisions and their limits remain a keen focus of users of deal point studies. Historically, Canadian deals tended to be far more generous for buyers than those in the US. An indemnity cap of the purchase price remains more common in Canada than the US (13% compared to 4%). That said, capping recovery to the purchase price is becoming less common in Canada as the prior study showed that 18% of Canadian deals had a cap of the full purchase price. The trends continue once one examines the numbers for something less than the full purchase price. For example, a cap in the US of 10% of less represents 73% of deals, whereas in Canada a cap of 10% or less only captures 33% of deals. Notably, that reflects a large increase in Canada, as the prior study showed only 18% of deals having a cap in that range. The difference in caps is likely attributable to the number of small deals (48% are under $50 million) included in the Canadian study.

 Conclusion

 Although buying a Canadian company represents a foreign transaction for American buyers, the similarities in law, culture and geography make the process relatively seamless. Fasken is a leading full-service law firm with offices in all the major commercial centres in Canada. Our firm has deep bench strength and is involved across our border. Whether we are leading a transaction, or providing the support needed in Canada as a trusted partner to a transaction team, we ensure that deals are done in real time with the highest levels of service and advice.  Gesta can be reached at gabols@fasken.com and Neil at nkravtiz@fasken.com.

The Southern California Innovation Ecosystem

Author: Eric Eide, Director, Alliance for Southern California Innovation

The Southern California Innovation Ecosystem is rapidly rising. Our diverse communities are taking huge strides in making the world a better place and helping people in a multitude of ways. We want the world to know what we are building so they can join in the co-creation.

 Our Canadian neighbors to the north are a natural place to turn to build these global partnerships given our proximity, similarities, and shared values. Southern California’s (SoCal)  and Canada both have increasingly vibrant innovation economies spanning media and consumer tech, aerospace, Artificial Intelligence (AI), and more; we are diverse and becoming more so; and have strong people-to-people connections anchored by one of the largest Canadian diasporas[1] in the country. In the newsletter below, I highlight SoCal’s assets, our diversity,and describe the role the Alliance for SoCal Innovation plays in helping to connect the dots across the fertile landscape.

This is SoCal

 SoCal is an amazing region rich with innovation assets and eager entrepreneurs. SoCal is also huge! The region is massive and spread out across more than 20,000 square miles, with over 20 million people, and a $1.2 trillion economy that ranks as the 13th largest economy in the world if SoCal was a country[2]. SoCal stretches from Santa Barbara down to San Diego, from the Silicon Beach inland to Riverside.

The SoCal region has the critical ingredients to be the next great tech hub

SoCal is a top global and national innovation hub, ranking among the top three tech ecosystems in the US. Only the Bay Area and Boston rank higher. Below are a few highlights on the SoCal ecosystem gathered by our strategic partner Boston Consulting Group (BCG). Please check out the BCG report for additional background.

• Startups: 

  • Over 3,700

• Top investment destination:

  • $82B in venture funding ('15-'19) 

  • Despite fewer investment deals in 2020, LA trended up nearly 40% to match New York City in deal value at $19.3B

• Deep talent pool:  

•  More tech-based employment than any other region (almost 500k)

• SoCal ranks #1 for tech PhDs and ranks #2 for engineer grads

• SoCal’s universities rank first in the US in tech PhDs awarded each year—about 600—and they are second only to New York State’s universities in tech graduates (more than 13,000 annually)

• The talent pool has robust expertise across a diverse set of sector verticals including deep technology

• 2nd largest higher education student population (approximately 1m) on the heels of New York and 3.5 times bigger than the Bay Area

• Top universities:

  • Largest concentration of research universities with Caltech, UCLA, UC–Irvine, UC–Riverside, UC–Santa Barbara (UCSB), UC–San Diego (UCSD), the University of San Diego, the University of Southern California (USC), and the Claremont Colleges, among others

  • World-class IP with around 1,000 patents issued annually

  • 80+ Nobel Prize winners

SoCal is diverse

The SoCal region’s diversity makes it difficult to characterize and distill, but is an incredible asset that buoys our innovation potential, creating endless opportunities for novel combinations. In short, our diversity is our region’s superpower! This diversity is multidimensional and applies to multiple areas including geographic diversity, industrial diversity, technology diversity, and individual diversity. 

 Geographic diversity: The region is a diverse and dispersed network of 14 innovation nodes or clusters that have unique competencies and achieved varying levels of activation. The maps and tables displayed on our website show startup, investor, talent, and corporate density that aggregates an overall innovation index score for each geographic community. The Alliance is also empowering local innovation communities, from downtown LA to Ventura, and SoCal-based vertical industry groups, such as in aerospace, to develop websites that showcase the communities’ unique assets and narratives about what their community can build and produce for the world.

 Industrial diversity: SoCal contains deep expertise across many industries represented by strong startup network and global corporate leaders. The largest SoCal technology sectors include:

• Software & Technology

• Health 

• Media

• Consumer

• Aerospace 

Diversity of deep technologies: Innovations cover a range of technology platforms, which cut across sectors, driven by R&D and startups. Over 40% of US Deep Tech companies are headquartered in California. What distinguishes deep tech in SoCal is our breadth across domains, with the largest category -- AI -- having less than 30% market share. This stands in stark contrast to the other top US tech hubs, which tend to dominate in a single category. 

In SoCal, the top 5 tech categories for "deep tech" are: 

• Artificial Intelligence (AI) - 29%

• Synthetic Biology - 24%

• Photonics & Electronics - 19%

• Advanced Materials - 16%

• Drones & Robotics - 11%

Individual diversity: SoCal’s population is among the most diverse in the US in terms of breadth of ethnicities and origins. SoCal leads in ethnic and professional diversity, which fosters diverse approaches to solving problems, thereby increasing our ability to innovate. Nonetheless, we recognize that there is much more work to do before our innovation and VCs communities more closely reflect the diversity in our local population.

• 67% non-white[3]

• 50% women

• 30% foreign born[4]

• Over 220 languages spoken

The Alliance for SoCal Innovation: A Super Connector

With so much here, how do we connect the dots? According to our Executive Director, Andy Wilson, by having a high-level architectural view of the entire region, the Alliance will have its greatest impact by acting as a strategic convener and matchmaker; putting players together who have complementary capabilities but share common objectives. It is only by having a holistic and broad view of the region and its strengths that we can facilitate the alignment of assets and players across the ecosystem.

The Alliance helps weave the rich innovation fabric that defines this amazing region: aligning the vertical threads within key stakeholder groups (academia, corporate, VC and community organizations) and then interconnecting them across these groups in hopes of instigating important collaborations. This strategy only works once you have assembled critical mass in each stakeholder group; at the Alliance are now reaching that critical tipping point with more than 75 partnerships/formal collaborators where our impact can be felt across a significant population of the innovation ecosystem. Here’s a brief summary of the collaborations we have formed:

• 20 leading corporations including Disney, Warner, Amgen, Edwards, Lilly, Edison, Verizon, Cubic, etc.

• 30 not for profit & community organizations with 15 in our SoCal Leadership Council including CLA-OC, BioSciencesLA, Biocom, Octane, Connect, LAEDC, CoMotion, etc.

• 10 Top Academic Research institutions: all the UC’s, USC, Caltech, Claremont Colleges, ASU & USD.

• 15 VCs/CVC including Upfront, March, TenOneTen, M13, Bonfire, Calibrate, Smash, NEA, CAA, City National Bank, and others.

How can the Alliance help?

The SoCal region is large, but the opportunities are immense. If you are an innovation oriented organization, are based in SoCal, have operations here, or are considering making the move, we’d love to hear from you. The Alliance, along with the Southern California Chapter of MAPLE Business Council®, can connect you with people and organizations that can help you realize your innovation goals.  We are pleased to have recently signed a MOU with MAPLE Business Council to collaborate on opportunities to connect Canada’s and Southern California’s innovation communities more closely together.

 If you are unclear where to start, we can point you to resources, assets, and partners that might help drive your business. We continuously work to provide fuller transparency on what is here to support innovation and have pulled together a number of resources, ranging from research institutions and wet labs to partners and event organizers to help you get started. 

Please get in touch directly if you’d like to learn more about SoCal’s innovation potential and how to engage locally (Eric@AllianceSoCal.org).

Notes

[1] As of 2017, California had the largest concentration of Canadians in the United States, totalling 131,200. The largest portion of these Canadian Californians live in Southern California, with the Greater Los Angeles area being home to the second largest single population of Canadians after only New York City. Source: LAEDC (2017) CANADA & SOUTHERN CALIFORNIA: United through collaboration, defined by partnership, sustained by friendship.

[2] For perspective, Canada has 37.6 million people and a $1.6 trillion economy, making it the 9th largest economy in 2020.

[3] Compared to 40% across the USA. Includes Hipspanic and Latino. Source: US Census Bureau; Pitchbook; BCG Analysis

[4] Compared to 13.5% across the USA. Source: US Census Bureau; Pitchbook; BCG Analysis

Planning for Cross-Border Success - A Special Compilation of MAPLE Voices

Social distancing has meant we've had to take a pause on shooting new episodes of MAPLE Conversations where we sit down with corporate members to discuss their work and insights on doing business across and between Canada and the United States. Over the past two years, we have produced over 40 episodes now which provide some fascinating windows on our members' expertise.

We are at a special moment of time now as Canada and the United States are committed to mutual support and joint recovery through the Roadmap for a Renewed U.S. - Canada Partnership. Our community has a lot to contribute as we've grown to become one of the largest Canada-U.S. business councils. MAPLE members work in over 20 sectors and live in 20 markets.

So we're celebrating the breadth and depth of our members' expertise in a special new video compilation of excerpts from past episodes of our MAPLE Conversations series with 15 different member organizations entitled "Planning for Cross-Border Success". There's no doubt that for any organization planning to enter either the Canadian or the U.S. markets, the expertise is within our community to help them be successful.

We are honored to include special messages from two of Canada's senior representatives in the United States in our video. Thank you to Consul General of Canada in Los Angeles, Zaib Shaikh, and Acting Consul General of Canada in New York, Khawar Nasim, and your teams for taking the time to share your perspectives on the past year and the opportunity for Canada and the U.S. to work together for a just and equitable economic rebound for all.

We hope you enjoy, "Planning for Cross-Border Success", and that it might spark ideas and opportunities for your business. Popcorn not included!

Consul General Zaib Shaikh, Consulate General of Canada in Los Angeles; Acting Consul General Khawar Nasim, Consulate General of Canada in New York.

2021 Canada Federal Budget: Detailed Commentary

On April 19, 2021, Canada’s Minister of Finance, Chrystia Freeland, released Canada’s 2021 Budget (Budget), the federal government’s first Budget in more than two years and first since before the pandemic.

The Budget addresses three fundamental challenges: (1) conquering COVID-19 itself, (2) climbing out of the COVID-19 economic recession, and (3) building a better, fairer and more innovative future.

The first challenge, conquering COVID-19 itself, includes securing and distributing vaccines to the provinces, and continuing to provide financial support to businesses to make it through the third wave of lockdowns. This includes, among other measures, extending the Canada Emergency Wage Subsidy (CEWS), the Canada Emergency Rent Subsidy (CERS), and other subsidy and benefit programs.

The second challenge, climbing out of the economic recession, includes new investments and other financial support to help businesses hire employees and expand their operations after the lockdowns of the third wave are over, and a substantial portion of Canadians are vaccinated.

The third challenge, building a better, fairer and more innovative future, includes the most significant and far-reaching measures in the Budget. For example, it includes a commitment to a universal affordable childcare program within 18 months; significant tax measures to incentivize green transformation; details on taxing digital service providers; a luxury tax on aircrafts, vehicles and boats; measures to increase corporate taxes on multinational entities; proposals for increased disclosure on tax returns; and enhanced audit powers for the Canada Revenue Agency (CRA). There is a clear focus on attempting to correct the perceived inequalities in the tax system, something the government started in November’s Fall Economic Statement, and now continues with full force and vigor in the 2021 Budget.

Leading up to the Budget there has been conversation about potential tax measures and increases the government might propose, but the Budget is largely silent on this front. In particular, the Budget does not include:

• A change to the federal corporate income tax rates or the $500,000 small business limit (except to reduce the rates for certain manufacturing and processing income, as set out below);

• An increase to federal personal income tax rates;

• A wealth tax;

• An elimination or cap on the principal residence exemption; or

• An increase in the capital gains tax rate.

This tax alert summarizes the business and personal income and indirect tax measures in the 2021 Budget relevant to the middle market, including international tax and transfer pricing considerations, credits and incentives, and audit and enforcement measures. 

Read our complete commentary at https://rsmcanada.com/our-insights/budget-commentary.html

Resilient Leadership in Uncertain Times

By Glenn Yonemitsu, Managing Director, High-Impact Firms, BDC Advisory Services and Rob LaJoie, Executive Advisor, High-Impact Firms, BDC Advisory Services

We have “survived” living and working under unprecedented restrictions for the past year. While many individuals and companies have been impacted, a great number have seized opportunities, succeeded and thrived.  Along with success comes confidence and with confidence, comes a false sense of security.

The one thing that COVID-19 has taught us is that we should never treat it lightly, and we should never let our guard down. The recent Covid variants that have emerged just as we were welcoming vaccines, should be taken as a warning that we are not yet out of the woods.

Being resilient means you can respond to issues as they present themselves. So, the changing nature of Covid should encourage business leaders to take care and be resilient leaders, who ensure their team is constantly scanning the environment, ready to triage, ready to make decisions, and ready to act….especially in uncertain times, when the situation is always changing.

Be fast and good

Resilient leaders should strive to be “fast and good”.  Being fast and good is what appears on the surface, but it is actually the result of being prepared. 

To ensure you have the best chance to be fast and good (star), you need to anticipate and have a high action-orientation.  Use your radar to scan the future, never letting your guard down - as whatever you expect, you can prepare for, and a better plan will be the result.  Then, once you have anticipated what might be, you have to ensure you and your team can make a decision in a timely fashion, and execute quickly.

As the percentage of the population who have been vaccinated increases, it is easy for your team to have a false sense of security.  Relaxing Covid precautions and not constantly scanning the environment may lower your anticipation.  As a leader, despite seeing green lights for the economy ahead, don’t forget to set the tone, encourage your team to keep their spidey senses on high alert, and ensure you remain aware of your resilient toolbox.

Make sure you work on the “right” issues

To be resilient and effective, you have to work on the “right” issues, and not the issues that won’t kill you.  Especially when you are in an unfamiliar environment, faced with challenges/issues that you haven’t seen before, many leaders succumb to the belief they need to deal with everything and anything.  

Leaders have to resist this urge. 

Similar to an emergency room in a hospital, not every patient gets to see the doctor immediately. Leaders have to act like a triage nurse and determine if an issue needs to be prioritized, when it needs to be addressed, who needs to deal with it, and how many resources should be devoted to it.  Simply put, you have to work on the “right” issue, with the “right” person, at the “right” time, and apply the “right” resources.  

If you triage properly, you will delegate the “simple” and “complicated” problems to others, and you and your leadership team will have more time and resources to work on the “complex” issues – the issues that can hurt you.

Then use your decision-making framework

Once you have triaged and know you are dealing with the issues that matter, the resilient leader needs to have a proven decision-making framework. This will accelerate your action-orientation. Once you are in the midst of the crisis, it is too late to develop the process. Not being able to make a decision, or executing slowly, all lead to a low action-orientation.  Develop a framework now, so you are prepared.  

While we encourage leadership teams to have their own decision-making framework, there is a great one to consider, in the US military’s OODA loop. 

Developed by Colonel John “Forty second” Boyd, who started with the USAF as a fighter pilot in the Korean War, and who became one of the most influential voices in shaping modern warfare, the OODA loop is a decision-making framework that helps encourage a decision, knowing there will be imperfect information, by using: 

Ø  Observe: Constant scanning of the environment, 

Ø  Orient: Analyze the information, and develop options,  

Ø  Decide: Decide which option is best, and develop the plan for action, and

Ø  Act: implement with a bias for action.

Observe:  This step includes observing the external environment by gathering information, reviewing outcomes from previous decisions, and keeping an open mind.  

Orient:  Analyze the information, knowing that you will never have perfect information, and determine your options for response.  OODA is great for a competitive situation, as this mirrors how the fighter pilot considers how your enemy would respond.

Decide:  Make a decision on the best course forward, never forgetting what the objective is, and taking into account the information that you have synthesized. While making a decision, remain aware of the impact of your decision, as this can then be used, as you iterate and return back to the observe step.

Act: This may sound simple, but we all know some companies/organizations who even once they have made a decision, have difficulty in executing. Taking the decision and acting upon it – by aligning your team, corralling your resources, monitoring implementation, and reviewing the results, again, so you can address it, when you iterate and get back to the observe step.

For a fighter pilot, knowing that the risk is never one and done, continuing to repeat and loop through this process, helps to ensure you are always prepared.  This is no different than when using the OODA loop in business.  The constant scanning ensures you can adjust strategies quickly.  This is how Boyd got his nickname, as when he was an instructor at the USAF’s fighter weapons school, he used to bet anyone that he can “win” any dogfight within forty seconds, by using the decision-making principles in the OODA loop.

The OODA loop’s principles have been successfully applied to business applications to encourage speedy decision-making and should be considered as a key tool in your resilience toolbox.

Example

In the leisure boating industry, marine assets cost thousands, if not millions on dollars. At the outset of the Covid restrictions and societal lockdown, given the length of time to fulfil orders, boat dealers were initially worried about whether their customer deposits would convert to sales, and whether their inventory would be relieved or stranded.  Those dealers who were quick to arrange emergency financing, were able to survive and withstand this unanticipated drag on working capital.

But, after this initial shock, smart dealers, rather than wallow in their problems, were constantly reviewing the situation and realized, as the summer approached, that boating actually offered a safe escape to families who couldn’t otherwise socialize.  

The OODA loop’s constant updating would encourage this quick pivot, to keep pace with an evolving environment.  Those dealers who anticipated this change, had first mover advantage, and were able to move their inventory.

Another example

During Covid public health measures have been dynamic and constantly changing.  Recently, as restrictions have been relaxed over the past few months, many businesses in the hospitality and restaurant industry, were getting back to business, reaching out to their customer base, rehiring staff, and ordering supplies.  

But yesterday, one region that was experiencing an uptick in cases, reversed their course, and returned to a lockdown mode.  Businesses who were not constantly scanning the environment, and remaining flexible, might be caught unawares and may have ordered lots of perishable supplies, all to be put at risk, because of the return to lockdown. 

If they had been using the OODA loop and constantly scanning the environment, they would have noticed the increase in cases over the past week, and they may have made the necessary adjustments to their business plans.

Summary

To ensure you are a resilient leader means you and your team can respond to issues as they present themselves.  And, even though we are moving in the right direction with the Covid situation, you need to remember some key principles in the resilient toolbox.

You can be “fast and good”.  A star anticipates the future, prepares, and executes in a timely fashion.

You can do this, by being “right”.  You can’t deal with every issue, so triage, like an emergency room, and make sure you deal with the “right” issue, at the “right” time, with the “right” person, and using the “right” resources.

Use a decision-making framework like OODA, to encourage better, more timely, and more consistent decisions.

The OODA loop can help you make the best decision you can, in the face of uncertainty.  The best problem-solving or decision-making frameworks, are iterative.  Repeating the cycle, observing the results, measuring effectiveness, making adjustments, and moving to the next iteration, all help ensure you constantly adjust your response.

Be a resilient leader and ensure your team is ready for the next situation.  

For more information on BDC Advisory Services, please visit https://www.bdc.ca/en/consulting.

An Interview with John Keisler, Economic Development Director for the City of Long Beach

This month, we are reconnecting with John Keisler, Director of Economic Development at the City of Long Beach, for an update on the City, key economic developments and how it is navigating the pandemic.

Thank you, John for the opportunity to reconnect and share a window on the City of Long Beach. To start, would you share with our readers what your role as the city’s Economic Development Director encompasses?

The mission of the Economic Development Department is to create inclusive economic opportunities for workers, investors, and entrepreneurs in the City of Long Beach.  In other words, our job is to help people make more money and provide for their families.  It is the best job in the world!

 Would you help our readers understand the size of Long Beach and provide an overview of its economic footprint in terms of its key sectors and strengths?

Long Beach is one of the largest cities in the State of California—a $3 trillion economy—and located just 20 miles south of downtown Los Angeles on the beautiful Pacific Ocean.  We have approximately 500,000 residents and operate one of the busiest international seaports in North America.  Our incredible University produces over 10,000 graduates per year, and we are one of the leading hubs for aerospace manufacturing and rocket launch companies.  We are diverse, dynamic, and nestled between both Los Angeles and Orange counties which together now produce over $1 trillion in GDP on an annual basis.

The past year has certainly been one of the most challenging that most of us have ever faced. What have been some of the resources that the City has drawn upon to weather the disruption caused by the pandemic? 

 The past year—2020—has been one of the most challenging and rewarding years of my career and has tested the spirit, resilience, and mettle of our community.  Fortunately, we have an extremely innovative Mayor and City Council, our own federal Workforce Development agency, and the strongest community partnerships of any City economic development department in the country.  We have drawn on our diversity for ideas, inspiration, and resilience. These partnerships have allowed us to serve the communities most impacted by COVID-19 in the most creative and effective ways in our City history. 

We are now one year since the start of the pandemic. How is Long Beach doing overall?

 Over the past year, Long Beach residents filed over 250,000 unemployment assistance claims as we watched our unemployment rate go from an historic low of approximately 4% to over 20% in a matter of weeks.  We also experienced an historic reconciliation process around systemic racism and the inequities in our economy.  We have a long way to go but we have bounced back in many sectors and watched employment expand in some high-tech manufacturing with many exciting announcements about company expansion, venture capital, and construction of new commercial and residential buildings.  At the same time, our tourism, hospitality, entertainment, and other service sector businesses have not recovered and this has impacted our diverse communities of color at higher rates than others.  It has not been equal in its impacts and we are just now beginning to make major reforms around racial equity and economic equity both that will make us a better City for all people.

John, what are the key economic development priorities that you and your office are currently focused on over the next 12-18 months and to what extent has the pandemic changed your priorities?

 We just announced a $200 million recovery package to protect our people and get the economy back on track.  You can read more about the details online. This recovery plan was developed after over 40 hours of community outreach, five economic impact studies, and hundreds of participants from various sectors of the community and the economy shared their challenges and recommendations for investment.  In short, the plan seeks to vaccinate service sector workers, provide direct relief to businesses and non-profits, and invest in customer and visitor activation to get the economy back on track.

For our readers in Canada who may be less familiar with the City of Long Beach, what makes Long Beach an attractive destination for investment and relocation?

Long Beach is one of the most modern, diverse, and innovative cities in the nation.  We have a history of building, making, and moving stuff—and we have invested heavily in our education systems and our transportation infrastructure.  In short, we invested in the key resources that sustain long-term economic growth—schools, universities, ports, railroad, airports, and now fiber networks.  The reason that the most innovative rocket and satellite launch companies are now clustering in Long Beach is because of the talent and the infrastructure we provide.  The weather, food, arts and culture is also as good as it gets!

A focus of many of Long Beach’s economic stakeholders has been to nurture and grow a local start-up community and to promote innovation. How is the Long Beach tech/start-up community doing now and what is on the horizon to continue to help it grow?

The local tech sector is booming in Long Beach and the surrounding region but we are most proud of our new Long Beach Accelerator which introduced its first cohort in 2021.  We also produce over 1,200 engineers a year at California State University Long Beach, and partner with the University Institute for Innovation & Entrepreneurship to create opportunity and foster the startup ecosystem for companies looking to locate and grow in Long Beach.  Several technology companies announced major investments this year including Zwift, Laserfiche, Relativity Space, Rocket Lab, Spin Launch, and Virgin Orbit among many others.

 It has been exciting to see the launch of the new Long Beach Accelerator and the announcements around its first cohort. Where does the Accelerator fit in the economic development strategy and what can we expect to see in the coming year?

Of course.  The Long Beach Accelerator is a partnership between the City, University, and private venture capital investment community.  There are few public-private partnerships like it that seek to provide access to technical assistance, investment, and mentoring for diverse technology entrepreneurs.  Because of its unique structure, the new cohort also has access to unique marketplaces to test their solutions such as the City of Long Beach and all of its service areas.  The Accelerator is currently recruiting its Summer cohort and will invite up to six more startups to launch in Long Beach.

MAPLE is proud to be a partner of the City of Long Beach and we’ve always been impressed with the degree of collaboration between the City’s economic development stakeholders including the California State University Long Beach, the Port of Long Beach, the Mayor’s Office, the Economic Development team and the business sector among others. To what do you attribute this orchestration between government, business and academia and what are the implications for businesses?

 Collaboration begins with good people who genuinely like each other and what is best for their community.  People who live in Long Beach love their community and are willing to donate time, energy, money, and talent to make it better for current and future generations.  There is also something special in Long Beach that values diversity, individuality, and the creative process.  We get to shape our City every day and the creative process is much more fun when you do it with friends!

 Thank you very much, John for taking the time to share a window on Long Beach. Do you have a personal message to share about where we all are in the pandemic and the opportunities in front of us?

 Innovation is born out of crisis.  Both Americans and Canadians are descendants of immigrants, explorers, and entrepreneurs who set-out from their home countries to discover and build things.  That same creative and resilient spirit will emerge from this current crisis to make our two countries better than ever.  It is also time for us to face some of the systemic problems with old systems and build a better, more equitable economy for our children.

For more information on the City of Long Beach, please visit the Economic Development Office website at http://www.longbeach.gov/economicdevelopment/

Controlling the Speed of Patent Examination in the US

Authors: Dan Altman, Partner and Vlad Teplitskiy, Partner, Knobbe Martens, Orange County, California

Introduction 

Imagine that that your company is getting ready to file a US patent application covering a key product.  Before the application has been filed, you ask your US patent attorney about how soon after filing the application you can look forward to receiving the good news of getting a patent.  To your surprise, you learn that, in the ordinary course, it would likely take about two to three years, and sometimes even longer.  But your company does not want to wait that long.  You ask if there is anything that can be done to speed up the examination process to get a patent sooner.

Now imagine a different scenario.  Your company is getting ready to file a US patent application on a product that is still in development.  The application covers several alternatives for the product, and it is not yet clear which of the alternatives will be included in the commercial product.  It certainly is not yet known which of the alternatives your competitors might decide to implement in their competing products.  You ask if it is possible to delay examination of the patent application to obtain more time.

The following presents strategies your company can implement in answer to both of the foregoing questions. 

 Accelerating Examination

 Speeding up examination of a patent application can be important for several reasons, such as, improving competitive positioning and company valuation, securing patent rights to enforce against competitors, and learning quickly whether the invention is patentable prior to spending significant resources to pursue patent protection in jurisdictions outside North America. 

 There are several ways to speed up examination of a U.S. patent application.  The most potent option is to pay an additional official fee to accelerate examination under the Track One Prioritized Examination program.  This program is available for virtually any new patent application meeting several technical requirements and simply requires payment of a fee of $2100 for most small businesses or $4200 for companies that have over 500 employees.  The Track One program guarantees a final disposition (i.e., an allowance or a final rejection) of the application within one year.  Indeed, current statistics demonstrate that applications filed under the Track One program typically reach a notice of allowance in just over six months.  Moreover, applications filed under the Track One program tend to receive more favorable treatment by the USPTO as a result of being assigned to more experienced patent examiners who are more likely to grant patents.

 Another way to accelerate patent examination in the US is to file a petition to make special.  This approach does not require payment of any fees, but the application must meet one or more of the following criteria:

·      At least one of the inventors is 65 years old;

·      At least one of the inventors is in poor health, or 

·      The invention will materially enhance the quality of the environment, contribute to the development or conservation of energy resources, or contribute to countering terrorism.  

In addition, patent applications related to COVID-19 may receive accelerated examination.

 It may also be possible to use the Patent Prosecution Highway (PPH) program to accelerate examination.  This program requires prior allowance of claims in a corresponding non-U.S. application. There are no official fees for requesting participation in the PPH program. While applications participating in the PPH program generally receive fewer official actions and are allowed at a higher rate, there can be downsides. In particular, there are limitations on how the claims can be amended, which may create a challenge in overcoming rejections raised by a US patent examiner.

 Delaying Examination

 There are also a number of reasons that it may be desirable to slow down examination of a patent application.  Such reasons include a desire to defer costs, determine the claim strategy to cover a competitor’s product, and a need to obtain time for obtaining additional data or experimental results to strengthen the arguments for obtaining a patent.  There are several options for delaying examination.

 The patent rules permit filing a request to suspend examination for up to three years. The suspension request can be filed at any time before issuance of a first action on the merits by the USPTO.  There is only a small official fee for filing the request.

 Additional limited options for slowing down examination include requesting suspension of action for up to three months subsequent to the filing of a request for continued examination or filing a petition for suspension of examination of up to six months upon showing of a good and sufficient cause and payment of a small fee.

 Moreover, it is possible to take advantage of various strategic options that will result in slowing down substantive examination.  While such an approach is not a “formal” mechanism for delaying examination, they can help achieve the desired result.  An exemplary process for proceeding slowly could include the following steps:

1.     Filing a patent application without meeting formalities (such as, without paying the fees), which would delay commencement of substantive examination;

2.     Presenting claims directed to multiple inventions, which would likely trigger an action by the USPTO requesting election of one of the inventions prior to commencement of substantive examination;

3.     Responding to rejections by the USPTO with only a pro forma response, which would likely lead to the patent Examiner maintain the rejections;

4.     Filing a notice of appeal in response to final action rather than filing a substantive response; and

5.     Filing a continuation patent application instead of an appeal brief in order to restart the entire cycle.

The USPTO has a process that permits the payment of a fee to extend the deadlines at each of the foregoing steps.  It is generally most cost-effective to pay for no more than two months of extension at each step.  By taking advantage of these extensions of time, each cycle of the strategy set forth above might provide a delay of  about 18-24 months.

 Conclusion

 USPTO patent rules and procedures provide numerous options for controlling the speed of patent examination.  By taking advantage of these options, you can meet your business goals by accelerating or slowing the time spent in obtaining a patent.  

Promoting Collaborative Communities in Ontario, Canada and Abroad

The Province of Ontario, Canada, is home to a thriving innovation ecosystem where we pride ourselves in the belief that we, as a province, become stronger and more dynamic when we incorporate diversity into our way of life. 

Ethnicity, language, and gender combine to paint a vibrant picture of Ontario’s values – a place where everyone is welcome. In Ontario, more than 200 languages are spoken on a daily basis, and people from over 150 countries have been welcomed to and now call the province home. In our provincial capital city of Toronto, more than 50 per cent of residents are foreign-born. 

The events of the past year, from the marches for racial equality to the COVID-19 pandemic and the shift to remote work, have underscored the importance of coming together to work on our collective challenges and opportunities. The journey is long, and never finished, but we will only reach our full potential when we become a truly diverse, accessible, and inclusive society.

We are proud to share how Ontarians – government, businesses, and ecosystem partners – back home and abroad are contributing to this important work. While not exhaustive, and always ongoing, here are just a few of the ways Ontario is taking steps towards promoting Diversity, Equity and Inclusion (DEI), thereby creating a positive environment in which everyone can thrive. 

Government

Ontario is a trade and investment dependent economy whose economic growth has been grounded in an open, pluralist, and welcoming society. The province benefits from personal, institutional, and business relationships that connect us to communities and economies around the world. What happens internationally affects Ontario, and as a result, inclusive economic empowerment has long been a priority.

 This engagement includes the promotion of commercial linkages with our longstanding trade partners, like the United States. It’s one of the reasons Ontario has five offices across the U.S., in New York, San Francisco, Chicago, Dallas, and Washington, D.C. – free and confidential, Ontario’s offices in-market are here to promote the benefits of doing business with the province, encourage new investments and job creation, and connect companies to support business expansion deals. 

 In addition to its international footprint however, Ontario is also focused on working towards a more inclusive environment domestically that presents new and greater opportunities for collaboration and innovation.

 For example, in fall 2020, Ontario launched the Small Business Strategy, a long-term framework that helps small businesses and entrepreneurs to rebuild, reinvest, and grow. The strategy will support the next generation of entrepreneurs and diverse business leaders to build a stronger, more inclusive economy with greater representation from women, Indigenous peoples, people from racialized communities, and people with disabilities. 

 Ontario also appointed the province’s first Advocate for Community Opportunities in 2019, and introduced the Premier’s Council on Equality of Opportunity (PCEO). The PCEO champions community voices; provides advice to government on how to help young people succeed in a changing economy; and proposes actions to build a diverse, skilled, and future-oriented workforce.  

 These newer initiatives amplify longstanding programs and policies that can support DEI goals. The Ontario Immigrant Nominee Program (OINP), for example, is the province's economic immigration program which supports employers who want to bring highly skilled immigrants to the province quickly and easily, and thereby grow an even more diverse workforce.  

Business Community

True progress requires the whole community coming together to find solutions. That’s always been the Ontario way. Members of the business community continue to create, advance, and improve on a business culture that promotes DEI. 

 Ontario is home to the second largest tech cluster in North America, after California, and homegrown Shopify is an example of the innovation and success found in the province.  Headquartered in Ottawa, Shopify is a leading e-commerce platform designed for businesses of all sizes. Shopify’s platform is used in 175 countries around the world, and the company is committed to DEI. In a CNBC Mad Money interview last summer, Shopify COO Harley Finkelstein noted that “the future of commerce needs to have diverse voices, more voices not fewer.” In fact, Shopify has been focused on DEI since the beginning, according to the COO. “Our mission from day one has been to level that playing field, and it feels more important now than ever before to do that,” said Finkelstein.  

 Global companies choose Ontario for their Canadian headquarters, and many of these companies are working on their own inclusive initiatives. 

·      Nokia Canada, also headquartered in Ottawa, supports activities focused on getting girls interested in STEM – including Girls in ICT Day, an annual event in which the company prepares hands-on activities and demos for girls of grade 4 and older. Nokia Canada created the Diversity Lab, a new space in their Kanata building to support diversity programs and demo technology created in the building in 2020. 

·      IBM Canada, headquartered in Markham, has been recognized for its work to empower gay, lesbian, bisexual, and transgender people in the workplace around the world. 

Across industries, Ontario companies are committed to promoting greater DEI. In the life sciences sector for example, Toronto-based BlueDot is an AI-driven infectious disease surveillance solution. The company was among the first to warn the world of COVID-19 is now helping to guide the Canadian government's COVID-19 response as well as working with the State of California. BlueDot was named to the 2020 list of Best Places to Work in Ontario.  BlueDot used the recognition to reaffirm its commitment to DEI, saying, “Building strength through diversity, equity, and inclusion takes work, and it’s work we’re more committed to doing now more than ever.”

 Innovation Ecosystem

Ontario’s innovation ecosystem highlights initiatives from various organizations that are geared towards women-led/diverse businesses to help them succeed. From incubators to academia, the wide and collaborative ecosystem can support positive impacts.

For example:

·      VentureLab, based in Markham, is a leading technology hub that supports tech entrepreneurs and small businesses. Its new initiative, Tech Undivided, is aimed at supporting women and underrepresented persons in the tech industry. Tech Undivided bridges inclusivity gaps by creating gender-balanced networks with diverse representation and works with founders, investors, and companies to prepare them for business and investment success by reducing unconscious bias.

·       The Information and Communications Technology Council, headquartered in Ottawa, has programs to help employers recruit, retain, and integrate women, Indigenous persons, youth, and internationally educated professions into the ICT workforce.

·      Ryerson University’s DMZ (Digital Media Zone) in Toronto is one of the world’s top university-based business incubators. Its Women Founders Fast Track program, designed to support women-identified founders, gives founders the resources they need to lead an early-stage start-up and facilitate its growth.

And speaking of universities, in 2019, Ontario welcomed 170,000 international students to its 44 post-secondary institutions. Five of the top 10 universities in Canada are located in Ontario, and Ontario universities produce nearly 50,000 Science, Technology, Engineering, and Math (STEM) graduates each year.   In Ontario, top talent, academia, research institutes, and accelerators come together to create an ecosystem that supports the development of new technologies to solve real world problems and steer toward a path to a brighter future.

Ontario Together 

While these actions are only part of our collective steps in a longer journey towards greater diversity, equity, and inclusion, Ontario is proud to be working towards a more welcoming and inclusive place to live and do business. We welcome further opportunities to engage with U.S. and Ontario based companies and organizations that want to learn more about doing business in the province, and Ontario’s efforts to foster an ecosystem that allows businesses and people to thrive. 

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This article was written by the Ontario Trade & Investment Offices located in San Francisco and New York City.The Ontario Trade & Investment Officesare a free and confidential one-stop-shop that works with U.S. based businesses to expand, and open new offices in Ontario, and also supports Ontario-based companies seeking new business opportunities in the U.S. For more information and/or to discuss your expansion plans to Ontario, please contact Chelsea Peet, atChelsea.peet@international.gc.caand/or Michelle Cheng, atMichelle.Cheng@international.gc.ca

Diversity, Equity and Inclusion in the Promotion of Cross-Border Investment, Trade & Entrepreneurship

“Diversity is being invited to the party. Inclusion is being asked to dance.”

Verna Myers – Diversity Advocate

 As so many organizations have, the events of 2020 and what they echoed historically and systemically, caused us to pause and reflect on how we can do better in embracing and living Diversity, Equity and Inclusion (DEI) in our organization. And as a growing bi-national organization whose mission is connecting people across borders, work that by its very nature is about diversity and inclusivity, our MAPLE Business Council leadership team felt we were overdue to address DEI.

 We are sharing our DEI commitments because they are integral to our mission and the value we want to deliver to our members and partners.  Moreover, as a membership-based organization, we have a large window on a wide variety of organizations and business sectors. This is both an opportunity to learn from our members and an opportunity to share our learnings with others. We can also learn from the DEI work that is happening in the United States and Canada. Not to take advantage of this unique vantage point would be a significant missed opportunity.

 In 2020, we took an important step forward in addressing a gender imbalance on our leadership team. We appointed four women executives including our Board of Directors, Advisory Board and regional leadership. This is of course just one step in our DEI journey. 

“Looking across a border is itself an act of inclusion.”

MAPLE DEI Statement

 Diversity, Equity and Inclusion are fundamental building blocks in our mission to promote economic ties between Canada and the United States. People, organizations and nations can only trade, invest and collaborate successfully together if there is an underlying respect, trust and accountability for and to one another. Looking across a border is itself an act of inclusion. 

MAPLE DEI Mission

 Our mission is to make Diversity, Equity and Inclusion integral to our community as evidenced by the composition, voice and actions of our leadership team, members and partners. 

MAPLE DEI Vision

 MAPLE Business Council recognizes diversity as an asset, and through our leadership, management, membership and partnerships, we will reflect the diversity of the cross-border communities we serve. MAPLE will be an inclusive community that is equitable and non-discriminatory in the treatment, access, opportunity and advancement for all. We want our actions to positively influence others to embrace these values too.

MAPLE DEI Values

• We welcome members and staff without bias to age, gender, gender expression, sexual orientation, color, race, ethnicity, nationality, religion, or creed.

• We commit to deliberate efforts to ensure our community is a place where every individual feels a sense of belonging and inclusion.

• We welcome differences and respectfully hear different perspectives.

• We celebrate the DEI that underpins our cross-border community.

• We project DEI in how we present our community to others.

• We are a student of DEI actively learning from our members, partners and the broader community.

• We do not tolerate attitudes or actions that do not respect DEI openly or privately.

MAPLE Initiatives

 Recognizing that it is about actions and not words, we are looking at all facets of our work through a DEI lens. This initially includes:

 Organization

·       Continuing to promote greater diversity on the MAPLE Board, Advisory Board, and operating team. 

·       Publishing our commitment to DEI on our website and in our network communications. 

·       Holding ourselves accountable to our DEI objectives in our leadership meetings

 Membership

·       Include DEI in onboarding discussions with new members

·       Ask our members to share examples of their DEI programs, insights, and key learnings that we can share with others and learn from ourselves.

 Communications

·       Dedicate an issue of MOMENTUM each year to DEI including best practices from our members.

·       Work with a member organization who would like to discuss their DEI best practices in episodes of MAPLE Conversations.

·       Project diversity in how we present our community, membership, events and content so others can see themselves as part of the MAPLE community

·       Repost content celebrating DEI as a regular component of our social media content including initiatives taken by our members and partners.

 Trade & Investment

·       Highlight DEI initiatives that are represented in the USMCA/CUSMA trade agreement and associated communications.

·       Communicate the business case for DEI (employee retention/attraction, etc.)

 Community

·       Take part in community DEI celebrations with our members and partners

 We look forward to sharing more perspectives on DEI in the future and for our members, partners and our team to learn, respond and grow as a result. 

Four Steps to Secure your Work from Home Environment

Author: Steve McGeown, Security Practice Leader, QA Consultants, Toronto, Ontario

Is your home network safe? Are you putting your corporate assets at risk while working from home? At 10 months into the ‘new way to work’ with many more such months on the horizon, QA Consultants shares simple guidelines to secure your work from home environment.

We have all been doing this Work From Home (“WFH”) thing for several months now. Not only work, but also school from home, competition for network bandwidth, shared devices, and conflicting requirements. Let’s start 2021 with a Security Health Check for your home environment. The variety of users, devices, networks, and access points puts us in a fragile position with little support. Applications such as videoconferencing and filesharing are being regularly misconfigured and this misuse can lead to serious personal and organizational security exposure. Advanced email phishing attempts will have plenty of ill-prepared targets if WFH users are not properly prepared.  

Do not be the reason your corporate network has been compromised. 

Conducting business virtually has introduced us to new applications in our separated collaboration and our ‘separate but together’ world.  Coordinating 20, 50, or 100 people into a virtual conference room is hard enough, but many are trying to do the same with families, AND ON YOUR WORK COMPUTER! 

And, we have our home infrastructure…maybe some Wi-Fi router that we bought in 2003, on special, with default settings.  

Reducing your security risk does not have to be overwhelming. The real security threats are not evil mysterious masterminds in hoodies stalking you. No, the real enemy is automation. Bots, bots, and more bots are automatically scanning 365/24 looking for easy entry targets. Once these autonomous bots identify a weak target – YOU – that is when they will attack with their human enablers to monetize your weakness through ransomware, or to attack your organization to steal data and otherwise gain other forms of access. Once in, they use your identity to attack your contacts with that information.  

We recommend four security measures that you can take to secure your WFH environment and increase peace of mind.  Take this approach to elevate your security posture and will keep the bots moving on to another target.

1)    Create and Follow a Work from Home Technology and Security Policy

Champion, build, and follow a company IT WFH policy. Do not hesitate to reach out for remote support from your IT group rather than spin your wheels in frustration. You can rack up hours trying to figure out router or device security settings when best practices can be documented for all.

Here are some key suggestions that you should follow:

a)    No family members on work equipment. And do not do business work on your home equipment. If your company has a VPN, use it. Use company supplied backup mechanisms if available and finally if you are in a bring your own device (“BYOD”) situation you'll need special care to do all of the above, but there should still be a company policy that follows for BYOD.

b)    Everyone is leaning heavily on collaboration tools to achieve office-like productivity including different conferencing and file-sharing tools, etc.  It is best to rely on your company best practices and guidance.  IT can help you manage those vulnerabilities, and they will know which impact all their employees and help you work around. However, one of the most important things is that most of the security vulnerability occurs through user configuration or settings.

c)    “Zoom bombing” is when people hijack your webinars or conference calls and display images or take over the chat feature with objectionable content. Do not publish your meeting links on social media or any public platform. Do not unclick the password requirement and consider using the “waiting-room” where you can validate attendees before allowing them to join the session. Carefully review all settings and configuration for setting up the platform before your sessions.

 2)    Update Your Hardware and Platforms

Now, back to that router you bought in 2003. If you have not upgraded your router in quite some time, chances are the firmware is very much out of date and Wi-Fi routers have had notorious problems with security in the past.  Update your firmware.  Then, remove the default credentials. Manufacturers ship their routers with an admin user ID and default password, and you will need to remove those because everyone in the “dark community” knows about that! Finally, you want to remove or turn off any remote admin access. Make sure there is a hard to guess SSID password – not your name, or address, or any way to know the location or owner of the router. 

For your workstation, laptop(s), tablets, etc., make sure your auto-updates are turned on and working. Some organizations like to control their own Windows Update. Check connections to other devices like printers or other needed peripheral devices. Update your firewall rules to only allow those devices.

You will never need to pay a ransom if your work is backed up! Cloud and local.   Use corporate and personal backups mechanism through a cloud provider and/or a peripheral backup drive.

3)    Passwords

Passwords are the most important of our four recommendations. It is not uncommon for bad actors to set up databases that can generate millions of passwords attempts to gain ‘brute force’ access to a particular system.  It’s very easy to do with an automated army. 

In fact, in one instance where QAC was asked by a client to penetrate a system, we found out that the that there was no actual policy control on passwords and users could put anything they wanted. As it turned out, we cracked over twenty thousand subscriber accounts while only using a database of about a thousand or so passwords. Yes, it is real!

There are only two acceptable means of setting passwords. 

1.    Use a passphrase: A passphrase is simply a phrase, not just a word, that you can remember easily, but is alphanumerically complex. I can even tell you my password, but because I have substituted “zeros” with the letter “O”, etc. or spelled parts out, it is difficult to guess.  It could take thousands attempts to guess and is a complex as a random generated algorithm.  

2.    Use a password manager: The other method is a password manager which will store your strong, cryptic passwords for each system across devices that nobody could ever guess and is all controlled by a single user ID (or your face). 

You should also always consider multi-factor authentication. You are probably familiar with this, especially when you sign on to your bank accounts from different devices.  It is simple to use and it and it supplies so much security to your risk profile. You log in as normal, then the system issues a token or a number via email or a text to your phone and you enter that second factor, so it knows it is you. 

 4)    Protect against Social Engineering (Phishing)

Social engineering has become so sophisticated that even the most cautious, security-conscious of us may be too quick to click on a nefarious link or open a dangerous attachment. COVID-19 and WFH has made phishing more prevalent and dangerous than ever! 

So, what is phishing and how has it become so much more dangerous than the classic Nigerian princess or FedEx scam. The bad guys are customizing their attacks based on doing some homework on your social media presence and the type of work you do. Then, they create a message that looks familiar (Family, Bank, Office) and includes a dangerous embedded link or attachment. All you have to do on a sleepy, early morning is click or open something that suddenly runs code on your machine and then, poof! You are ‘owned’ by them, and ransomware ensues, and all sorts of bad things happen. These communications are very, very, difficult to detect and prevent in any proactive way. 

At the office, there is the dreaded Microsoft Office 365 credentials phishing and the dozens of variants. Here’s where bad actors spoof the Office 365 team and send you and your company’s 365 account members an official-looking email that warns you of a full mailbox. A well-disguised message that suggests clicking on a URL to get an extra number of gigabytes for free.  The primary purpose is to have you click on a fake URL and enter your sign-in credentials and password.   

Our strongest, failsafe recommendation regarding URL links is to never click on them directly within the email. Do not click links even from known contacts as it could have been sent from an already compromised account.  Do not cut and paste the link into your browser and just directly navigate to the content. Find the content directly if it is important.  You can live without another cat video.  Be vigilant about this. 

If an email is asking you to change your password, does it seem like this is the normal password change process that your organization uses regularly? If you suspect anything, call the IT organization. Call anyway.  

 In summary, we are under constant attack, but muscle memory is key.  Start with these four simple exercises. You will have big gains in your home security posture, and your confidence, and there will be huge benefits for your company if you follow this guide. If you have questions, comments, concerns, or, if you were looking for a checklist for higher complexity environments, please submit to QA Consultant’s website:

https://qaconsultants.com/contact-us/ (Did you click the link or type it in your browser?)

A video of this presentation can be found and shared with your organization at this link:

https://qaconsultants.com/solutions-and-services/security-testing/

QA Consultants is North America’s largest independent software quality assurance services firm. QAC is 100% focused on software QA and security, delivering services onshore primarily through their Toronto TestFactoryTM. QAC’s services cover the full spectrum of software testing including functional (manual and automated) testing, performance engineering and testing, accessibility, audit/advisory, application security vulnerability, among other QA disciplines. QAC has a robust Emerging Tech practice that is predominately funded by the Canadian government for leading-edge research on QA for connected and autonomous vehicles, AI, and blockchain. With over 26 years of experience, market leading IP, and 10,000 engagements delivered, QA Consultants has consistently proven that independent QA is cost effective, value based, and efficient. QAC has deep domain expertise in banking and financial services, Retail, Government, Software/Tech, and Transportation. For more information, please visit www.qaconsultants.com.

Looking forward: Canada's economy in 2021

Joe Brusuelas, Chief Economist, RSM US LLP

The North American economy is defined by two trading partners connected through a common set of sociopolitical values, culture and industry. For every Raptors fan, there’s a heartbroken Warriors fan. And for every Ian Tyson who thinks he’ll “go out to Alberta,” there’s a Neil Young living in Los Angeles. Is that American or Canadian R&B that The Weekend is selling?

Canadian output is likely to expand by roughly 4 per cent in 2021 and 2022.

Though Canada had been somewhat immune to the business cycle of the United States, the interconnectedness of the American and Canadian economies and their financial markets appears to have grown during the post-industrial era. In fact, one might make the case that it is one large integrated economy separated by two currencies.

We could point to the U.S. reliance on Canadian resources and the Canadian reliance on American refineries. The fact that auto parts can go back and forth across the border five times while being manufactured makes it difficult to label the final product as American or Canadian. In the digital economy, Microsoft has headquarters in Seattle and a campus in Vancouver. And with U.S. immigration in shambles, universities in Canada are finding it easier to attract intellectual capital.

So with the turmoil caused by U.S. trade war and the American election coming to an end, and with the coronavirus attacking indiscriminately on each side of the border, it is time to consider growth prospects for the year ahead and take stock of the condition of the Canadian economy.

A choppy and uneven outlook

Canada’s economy has been decelerating since the end of 2017 and has been in outright decline for the whole of 2020. Prospects for recovery and expansion in 2021 are directly linked to an equitable distribution of a safe and effective vaccine.

Canada’s total output declined by 12.5 per cent and 5.2 per cent in the second and third quarters relative similar periods in 2019.

Once that vaccine is in place, we are confident that the reopening of the domestic economy coupled with a reduction in trade frictions in North America will combine for robust growth over the next two years. For this reason, Canadian output is likely to expand by roughly 4 per cent in 2021 and 2022. While this is solid, the Canadian economy is not likely to reach its full capacity to produce until 2023.

Canada’s total output declined by 0.3 per cent in the first three months of 2020 relative to the first quarter of 2019, followed by declines of 12.5 per cent and 5.2 per cent in the second and third quarters. Note that we are referring to year-over-year percentage changes in real gross domestic product, which are more valid indications of economic growth during periods of economic stress than the outsized annualized numbers mentioned in the press.

All in all, the third quarter was not as bad as the second quarter. But that’s like saying that a five-car pileup is better than a 12-car pileup.

And that’s not to say that the economy can’t or won’t improve, though the rates of change might not be as dramatic as after the initial shock to the economy. Monetary policy is in place and fiscal programs are propping up the income of Canadian households. So the likelihood of another economic or financial collapse will likely depend on the time it takes to vaccinate the entire population.

As Tiff Macklem, governor of the Bank of Canada, told the House of Commons recently, “the very rapid growth of the reopening phase is now over” with the economy entering a “slower-growth recuperation phase.” For 2020 as a whole, the bank anticipates “that the economy will have shrunk by about 5½ per cent,” he added.

Because some parts of the economy will not be able to completely reopen until a vaccine is widely distributed, the bank expects “annual growth to average almost 4 per cent in 2021 and 2022,” anticipating uneven gains “across sectors and choppy over time,” he said. There are other factors at play. For example, the bank expects that the energy-intensive parts of Canada “will face greater difficulties than others,” he said.

The bank expects business investment to remain subdued and exports to grow only slowly, and concludes that “the economy will still be operating below its potential into 2023,” Macklem said.

Decreases in potential output

The economies of the U.S. and Canada have endured large supply shocks that will likely leave both economies reeling for a number of years. Damages to the labour force and a decline in investment in productivity will result in output below what the economy is capable of producing.

Because of the pandemic, the Bank of Canada’s estimates for the growth of potential GDP – excluding containment effects — have been halved since April. From potential output growth of 1.8 per cent per year in 2019, the bank now estimates potential output growth falling to 0.7 per cent in 2020 and 0.9 per cent in 2021, before leveling off at 1.1 per cent to 1.2 per cent per year in 2022-23.

The International Monetary Fund projects that it will take six years before the economy is operating at its potential. The output gap — defined here as the (ratio of) the difference between actual GDP and potential GDP – has plunged to greater than 3 per cent only three times since 1980. It occurred during the 1980s double-dip recession after a series of energy shocks, then during the 2008-09 Great Recession after the financial crisis, and, finally, this year during the aftershock of the economic shutdown and equity market crash. In the first two of those devastating economic downturns, it took five to six years for the Canadian economy to close its output gap, and we expect no different with the most recent shock.

Considering that the output gap might not be closed until 2025, and that potential GDP will be growing at a reduced rate, then the Bank of Canada’s forward guidance of low-for-long interest rates seems more than appropriate.

With an accommodative monetary policy in place, the fiscal responses of the U.S. and Canadian governments will determine the extent of damage to the economies of the trading partners as well as the length of time until recoveries in each of the economies reach sustainable rates of growth.

Long-term labour-market stress

As with the overall economy, the labour market has undeniably improved since the outbreak of the pandemic. There were 2.9 million fewer jobs in April 2020 than there were in April 2019. By October, there were 600,000 fewer jobs than in October 2019.

The bulk of those losses remain in the service sector, where half a million people are still without a job. That implies that typical shovel-ready infrastructure programs — which are of greatest value to the construction sector — might fall short in restoring the overall labour market to pre-pandemic levels.

Indeed, if the pandemic were to permanently change the way we work and how we shop and entertain ourselves, then the economy runs the risk of a shortage of jobs in the service sector. An oversupply of labour would have the effect of dragging wages downward and reducing household income and consumption. Reduced spending by the consumer sector would have a profound impact on economic growth.

Policies to address service-sector employment could focus on education of the labour force, not just in terms of academic advancement, but also in acquiring additional skills through apprentice programs and trade schools.

The body of research following the financial crisis in 2008-09 — and the U.S. government’s truncated response to the Great Recession — found a degradation of the U.S. labour market during the long, drawn-out recovery.

Skills among unemployed workers deteriorated as they found themselves unable to keep up with changing technology. The unemployed who were unable to quickly rejoin the labour force were stigmatized as the duration of being unemployed lengthened. This resulted in a cycle of diminished productivity and a degradation of potential output.

April’s sudden decrease in the duration of Canadian unemployment and the subsequent increase above its long-term average in August – like annualized GDP growth — need to be interpreted first in the context of the shock caused by the economic shutdown and then by its potential for long-term negative effects.

In April, the economic shutdown caused a significant number of workers to join the ranks of the unemployed all at once. As the economic hardship mounted through the summer and into the fall, the average duration of unemployment moved above its average from 2000 to 2019.

The trend in duration during the upcoming vaccination program should be an indication of the need to maintain public assistance.

The consumer sector

In the third quarter of the pandemic, households continued to exhibit an increased propensity to save despite increases in disposable income.

In the three quarters before the pandemic, households were allocating 1.4 per cent to 2.0 per cent of disposable income to savings. While that’s great for the housing market and the retail and wholesale sector, the lack of savings and the burgeoning amount of household credit has always been a concern for the Bank of Canada’s interest-rate policy decisions.

In the three most recent quarters, household savings soared to 5.9 per cent in March as the novel coronavirus set in, then to 27.5 per cent in the June quarter and 14.6 per cent in the quarter ending in September. Within the perversity of the pandemic, an increase in savings could become a concern for the fiscal authorities should the lack of household spending turn a supply shock into a demand shock.

Again, this will depend how quickly vaccines are distributed and how long they retain their efficacy.

The corporate sector

Financial firms probably have the monetary authorities to thank for the shallowness of their downturn – if there was one — and the return to normal levels of net operating surplus. One would suspect that the corporate sector will lead the economy out of the recession just ahead of a distribution of a vaccine in mid-2021.

Nonfinancial corporations made a remarkable recovery in the third quarter and are 98.5 per cent of the way back to normalcy going into the last three months of the year. Moreover, as trade barriers with the U.S. decline, we think that the nonfinancial corporations are poised for outperformance as the economy of its neighbor to the south begins to awaken.

The Bank of Canada and financial conditions

Economists have come to understand that monetary policy and economic shocks are transmitted to the real economy through the financial system. As such, monetary policy decisions to create an accommodative environment for investment will entail the confidence that the central bank will respond to supply or demand shocks or shocks to the financial sector. They will also entail the confidence that the setting of interest rates will be appropriate for the level of economic activity and inflation.

Since the 2008-09 financial crisis, the U.S. and Canadian central banks allowed interest rates to rise once the economic recoveries from the crisis were sustainable. They then pushed interest rates back to the zero bound when economic growth was threatened by the 2014-15 oil glut and commodity-price collapse and then by the ill-advised trade war in 2018 and, more recently, the pandemic.

The Bank of Canada’s policies of near-zero overnight rates and large-scale purchases of longer-term securities correspond to the standards of a Taylor Rule response function. (The Taylor Rule determines the appropriate level of a central bank’s policy rate, according to the deviation of inflation from the bank’s target for inflation, and by the level of employment relative to what is considered to be a noninflationary level of employment.)

Although the Taylor Rule would suggest negative interest rates in Canada and the U.S., there are risks that the economies might never recover normal levels of growth, as is the case in Japan. This could occur if the confidence in the sustainability of an economic recovery and if higher price levels are undermined, or if the existence of negative returns on fixed-income investments were to create bubbles in other assets (such as speculation in the housing market or equity market).

We would argue that the Bank of Canada and the Federal Reserve have made the right choices, most of the time, and provided the correct forward guidance. The Bank of Canada’s balance sheet has stabilized, with buying longer-maturity bonds reducing costs for residential fixed-rate and corporate borrowing. “Canadians can be confident that borrowing costs are going to remain very low for a long time,” Macklem, the Bank of Canada governor, said.

In fact, the bank consulted with market participants who thought the Bank of Canada’s Government Bond Purchase Program (GBPP) “was the key factor in raising the unprecedented amount of long-term federal government debt in an orderly manner, since the GBPP absorbed a significant portion of the extra issuance,” the bank said in its summary of its findings.

The consensus from the market was that “the 10-year sector could readily absorb more net issuance since the sector benefits from liquid and well-developed futures markets,” the summary said.

As such, financial conditions in Canada are accommodative, with the only potential source of stress coming from the equity markets and the potential for OPEC-induced disruption.

Of note, there has been an increase in oil prices, which might have more to do with OPEC’s successful reduction of supply than with diminished demand for energy during the pandemic. Still, the reduced number of North American oil rigs and the increased number of bankruptcies in the energy sector might suggest otherwise were the pandemic’s effect on household consumption to continue much further.

Coronavirus update: Cases, deaths and vaccines

The devastating resurgence of the novel coronavirus in the U.S. will undoubtedly threaten the economy of Canada through the trade channel. Its resurgence in Canada follows a similar autumn trajectory, with the cumulative number of cases surpassing 400,000 at a rate of 6,200 newly reported infections per day in early December. That is nearly three times the peak rate during the first wave in early May. Deaths are occurring at a rate of 86 per day, and have been increasing since October.

The hopeful news is that the vaccine appears to be near. England has recently authorized use of the Pfizer vaccine, and Maclean’s reports that “Ottawa hedged its bets by making advance-purchase agreements for a wide portfolio of vaccine candidates.” These include three versions of the vaccine, with prospective releases in the coming weeks, according to Maclean’s:

• Pfizer/BioNTech (U.S.) – “Canada has an advanced-purchase agreement for 20 million doses, with the option to buy 56 million more. Since it is a two-dose vaccine, the initial order would be enough to vaccinate 10 million Canadians.“

• Moderna (U.S.) – “Fully 20 million doses, with the option to purchase 36 million more. The initial advance order would be enough to vaccinate 10 million Canadians.” Regarding fears that other countries might get the vaccine before Canada, “Moderna’s chief medical officer told the Globe and Mail that doses of the first batch will be coming to Canada—albeit a small amount; he is ‘hopeful that you’ll see significant quantities coming to Canada’ ” in the first and second quarter of 2021.

• AstraZeneca/Oxford (U.K.) – “Canada signed an agreement in September for 20 million doses,” Maclean’s reported. The report continued: “The director of the Oxford University vaccine group called this the ‘vaccine for the world.’ That’s partly because it’s low cost — about US$3 per dose, one fifth that of the Pfizer and Moderna vaccines — and because it can be stored at the temperature of a common refrigerator.”

For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.

This article was reprinted with permission from The Real Economy Blog - Dec. 9, 2020. To view the article online, please visit https://realeconomy.rsmus.com/looking-forward-canadas-economy-in-2021/