TORONTO—Ontario’s Liberals are handing $220 million to high-tech giant Cisco Canada over the next decade.
Premier Kathleen Wynne signed a 10-year deal with Cisco that she said will add up to 1,700 jobs and expand the company’s current Ontario workforce to 3,000 over the next six years and 5,000 within a decade.
It’s a big blow to Ontario’s hard-hit manufacturing industry, which also saw Heinz announce it would close its plant in Leamington, Ont., costing another 740 jobs.
Each of these companies received government subsidies prior to closing up shop.
“It’s very important to understand that jobs like these spawn other jobs,” Wynne said from Cisco’s downtown Toronto offices.
“There are other jobs that are required to support this kind of high tech, so I believe that we have a bright future because of creating hubs like this.”
Cisco, which sells routers, switches, software and services to corporate customers and government agencies, said it’s investing up to $4 billion in Ontario over the next decade.
There are provisions within the agreement that “tie job creating and retention to performance measures,” Wynne said.
“It’s very clear to everyone that the expectation is that that money is contingent on the jobs being created and maintained.”
Cisco Canada president Nitin Kawale said it will create high-value jobs that will stimulate Ontario’s economy.
“We invest in Ontario because the province produces smart young graduates,” he said.
“Ontario has a stable economy and Ontario has talented, innovative and hard-working people.”
But the Progressive Conservatives say they oppose such “corporate welfare.”
“This is nothing more than another photo op for Kathleen Wynne and the Liberals,” said Tory finance critic Vic Fedeli.
“Spending about $130,000 a job is no way to create employment in Ontario. Buying jobs is not the way.”
Wynne defended the government cash to Cisco, whose U.S.-based parent company earned $2 billion in the last quarter.
The Heinz processing plant in Leamington, where entire families worked, is a different story, she said.
“It’s a company that was in a different kind of transition and had made a business decision,” Wynne said.
“This is a situation where there was an opportunity to move forward and a company that was interested in taking advantage of the business climate in the province.”
“It pains me when we lose jobs, but the reality is there are businesses that are in transition,” she added. “We are moving from a different kind of manufacturing base to advanced manufacturing.”
Investments should be made, but the Liberals have a poor track record when it comes to ensuring the jobs stay in Ontario, said New Democrat Gilles Bisson.
Two years ago, former premier Dalton McGuinty gave $4 million to Novartis, he said. Now the pharmaceutical company has announced it’s closing its Mississauga plant.
“How many times have we seen this government say there are guarantees in this agreement that are ironclad, we’re going to make sure that we have the jobs,” Bisson said. “And the jobs end up leaving at one point.”