From fledgling startup to foreign-owned subsidiary, Robert Tong has spent 30 years navigating the waters of Waterloo Region’s tech sector.

Starting with Cambridge-based satellite company COM DEV in 1981, Tong joined Dspfactory, a spinoff of hearing-aid leader Unitron in Kitchener, in 1999. He grew the company from $250,000 to $15 million in annual sales by 2004, when it was acquired by U.S.-based AMI Semiconductor. AMI was then purchased by ON Semiconductor, a multinational based in Phoenix, in 2008.

As vice-president of ON’s medical division, with operations employing about 50 in Waterloo and 140 in Burlington, Tong has come to know the unique aspects of heading up Canadian operations for a parent company based abroad.

On the upside, he can tap into international talent and capital pools within ON, an American-based company with worldwide operations. On the downside, there can be a sense of disconnect from other Waterloo Region companies, who assume they have nothing to gain from a relationship with a foreign-owned local outpost.

In a recent chat with Communitech, Tong shared his insights and expressed a desire to bridge the gulf that sometimes opens between Canadian and foreign-owned businesses.

Q – You’ve worked with a number of companies of different sizes and ownership structures. What’s the biggest revelation you can share from those 30 years?

A – One of the things I would say is most important for us is, in Canada, we win because we are innovative with our products and our technical ideas.

Canada does not win on manufacturing prowess or low cost or efficiency; we’re not as hard-working as our U.S. counterparts; we don’t put in as many hours and we are a little bit more laid back. But we really win on innovation.

A big part of why I believe we win on innovation is, Canada is much more diverse and there’s a high degree of acceptance of different types of people, whereas the U.S. and some of the European countries tend to be more homogeneous.

Having that open attitude of accepting many people from different cultures and backgrounds allows us to be more innovative than otherwise.

Q – You acknowledged what many thought leaders have been talking about recently, which is a productivity lag in Canada. Is this an urgent issue that Canada needs to address?

A – I think so. I think productivity is something that’s always going to be important.

I don’t think our people here are necessarily less capable of producing more. We tend to be a little bit more laid back than some of our competitors, like in Korea. You go see Korea and you really see how competitive these people are, or China or even the U.S.

Five years ago, the Canadian dollar exchange rate more than offset whatever productivity gap there was.

A friend of mine who was a VP of a semiconductor company in the U.S. often said Canada and the U.S. are at par in productivity when you take the exchange rate into consideration. If you eliminate the exchange rate, then we will be behind the U.S., and he’s right. We are struggling.

And I see that. Before, when I was Dspfactory only, it wasn’t easy for us to hire talent from outside of our own country, because you don’t have the legal entity and the infrastructure in place. So, inevitably, we’re stuck just hiring from within. But ever since we’ve become AMI and ON Semiconductor, hiring talent anywhere in the world becomes easy.

I can hire in Korea, in Taiwan, in China, in the U.S., in Europe, wherever I want, and under that scenario, obviously I’m always looking at where is the best place to put my R and D dollars. I have to say it’s a really hard choice to try and hire in Canada; to justify why I want to be in Canada as opposed to the rest of the world.

Q – So how do you do that? How do you maintain relevancy in Canada as part of this large multinational?

A – Well, we’re still relying on innovation. The sole justification for our existence here in Canada today is because we believe we out-innovate our counterparts in the U.S. or wherever.

If it wasn’t for that, there would be no reason for us to exist in Canada. I have no customers in Canada; I have no sales in Canada. If the productivity’s not better, why would I be in Canada?

So, we’re still really banking on the innovation piece, but I would like to be able to say there’s more than just innovation.

Cost of living is another problem for us. We could never attract people from the U.S. to come and work here because the cost of living here is significantly higher.

I didn’t believe that; I actually even argued with our corporate HR people who manage expats and the cost-of-living adjustment, and they’d always come back with this basket of goods that says we are 15 to 20 per cent higher in cost of living compared to the U.S., and I’d say “No, no, no, no.”

Then I started spending more time in Phoenix and said ‘Oh my God, everything here is cheaper, significantly cheaper.’ And I am now convinced that the U.S. has a significantly lower cost of living, taxes aside. Once you throw in the tax equation, it makes it impossible to attract people from the U.S. to come and work in Canada.

Q – So in your view, what can Canada and Waterloo Region do to make life easier for you; to make things better for you in running this operation?

A – That’s a tough one. I don’t want to try and convince the government to change the tax laws, because that’s not going to happen. With the standard of living, that’s not going to happen.

But I think there are a lot of things that appeal to us who live in Canada. I think the quality of life is different. We do have a better quality of life here.

The fact that we’re a little bit more laid back means that the competition is not as intense, the personal competition, so again, that adds to the better quality of life.

We have a bit more of a social conscience in Canada than our counterparts in the U.S., and I think that appeals to a certain type of people.

So, in some way, I think it’s important for us to be able to accentuate our strengths and our attractiveness for being in Canada.

Q – So the trick is not to try to be more like the Americans, but to capitalize on the strengths that we have, and the upside of these things that others may view as a downside?

A – Yes.

You know, we do have a first-class health care system, despite how we complain about it ourselves, which the U.S. doesn’t have.

So I think there will be people who will be attracted to these things who would be willing to come, but if we always focus on the fact that we have a higher cost of living and more taxes and all that, then people will say, why do I want to come?

Q – So do you think we could be doing a better job of marketing Canada based on quality of life?

A – Not just quality of life, but a whole bunch of things; you know, our whole philosophy to life, our social view of the world.

Q – We often hear that tech workers will leave Canada for Silicon Valley, where the weather is great but the cost of living is high, but then return to raise their families due to that quality-of-life advantage. Has that been your experience?

A – I think younger people will always be more adventurous to go and try things, but we have a team in Santa Clara, Calif. and you try to get those guys to move up here? No chance. It doesn’t matter what you tell them about the disadvantages of being in California.

They do have a culture there that attracts people who like to work hard, play hard and really embrace the entrepreneurial culture there. One advantage is that if you don’t like one company, 15 minutes away you’ve got another one. Here, often you have to relocate, so it’s tough to try and attract people from California.

And they also all feel that if they work hard, they will get somewhere, and I think they have a stronger feeling of that, whereas people here either don’t care as much about that, or they don’t feel that that possibility is as abundant for them.

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About The Author

Anthony Reinhart
Director, Editorial Strategy
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Anthony Reinhart is a veteran journalist who left the Globe and Mail to join Communitech in 2011. Tony has covered everything from crime, politics and courts to business, the arts and sports, and his writing has won numerous journalism awards. He is Communitech's Director of Editorial Strategy and senior staff writer.