Would Blackberry’s demise spell Waterloo’s doom? Unlikely

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Anna Mehler Paperny and Jamie Sturgeon – Global News

To get a sense of just how central a role the company formerly known as RIM plays in Waterloo’s civic psyche, you could start at the city’s homepage: The first image that greets you is a coterie of glossy Blackberrys (Z10s, in case you’re wondering).

Here, Blackberrys take on a sense of patriotic fervour. When Mayor Brenda Halloran urges all Canadians to buy the company’s products out of civic duty, she isn’t joking around.

In many ways, the company dreamed up by Mike Lazaridis and Jim Balsillie has put the Canadian city on the map, making it enough of a tech hub to attract the likes of Google and spawn a gaggle of startups.

So when Blackberry put itself up for saleMonday, many in the region were rattled. If the embattled mobile giant craters, what happens to its host city?

But data over the past decade indicate the region’s economy, while impacted by Blackberry, is by no means tied to fluctuations in the company’s fortunes.

Unemployment and participation rates, for example, are much more closely correlated with the ebb and flow of the global economy – regional manufacturing took a sucker punch during the recession, for example. And the city’s social services have been bracing for the closure of a Maple Leaf plant, which will affect 1,200 workers by the end of next year.

“It was my own choice to be self-employed. I love it”

Tony Zhang is living proof there’s life after RIM.

The 43-year-old Chinese expat, who moved to attend a local university in the 1990s, worked as a program manager in RIM’s carrier relations unit for North America.

He was laid off in September of last year. And no amount of psychological preparation was enough.

“For me, my life has been turned upside down,” he said.

But his tone’s upbeat: Still living in Waterloo, he’s started selling insurance for Desjardins.

“It was my own choice to be self-employed. I love it; it’s totally different from what I did for the past 10 years.”

Was compensation was comparable? “I wasn’t just looking for money. I knew it wouldn’t be the same being self employed.”

Zhang and his wife have agreed to give the position two years before they consider moving, possibly taking their two kids – 9 and 2 – to Toronto or Ottawa.

It isn’t out-of-work developers that Waterloo’s food banks are worried about: It’s manufacturing workers in a town that’s seen much of its manufacturing sector crumple. They don’t have the education or training to make in a high-tech workplace, so they’re often stuck working multiple jobs and still unable to make ends meet.

“There’s been an increase in the Ontario Works caseload, there’s been increased demand for services for families,” said Nancy Bird, with the region’s United Way. “There’s a lot of people who, even after going through retraining programs, are still struggling.”

RIM trying to “drive the Q10 product – which is a great product – try to drive that to the next level”

While the city’s an enthusiastic Blackberry booster, it’s adamant Waterloo can make it on its own.

Blackberry’s “share price has dropped over the last several years, gradually, but our unemployment rate has remained quite stable, actually,” notes Justin McFadden, the city’s Director of Economic Development.

“There’s definitely some diversity to the economy that certainly allows us to absorb fluctuation in different areas.” And whatever happens, he thinks tech will “absolutely” be a main driver of the economy.

That said, McFadden hastens to add he doesn’t think the company’s going anywhere soon.

“I think we’re certainly getting ahead of ourselves to think about RIM leaving,” he said. “I think what they’re looking at right now is … they’re basically taking a deep look into the options that company has, trying to strengthen it and make it more successful, try and drive the Q10 product – which is a great product – try to drive that to the next level.”

The attrition of high-earning RIM employees hasn’t yet dented real-estate values, which have seen similar gains in prices as the rest of the country in recent years.

Amid Blackberry’s cull of 5,000 jobs last year, the average price for a home in the region increased 3.3 per cent, to $311,006. Volume was flat (down 0.7 per cent).

“Prices in in Kitchener-Waterloo have pretty much increased on a steady basis – with no major peaks or dips for the past decade,” said Tania Benninger, a spokeswoman for the Kitchener Waterloo Association of Realtors.

She doesn’t expect neighbourhoods to lose value as a result of the company’s flagging fortunes.

“A lot of people presume that RIM, or BlackBerry, is the be-all and the end-all in this community. It really isn’t.”

Many former RIM employees have stayed, joining startups who latched onto the tech giant’s coattails in the boom years and went on to create viable businesses of their own.

“A lot of people presume that RIM, or BlackBerry, is the be-all and the end-all in this community,” Benninger said. “It really isn’t.”

Still, there are niggling indications the company’s crumbling fortunes are taking a toll.

The latest new home prices index reading for the region trended down 0.8 per cent in May – one of  three markets to post a negative reading and the first in Southern Ontario since the recession.

“I don’t think it’s going to create an economic crisis.”

Communitech, a not-for-profit that acts as an all-purpose tech hub for the region, figures BlackBerry accounts for just over a third of the regional tech sector’s $30 billion in sales. There remain software giants Open Text, Com Dev, SAP and Electronic Arts – even Google – who soak up the available supply of engineers and computer scientists leaving BlackBerry.

“There’s a lot of anchor-type tenants,” said Communitech CEO Klugman. “BlackBerry is the largest, but there’s a thousand trees in this forest.”

Ultimately, argues University of Waterloo School of Planning professor Dawn Parker, the question isn’t whether Blackberry will drag Waterloo down with it, but whether Waterloo can market itself as a place you’d want to work without the tech titan. That means transit. And nightlife.

“What will happen in the future has less to do with what happens to RIM and more to do with how successful the region is in continuing to build on that momentum and continuing to attract new firms,” Parker said.

“The question is, are we perceived as having the employment base? Are we perceived as having the amenities and quality of life that’s going to support that employee base?

“It would definitely have an impact if RIM has a major change in activity or shuts down, but this is an incredibly resilient region,” she added. “I don’t think it’s going to create an economic crisis.”

How closely tied are Waterloo’s fortunes to Blackberry’s? The interactives below chart a decade of unemployment rates, and map a 10 years of change in median family incomes in the Kitchener-Waterloo area:

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