November is turning into a month that Waterloo Region’s tech sector would like to quickly forget — while hoping it isn’t repeated any time soon. In the space of just over a week, several big hitters in a crucial part of our local economy announced significant layoffs that not only negatively impacted many individual lives but raised legitimate fears about the future.
First, Kitchener-based D2L Inc., which makes online learning software, announced it was cutting five percent of its workforce, a move that affected 60 people. Next, Faire, an online wholesale marketplace platform with headquarters in Waterloo and San Francisco, said it was laying off seven percent of its 1,200 employees. Then, Communitech, a Kitchener tech hub that helps start and grow new companies, let go 11 people — 10 percent of its workforce. With the Communitech cuts, it seemed as if an auto shop was laying off mechanics when they were needed most.
Such painful downsizing would be disconcerting enough if it were bucking industry trends. Sadly, it’s mirroring them. So far this year, tech companies have laid off 150,000 people across North America. And Communitech chief executive Chris Albinson says more local tech sector downsizing is likely coming. With the headwinds of a possible recession blowing our way, this is no time for one of the engines driving this region’s economy to go on the blink. It’s supposed to carry us through hard times — not turn into an anchor.
Given the economic as well as political turmoil that’s disrupted the world over these past three pandemic years, no one should minimize the seriousness of the situation we’re caught in. The five tech giants of Silicon Valley — Alphabet, Amazon, Apple, Meta and Microsoft — have seen their market capitalizations collectively drop by 37 percent this year, representing a staggering loss of US$3.7 trillion in their overall value. Have no doubt: The international tech sector is being hammered, and some of those blows are falling in Waterloo Region. That said, there are also reasons to feel confident our local economy, including its tech community, is strong enough to withstand such a battering.
History shows the local economy moves like a roller-coaster, transporting us through exhilarating climbs and scary drops. The manufacturing sector, long considered the cornerstone of the region’s economy, was hollowed out in the ’80s, ’90s and early 2000s as tire makers, auto parts factories and food processors, along with footwear and garment makers, shut down. Thankfully, a local startup, Research In Motion, emerged to make cellphones that revolutionized communications and established this region as a global high-tech Mecca.
Of course, the precipitous decline of BlackBerry, as RIM was renamed, proved a major setback. But it by no means stopped the growth of our tech sector. In fact, many employees who left BlackBerry, which still operates as a smaller company, took their skills, know-how and experience into other local tech firms. The arc of our tech community kept rising upward.
So did other players in this region’s economy. Our manufacturing sector, which employs far more workers than tech, rebounded and remains vibrant. Our financial companies include some of the biggest, most respected names in Canada. The diverse nature of our local economy has kept us above rising recessionary flooding before. It can do it again. And helping it all the way will be our dynamic institutions of higher education. The University of Waterloo, Wilfrid Laurier University and Conestoga College are not only major employers but produce the talent and generate the innovations that will ensure a strong, expansive local economy.
To be sure, the local tech workers losing their jobs are experiencing serious personal upheaval and deserve help. But Communitech offers an online portal for tech companies looking to hire. Even as the industry has contracted, that portal, the Work in Tech platform, has expanded. It currently lists more than 1,500 tech companies across Canada which between them have more than 9,000 job openings. A full two-thirds of those vacancies are in the Toronto-Waterloo tech corridor that added 80,000 new jobs in 2021. Today there are 313,000 tech workers in this corridor. And some local tech firms, such as cybersecurity company eSentire, continue to grow and hire.
Keep all these things in mind if you think we’re headed for a winter of high-tech discontent in this region. A better spring and summer almost certainly await us.
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