Synopsis of Remarks to the Indo-Canada Chamber of Commerce

ICCC-Ottawa Council, First Anniversary Dinner, Key Note Speaker, Room 200, West Block, Parliament Hill March 2000

Here is a synopsis of remarks I gave to the Indo Canada Chamber many years ago.

Some predictions came true; others did not.

What mainly interests me is that I described the home building and development business as a craft industry (true), and hoped that the internet would change that (alas not true).

If the tech industry was like real estate, every time you got in your car with your smart phone today, you’d have three semitrailers full of knobs and tubes following you to make it work…

By Dr. Bruce M. Firestone, B.Eng.(Civil), M.Eng.-Sci.,
PhD

Founder, Ottawa
Senators, Adjunct Research Professor, School of Architecture, Carleton
University, Chair, Hickling Capital Corporation

In 1955, when I was a small boy, I remember the day my
grandfather, Sam Torontow, got his first car- a Chevy.

Sam
and his wife, Anne, had come to this country in 1913 from a small Russian
village outside of Kiev.
They raised their three little daughters in a three bedroom apartment above the
hardware store they ran on old St. Patrick’s Street in lowertown Ottawa.

My
grandfather told me: “Can you believe that a poor Russian can own a car like
this!” He loved Canada-
he was always a Canadian first.

My
grandfather’s Chevy came out of its garage only on Sunday afternoons; he would
polish it and then take the family for an outing, usually in the Gatineau
Hills. That car never saw a snowy day.

He
believed that Canada
represented a concept- civil order, courtesy, sharing and caring, opportunity
for all.

In
1967, on my first day at McGill
University’s Faculty of
Engineering, our Dean said to the gathered first year students: “Look to your
left and look to your right, by Christmas, one of you won’t be here.” He was
reminding us that, while Canada
is a land of opportunity, it is also part of an intensely competitive world
where effort, focus and ability are also needed for success.

We
are seeing enormous changes in the global economy- the most fundamental shift
since the industrial revolution is taking place right now. Human capital-
brains and education- is now the most important resource that any country has.

There
can be no doubt that Canada
has these resources in abundance and that we are moving in a direction that
recognizes this. Nowhere in Canada
is this more true than in the New City of Ottawa.

In
calendar year 2000, technology employment will overtake federal government
employment as the largest sector in Ottawa.
This is a future shaping event that has already changed our community in
fundamental ways.

We
are seeing that it is possible to live and work in the New City of Ottawa and
do world class things from here. Jim Durrell, former Mayor of Ottawa, told me
that when we brought back the Ottawa Senators in December 1990, a team that had
not played a game in the National Hockey League in over 58 years, it was the
biggest thing that had happened to our old logging town, Bytown, since Queen Victoria had named Ottawa
the capital of Canada.

In a
way, Jim was right- the Ottawa Senators represent the new Ottawa- young, dynamic, world class, unafraid
of competing with the best of the best.

Commentators
in Ottawa and elsewhere often talk about Ottawa as a ‘small market’- let me tell you, Ottawa is not a small
market for hockey. You would rather own the Senators in Ottawa
than many teams in the U.S.

Last
year, Ottawa edged out Calgary
for top spot in Canada in
terms of job growth- 5% versus 4% job growth in Calgary. The Kanata area alone can expect to see as many
as 10,000 new jobs created there in the next three years.

There
will be close to 800,000 people living in the New City of Ottawa when it is
officially formed at the end of this year from the amalgamation of the 11
municipal and township governments together with the Regional Municipality of
Ottawa-Carleton. When the Outaouais (including Hull,
Aylmer and Gatineau)
is included, the National Capital Region’s population swells to 1,009,000. And
within a one hour driving radius, there are 1.7 million people with the highest
average family income in Canada
at over $64,000. This is one of the best kept secrets in Canada; hardly anyone knows just how big the
area has become and how much influence Ottawa
has on a world stage in many areas not least of which is that we have become
the global leader in IP (internet protocol) technology. Even people living here
all their lives do not understand the changes taking place in their community.
It may not be too bold to predict that the population of the greater Ottawa area may pass the Vancouver
metropolitan area before 2020; Ottawa
has the momentum and it has the space.

Tampa’s population, by
comparison, is just over two million with an average family income of just
$28,000 US. And there are far more hockey fans in Ottawa
than there are in Tampa.

When
a city reaches the one million population mark, an interesting transformation
takes place- economic growth becomes self sustaining and new opportunities and
new options present themselves.

One
of the things we need to do a better job of, is convincing our educated young
people, who are our greatest resource, that they can stay in Ottawa and do great things here. It certainly
does not hurt that five young men in Ottawa recently built a company called
Extreme Packet Devices in under two years and sold it a few weeks ago for $600
million US. There are so many examples of this kind that we can point to now
and it is our most important marketing job- to market Ottawa to young Ottawans.

It
has always bothered me to drive the Queensway east bound from my home in Kanata and to see a sign: “Ottawa, Population 304,000”. No wonder the
media, visitors to our city and our own residents think of Ottawa as small and weak; it is a misleading
impression and a damaging one as well. The New Mayor of the New City of Ottawa
should make it a priority to take down these signs and erect new signage at all
major ingress and egress points to the City and inside the City’s boundaries as
well as to show the true facts- “Canada’s Capital City, Population 1,009,000”.

Two years ago, a huge proportion of our graduating class
in the School of Architecture
at Carleton University,
where I teach part-time, found employment in the U.S. This is repeated over and over
again throughout the Faculty of Engineering to which the School belongs. It is
a serious national challenge, which we must face up to.

Today,
what we need to sell to young people is opportunity: access to venture capital
and stock option plans, quality lifestyles, lower cost of living and housing,
lower cost of doing business, the socializing of risk (Canadian medicare and
support for public education come to mind) and an absence of social disorder
and lower crime rates. Some commentators view medical care as a cost while, in
fact, it is an investment in human capital. Healthy people and a healthy
economy go hand in hand.

The
future global economy will, in my mind, depend on highly dynamic city-states
for economic growth; it will be a return to highly self-reliant urban
agglomerations reminiscent of ancient Athens and
Sparta or renaissance Florence,
Venice and Genoa.

Glen
Shortliffe’s report on amalgamating this region into the New City of Ottawa
reflects this trend. Hopefully, the New City will also allow us to keep the
wonderful diversity of this region- the rural lifestyle of West-Carleton just
30 minutes from downtown, the french fact of Vanier, the quaintness of the
Village of Rockcliffe Park and so on.

But
there is more that we can do to make our city-state pre-eminent in Canada.

We
need to convince the new national junior stock exchange, the CDNX, to open an
office in Ottawa
so that our entrepreneurs can obtain faster and easier access to capital
markets at an early stage of their development.

My
eldest daughter, Rachel, will be entering Grade 8 next year and her fervent
wish is to attend the Canterbury
High School for the Arts.
Canterbury, for
those of you who have had the chance to visit, is a supercharged place where
students take on a normal course load and they do an additional hour or two
each day in an area of their choice- dance, music, theatre, visual arts. There
is no vandalism at Canterbury.
A visit there is a stark contrast to some of our other high schools where any
disaffected young person can obtain any type of illegal drug within an hour.

Why
should we not have more Canterburys?

Why
not have a High School for the Technological Arts- where our young people can
study multi media, internet protocol, web site design, fibre optics, computer
networking, micro-electronics and software arts? I would guess that such a
school would attract thousands of highly energetic and committed young
applicants. Let us not underestimate the power of our teenagers- afterall,
Einstein did some of his best work as a teenager.

Sweden
recently announced a national program to make broadband access available
everywhere in that country and available to all. This type of initiative is as
imperative to our nation as electrification was in the early part and middle of
the 20^th Century.

Ottawa has the highest penetration of internet users in Canada (at 40%)- we should pressure Bell Canada
and Rogers to
wire up every street in the New City of Ottawa for broadband communications.
And, while we are at it, let us hope that the New Mayor of the New City of
Ottawa can prevail upon Bell
to make the entire National Capital Region a local call- no more long distance
to Barrhaven, please.

Let
us make a commitment in Ottawa
to being at the leading edge in technology, education, the environment and
government services. The New Mayor should commit to having the majority of
municipal government services available on the net by 2002. Citizens should be
able to pay their property tax bills, get a dog license, obtain a building
permit, apply for a zoning change- all of it on line.

Flying
over Ottawa on
a summer’s day, one is struck by the amount of green space and the number of
trees inside and outside the City. The New City of Ottawa should make a
commitment to plant 1,009,000 new trees (one for each resident of the National
Capital Region) on public rights-of-way before the end of the year 2010, as a
way of affirming our continuing commitment to the environment. History has
shown that every country that has become deforested has also become
impoverished.

When
I was seven, I rode Ottawa’s
streetcars for a nickel. My friends and I went to the now defunct Rideau
Theatre- 5 cents each way for the streetcar, 10 cents for the film, 10 cents
for a candy bar (my favourite was Crispy Crunch) and 10 cents to phone home if
trouble came our way. One of the biggest planning errors we made, was to rip
out our streetcars and our downtown rail station, Union Station, largely to be
replaced by the private automobile. This disenfranchised children and made car
ownership a pre-requisite for first class citizenship. This needs to be
re-examined- the mandate and mission of OCTranspo needs to be rethought. One
must not underestimate the importance of Toronto’s
streetcars, subways and Go Trains in making that city-state the powerful player
it is on the world stage.

We
need to be more accepting of and take steps to address the question of mixing
together different economic classes and different land uses. Another daughter
of mine, Jessica, is a huge fan of the Archie comic books and she can not
imagine anything better than living in imaginary Riverdale with Archie and
Veronica and Betty. If you ask her why, it is because, in Riverdale, these kids
can live next to the Pizza Pit. In Kanata
Lakes where I live, this
would not be permitted- it is 1.6 kilometres to the nearest shop. We need to
find a way to build an affordable and mixed use city, one that works for all.

We
should follow policies that allow families to stay together by permitting the
construction of in-home apartments or ‘granny flats’ in the rear yard. Why
should we force the elderly to live in high-rise warehouses, in a ghetto where
everyone else is elderly? It is expensive and de-humanizing.

We
should continue to build communities that provide a wide range of housing and
transportation alternatives and we should support our public institutions with
adequate funding for public schools and medical care. We have not embraced in
Canada the concept of gated communities with their private provision of ‘public
services’ by quasi private governments (Home Owner Associations); some 80% of
new subdivision housing in the U.S. is being built there in the form of gated
communities, thereby dividing U.S. society into haves and have-nots. Clearly,
this is a grave challenge to social cohesiveness in the Republic to the south
of us.

We
can set the stage for further growth but it will be up to individuals to make
the future happen- individuals count. A few months ago, a friend of mine, Ram
Kumar Sharma (not his real name) originally from the Punjab,
came to me for advice. Since his arrival in Canada, he has been working in the
parking garage of a large hotel. He is married with four small children and a
wife that works inside the home. He has sponsored his entire family including
two of his brothers-in-law who are now with him in Ottawa. He is currently on duty from 6:30 am
to 4:30 pm and again from 7:00 pm until the garage closes at midnight.

Ram
is also a huge hockey fan and that is one of our common interests. He enjoys
playing Pro Line, an Ontario Lottery Corporation sports betting business. Ram
is ambitious, incredibly hard working, a good family man and he has a ‘good
heart’; he is generous to a fault. A few months ago, he decided to use his
skills in picking winners a little differently. He borrowed $5,000 on his
credit card, obtained a margin account with a discount broker and,
subsequently, bought $10,000 worth of
stock in a company that he had studied intensively … the company that he
chose is now called JDS Uniphase and Ram’s investment account is now worth
$187,000.

Ram
is buying today a food concession business and I am sure that if we check back
with him in five years, we will see a very successful person.

Ram represents entrepreneurs as I have known them-
calculated risk takers, ambitious, unafraid, optimistic; they never take ‘no’
for an answer.

When
entrepreneurs fail, they start again. They learn from their failures; they gain
experience and that sets the stage for future successes.

Canadians
can learn from the American tolerance for failure; they successfully recycle
the most precious resource- human capital. We know that one of the purposes of
the bankruptcy act is to protect creditors but we must also learn that a second
purpose is to give entrepreneurs another chance.

The
flexibility of the U.S. economy (from the efficient allocation of capital to
new, innovative and highly productive sectors of their economy to the fast
recycling of workers and entrepreneurs from failed or slow growing parts of the
economy to fast moving sectors) is a huge part of their success.

The Americans are early adopters of technology and none is
more earth shattering than their embrace of the internet. The internet is
eating an enormous hole in the world’s economy.

It
does not matter how little someone is paid in the third world, the internet can
do it faster and cheaper.

The internet is all about automation.

That
means that you do not take your existing business model and ‘put it on the net’
and expect success. That is why I have my doubts that re-runs of “I Love Lucy”
on the net is where it is at. Putting Time Warner content on AOL is not, in my
view, what that merger was all about. It is AOL needing access to Time Warner’s
cable systems and their large pipes into the homes of America that drove that merger.

I
have my doubts about e-commerce too, at least the type of e-commerce
represented by the amazon.com book selling business model.

The internet is all about automation.

That
means that downloading music from the net makes sense but placing an e-commerce
order for an amazon.com book on a UPS truck, followed by a UPS plane, then
another UPS truck just to get it to your front door to find that you are not
home, that does not sound like a revolutionary technology to me.

But
amazon.com does offer some truly astounding advantages to the user- their use
of a relational data base means that their web site can prompt you with titles
of other books that other people are buying who bought the one you were
initially interested in. Because they have millions of customers, this is a
powerful short cut for researchers and one of the reasons I use amazon.com. It
also obviously helps amazon.com sell more product.

When
IBM or others finally perfect e-paper then the amazon.com model for book
selling will have truly arrived.

The internet is all about automation.

Let
me give you another example. We have a number of homebuilders in the audience
today and I am proud to say that I live in a fine home built by one of those
companies for my family and I in Kanata
Lakes.

Today,
with all due respect, the home building business is still a craft based
endeavour which, if it were compared to the computer industry, would still
produce five function calculators that look like primitive World War II vintage
Turing machines (used for breaking Japanese and German codes)- big, clunky and
expensive.

Ultimately,
a home builder’s web site will allow consumers to ‘goggle’ in to the site in
three dimensions, to choose the model that they want, the lot that they want
and then to load up their shopping carts with the features they desire. As they
make changes to their design and add and subtract amenities, the calculator
will tally and show them their costs.

Visa
and Mastercard are moving upstream- their credit cards will be used for
everything including buying a new car or buying a home. There is a small but
fast growing market for power cards that carry credit limits in the hundreds of
thousands of dollars.

But
this home buying e-commerce transaction using a credit card is only the tip of
the iceberg. In all probability, it is the e-business applications that will
have the most dramatic impacts on home building. Pre-authorized suppliers and
sub-trades will log on to the builder’s web site to estimate the volume of work
required and to bid on it. Scheduling, based on just-in-time delivery, will be
net based. Payments will flow business to business via e-payments. Municipal
inspectors will log on to see when they are required for inspections.
Municipalities will recognize that home builders are their clients. The number
of separate subcontractors and trades will fall from 25 or 30 today to just 6
or 7.

If
former Russian President, Boris Yeltsin in his early days as a construction
boss in Sverdlovsk (1,000 miles east of Moscow) could build five storey, wood
frame apartment buildings in five days (albeit with a huge crew), surely we can
learn to build houses in 30 days or less at higher levels of quality, with fewer
defects, higher margins for the industry and lower prices for consumers.

The
home builder will become a web site operator. Legal closings, land registry
documentation, mortgage financings … all will be web enabled.

I
remember Don Holtby, then general manager for CFRA, a local Ottawa
radio station, telling me that he was so excited about the return of the Sens,
that he had the station rig up a dedicated land line so that he could hear the
play-by-play from his condo in Florida
on October 6, 1992. He felt that the $270 U.S.
cost for the three hour broadcast was well worth it (Ottawa won, by the way, 5 to 3 over the
Montreal Canadiens).

Today,
Don would log on to broadcast.com with his laptop and listen to the live
play-by-play using a local line- the marginal cost to Chum Limited would be
zero.

Old-line
industries are going through incredible re-engineering.

A
national advertiser who wanted to launch a national billboard advertising
campaign just three years ago went through a six to twelve month process. They
drew up a campaign theme, got the creative done by an agency, had the agency
contract billboard locations with up to 25 regional billboard companies, sent
the artwork out to all of them by courier, received back the proofs from all 25
for approval, made the necessary changes to get consistency in the artwork,
sent them back, checked them again, signed off finally. The images were then
often hand painted on huge strips and, at last, a crew went on site and glued
them to the board.

Today,
billboard companies put their inventory of available billboard locations on
their web sites and agencies can book and pay for that inventory on line.
Agencies then can download their artwork over high speed lines and, as
billboard companies merge and become national and as they move towards
replacing conventional billboards with high definition video boards, an agency
can place a national campaign in a matter of hours or days. It does not matter
how little a third world labourer is paid, the web can do it faster and cheaper.

That
means that the entire global economy has to move up the food chain- and the
only way to do this is to invest in education, medical care and social order,
which happen to have been Canada’s
priorities for the last 50 years. We have it right, now we just need to
execute.

Copyright. Dr. Bruce M. Firestone, Ottawa, Canada,
March 2000.