NEW YORK BUSINESS REPORT
Ideally situated an hour’s drive from Ottawa, St. Lawrence County is eagerly courting Canadian businesses looking for a convenient and affordable foothold in the U.S. market. We talked with local economic development agencies, municipalities and others to as a great place to set up shop.
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understand what sets the area apart
northern new york business report
Finding a foothold on America’s ‘fourth coast’
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By Leo Valiquette New York’s St. Lawrence County is open for business. From Ogdensburg to Potsdam and the campus of Clarkson University, the message is consistent and clear. This large county, located only an hour’s drive from Ottawa across the Ogdensburg-Prescott International Bridge, is eagerly courting Canadian enterprises looking to establish a U.S. presence. The county has some obvious advantages. It is ideally situated adjacent to the Toronto-Montreal corridor with the only U.S. port on the St. Lawrence Seaway, an airport that provides daily commercial service to points in New York State and southeastern Ontario, a shortline railway with cross-border connections, and a Foreign Trade Zone (FTZ). But local communities, educational institutions and other economic stakeholders such as the St. Lawrence County Industrial Development Agency (IDA) have not been
content to sit back and rely on the county’s obvious attributes to attract capital investment. In response to the economic challenges of recent years, the county as a whole has taken a collaborative approach to drive development and attract new employers.
Did you know ... St. Lawrence County is beneficiary of the U.S. EB-5 visa program. The visa allows foreign nationals to obtain a green card for investing in the local economy. To qualify, individuals must invest at least US$500,000 into a new or existing commercial enterprise that will create or preserve at least 10 jobs for U.S. workers, excluding the investor and their immediate family.
“Collectively, the entities in the county want to make sure that we best align our available resources to enable the companies we work with to maximize their success, as their success leads to positive economic returns for us,” said IDA CEO Patrick
Kelly. “What’s good for one community or one agency is invariably good for the entire region.” “We figured out a while back that if we would be cutthroat competitors, we couldn’t get anywhere,” added Fred Hanss, director of planning and development for the town of Potsdam. “We’re all on the same page. People I’ve met from Ontario and Quebec are frankly amazed that, when they come here, there are four or five people ready to meet with them and help them get started.” Businesses that choose to locate in St. Lawrence County readily find the resources and help they need to get started, said Wade Davis, executive director of the Ogdensburg
northern new york business report Bridge and Port Authority. The biggest misconception he finds among visitors is the effort it takes to establish a business. “They think it’s rocket science and it’s just plain vanilla.” In addition to operating the rail head, Seaway port, airport and FTZ, the authority also operates two industrial parks that are shovel ready and primed for development. Current tenants include Ottawa defense and security contractor Allen-Vanguard and Hawkesbury’s Tulmar Safety Systems. “We already have buildings and infrastructure in place,” said John Pinkerton, Ogdensburg’s city manager. “It’s an almost turnkey operation that businesses could walk into.” Business on campus But having quality space and the transportation infrastructure in place to move goods and people is only part of the equation. St. Lawrence County also boasts four post secondary institutions: liberal arts college St. Lawrence University, State University of New York at Potsdam, Clarkson University and the SUNY-ESF Ranger School. Clarkson, which has a strong history in business and engineering, actively supports the commercialization of university re-
In the Zone
search and lends the expertise of its faculty, staff and students to help private industry. “The success of the region is important for us to attract high-quality students, faculty and staff,” said university president Anthony Collins. “The connection there is pretty obvious to us. It’s a mutually beneficial role. If you are a technical institution and you are not connected with real problems you are missing the boat … For us to provide real value to our students, you have to be connected to the world.” Clarkson has several initiatives that can assist startup enterprises and businesses that are new to the county: the Peyton Hall Small Business Incubator; the Shipley
A foreign or “free” trade zone is a secured area outside of a nation’s customs territory. Goods coming into an FTZ are not subject to import quotas or to customs duties until they are removed from the zone. This provides a number of advantages. Businesses can: • Store goods indefinitely without being subject to import quotas • Exhibit goods indefinitely without paying duties • Test, destroy, return and repair goods without paying import duties • Manufacture goods within the zone and pay duty only on the saleable product • Assemble/combine domestic, imported materials or components to lower import duties payable • Use FTZ marketing services such as international trade marks, display areas, showrooms • Avoid paying duty on accountable losses that affect weight of materials, such as seepage or evaporation Center for Innovation – which focuses on technology transfer – and the Reh Center for Entrepreneurship, which also serves as a business incubator for new businesses. “Folks at Clarkson provide an outstanding technical resource for entrepreneurs,” said Hanss. “It’s a place where they can access world-class talent in a variety of fields.” But it isn’t only a rich crop of new grads that businesses new to the county can draw upon. The workforce in general can
be characterized as industrious, loyal and skilled. And while the recession has cost the county some jobs in industries such as telecommunications and contract electronics manufacturing, the good news is that this has left a skilled labour pool eager for new opportunities. “Companies relocating or opening offices in St. Lawrence County will find a willing workforce that can help them from day one,” said Collins.
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northern new york business report
From the horse’s mouth Two Ottawa-area businesses discuss why they set up shop in St. Lawrence County By Leo Valiquette It’s not surprising that economic development agencies, municipal officials and other local stakeholders across St. Lawrence County are quick to sing the region’s praises as a place from which to do business. But what do a couple of Canadian enterprises that have set up shop have to say?
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T-Base Communications Ottawa’s T-Base Communications is active in the alternative format communication industry, transforming information into braille, large print, e-text, audio as well as formats for online delivery via accessible PDF files and HTML. To better serve and interact with its U.S. clients, T-Base established an operation in Romney, W. Va. However, it eventually decided to relocate to Ogdensburg. “The most significant appeal is its proximity to our Ottawa head office,” said president and CEO Jeff Potts. “Just an hour away, it allows more frequent interaction between our Canadian and U.S. employees.”
The St. Lawrence County facility produces alternative format statements, documents and textbooks to help clients with their blind and partially sighted customers. T-Base’s U.S. clients include large financial institutions, telecom companies and universities. “As an inducement (to locate in Ogdensburg) we received various financial incentives, including low interest-rate loans for capital costs and grants from the City of Ogdensburg and St. Lawrence County,” said Potts. “Of course, T-Base is proud to contribute to employment and economic growth in (the area).” Tulmar Safety Systems For 20 years, Tulmar has been manufacturing engineered textile products for aerospace and defence markets around the world. The Hawkesbury-based company’s products include aviation seat restraints, life vests and life rafts, as well as inflatable shelters and protective covers for military vehicles.
The U.S. is an obvious market for Tulmar’s products. When it comes to the development, sale and transportation of defense-related articles and services for U.S. procurement, the need to integrate supply chains and reduce cross-border headaches became much more acute following 9-11 and the implementation of the U.S. government’s International Traffic in Arms Regulations (ITAR). But Tulmar’s first foothold on U.S. soil, with a location in the Detroit area, was less than successful, said owner Barney Bangs.
“The most significant appeal is its proximity to our Ottawa head office.” — jeff Potts, president and CEO, T-Base Communications
“It was just a logistics nightmare because the plant was so far from our home base in Hawkesbury,” he said. Tulmar closed down the location after only a year, but the needs of its U.S. de-
fence business soon led the company to try again. This time Tulmar looked much closer to home for the ideal location for a light industrial manufacturing operation. The initial attraction of St. Lawrence County was its proximity to Hawkesbury – it wasn’t necessary for the company to invest in having an additional engineering department and back office. The location was also close to raw material suppliers in the U.S. and Montreal. The company found the home it was looking for in one of the two industrial parks operated by the Ogdensburg Bridge and Port Authority and commenced operations with little difficulty, according to Bangs. “The port authority had available space and was accustomed to dealing with Canadian companies,” he said. “It was more of an effort to get on the Department of Defense’s supply chain and show we were qualified to produce certain components.” Since setting up shop several years ago, Tulmar has benefited from a skilled and reliable workforce and the lower operating costs that come of being located in a small town. The company is now looking at the various financing and employee training incentives available in St. Lawrence County to help grow the operation, said Bangs.
Better cross border solutions for Ottawa companies S
trader-Ferris International has given Ottawa area companies a U.S. presence since 1953. Privately owned and managed, the company takes pride in its ability to provide the most comprehensive logistics infrastructure available at Ottawa’s closest border crossing, the Prescott-Ogdensburg International Bridge. Services include both U.S. and Canadian Customs brokerage services, crossborder transportation with their own fleet of trucks, as well as warehousing, fulfillment, and freight forwarding from locations on both sides of the border. A steady pattern of growth over the last decade has placed the company as one of the top Fedex shippers along the northern border. “We are proud of our reputation in the Ottawa market”, says Mike Ferris, SFI’s President and 3rd generation owner. “Our ability to tailor a solution to the individual needs of a customer is what sets us apart. We don’t try and dictate how cross-border trade gets done but rather help companies implement strategies that fit with the unique aspects of their operations and their core competencies. By staying flexible we’re able to simplify customs
and logistics processes that too many companies find intimidating when they don’t have to be”. hen asked about the company’s position as the only player on both sides of the border at Prescott-Ogdensburg, Vice President Derek VanSchie provides, “Yes, it’s one aspect that makes us unique in our ability to help Ottawa companies. However, having the right people in place is even more important.” The 18-year company veteran adds, “Many of our competitors tend to be too large to be hands-on, forcing customers to chase answers from one office to another or even one department to another. With Strader-Ferris you get a single point of contact and immediate results regardless of whether you’re shipping to Canada, the U.S., or internationally. We handle shipments all across Canada and the U.S. every day for all sorts of companies thanks to the fact that most trade has moved to an all-electronic reporting platform. It’s really empowered our business model.” hange seems to be one of the constants for the company that celebrates it’s 60th
“Having bricks and mortar, trucks, inhouse experts, and the technology; it’s all required to provide a truly great service.”
anniversary in 2013. “Our core strength as customs experts has required us to remain open to change as rules and regulations have quickly been amended and continue to evolve in a post-911 world”, explains Ferris. “It spills over to the approach we take to meeting Mike Ferris (left), President of Strader-Ferris customer needs. I feel International, along with Vice President we have always been Derek VanSchie ahead of the change curve. For example, when I look at our pro- and mortar, trucks, in-house experts, -and the prietary technology that integrates customers’ technology; it’s all required to provide a truly business systems with shipping and interna- great service.” tional trade tools it shows we’re ahead of the competition. It’s a platform we recognized as a potential source for a competitive advantage over 10 years ago, and it has become the de facto solution for many of Ottawa’s largest shippers. We currently support over a dozen different carriers via a single web-based platform”. VanSchie adds, “Yes, and that is only 850 Sophia Street, Prescott, Ont. part of the story. Ongoing investments in in808 Commerce Park Drive, frastructure over the past decade have also led Ogdensburg, N.Y. to new services such as fulfillment for e-commerce as well as b2b clients. Having bricks (613) 925-4271 • www.sfi.ca
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NORTHERN NEW YORK BUSINESS REPORT
Power for pennies Area levers its hydro-electric resources to fuel economic investment By Leo Valiquette In addition to the various financing and training programs available to help businesses set up shop or expand in St. Law-
rence County, the biggest boost to the bottom line may in fact be found flowing past the shoreline. As is the case with Ontario, much of northern New York’s power comes from hydro-electric sources. In this instance, the source is the 912 MW St. Lawrence-Frank-
lin D. Roosevelt Power Project at Massena. The project is operated by the New York Power Authority, with power allocated to area utilities, including the Massena Electric Department (MED). Hydro power has the obvious benefit of being green. The FDR power project also has the strong record for reliability that is important for continuous process manufacturing, such as plastics and Alcoa’s aluminum plant which has operated in the area since the 1950s. But the greatest advantages for business may come from the various incentive programs that have been developed to spur capital investment and economic development. These programs come in the form of fixed rate contracts that reduce volatility and risk for participating businesses, said Andrew McMahon, superintendent of MED. Earlier this year, the New York Power
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Authority created a new program by allocating to MED 20 MW of low-cost power expressly for the purpose of stimulating local economic development in St. Lawrence County. To put that in perspective, one MW is enough to power 800 to 1,000 homes. A large power-intensive operation such as Alcoa requires a whopping 490 MW of power, while the typical small- to mediumsized businesses that have so far expressed interest in the 20 MW program have needs ranging from 0.5 to three MW. According to McMahon, the rate for qualifying businesses is three to four cents per kilowatt hour. This is only about 25 per cent of the market rate in Ontario and a third of the typical rates found in other areas of the state. At present, this block of power has yet to be allocated to qualifying businesses. The catch is that to qualify, a business must be setting up a new operation or expanding an existing one that will create jobs. There is no deadline for the full 20 MW to be allocated. The St. Lawrence River Valley Redevelopment Agency, which works in partnership with the St. Lawrence County Industrial Development Agency (IDA), will judge applicants on a caseby-case basis by considering the number, quality and pay of the jobs to be created and how an applicant’s venture will contribute to local economic diversification. “We’re looking for good long-term marriages to create stable jobs in the community,” said McMahon. The 20 MW program is the latest, and most economical, in a string of incentive programs that have been unveiled over the
past decade by the state government to support the St. Lawrence County area. Two others of note that still have some blocks of power to allocate are Preservation Power and Recharge New York. Both of these programs utilize power output from the FDR power project. Recharge New York is also open to qualifying non-profit organizations. Pellet power One business that has benefited from previous power programs available to the area is Curran Renewable Energy. The company operates a 100,000-ton capacity wood pellet production facility in Massena for pellet-burning woodstoves. The company enjoys a reduced power rate from the local utility in return for its investment in the local economy. For owner Pat Curran, the cost advantage is obvious. “If I were to locate this plant at a location even eight kilometres away, my power costs would be doubled,” he said. But he is quick to emphasize that incentives to reduce operating costs are only part of a broader picture. For any business looking to expand in St. Lawrence County, he advises they also partner with local support organizations such IDA and take advantage of all they have to offer. In his situation, IDA’s help was crucial to finance the Massena facility’s $10 million in startup costs. “Most people who are going to start a business are not going to have enough cash to just go out and build it,” he said. “If a person doesn’t take (financial help), chances are they aren’t going to built a lasting business.”
Business advocacy that knows no borders In addition to the resources available within St. Lawrence County to help Canadian businesses set up shop south of the border, there is another international organization dedicated to promoting the two-way flow of trade and investment between Canada and the U.S. The American Chamber of Commerce in Canada (AmCham Canada) is a private, non-profit, membership-driven organization headquartered in Toronto with chapters in Halifax, Montreal, Ottawa, Toronto, Calgary and Vancouver. AmCham Canada, along with its six operating Chapters across the country, is directly affiliated with the United States Chamber of Commerce, the world’s largest business organization. The overall mission of AmCham Canada is to facilitate cross-border trade and investment opportunities between Canada and the United States. AmCham Canada’s membership includes more than 250 organizations, spanning both large and small American companies that operate within Canada, as well as Canadian companies of all sizes that sell to, or operate, in the U.S.
Here in Ottawa, the focus of the National Capital Chapter is providing advocacy, professional development and networking programs focused on cross-border trade and investment. “AmCham Canada is committed to promoting trade opportunities, advancing economic growth, and promoting the cross-border mobility of people, goods and services,” said AmCham National Capital Chair Rick Tachuk. “As the voice for crossborder business our goal is to promote and foster a positive climate that facilitates the expansion of trade and investment between our two countries.” The National Capital Chapter also heads up development of AmCham Canada’s “National Policy Framework” on behalf of AmChams across Canada. Policy committees have been established to address key cross-border issues in the areas of regulatory harmonization, intellectual property rights, defence and security, banking and finance and energy. To learn more, please visit www.amchamottawa.ca