The Montreal skyline on March 25, 2020. Graham Hughes/The Canadian Press
Canadian and international companies continue to make record investments in the Montreal area this year as the region shakes off the effects of the ongoing COVID-19 pandemic, but a slowdown is looming in the coming months amid the prospect of a recession. Quebec’s most massive language change in nearly half a century may also spook some businesses.
Companies from outside Quebec made investments worth $1.74 billion in Canada’s second-largest city in the first six months of 2022, launching a record 57 projects and creating about 4,700 jobs, according to the latest data from Montréal International. the city’s investment promotion agency. Thirty-one companies established a subsidiary in Montreal for the first time.
Last year, during the same period, corporations allocated $1.86 billion to 40 new projects. But Montréal International, a public-private partnership partially funded by the governments of Quebec and Canada, only counts the investments it has facilitated, meaning the absolute numbers could be much higher.
Known for its significant knowledge and research base, the Montreal region has attracted particular attention from global investors over the years for its expertise in artificial intelligence (AI) and deep learning. Companies such as McKinsey & Co.-owned data analytics company QuantumBlack and aerospace giant Thales SA are just two companies that have set up AI operations in the city in recent years.
Healthcare and life sciences companies also generated a significant portion of investment activity this year, with 7 projects launched at a net value of $321 million. This is a higher amount for six months than for all of last year. Moderna Inc.’s plan, announced in April, to build a vaccine manufacturing plant in the Montreal area has not yet been factored into the numbers.
Silicon Valley-based Circle Medical Technologies is among the firms expanding in the Montreal region. The company, which specializes in virtual telemedicine, currently has 25 employees in the city with plans to increase that number to 360 over the next three years. The company has already made several hires in software engineering, product design and operations management, said George Favvas, a Montreal resident who co-founded the company and now runs it as CEO.
Mr. Favvas said his management team initially thought Montreal would simply be an office supporting the company’s San Francisco base. Now he says the city’s strong labor pool and tech ecosystem have convinced him to build operations there in tandem with the US headquarters.
“We’re seeing Montreal almost as a second head office or a satellite head office,” he said. “There are a range of roles where we are willing to have the candidate work, either in Montreal or in San Francisco, on equal terms.”
The growth underscores the diversity of Montreal’s economy, which has a lower unemployment rate than Toronto, Vancouver or Calgary at 4.8 percent. Government incentives and the organization’s own advertising also play a role, said Stéphane Paquet, president and CEO of Montréal International.
Still, he says it may be difficult to maintain momentum.
“I think investment will slow down,” Mr Paque said. A recession could cause companies to withdraw their plans, he said. Quebec’s economy has about a 35 percent chance of being hit by a recession, Eric Girard, Quebec’s finance minister, said last month.
Lingering questions about Quebec’s new language law could also affect business decision-making, Mr. Paquet acknowledged.
The Quebec government passed Bill 96 in late May in an attempt to correct the language pendulum, which it says swings too far from the use and acceptance of French in everyday life. The controversial new legislation includes measures to make French “visibly predominant” on business signs and forces companies with 25 to 49 employees to meet French language certification obligations under the same strict standards that previously applied to companies with 50 to 99 employees .
Many business leaders in the province have expressed support for strengthening French, although they warn the new legislation could burden companies with additional costs and complicate their hiring efforts at a time when Canada faces an acute labor shortage. Top executives of 37 Quebec-based technology companies last month called for a freeze on enforcement of the legislation while Prime Minister Francois Legault’s government introduced French language training and other tools businesses need to comply.
Montréal International’s phones started ringing last year when companies started asking questions when the legislation was introduced, Mr. Paquet said. The group organized educational sessions led by the law firm Fasken, after which fewer questions came in. As the bill became law in late spring, inquiries began again.
“We thought it was all over, but apparently it’s not,” Mr Paque said. The organization now connects companies directly with the Office québécois de la langue française (OQLF), which is the government agency responsible for implementing Quebec’s French language charter.
One such information meeting was held on July 13 between representatives of foreign companies and OQLF officials, Mr. Paque said. “What they told me is that after they talked to the OQLF, it’s a lot clearer and they’re reassured.”
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