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Originally published December 25, 2013 at 5:39 PM | Page modified December 26, 2013 at 7:41 AM

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Tech region BlackBerry helped create booms despite firm’s decline

A few years ago, BlackBerry was a smartphone leader; its fall has been nearly as steep as its climb — but the huge downturn doesn’t appear evident in its hometown of Waterloo, Ontario.


The New York Times

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WATERLOO, Ontario — BlackBerry is down, but its hometown is far from out.

Unlike some cities that suffered when a big local business faltered, as Rochester, N.Y., did with Kodak and Xerox, BlackBerry’s backyard of Waterloo is bubbling with economic energy. Technology companies large and small are coming to Waterloo, about 70 miles southwest of Toronto, to recruit BlackBerry’s talent. Several companies are also setting up shop in town.

Google, a presence for nearly a decade, was recently joined by its Motorola Mobility hardware subsidiary. Square, the mobile credit-card-processing service started by Jack Dorsey, Twitter’s co-founder and chairman, opened an office. Cisco said this month that it would create 1,700 research-and-development jobs within commuting distance.

Several startups that left Waterloo for Silicon Valley, Calif., including Thalmic Labs, a gesture-control computing company, have come home.

Because of these companies and the appetite for tech workers from the region’s long-established insurance industry, several analysts suggest that most former BlackBerry workers in Waterloo will find work without having to move.

“The area has a really strong density of tech talent,” said Bryan Power, talent director for Square, which plans to have about 40 employees working in the region by the end of 2014. “We have a long timeline for here. We really want to be part of this community.”

BlackBerry, originally known as Research in Motion, was not the first technology company in the city. But the company’s rise to global prominence turned Waterloo and its larger twin city, Kitchener, from being Canada’s rubber-goods, hot-dog and furniture capital into the country’s high-tech center.

BlackBerry’s rise and the relatively high salaries of its employees drew unusual trappings for a Canadian urban area the size of Kitchener-Waterloo, which has about 320,000 people. Jaguar and BMW dealerships have thrived, for example, as has an Apple store.

A few years ago, BlackBerry was a smartphone leader. Its fall has been nearly as steep as its climb. On Friday, BlackBerry released another grim earnings report, posting $4.4 billion in losses and a 56 percent drop in revenue for its fiscal third quarter. The report was the latest in a string of cringe-worthy quarters from the company, results that have forced BlackBerry to begin laying off 4,500 people, 40 percent of its workforce.

Still, no big downturn is evident in the area.

The company does not generally break down layoffs by region, but Karen Gallant, who runs a program to find local work for jobless tech employees, estimates that from the current layoffs and an earlier round begun in 2012, 3,500 BlackBerry workers have lost their jobs in the two cities. The regional unemployment rate last month was 6 percent, down half a percentage point from a year ago.

Even before the latest round of layoffs at BlackBerry was announced in September, several top technology companies, including Apple and Facebook, held recruiting nights in the area. Some companies have swooped in and tried to woo people to distant head offices.

But Power said Square decided an office in the area would improve the company’s chances of hiring the best talent from the University of Waterloo, which has highly regarded computer science and engineering faculties and is a major part of the attraction for tech companies.

While the jobs are staying in the region, they are concentrating in a different location. BlackBerry’s main office complex, a couple of years old, sits on Waterloo’s most suburban fringe. Little but farms are beyond it.

But many of the newer technology companies in the area, including Google, Square, MappedIn and Motorola, are in former industrial buildings in the heart of downtown Kitchener.

For more than seven years, Derek Phillips worked for Google at a building downtown that was once a tannery. He then helped sell Motorola on the idea of opening an office in Canada. Motorola is slowly leasing more and more temporary offices in a sprawling brick factory downtown that first made rubber boots at the beginning of the 20th century and later produced automobile parts.

Phillips, who is now the engineering director for Motorola Mobility Canada, said the blend of workers in the area was a major draw for the company.

For employers, he said, the competition to hire the best talent is less intense in Kitchener-Waterloo than in many other places, including California, employee turnover is much lower and the community offers services such as Communitech to help with recruiting. And because Canada’s immigration laws are more flexible than those of the United States, tech companies are able to add talented foreign workers to the mix.

For employees, Phillips said, the area offers reasonable housing prices, good schools and other attractions. “I’ve been in Waterloo for almost 20 years now, and I really like the area,” he said.



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