Ottawa narrows ‘superclusters’ hopefuls to nine industry groups

Share

Ottawa has chosen nine industry consortiums that will qualify to receive $950-million under the Liberal government's flagship innovation initiative known as its "superclusters" program, The Globe and Mail has learned.

Groups comprising Ontario mining giants, Quebec aerospace manufacturers, Prairie agriculture companies, Atlantic Canadian fishing and energy enterprises, Alberta construction firms and dozens of other prominent Canadian corporations are among the nine bidders selected by government officials from more than 50 letter-of-intent applications submitted in July. Full applications are due from shortlisted groups by Nov. 24, and the government plans to announce up to five finalists in early 2018.

The identities of shortlisted groups has been a closely guarded secret given more than 1,000 firms – including many of Canada's largest corporations – participated in the process. The list will be unveiled by Innovation Minister Navdeep Bains and cabinet colleague Ralph Goodale at news conferences across Canada this week, starting Tuesday in Halifax and Montreal.

But senior government sources on Monday revealed the short list to The Globe. Those bids include:

• an “oceans supercluster” headed by energy company Emera Inc. and Clearwater Seafoods Inc., both of Nova Scotia, that would invest in digital technologies for offshore industries;
• an “advanced manufacturing” supercluster drawn from companies and universities in the Toronto-Waterloo corridor, including auto parts maker Linamar Corp., Maple Leaf Foods Inc. and software startup Miovision Technologies Inc. aimed at improving manufacturing efficiencies;
• a “protein innovations” supercluster from Saskatchewan led by agriculture firms including Regina’s Alliance Grain Traders Inc. and American giant DowDuPont Inc.;
• and an “AI-powered supply chain” supercluster led by Quebec City’s Optel Group and backed by such Quebec Inc. mainstays as BCE Inc., CGI Group and Alimentation Couche-Tard that intends to use artificial intelligence to improve business processes in retail, manufacturing and infrastructure sectors.

Other shortlisted applicants include a group led by Montreal flight simulator maker CAE Inc. looking to bring digital technology advances to aerospace and other industries; a second agriculture consortium led by Calgary-based Agrium Inc. aimed at making Canada a preferred global supplier of "sustainable high-quality safe food" and a "digital technology" group drawn from a swath of B.C. firms including Telus Corp. and Timberwest Forest Corp. and six postsecondary institutions.

"We're very happy to have been successful to this stage," said Doug Morrison, chief executive officer of the Centre for Excellence in Mining Innovation, who is spearheading a shortlisted bid backed by many of Canada's largest mining firms, including Barrick Gold. Corp., to turn Canada into a leading source of cleaner mining technology and industry practices. "The industry needs to make major changes to its technology platforms. And Canada, more than any other country except for Australia, is best capable of making that transition."

The government originally announced a $800-million "cluster" funding plan in 2016 but boosted it in the March, 2017, budget to $950-million, suggesting it could fund sectors including advanced manufacturing, agrifood, clean tech, digital technology, health/biosciences, clean resources and infrastructure and transportation. Indeed, the short list conveniently covers those sectors and all major regions of the country.

The superclusters funding was included in a package of innovation-friendly items unveiled by the Liberals in the previous budget, which also included a $400-million funding infusion for venture capital firms that invest in startups, $1.4-billion in new financing for clean technology, $125-million to support Canada's teeming artificial intelligence sector and a new procurement program to help startups sell their wares to government. The government also launched reviews to improve Canada's intellectual-property protection regime and how Ottawa spends on an array of innovation funding programs.

The government kicked off the program in May, offering to fund consortiums in specific sectors comprising large "anchor" corporations, smaller firms and postsecondary institutions. The consortiums were expected to pledge to spend at least $1 for every dollar requested from government and propose plans to create jobs and commercial activity while ensuring any breakthrough intellectual property developed by the groups benefited Canadian, rather than foreign interests. Government officials said the nine shortlisted groups promised to spend anywhere from $200-million to $900-million on their proposals, and in aggregate, pledged $1.50 for each $1 requested. For example, the private sector backers of the mining proposal promised to put up $327-million while asking for $185-million from Ottawa.

Government officials indicated final bids could be different from the short list; they have encouraged the nine groups to bring in more participants and lay out more ambitious job-creation plans in their final applications – and likewise told unsuccessful bidders to seek out and join groups that made it this far. "We're saying to those shortlisted: you haven't won anything yet, go out and improve your bids," a senior government official said. "For us, this is all about [creating] jobs."

Some critics have questioned the program, saying government shouldn't pick winners and losers, while questioning how a supercluster – which must be administered by a non-profit body – is supposed to function. "Poorly done, this will be simply another regional economic subsidy," warned Richard Gold, former director of McGill University's Centre for Intellectual Property Policy and a professor with the school's faculty of law.

But he and others who have criticized Ottawa's poor track for helping innovative industries in the past said the program shows more promise than previous initiatives. "I think superclusters are a very good idea" because they will bring industry participants together to "start behaving like communities rather than individual actors," said Dan Breznitz, co-director of the Innovation Policy Lab at the University of Toronto's Munk School of Global Affairs. That "is the best thing that Canada can do."