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Near-record $1.7-billion poured into Montreal in first half of 2022

Montreal’s 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 continuing COVID-19 pandemic, but a slowdown looms in the months ahead amid the prospect of recession. Quebec’s most sweeping language overhaul in nearly half a century could also scare some businesses away.

Non-Quebec companies made $1.74-billion worth of investments in Canada’s second-largest city through the first six months of 2022 as they launched a record 57 projects and created some 4,700 jobs, according to the latest figures from Montréal International, the city’s investment promotion agency. Thirty one companies established a subsidiary in Montreal for the first time.

Last year over the same period, corporations committed $1.86-billion for 40 new projects. But Montréal International, a public-private partnership partly funded by the Quebec and Canadian governments, counts only investments it facilitated, meaning the absolute numbers could be much higher.

The Montreal region, known for its substantial knowledge and research base, has drawn particular attention from global investors over the years for its expertise in artificial intelligence (AI) and deep learning. Companies like McKinsey & Co.-owned data analytics company QuantumBlack and aerospace giant Thales SA are just two companies to set up AI operations in the city in recent years.

This year, health and life sciences companies also generated a notable chunk of investment activity, with 7 projects launched worth a net $321-million. That’s a higher amount in 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 isn’t yet included in the numbers.

Silicon Valley-based Circle Medical Technologies is among the firms expanding in the Montreal region. The company, a specialist in virtual telemedicine, currently has 25 employees in the city with plans to grow that number to 360 over the next three years. It has already made several hires in software engineering, product design and operations management, said George Favvas, a Montrealer who co-founded the company and now runs it as chief executive.

Mr. Favvas said his leadership team initially thought Montreal would just be an office supporting the company’s San Francisco base. Now he says the city’s strong labor pool and technology ecosystem has convinced him to build out operations there in tandem with its US headquarters.

“We see Montreal is almost a second head office or a satellite head office,” he said. “There’s a range of roles where we’re open to having the candidate work, either in Montreal or in San Francisco, on equal footing.”

The growth underscores the diversity of Montreal’s economy, which has a lower unemployment rate than Toronto, Vancouver or Calgary at 4.8 per cent. Government incentives and the organization’s own promotion work also play a role, said Stéphane Paquet, Montréal International’s president and chief executive.

Still, he says it could be difficult to keep the momentum going.

“I think investment will slow,” Mr. Paquet said. A recession could prompt companies to pull back their plans, he said. Quebec’s economy has about a 35 per cent chance of being hit by recession, Eric Girard, Quebec’s finance minister, said last month.

Lingering questions about Quebec’s new language law could also factor into businesses’ decision-making, Mr. Paquet acknowledged.

The Quebec government passed Bill 96 in late May in a bid to correct a language pendulum it says is swinging too far away from the use and adoption of French in daily life. The controversial new legislation includes measures to make French “markedly predominant” in commercial signage and compels companies with 25 to 49 employees to meet French-language certification obligations under the same stringent standards that previously applied to companies with 50 to 99 employees.

Many corporate leaders in the province have expressed support for reinforcing French, even as they warn that the new legislation could saddle companies with additional costs and complicate their hiring efforts at a time when Canada is facing an acute labor shortage. Top executives with 37 Quebec-based technology companies last month called for a freeze on the implementation of the legislation until Premier François Legault’s government has put in place French-language tutoring and other tools businesses need in order to comply with it.

Montréal International’s phones started to ring last year as companies began asking question when the legislation was tabled, Mr. Paquet said. The group organized education sessions led by law firm Fasken after which fewer questions came in. Since the bill became law in late spring, the queries started again.

“We thought it was over but obviously it is not,” Mr. Paquet said. Now the organization is putting companies directly in contact with the Office québécois de la langue française (OQLF), which is the government agency responsible for enforcing Quebec’s French language charter.

One such information meeting was held July 13 between representatives of foreign-based companies and OQLF officials, Mr. Paquet said. “What I am told is once they’ve talked to the OQLF, it’s much more clear and they are reassured.”

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