By Roshan Mohan and Stephen Thompson
Across the globe, many countries, states and provinces are blessed with abundant natural resources. Ontario, Canada, is one of them. The gift of natural resources and the revenue derived from them, such as hydrocarbons and minerals, help drive economic growth, spark innovation, create employment and provide much-needed tax revenue. However, this story can become a cautionary tale, as an over reliance on natural resources can be detrimental if a long-term and sustainable strategy is not embraced.
Ontario’s journey of diversification and evolution from a petrochemical pioneer to a bio-hybrid chemistry leader provides ample lessons learned and a useful case study for other economies looking to travel down this path.
So, how did Ontario do this? The province has been involved in petrochemicals since the discovery of large oil reserves in the late 1850s. This led Ontario to be a global chemical and petrochemical leader. The province gradually embraced a strategy to evolve and gradually diversify, transforming from a petrochemical pioneer to a global leader in petrochemicals with an innovative biotech sector.
For example, the Sarnia-Lambton district is home to global players from the oil, gas and petrochemical industry, such as Lanxess, Shell, Exxon Mobil and DuPont, all of which have invested in the area. Located in southwestern Ontario, Sarnia-Lambton houses Canada’s largest concentration of chemical and biochemical companies – one of the largest of its kind. With an increasing emphasis on researching and commercializing biotechnology, in addition to its strengths in classic petro-technology, Sarnia-Lambton has now become a unique bio-hybrid chemical cluster.
What are the secrets behind this success? What are the lessons learned?
- Offer support through partnerships and funding
- Invest in advanced and targeted education and training and
- Create collaborative hubs and clusters with research and development, manufacturing, education and training, marketing and distribution, within close proximity.
1. Offer support through partnerships and funding
Industry trade groups comprise the core of Sarnia-Lambton’s chemical cluster and are crucial to the region’s success. The Sarnia-Lambton Economic Partnership, for example, was formed in 1994 to provide strategic leadership and support to aid in community-based economic development through the private-public partnership. The organization helps companies in the early stages of development find work sites and facilitate approvals. In addition, it helps connect new graduates and skilled workers with companies, while standardizing safety training for all workers in the region. The Partnership, in conjunction with the Sustainable Chemistry Alliance (SCA), has also invested in sustainable technologies and organizations, such as GreenCentre Canada, GreenCore Composites and Solutions4C02, enabling the new sector to flourish.
The Western Sarnia-Lambton Research Park offers both multinational companies and start-ups an attractive location for research, development and the commercialization of innovative technologies. Associated with Western University and Lambton College, the Research Park is where innovative ideas and lab discoveries become market commodities. The research park was ranked seventh in the North America Top 10 University Business Incubators in 2014 by UBI Global.
As a government and industry-funded catalyst for industry development, Bioindustrial Innovation Canada (BIC) also helps position the Sarnia-Lambton region as a world-class hybrid chemical cluster. BIC manages an investment fund to provide essential capital to early start-ups. Early stage funding is crucial for young firms and enables them to refine their business models and attract larger-scale follow-up investments. To date, four Sarnia-Lambton-based companies that received early BIC funding have successfully raised more capital through public offerings. This support attracted new minds and companies to come to the Sarnia-Lambton area, aiding in the overall transformation of the region.
2. Invest in advanced and targeted education and training
Education was made a priority in southwestern Ontario, to ensure the bio-hybrid chemical industry continues to grow and develop. Through its co-op program and strong industry collaboration, Lambton College provides a unique opportunity for students to get hands-on experience in the chemical industry. The Centre of Excellence in Energy & Bio-Industrial Technologies at the college gives industry partners opportunities to participate in applied research and program capstone projects that are faculty-led and involve students. By providing this integrated educational experience, students leave the program with in-depth knowledge and experience in their fields and can bring fresh, innovative perspectives to the industry.
BioAmber, the world’s largest producer of succinic acid, has a state-of-the-art $140 million plant located in Sarnia, and has been able to take advantage of the area’s readily available, skilled workforce, who is trained and educated in chemical processes. The company uses cutting-edge biotechnology to sustainably produce succinic acid from glucose instead of fossil fuels. Its strong workforce is one of the reasons BioAmber has become the first bio-succinic acid plant to reach commercial production, globally.
3. Create collaborative hubs and clusters
The companies in Sarnia-Lambton are located within close proximity of one another, further enabling collaborative innovation. This allows companies in the region to share a number of resources, including steam, waste water and infrastructure (rail, water and roads).
The Lanxess Bio-Industrial Park, for example, owns a 500-acre site with established infrastructure including warehousing, a deep water dock, road and rail transportation, as well as behind-the-fence power with large brownfield and greenfield development sites available to other companies. BioAmber chose the Lanxess site to develop its first plant, in order to capitalize on the available infrastructure and ultimately reduce set-up costs.
The region is also connected to an extensive pipeline system bringing oil, natural gas and natural gas liquids from all over North America to the province. Moreover, the area is rich in agricultural and wood biomass feedstock, affording companies reliable access to raw materials.
By offering support and funding, investing in skilled labour and facilitating industry collaboration, true transformation is possible for other regions in a similar position. Ontario has shown itself as a key leader in the biotechnology industry, setting the course for regions interested in shifting from a traditional resource-based economy to one that is both sustainable and highly competitive.
Industry snapshot: Chemical and biochemical industry in Ontario
- Ontario is home to Canada’s largest chemical manufacturing cluster
- The chemical industry employs 27,000 people in Ontario, making it the fifth-largest in North America
- The industry’s annual output is $16 billion (2013), ranking ninth in North America
- Chemical products from Ontario range from industrial chemicals and synthetic resins, to fertilizers, and petroleum; refining also happens in the region
- Located in North America’s industrial heartland, Ontario is within a day’s drive of 141 million customers
- As a part of the North American Free Trade Association (NAFTA), Ontario businesses have access to a $20 trillion market
Image credit: Flickr/Jerry Huddleston
Roshan Mohan and Stephen Thompson are Consuls and Senior Economic Officers who lead the Ontario International Trade and Investment offices in New York and San Francisco. They promote Ontario in the U.S., assist American companies to setup operations in Ontario, and help Ontario companies forge partnerships and export to the U.S.. The New York office covers New York, New Jersey, Pennsylvania, Connecticut, Delaware, Greater Boston and Greater Chicago. The San Francisco office covers California, Arizona, Nevada and Hawaii.