Arvato Services, a division of US$20-billion German conglomerate Bertelsmann AG, opened a new customer support (CRM) center in Kitchener in May 2004, which will employ 250 people. An ample and qualified work force topped the location criteria.
      Sven Hohmann, executive vice president of consumer services for Arvato, tells Site Selection, "We think Canada plays a role in the outsourcing world and will continue to do so for the
foreseeable future."
      But he expects that role to be played at a higher level, with the labor arbitrage that many call center site selections hinge on giving way to a shift in Canada to the more highly-qualified work of auxiliary services.
      Hohmann says telecom costs are competitive -- "way cheaper than anywhere else near-shore or offshore" -- and reliability is equivalent to that found in the U.S. He contrasts this with the Caribbean, where there is rarely a competition between vendors and reliability is not as consistent.
     
      One company making a splash in CRM data management is business intelligence software company SAS Institute, based in Cary, N.C. The $1.3-billion company, entering its 27th year of profitmaking, employs 9,000 worldwide, through 70 subsidiaries that help their customers harness data.
      The next place it will be operating is a LEED-certified US$22.8-million, 400-employee Canadian corporate headquarters that could be the catalyst for an entire downtown Toronto neighborhood.
      Stuart Bowden, senior vice president for operations and finance, and Jerome T. McDermott, manager of real estate development, tell Site Selection the holistic method of the project merely mirrors the progressive methods of the company. But it mirrors the market too.
      "If you look at the mass of commerce that is transacted within about an eight-block radius of here, I'd have to say probably one-third of Canada's GDP occurs here," Bowden says. "And you can attract a different type of employee in the core."
      Most meaningful to SAS's highly valued employees was ease of access to the office. But McDermott says LEED can make accountants happy too.
      "We've found that on the mechanical side, it's probably 6-percent more expensive to put in LEED equipment," he says, "but with electrical, it's actually less expensive. For ongoing operating costs, for some of the equipment, we're targeting 50-percent energy savings, and energy in Toronto is about 60 percent of your cost of operating a building."
      SAS Canada has its own P&L and thus makes its own real estate decisions. That operating independence has fostered the company's success. "One of the reasons we've been successful from a growth perspective is the fact that management in the subsidiaries is very engaged," says Bowden.
      So is the neighborhood the company is preparing to enter.
      "Since we've acquired that land [February 2004], it's been amazing," says McDermott. "From week to week, the level of store or restaurant that's there has improved, and the whole neighborhood has improved, in terms of condos being completed and occupied, people on the street and so on. It's looking more like a community than it has in the past."
     
      It wouldn't be a quantum leap to think that one construction element in the SAS building might come from a new factory about 1.5 hours southwest, in Cambridge. That's where ATS Automation has operated for years, and where it's launched a new division: Spheral Solar Power. The company is investing nearly US$76 million in a 100,000-sq.-ft. (9,300-sq.-m.) plant that will eventually employ 200 in the manufacture of flexible solar panels for commercial construction uses, including factories and headquarters.
      Milfred Hammerbacher, president of Spheral Solar, says it was a convergence of more than the sun's rays that brought about the new direction. For one thing, the solar market has seen over 30-percent annual growth in the past five years and shows little sign of slowing.
      "We were also successful in getting financing from Industry Canada, which was a major reason for us to go ahead and start," says Hammerbacher. "A program called Technology Partnerships Canada is investing about CA$29.5 million, or about 30-percent of the cost of our development here."
      The site selection competition mirrors was truly global in scope.
      "Lots of governments around the world see solar as one of the few industries offering high growth," says Hammerbacher, singling out Japan and Germany as two that are "several years ahead of North America in terms of renewable energy.
      "Those two also offered a lot of incentives," he adds. Then the company started looking around its own neighborhood in Canada, considering Québec and British Columbia too.
      "Both of those provinces offered some incentives, but in the end we felt that those incentives weren't worth the value of putting this first factory right next to where the equipment is going to be built," he says, noting that about 80 percent of the new factory's equipment will come straight out of the ATS facility down the street.
      "It's quite nice, if you want a prototype, it's there, right next door. And this is a fantastic area. I've lived and had business in the U.S., France and Canada, and the team we've put together here is pretty phenomenal, a great bunch of people."
      Typically, ATS acts as its own general contractor on all its buildings.
      "All of our buildings look pretty similar, and it's just one of the many ways ATS goes about trying to bring cost out of things," says Hammerbacher. "We have a philosophy around here that if you want it done right, do it yourself."
      That's a philosophy that virtually emanates from ATS President and CEO Klaus Woerner.
      "Klaus wants to build a factory to build solar factories -- that's the vision," says Hammerbacher. The Spheral facility will include a staircase to a rooftop showroom of sorts, to demonstrate the different ways the flexible technology can be used. But Hammerbacher admits there could be a battle brewing.
      "This first year there's going to be a pretty good tug on our product from our customers," he says, "so it may be a year or so before we can get much of our product on our own roof. It's too tempting to sell it and make money."
      That's a problem Spheral -- and its Ontario corporate brethren -- will gladly confront.

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