Brad Duguid is minister of economic development and growth for the Canadian province of Ontario. In this capacity, he plays an important role in helping the regional automotive industry stay competitive. Duguid spoke to automotiveIT International at the Ontario Parliament offices in Toronto recently.
automotiveIT: How do you assess the sweeping changes in the auto industry today?
Duguid: I believe automotive companies recognize this is a very difficult time and they are going to have no choice but to be extremely nimble in the years ahead. If they don’t, they will see themselves become a thing of the past. It’s always difficult for large organizations in disruptive environments to become dramatically innovative. That’s why I believe consumers, rather than companies, will lead the change. The connected car is led by an insatiable desire of consumers to have the new technology in their cars. Consumers aren’t quite ready in North America for clean cars, but once they are, they’ll be ready en masse.
The electric vehicle revolution is, indeed, slow to take off in North America.
I think the trigger is reducing range anxiety. What’s needed is a charging-station infrastructure. And then consumers need to be educated. A second trigger is convenience. It’s very challenging to ask people to do something that is not convenient. An example is when it takes half an hour to charge a car. My hope is that technology will be able to address this.
Is your government providing enough incentives for electric vehicles?
We have the most generous incentives in North America and they are helpful. But the key remains consumer awareness. Even if there’s no longer a price difference between EVs and traditional vehicles, consumers are still reluctant at this point. It’s the job of governments and industry to reduce range anxiety and the fear of something new. The message needs to be that the range on offer is now significant and that there are some huge cost advantages in owning an electric vehicle.
Ontario has a big automotive industry and a lot of automotive start-ups, especially around Toronto. How do you stay competitive vis-à-vis Silicon Valley and other high-tech clusters?
I actually like where we are compared with Silicon Valley. It all comes down to one thing: talent. We are today producing what is considered the best and most sought-after talent in North America. That’s because we have embedded in our education system a culture of entrepreneurialism. And we’re leading the world with experiential learning. Our co-op programs (which require each student to engage in practical work several months a year ) are extremely valuable for graduates to be job-ready and more focused upon graduation.
Start-up cultures require a willingness to take risks. Is that willingness there in Ontario?
Ten years ago it wasn’t. We were relatively conventional and conservative and that served us well and helped us weather global recessions well. But in today’s economy, that approach is not going to cut it because the world is changing so fast and new technology is disrupting every segment of the economy. That’s why 12 years ago we launched an innovation agenda that transformed our talent pipeline. The agenda helped insert an element of entrepreneurial thinking and a commitment to innovation. That, more than anything else, has helped to churn out talent that is attractive to the new automotive sector. Our ICT cluster in North America is second only to Silicon Valley.
Are you getting a good return on the tax dollars you’re investing in Ontario’s high-tech industries?
If you’re not a leader in R&D, you very quickly become a backwater in the new economy. The very old school manufacturing-style economy of Ontario has completely changed. Manufacturing has become advanced manufacturing. Ontario is the number one car manufacturing state in North America, with Michigan a very close second. We produce more vehicles here than all of Mexico. But we’re also a center of research and innovation and that’s where our new-economy positioning needs to be.
And what kind of role do you see for your government in the auto-industry transformation?
We have a huge innovation cluster east of Ottawa. A lot of talent is still there from Nortel, which ceased operations as an independent company several years ago. The talent never went away, though. We also have QNX, which is a leading connected car company whose systems are in 40 to 60 percent of all cars. Ford earlier this year announced it is partnering with QNX and is setting up a hub in Ottawa for connected-car R&D. Ottawa is connected to Toronto and Waterloo and we have a fast-growing connected automotive ecosystem here. Even if the automotive business model will change dramatically in the next 10 years, we will be well placed to develop technology leadership.
Live testing of autonomous vehicles is important for the industry. Where do things stand in Canada?
Ontario was the first state in Canada to allow this and we were one of the first in North America. We have to continually upgrade regulations as technology evolves.
And when will we start seeing autonomous cars on the roads in greater numbers?
In my view, it’s still a long way off, but when it happens, it will come so fast that your economy needs to be ready to play a role in what will be a completely new business model. The technology is very close, but now it’s a question of adapting the road infrastructure to the technology.
Are the political changes in the US having an impact on the outlook for Canadian automotive and high-tech companies?
Ontario is in a position of strength and can weather whatever goes on south of the border. But a large number of automotive jobs depend on unfettered cross-border transports.
(Other stories on the Ontario high-tech start-up cluster can be found in the current edition of automotiveIT International magazine. For a complimentary subscription, please go to: www.automotiveIT/subscribe)
Interview by Arjen Bongard