What do Rod Dobson of ADP Canada, Wendy Bocti of Mellon Bank of Canada, and Gary McMillan of AIG Canada have in common? They are all presidents of Canadian subsidiaries of U.S. companies and participants in Project Eagle, a unique private-sector initiative helping promote U.S. investment in Canada. They all view Canada as a hospitable environment in which to do business — not only to serve the Canadian market, but also as a base for global operations. And through Project Eagle, they are helping to spread the word about Canada's competitive advantages: from low business and R&D costs and availability of first-class knowledge workers to easy access to North American and global markets.

Its Mission
Now in its third year, Project Eagle is sponsored by Oxford Developments Inc., Canada's largest commercial landlord; Royal Lepage Commercial Inc., Canada's largest commercial real estate broker; Marsh Canada, the world's largest insurance broker and risk management consultant; and Bell Canada, the largest telecom and fifth-largest corporation in Canada. Project Eagle aims to assist American subsidiaries in Canada to make the case to their U.S. parents for expanding their Canadian operations, or choosing Canada as a location for new investments. There are currently over 80 companies participating in Project Eagle, drawn from a broad spectrum of America's corporate elite: IBM, AON, GE, Compaq, Unisys, and MasterCard to name but a few.
     Most of the Project Eagle companies operate on a global basis and must grapple with difficult decisions about locating or relocating operations in order to remain cost-competitive. In the words of one IBM spokesperson, "It's not about one shore or another shore…It's about investing around the world, including in the United States, to build capability and deliver value as defined by our customers."
     A core activity of the Project Eagle team is to engage the Canadian leadership of American subsidiaries and to brief them on the benefits of Canada as a business location. While these Canadian-based CEOs obviously know a lot about their own operations and about the locational economics of their U.S. operations, some are not as aware of how Canada stacks up to other countries and U.S. states. By understanding and being able to articulate Canada's competitive advantages, these executives become in effect important champions for Canadian investment. They are also instrumental in opening doors in the United States for visits by the Project Eagle team to present Canada's advantages directly to American business leaders.
     The Project Eagle team is well-positioned to provide briefings and information on real estate, labor, insurance, communications, transportation, and customs, just to mention a few areas of expertise. In many cases, the information validates what the more seasoned executives already know: Labor is plentiful, exceptionally skilled, and less costly than in the United States; and transportation, communications, technology, and business support are at par with the United States, and available at a significant cost advantage.
     Through visits to the United States and one-on-one meetings with U.S. corporate leaders, the Project Eagle team has gained insights into the global business plans of American multinationals. A common thread is that increasing pressures to cut costs and build global supply networks are forcing U.S. companies to look at near-shore (Canada and Mexico) and offshore (Asia, Eastern Europe, South America) locations to strengthen their domestic and global competitiveness.

Canada's Advantages
In this highly competitive business environment, Canada is a strong contender. Canada was ranked by The Economist as the number-one country in which to do business in the next five years (see article on page 43). In addition, according to a recent study by A.T. Kearney on selecting a country for offshore business processing, Canada ranked second in the world — even compared to low-cost countries in Asia, Eastern Europe, and Latin America — because of its superior employee-retention rates, markedly superior infrastructure, low economic and political risk, business processing experience, and proximity to the United States. Accordingly, numerous global companies have selected Canada as an offshore location, including BP Amoco, Allmerica, Siemens, and HP Compaq.
     In fact, HP Compaq is reported by Kearney to have realized up to 15 percent cost savings by locating five call centers in Canada. A factor in Compaq's decision was the highly specialized work force management technology of Canadian call centers, used by less than 12 percent of the call centers in the United States, which can automate scheduling and help drive sales.
     Other benefits Canada offers include a culturally diverse population with the education and linguistic skills U.S. companies need to service global markets, high standards of business integrity and corporate conduct, and similar business and legal cultures — and all this in America's backyard. A Canadian location can meets the needs of U.S. corporations, without some of the drawbacks of more distant locations, such as political and economic instability, cultural and linguistic differences, and unreliable infrastructure. Putting it all together means, as it was succinctly put by a senior executive at Cendant Corp., "Canada is the sweet spot."

Cross-Border Commerce
Not surprising in the post September 11 environment, security is an increasingly important consideration, and in Canada's case, a drawing card. From its border regime — including significant enhancements flowing from the Canada-U.S. Border Accord — to critical infrastructure, Canada offers one of the most secure environments in the world in which to do business.
     To the inexperienced, moving goods across the Canada-U.S. border can appear daunting, but not to Bob Johnson, president of Purolator Courier Ltd., another dynamic participant in Project Eagle. Bob's message to companies considering Canada as a location is simple: "Our respective governments have acted to increase security and cooperation while still maintaining a seamless flow of goods across the border. Companies that are looking to expand operations into Canada need not hesitate as a result of border concerns. There are issues to be considered and proper planning is essential, as it is in any business expansion, but once the prep work is done, companies can easily enjoy the benefits of servicing a North American market from a Canadian location."
     Project Eagle is also a useful forum for Canadian and U.S. business leaders to exchange views on the business dynamics in Canada as well as Canada-U.S. trade and economic relations. For example, at a business roundtable Project Eagle organized in Toronto last summer, noted Canadian economist Peter Anderson gave a presentation on economic trends since the implementation of the NAFTA, which was followed by a lively discussion.
     NAFTA has accelerated trade and investment flows between Canada and the United States as well as economic convergence, to the point that north-south regional commerce often surpasses east-west commerce, or trade with other nations and regions of the world. For instance, more goods cross the Detroit River than the United States trades with Japan or any other country. More trade flows between the United States and Canada than between the United States and all the countries of the European Union combined. Business and legal cultures are also converging, and communications and transportation systems are becoming seamless, according to Anderson. A major driving force is the ever-increasing intracompany trade crossing the border (cross-supplying), especially in the transportation (automotive and aerospace) industries.
     Business leaders participating in the roundtable concluded that integration will continue, but also recognized that some differences will remain. It is illuminating that two major differences — Canada's public healthcare system and the smaller scale of Canada's economy — were perceived by many as advantages. Public stewardship of health in Canada results in significant cost savings for U.S. companies operating in Canada, whereas Canada's smaller scale can provide a broader range of experiences to business managers, which explains why many U.S. companies use Canada as a proving ground for senior executives.
     On security, the roundtable concluded that Canadians must realize how traumatic September 11 was to Americans and share fully the responsibility of building a secure border. It was recognized that a great deal has been achieved so far under the Canada-U.S. Border Accord, but that more needs to be done to communicate that the border is not a barrier to trade and investment. It was also noted that there are opportunities for Canada to showcase its strengths in this area, for example its lower security risks and resulting lower insurance premiums.

Its Best Advocates
Executives of U.S. subsidiaries in Canada are some of the best advocates we have. Through their understanding of Canada's business environment, they are in a unique position to articulate the significant advantages of doing business in Canada and to break down barriers that stem from misperceptions about Canada's differences. They are potentially Canada's most important investment champions.
     A guiding principle of Project Eagle is that business leaders need to be more proactive in promoting Canada as an investment location. To find out more, visit www.projecteagle.com.