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A day in the life of an entrepreneur


Publisher/Editor: Jon Rohr

Associate Editor: Paul Knowles

Feature Writers: Jon Rohr,Paul Knowles

Columnists: Mark Bingeman, Jim Brown, Daniel E. Girard, Terry Wichman

Advertising Sales: Brian LyonTMR (519) 886-1946

Creative Director: Diane Johnson

Art Direction: Laurie Martin

Photography: Jon R. Group Ltd., Lisa DentersPhotography, University of Waterloo

Circulation/Office Administration: Leanne Rohr

Exchange

EXCHANGE magazine is a regional business publication published byExchange Business Communication Inc. President, Jon Rohr. Eight issuesper year are distributed to each company in Kitchener, Waterloo,Cambridge, Guelph, and Fergus as determined by Canada Post BusinessPostal Walks. Subscriptions are available for $29.90. Send cheque ormoney order to Exchange, P.O. Box 41030, Waterloo, ON N2K 3K0. Attn:Circulation Department. Back issues are available for $8 per copy.Phone: (519) 886-9953. Fax: (519) 886-6409. ISSN 0824-457XCopyright, 2005. No part of this magazine may be reproduced withoutwritten permission from the publisher.

JANUARY/FEBRUARY 2006 l exchangemagazine.com l 5

DEPARTMENTS

7 PUBLISHER’S NOTE

8 BUSINESS MONITORProvincial double-speak; The shrinking labour poolXQuarterly; XQuote

33 WATERCOOLER

FEATURES

10 ATRIA HAS A VISION FOR GROWTHBY JON ROHR & PAUL KNOWLES

The first room you’ll enter before you go out tothe rest of the planet.

26 INDUSTRY SECTION: The sky’s the limit,whatever the colour you want it to beBY PAUL KNOWLES

38 A GLOBAL IGLOOBY JON ROHR

Conjuring up a warm place in a cold environment.

COLUMNS

17 TAXWISEBY TERRY WICHMAN

Car Expenses: Employee BewareThe Canada Revenue Agency is taking a run at car operation

18 WEALTH MANAGEMENTBY DANIEL E. GIRARD

Stay FocusedDon’t be your own worst investment enemy

22 GUEST COLUMNBY MARK BINGEMAN

Fundraising EventsGiving more than the same old same old

23 BUILDING BETTER BOARDSBY JIM BROWN

Board Secretary SecretsThe inside scoop for outstanding secretary services

SERVING BUSINESS IN WATERLOO REGION AND GUELPH

P.O. Box 41030, Waterloo ON N2K 3K0 • Tel: (519) 886-2831 • Fax: (519) 886-6409email: [email protected]

ExchangeCONTENTS

Volume 23, Number 3 JANUARY/FEBRUARY 2006

On the cover: Steve McCartney, president and CEO ofAtria Networks Inc.

Open Text Chair Tom Jenkins, left, with RIM’s JimBalsillie, at the media launch of IGLOO - page 38


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On Wealth, Poverty and Sustaining Our ProsperityPreparing for yet another political decision

BY JON ROHR

PUBLISHER’S NOTE

develop history, this book is a great start. As politicians prepare for the holiday campaign, holiday

gatherers have a great opportunity to be arm-chair-diplo-mats. Family has always had a way of zeroing in on theimportant issues, and what’s meaningful to family is gener-ally a good indication of what’s meaningful to the communi-ty. Kept civil, you can enjoy enlightening conversations.

As 2005 comes to a close, the end ofthe 4th quarter brings a mix of newsclippings that may beg the question,How will our economic catchbasinrespond to changes in various sectors?If we look to our past, “quite well” is theresponse. Looking to 2006, I predictmore change and more growth. As fed-eral campaigns move from east to west,Ontario will remain an influencing force,and rightly so; Ontario has a huge

investment in seeing that Canada remains a prosperousleader in global decisions. Canada requires good leaderswho possess qualities placing them beyond rudimentarypolitical patronage. Canadais on the cusp of a historicalturning point. The realities ofa global economy tell us thatto compete and grow “wehave to be better than that”.

Season Greetings andMerry Christmas to you andyours.

Most economists will be familiar with Adam Smith’s“Wealth and Poverty of Nations”. You may be unfamil-iar with “The Wealth and Poverty of Nations: Why Are

Some So Rich and Others So Poor,” by David Landes, 1998.An Economic History Services book review found at

(www.eh.net/bookreviews/library/0084.shtml) says, “DavidLandes turns to the grandest question of all: the causes of the(so far) divergent destinies and relativeprosperity levels of different nationaleconomies. The title echoes Adam Smith,but Landes is interested in both thewealth and poverty of nations: AdamSmith lays out what went wrong as thebackground for his picture of how thingscan go right, while Landes is as interestedin the roots of relative – and absolute –economic failure as of success.”

I mention this book to provide a back-drop to Canada’s approaching federal election. Once again wewill be asked to decide the direction we would like our nationto pursue. I’m not saying that what promises made remotelyresemble what follows but, when asked to vote, we do sowith an expectation that our vote means something. When itcomes to Canada’s future, economic development is para-mount and choices limited – grow or die. Campaigns thatfocus too heavily on what could be deemed “lifestyle choicesof a prosperous nation”, may win elections, but fail to giveperspective and discourse on sustaining and growing a future.

Landes book has a “no pulled punches” approach to tellingit like it is. If you’re at all interested in global economic

JON ROHR IS

PUBLISHER OF

EXCHANGE MAGAZINE

FOR BUSINESSe-mail: [email protected]

We look forward to Serving You in Grand Style

425 Bingemans Centre DriveKitchener, Ontario N2B 3X7Tel: (519) 744-1555www.bingemans.com

“No matter the function, we’re at Bingemans…doing it inGrand Style.” – DONNA DIEBEL

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8 l exchangemagazine.com l JANUARY/FEBRUARY 2006

BUSINESS MONITOR

www.xquarterly.ca

CANADIANS EXPECT TO HAVE THEIR MINIMUM

BASIC NEEDS MET; this is rooted in historicgovernmental promises and programs.These promises are taken as a given, bymunicipalities, communities, and citizens.

Most families living in Ontario couldn'tconceive of a world without the availabilityof “pseudo-free” physicians, nurses, hospi-tals, clinics and long term care services. Youwill be cared for – that’s the bedrock of ourrelationship with our government.

According to renowned psychologistAbraham Maslow, the most basic needs arephysiological; an individual will deprioritizeall other desires and capacities to gain thisfoundation for growth. Physiological needscan control thoughts and behaviors, andcan cause sickness, pain, and discomfort.

Physiological needs can also extend tocommunity. The political stewards ofOntario are responsible to meet these phys-iological needs, through health care, longterm care and welfare programs.

Recently, Grand River Hospital in Kitch-ener experienced a hospital funding gain,but one that was more problematic thanpraiseworthy in the minds of WaterlooRegionites. After a seven year, Region-widefunding campaign, called “One Voice OneVision,” promises were made for funding bythe province, involving expected money forKitchener Grand River Hospital and Cam-bridge Memorial Hospital. But Kitchenerreceived the promised funding – CambridgeMemorial did not.

In September, 2005 the provinceannounced the go-ahead for Grand River’s$72 million project: “The Grand River proj-ect is one of several approved under ReNewOntario, the government’s five-year, $30-billion infrastructure investment plan,which commits $5 billion to health careinfrastructure.” ReNew Ontario is a plan tomodernize and replace many hospitals,schools and post-secondary institutions.

But the announcement and subsequentevents have all the makings of a science fic-tion novel, in which manipulation of lan-guage is used for political gain, where totalcontrol and all decisions come from thestate, where there is active encouragementby the state for community leaders toembrace inconsistent concepts, without dis-sent. It is, in fact, positively Orwellian.

When the Kitchener-focused funding wasannounced, Cambridge’s politicians andbusiness groups screamed “bloody murder”,leaving Ontario Minister of Health and LongTerm Care George Smitherman, lookingsomewhat confused, even discredited. Cam-bridge believes Smitherman made severalOrwellian mistakes.

Mistake one: playing with language, andthe actions the government made – "apledge, and a promise – there was even acheque-issuing ceremony”, that made themlook good without coming through.

Mistake two: in reneging on CambridgeMemorial Hospital’s funding promise and

George would be proudThe region responds to provincial double-speak

subsequent reluctance to discuss the issuewith political peers Smitherman seems toconvey an indifference to the situationderived from a position of absolute power.

Mistake three: Smitherman refuses tooffer to a rational explanation behind hisfunding reasoning. Leaving an "air of confu-sion and uncertainty within everyoneinvolved," he further asks for leaders toaccept the decision and cut the rhetoric.

George Orwell couldn’t have created a

better plot. The citizens of Waterloo Region,taking seriously the mantra of “one voiceand one vision,” have joined together, acrosssometimes uncomfortable municipal bound-aries, to refuse to put up with big brother’snonsense and to seek restitution. “Theprovincial government has an obligation toclear this up,” says Cambridge Chamber ofCommerce President Paul Spencer.

“If we look at the underlying issue, it'sHealth and Education,” says Don Smith, CAOof Cambridge. The province’s recent Placesto Grow Act defines Guelph, and WaterlooRegion including Cambridge, as a highgrowth area. Smith adds that, since "Areasthat by provincial policy are intended togrow and fill in, [this] means that we need tohave the infrastructure in order to supportthat growth... That includes having properhealth care for the future population... Whatthey’re really telling us is that we have to beprepared for a dramatic increase in popula-tion. In Cambridge, they've got to put theinfrastructure, including the health careinfrastructure, in place to support that. It'sconfusing from that point of view."

In 1998, the very successful “One VoiceOne Vision” fundraising program was a capi-tal improvements campaign run by all threehospitals in the Region. The funds raisedwere to be used at all three facilities, asmandated by the Ontario’s health servicescommission, which called for improvementsbecause they found gaps in local services:emergency room facilities, psychiatric day-care facilities, real hospital needs at St.

Mary's, Grand River, and Cambridge Memo-rial. The One Voice One Vision campaignraised in excess of $43 million.

Some was pledged over several years.“The money is still coming in with thelargest donation of $5 million to come in2006,” says Lee Gould, Executive Director ofCambridge Memorial Hospital Foundation.“The real worry at this stage, is people areangry, frustrated ... and worried that peoplewill look at this and say ‘Maybe I should beputting my dollars somewhere else’."

Cambridge Memorial Hospital Chair JohnBell, CEO of Polymer Technologies, was oneof a few people offered a meeting withSmitherman. He and Mayor Doug Craig, with

hospital representa-tives, were clearlydisturbed at whatthey found. "Theydon't have a publicdocument to justifywhat they have done,or where they'regoing," commentedCraig. Bell, a respect-ed community andbusiness leader, isastonished. Bell saysthe funding modelused by Smithermanto allocate resourcesfor hospitals is "notbased on fact, notbased on reason, we

have to assume it's political."Cambridge MPP Gerry Martiniuk, a PC,

was ejected from Question Period for press-ing Health Minister Smitherman on why hemet with previous Cambridge Liberal MPPJanko Peric, instead of Martiniuk.

"What is more important than quality oflife and prosperity... from a community per-spective?” asks Greg Durocher, CambridgeExecutive Director. "Under the province’sown bench lines, we were mandated todeliver health care to all residents in theway that they would like us to."

Durocher agrees that the problem seemsto involve partisan politics. "Where are thepriorities, are they with wherever the gov-ernment’s elected officials are, or is it wherethe governments sees that needs to bemeet? Something that strikes me as odd isthat they’re not looking at this area as thefastest growing, most prosperous economyin the province of Ontario’.”

The response from the Health Minister is

Cambridge Foundation Executive Director LeeGould, stands in front of the deterioratingexterior of Cambridge Hospital.

• The leading indicator posted a 0.5% gain inOctober, up from a 0.4% advance in September.Recent months have seen a shift in growth fromhousehold spending to investment demand.

• Corporations earned record high operating prof-its of $55 billion in the third quarter of 2005, a2.9% increase over the second quarter. Profitshave risen for four consecutive quarters, and



BUSINESS MONITOR

XQuote“I have always known thatWaterloo is an exceptionalplace for the study of mathe-matics and computer science,but David Cheriton’s gift simply underscores that whatwe have achieved is only thebeginning.”

- THOMAS COLEMAN, DEAN, FACULTY OF MATHEMATICS

The falling birth rate and the impending retirement of thebaby boomer generation present a challenge to Canadiancompanies. According to a recent survey from Deloitte,“Canadian organizations are less prepared to addresslabour force issues than their global counterparts”.

“Canada is particularly vulnerable to the demograph-ic changes that are leading to a shortage of skills and athreat to business performance worldwide,” said IanCullwick, National Human Capital Practice Leader,Deloitte. “It’s imperative that Canadian organizationsdevelop strategies now before irreparable harm to eco-nomic growth results.”

The sentiment is echoed by Conestoga College presi-dent John Tibbits. Tibbits, a passionate promoter of con-tinuous learning, has been trumpeting the need for skillsdevelopment at all levels in the education system. Henotes that competitiveness in today’s work place is “waybeyond” what he had to face when he was younger andgetting started. “It was much easier in the past; [today]it’s more difficult, much more complex.”

One of the major differences that exist into today’sworkplace is that organizational layers have diminished.Tibbits says, “In the old days they had these huge hierar-chies. Those days have diminished. You are in muchmore competition, you have sharper people on the floor.”

The Deloitte survey stated that Canadian businessesare feeling pressure from the draining labour pool inmany areas. “An overwhelming majority (86%) of Cana-dian respondents say they are experiencing or anticipat-ing talent shortages for salaried staff, compared to 74%of global respondents.”

Further, the study stated the imbalance is in bothfront office and shop floor. “Talent shortage is not limitedto white-collar workers as 66% of Canadian respon-dents are experiencing or anticipating the same short-age among hourly staff,versus 54% of globalrespondents.”

The next generationof employees will needeven a bigger leg up.Says Tibbits, “We haveto get parents and thecommunity to under-stand that, first andforemost, our first lineof competitive advan-tage is the productcoming out of our highschools, what compa-nies require, for entry

level jobs. They want people, with reasonable mathskills, good literacy skills, to be good with people.”

Sixty-three percent of Canadian organizations polledbelieve talent management issues are a significantcause of Canada’s lagging productivity. As well, 51%think the shrinking talent pool is limiting their ability tomeet production requirements and customer demand.

The report goes on to say the greatest concern is“the fact that awareness of the issues among Canadianorganizations has not translated into action.”

Tibbits understands the inherent difficulties of edu-cation. He is grateful for the money that has come fromthe province, but he would like to see more communitydollars go into education at the apprenticeship level.

As president of Conestoga College Tibbits is activelyinvolved in making his institution the best it can be. Butso too are all post secondary education facilities.Recently, the provincial government has said that theywant to have an additional 7000 apprentices trained onan annual basis within the next two or three years. “Wecould step up here and we could be something . Wecould grab hold of anywhere from a thousand to twothousand additional spaces which would really, be agreat combination and accelerator network, looking tomove ahead in nanotechnology, biotech at the Universityof Guelph. At the same time the foundational elements ofskills is there. So any family can say – whether it’s sci-ence, business or whether its arts programs – this is theplace to be.”

To help make it happen, Tibbits looks to the localmunicipalities. From “the municipalities in the last eightor nine years, I think you’ll find close to $100 million inlocal tax money has gone to the University of Waterloo.Not a nickel has gone to the college, and I think we havea real opportunity right now.”

CANADIAN COMPANIES CHALLENGED BY SHRINKING LABOUR POOL

that they haven’t the money. The situationhas created a ripple that will build into atsunami. Kitchener-Waterloo Chamber ofCommerce sent a second letter to Smither-man expressing concern over the delay ofthe promised funding.

There may be more going on here thanfirst thought. “One Voice One Vision” was asuccessful campaign that brought an other-wise “at odds” community together. Regard-less of how well Cambridge promotes itscommunities’ distinctiveness, there arealways going to be outsiders who view thisarea as one. But if they think that whatthey’re doing for one, will be a good thingfor all – administratively, that just isn’t real.Hospital funding in Kitchener does not rippleequally into Cambridge.

Health Minister Smitherman possiblyviews this administratively diversified areaas one community. There is no doubt thatpolitical switches are been thrown. But let’sbe clear – with One Voice One Vision, ashared need was felt, but with an under-standing that the solutions would be admin-istered on the local level, serving the variouscommunities in an equitable manner.

That equity has been sadly lacking in themost recent provincial funding. Theprovince has managed to evoke a high levelof cynicism across our region. Businessinvestment decisions, quality of life, level ofhealth care, are far too important to playpolitics with.

Cambridge citizens and business haveworked hard to keep current, and grow.Waterloo and Kitchener citizens and busi-nesses have stepped up with Cambridge tomake the One Voice One Vision campaignripple through the parliamentary offices atQueen's Park. It is what is required to keepthe beat, in the heart of Ontario and NorthAmerica’s economic engine.

for 13 of the past 15 quarters.• Wholesalers enjoyed an 11.4% increase in oper-

ating profits in the quarter, led by wholesalers ofmachinery and equipment.

• Manufacturing profits edged down 1.2% to $10.6billion in the third quarter, the fourth decline inthe past five quarters. Gains by manufacturersof motor vehicles and parts and petroleum andcoal were more than offset by weakness inmost of the remaining industries.

• Motor vehicle and parts manufacturers earned$0.9 billion in third quarter operating profits, up

from $0.6 billion inthe second quar-ter. Operating rev-enue grew 9.1%, as extensive incentive pro-grams sustained sales. Exports of automotiveproducts strengthened in the quarter, butremained below the peak levels of 2004.

• Primary metals producers earned $0.3 billion inthird quarter operating profits, less than half ofthose earned in the second quarter.

• Wood and paper producers saw profits pared19.7% to $0.9 billion in the third quarter. Profitshave weakened for five consecutive quartersfrom the recent peak of $2.1 billion in the sec-

ond quarter of 2004.• When 2005 ends, the country will have over $2.6

trillion in structures and equipment in use toproduce goods and services, an increase (inreal terms) of 33% over the last 10 years.

• The all-items Consumer Price Index (CPI)declined 0.5% from September, the fastestmonthly decrease since April 2003.

• Consumers in October this year paid 2.6% morethan they did in October 2004 for goods andservices.

Body language speaks: at a recent forum on the regional amalgamation –undoubtedly not the most popular idea with all local politicians – our lead-ers’ stands on the issue may be apparent. From left, Regional Chair KenSeiling, Waterloo Mayor Herb Epp, Cambridge Mayor Doug Craig, andKitchener Mayor Carl Zehr.


january/february 2006 – $4.95 magazine for business ... · l magazine for business & economic...

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