In 1971, Ontario Premier William Davis cancelled Toronto's plans for a Spadina expressway that would cut through the heart of the city, and pledged to invest in mass rapid transit and its technology. Four decades on, one legacy of that decision is a Toronto engineering hothouse – a unit of a French conglomerate – that develops automated signal and control systems for global transit networks. Michael MacKenzie heads this pioneer in communications-based train control (CBTC), which has seen several ownership shifts from the original provincial investment. He says the urban rail arm of Thales Canada – with $300-million in annual sales – remains a Canadian champion, and aims to double its business in three to four years.
Can the existence of your company be attributed directly to the Spadina expressway's cancellation?
I couldn't say. But I could certainly trace the lineage of this company back to the willingness of the Ontario government to actually invest in innovation. It gave the handful of engineers who started the company the opportunity to really develop something that is now the industry standard.
The urban centres around the world are the beneficiaries of that decision. This technology has dramatically improved the ability of people to move about their cities in so many cases. In China, where we have a large presence – in Shanghai, Beijing and other cities – you couldn't move those volumes of people with standard technology.
Are you in the right growth areas?
As of this morning, we are in India. We just won a significant contract in Hyderabad. India was one of our strategic regions to penetrate this year. We are resignalling a line there and it is a great opportunity to install what will be the first CBTC system in India. That market is exploding with the infrastructure investment plans and forecasts for urban growth. That will be the next China in terms of our industry.
This year we were able to launch two projects in Brazil, which was another of our strategic targets. We have long had a presence in the Middle East, as well as in Asia outside China – although Europe is a market that is questionable at present because of the economic climate.
Is this testimony to the value of state investment in research and development?
In our origins, we owe a lot to government investment to get appropriate projects started and we are beneficiaries of small levels of R&D [research and development] support from various governments – more could be done there.
We also see a number of countries looking for more localization of content. That will be a challenge for us and all our competitors. Frankly we are slightly advantaged that we do have the broader Thales Group company. So with its presence in 50 countries, we often have a significant local presence already.
But given that you are French-owned, can you say you are a Canadian company?
We are absolutely a Canadian company. Thales has in the past 21/2 years invested a great deal of energy to become one company in Canada, instead of three discrete divisions [urban transit, defence and aerospace]. We share a lot of services, and the management team is one team. We look at how we can leverage from one another, including in technology. That all helps from a Canadian company perspective.
And we have a huge advantage in the multicultural nature of Toronto. We are represented by over 30 cultures in this building and when we go to market across the globe, we bring people of the same culture, who understand the language, as part of the project team.
Couldn't this just be absorbed by the French parent and we will lose this Canadian-made capability?
I don't see it that way. In reality, we are a very successful business, we are growing, and we have demonstrated our ability to continue to evolve the technology in this industry and be a leader. We are very well respected inside the Thales Group. In fact, there is a move to further enable this organization through organizational shifts.
While we do have the benefit of the larger group, we get to operate quite autonomously in the urban rail business. I do have reporting lines into headquarters and I do need approvals for various decisions, but we are generally asked for our recommendations and those are taken.
Just what do you do here?
We have 600 engineers here in Toronto, and what they do is primarily to develop the product itself through R&D, as well as design the solution, because every customer's location is very unique. The product needs to be customized. Of our total 850 people, everyone is highly skilled. These are very complex systems, the projects are highly complex, and tend to be three to five years long.
So this is an unknown gem?
Absolutely. One of my early observations when I came here [in early 2011] was we did not have as much of a domestic presence as I felt we could or should, given that we are headquartered in Toronto. To that end, we have made significant progress. In the past 18 months, we have won a project in Edmonton, and we have one going on in Montreal.
But have you scored any wins in hometown Toronto?
The Scarborough Rapid Transit [line, which began service in 1985] was one of the first, along with SkyTrain in Vancouver. Both were done at about the same time. We do ongoing work with the Toronto Transit Commission, and we are installing various systems on the existing lines. We are looking forward to the [transit] expansion in Toronto and how we can play a part. We have the technologies to support the plans, no matter what they end up being.
Do you drive to work?
I do. To be honest, I never thought twice about driving to work till I started working here. Since I've been in this industry I almost feel guilty taking a car to work. Having exposure to some of the the very, very aggressive transit-development plans around the world, I can only hope Toronto follows suit and quickly comes to a resolution and builds out this city.
Is transit a competitive tool?
It brings huge value to any urban centre that makes the investment. We look at population growth everywhere across urban centres, particularly in developing countries but also in Europe and North America. Addressing that has huge impact on productivity and, I think, quality of life.
Do your signalling systems require actual people to be driving the train?
Our system can run fully automated, but we have a number of clients who have to have on-board personnel, such as required under certain labour restrictions. We have places where, culturally, it is preferred to have someone in attendance on board. But a number of clients run fully automated; Vancouver is one place where there has never been a driver on the train. At 4 a.m., the trains start up by themselves and they just go to work.
Vice-president and general manager of transportation solutions, Thales Canada Inc., Toronto.
Born in Windsor, Ont., in May, 1963.
Industrial engineering degree, University of Toronto.
Joined IBM Canada out of university.
One of the founders of Celestica when it was spun out of IBM in the mid-1990s.
Became Celestica's vice-president, global operations.
In early 2011, joined the transit arm of Thales Canada, a subsidiary of Paris-based Thales Group SA.