Calgary’s high-tech industry is financially healthy and expanding despite a few companies that have announced layoffs, say analysts, job recruiters and industry players.
Nortel Networks Corp.’s wireless development division here is on a “hiring binge,” even though the company announced last week it will eliminate about 4,000 regular full-time positions in Canada and the U.S.
“Nortel’s (move) is just a normal attrition” as the company refocuses its business on high-growth areas, says Brian Pow, technology analyst with Acumen Capital Finance Partners Ltd. in Calgary. “You’ll probably see them hire the equivalent number of people into different areas of their business over the next while.”
Nortel’s Calgary operations are growing and some of the employees getting their notice in Ontario may find new jobs in the city, says company spokeswoman Tina Warren.
No layoffs are planned in Calgary, she says. “Wireless is a high-growth area, a very exciting part of our business.”
In another indication of the strength and depth of Alberta’s information technologies industry, a yet-to-be-released labour market study shows the province’s telecommunications and electronics manufacturing sectors aren’t able to hire enough skilled people to keep up with demand.
The ICET (Information, Communications and Electronics) Alliance conducted the study. The alliance has more than 100 members in Alberta, including electronics manufacturers, software and e-commerce companies, telecom firms and others.
“We’re not seeing a slowdown in the demand” across Alberta for skilled IT workers, says Keith Gylander, executive director of ICET Alliance.
The study, to be released by the end of the month, found Alberta’s IT graduates are receiving a quality education and excellent industry training, Gylander notes. “The problem is, we don’t have enough of them.”
Pow says that Calgary’s wireless sector also has a solid foundation, despite a high-tech stock market now rewarding revenue and business plan execution rather than business concepts.
Wireless’s underlying strength was evident from Wi-LAN Inc.’s ability last week to raise twice as much money in a public share offering as the company anticipated, Pow says.
The manufacturer of high-speed wireless networking equipment doubled the size of its offering to $13.2 million from a $6.5-million bought deal, saying it was due to strong market demand.
“Wireless hasn’t gone away and Wi-LAN has a competitive product that they can sell out into the marketplace,” Pow says.
In contrast, local wireless firm Cell-Loc Inc. announced last week it will eliminate one-third of its staff, including about 40 positions at its Calgary head office. Cell-Loc’s technology pinpoints a cellphone’s location.
Cell-Loc, unlike Wi-LAN which is generating revenue, is still trying to convince customers in a competitive market that they need Cell-Loc’s technology, Pow says. “Investors are making decisions on businesses that have visibility of revenue and predictable revenues,” he says.
Cell-Loc’s layoffs aren’t due to any weakening in Calgary’s high-tech industry, says Tammy Yamkowy, the company’s manager of public relations.
Cell-Loc has shifted from trying to deploy its technology in networks across the U.S. to generating revenues from its two existing networks in Calgary and Austin, Tex., Yamkowy says. The new focus requires people with different skills than those needed for a huge network deployment, she says. “We’re still moving forward with our business.”
Internet security leader Jawz Inc. also announced last week it will cut 37 positions in Canada and the U.S. in a drive for profitability. But only 12 of the company’s estimated 160 positions in Calgary will be eliminated, says Leanne Bucaro, the company’s communications director.
Jawz has grown quickly, mostly through acquisition, which resulted in duplication of some positions, Bucaro explains. “We really had to concentrate in certain areas and also really concentrate on where we could deploy people into the U.S.” to meet customers’ needs.
Calgary’s high-tech future looks bright, especially since Alberta’s oil-and-gas and biotechnology sectors remain strong, Bucaro says.
“Calgary is in the fortunate position of having both high-tech and tried-and-true oil and gas,” she adds.
Ottawa, whose high-tech economy is more reliant on its version of Silicon Valley, is being hit harder than Calgary by current market conditions, Bucaro says.
In fact, the prospects for laid-off workers at Jawz and Cell-Loc landing new jobs in Calgary are excellent, says Bill Hanniman, vice-president of recruiting at Eagle Professional Services Inc. The local company specializes in placing IT professionals in contract positions.
Some of the local workers who’ve received their notices are already being interviewed by other companies that are starved for IT talent, Hanniman says.
“If you’re an IT professional these days living in Calgary, you’re not going to be out of work for very long.”
Dave Kennedy, senior vice-president and director of KPMG Corporate Finance Inc. in Calgary, says the city’s high-tech industry has become a “self-supporting matrix” that isn’t going to disappear even in a mild recession.
“The demand for telecoms technology or the demand for the products of biotech research isn’t going to go away just because the U.S. has a couple of quarters of negative growth,” Kennedy says.
But before the current shakeout ends, expect other local companies to fall by the wayside, says Acumen Capital’s Pow. Firms that are unable to execute their business plan or generate a profit won’t survive, he says.
Companies that show they can reach those milestones will succeed and thrive in Calgary, Pow says. “We’ve got a real (high-tech) economy here. It’s not going to go away.”
