• Superior Quality Workforce

• Availability of Skilled Labor

• Low Labor Costs

• Low Labor Costs (cont’d)

• Competitive Labor Costs

• Low Employer-Sponsored Benefits

• Low Employer-Sponsored Benefits (cont’d)

• Low Payroll Costs

• Rising Productivity

• Low Labor Turnover

• Significant Reduction in Work Stoppages

• A Highly Educated Workforce

• University Excellence

Table of Contents

Superior Quality Workforce

Knowledge Workers — World Rank*

Canad

aU.S

.

Franc

eU.K

.

Germ

any

Italy

Japa

nIn

dex

1st

3rd

8th 20th11th 18th 22nd

• The overall skill level of Canada's workforce ranks high among competing countries.

* Tertiary education enrollment standing among the 53 countriesconsidered in the Global Competitiveness Report, 1998

Availability of Skilled Labor

• Plus, anecdotal evidence abounds that a shortage of capable workers is a more serious problem in the U.S. than in Canada, and that it is on the rise.

- For example, Coopers & Lybrands' “Trendsetter Barometer (March 1999)” reports that “nearly two thirds of fast track technology businesses have come up short in their hiring of IT workers for their U.S. operations over the past 12 months.”

Availability of Skilled Labor*

Germ

any

Franc

e

Canad

a

Japa

nU.S

.Ita

lyU.K

.In

dex

3rd

8th 15th 16th

23rd26th

34th

* Standing among the 47 countries considered in the World Competitiveness Yearbook, 1999

Low Labor Costs

* Figures are for 1997.

Source: U.S. Bureau of Labor Statistics, 1998

• A competitive labor market is keeping wage settlements down.

Cost of Labor — Manufacturing*

28.28

19.37

18.24 17.97 16.7416.55

15.47

Germ

any

Japa

nU.S

.

Franc

eIta

ly

Canad

aU.K

.

$U.S

. per

hou

r

Low Labor Costs (cont’d)

• Canada has the second lowest manufacturing wages in the G-7.

Richard Peabody, PresidentHarris Farinon Canada

Occupational Wages — Knowledge Workers, 1998

Full-time, full-year wages* ($U.S. PPP**)

* Mean earnings are shown for Canada, median earnings for the U.S. Data has beenconverted to full-year assuming a 50-week work year.** Purchasing power parity

Source: IC calculations based on Statistics Canada and U.S. National Science Foundation

"Our costs per engineer are roughly half of what they would be in the United States." [combination of low salary and wage costs, as well as Canada's and Quebec's superb R&D tax treatment ]

Engineers, Architects & Surveyors

Mathematicians & Computer Scientists

Natural Scientists

$49,400

$46,900

$41,400

$37,068

$34,710

$33,016

• Between 1992 and 1995, Canada registered the smallest total increase in hourly manufacturing compensation costs among G-7 countries

Competitive Labor Costs

Compensation per Hour (National Currency Basis)

* Source: US Bureau of Labor Statistics, Monthly Labor Review (November 1996), p. 104

90

95

100

105

110

115

120

Can

ada

U.S

.

Ger

man

y

Fra

nce

1992

1993

1994

1995

Low Employer-Sponsored Benefits• Employer-sponsored

benefits are lower in Canada than in the U.S. Total payments for Canadian employer-sponsored plans and time not worked are 18.0% of salary and wages compared to 31.7% in the U.S.

-Lower medical insurance premiums and vacation and holiday payments are the prime reasons.

Statutory Benefits as a % of wages — 1998

G-7 Comparison

Canada

U.K.

U.S.

Japan

Germany

France

Italy

4 8 12 16 20 24 28 32 36 40 44 48 52 56 60

Source: KPMG Management Consulting, 1999

Low Employer-Sponsored Benefits (cont’d)

• Payroll taxes are lower in Canada than anywhere else in the G-7.

* Employer-paid statutory benefits and wage-based taxes include: premiums forunemployment insurance plans; public medical plan premiums; public pension plancontributions; premiums for workers' compensation insurance; and other payroll taxes.

*KPMG Management Consulting, 1999

Source: KPMG Management Consulting, 1999

Province - State Comparison

AlbertaB.C.

New BrunswickSaskatchewan

Nova ScotiaP.E.I.

OntarioManitoba

North CarolinaNewfoundland

MinnesotaCaliforniaVermont

MassachusettsPennsylvania

New JerseyWashington

ColoradoTexas

Quebec6 8 10 12

• The latest OECD report found Canadian payroll costs as a percentage of the GNP to be the lowest among all G-7 countries.

Low Payroll Costs

* Source: OECD (1996)

Payroll Taxes as a Percentage of GNP (1994)

0

2

4

6

8

10

12

14

16

18

20

Canada UK US Japan Italy Germany France

• Canadian productivity is rising, especially in the manufacturing sector.

• Canadian unit labor costs have fallen sharply since 1992 and are among the lowest in industrialized nations. Significantly lower than in the U.S.

Rising Productivity

* Source: US Bureau of Labor Statistics, Monthly Labor Review (November 1996), p. 104

Unit Labor Costs ($US)

0

20

40

60

80

100

120

Canada U.S. Germany France

1992 1993 1994 1995

Low Labor Turnover

• Workers are less "footloose" in Canada than in the U.S.

- Lower turnover rates are associated with reduced training, hiring and separation costs.

Lindo Lapegna, PresidentTestori Americas Corporation

“The high productivity and low turnover we have experienced over the past 14 months have more than fulfilled our expectations. And our decision to expand is a direct result of that.”

*U.S. data is based on the Current Population Survey (February 1998). Canadian data is an annual average. **FIRE is Finance, Insurance and Real Estate in the U.S. In Canada, FIRE also includes Leasing.Source: U.S. Bureau of Labor Statistics and Statistics Canada

Average Job Tenure by Industry Group — 1998*

0 5 10 15 20

All IndustriesPublic Administration

ServicesFIRE**Trade

ConstructionManufacturing

Agriculture

Years with Current Employer

Significant Reduction in Work Stoppages

0

2,000

4,000

6,000

8,000

10,000

12,000

1976 1986 1990 1992 1993 1994 1995

Source: Department of Finance, Economic and Fiscal Reference Tables. August 1996, p.72.

Time Lost in Work Stoppages, Selected Years (thousands of person-days)

• Canadian Labor-Management relations have become markedly better over the past 2 decades.

• Incidence of strikes and lockouts has declined dramatically in recent years:

• From 1986 to 1996, the number of work stoppages per year fell by almost 60%.

• Time lost due to work stoppages has dropped by almost 70% since 1990.

• Clear trend toward fewer industrial disputes and fewer days lost due to work stoppages.

• Canadians are highly educated– 47% of Canadians

over 25 have a post-secondary education

– 30% have a university degree

A Highly Educated Labor Force

Percentage of the Population 25-64 Years of Agewith Tertiary Education, 1995

0

10

20

30

40

50

Canada US Norway Sweden Germany UK France

UniversityDegree

Non Universitytertiary

Source: OECD

• Canada’s 67 universities and colleges produce more than 25,000 graduates per year in math, engineering, and pure and applied sciences

• The U.S. Gourman Report scored 10 Canadian electrical engineering programs in the top 22, and 18 in the top 40 of North America

RANKING OF ELECTRICAL ENGINEERINGUNIVERSITY PROGRAMS

Source: 1998 Gourman Report, U.S.

Institution

M.I.T.StanfordBerkeleyIllinois› TorontoUCLA› McGillCornell› U.B.C.› McMasterPurdueSouthern CaliforniaPrincetonMichiganCarnegie MellonPolytechnic-Brooklyn› Queen’s› Alberta› Calgary› École Polytechnique› Manitoba› Saskatchewan

1234

5

6

789

101112

1

2

34

56789

10

4.924.914.884.864.864.824.824.814.814.804.794.774.764.754.744.734.724.724.714.704.704.70

Score U.S.Rank

Cdn.Rank

University Excellence