FedDev Ontario 101, March 2025

Fueling economic development in southern Ontario

FedDev Ontario at a glance

FedDev Ontario’s evolution

Organizational structure

Nancy Gardiner, President

As the Deputy Head of the Agency, the President is responsible for its overall strategic direction to deliver on the Minister’s mandate, and is supported by the following leadership team:

Home to diverse subregions comprised of 289 communities

Toronto and surrounding communities – a key driver of Canada’s growth and knowledge economy strengths.

Kitchener-Waterloo and Ottawa – cities with sectoral strengths in tech and innovation.

Southwestern Ontario – well-linked opportunities to foster future growth (e.g., clean technology in Sarnia, automotive sector in Windsor and health sciences in London).

Eastern Ontario – unique local assets and opportunities (e.g., Belleville’s packaging manufacturing and food processing, Peterborough’s clean tech and water purification strengths).

Small and rural communities – facing diverse opportunities and challenges (e.g., Kincardine and Carleton Place).

Indigenous communities – First Nations, Inuit and Métis people make up a population of approximately 253,000 in southern Ontario. There are 33 reserves in southern Ontario, including Canada’s two largest First Nations reserves; Six Nations of the Grand River and Mohawks of Akwesasne.

FedDev Ontario - catchment area and census divisions

Home to the Greater Toronto and Hamilton Area, which accounts for 20% of Canada’s population (July 1, 2024).

Around 3.6 million live in small and rural communities (~25% of the population).

The region is a key driver of Canada’s growth

• 39% of Canada’s GDP (~1.1T in 2023)
• 35% of Canada’s goods exports in 2024 ($252.3B)
• Leads Canada’s Venture Capital landscape with over 32% of VC dollars going to Ontario-based firms in 2024
• 35 Post-secondary Institutions in southern Ontario and some 70,000 annual science, technology, engineering and mathematics (STEM) graduates
• Attracts over 43% of all newcomers to Canada (~30% to the Greater Toronto Area (GTA) alone)
• Nearly 45% of Canada’s manufacturing output and 47% of its exports
• More than 130 business accelerators, incubators and innovation hubs
• More than 500K firms and home to 33 of 50 fastest growing companies in the country
• Strengths in Automotive (~26% of Ontario’s exports in 2024), Aerospace, Agri-Food, and Life Sciences, as well as North America’s second largest Financial Services and ICT clusters. The region also boasts growing footprints in emerging growth areas of Electric Vehicles, Artificial Intelligence (AI), Fintech, Crypto/Blockchain, Edtech, Internet of Things and Big Data

The region’s economy

Manufacturing is an important contributor to Ontario’s GDP

• Manufacturing accounts for 11% of the province’s economy and represents 45% of Canada’s manufacturing sector (2023)
• However, growth in this sector has been stagnant for about 20 years and its share of the economy has declined 41% since 2005
• Important transformations are underway, including the shift to EV production, greener energy production, and the emergence of AI

Knowledge-intensive services, including information and communications technology (ICT), finance, professional services (e.g. management consulting, legal, accounting, engineering services) and life sciences are increasingly fueling growth

• Employment in life sciences and tech grew faster than employment in the overall economy in eight out of the last ten years
• 38% increase in Tech jobs between 2014 and 2024; almost 66,000 new jobs added since 2020

Regional economic considerations

Housing affordability

According to Weekly Housing Affordability Metrics (WHAM), only 9 out of 51 Canadian markets were classified as affordable in January 2025, compared to 41 in 2005. Ontario accounted for 10 of the 17 markets categorized as having extremely limited homeownership accessibility.

Interprovincial outmigration

An increasing number of Ontarians have left the province (112,000 in 2022-23); double the number from 2000-01. ~70% of those who left are 39 years old or younger.

Weakening near-term outlook

Ontario is now projected to see a 0.2% contraction in its GDP in 2025 (BMO, March 2025) given the ongoing geopolitical challenges and the imposition of tariffs by the U.S.

Ontario-U.S. economic relationship

Deep economic ties

Canada and the U.S. share one of the world’s closest economic relationships, with the U.S. accounting for ~77% of Ontario’s domestic exports ($195B in 2024).

Jobs & growth driver

Trade with the U.S. supports up to 1 in 5 Ontario jobs, driving regional GDP and prosperity.

Border connectivity

Proximity to U.S. cities (e.g., Detroit, Buffalo) enables daily commutes, short-term migration, and business ties. Ontario also has a strong trading relationship with bordering states in the Great Lakes Region.

Energy's defence links

Ontario is a critical energy supplier to the U.S. and is home to over 50% of Canada’s defence industry, supporting bilateral security cooperation.

Tariffs

U.S. trade actions pose challenges for southern Ontario’s economy and could harm the region’s near-term outlook, given the highly integrated nature of the region’s manufacturing base.

Regional impacts of U.S. tariff measures

While the U.S. tariffs on Canadian goods will severely disrupt many industries integral to the southern Ontario economy, including machinery, food and beverage, and plastics and rubber manufacturing, two industries expected to be the hardest hit include:

• Automotive manufacturing - Ontario’s largest export sector employing over 100,000 workers is highly vulnerable due to its deeply integrated supply chains, which in turn leads to a reliance on U.S. exports. Tariffs could deter investment, increase supplier costs, and trigger layoffs, plant shutdowns, or closures.
• Steel and aluminium - Southern Ontario is home to two of Canada’s three largest steel producers which may see job losses, delayed investments, and higher consumer prices due to tariffs, as well as a significant number of metal fabricators and suppliers. This industry is concentrated in high value products and feeds several industries such as automotive, potentially creating cascading effects through the regional economy.

Broader Impacts:

• Uncertainty has already dampened investment, with SMEs likely to delay expansion or hiring in the near term and many prospective FDI opportunities paused.
• A prolonged period of tariffs or trade-related uncertainty could push FDI and manufacturing to the U.S. to avoid trade barriers.
• The current situation has highlighted structural issues that need to be addressed to increase the competitiveness of the region’s SMEs (e.g., productivity improvements, etc.) and trade diversification (including internal trade).

FedDev Ontario plays key roles for the federal government in the region

• Co-investor
• Convenor
• Champion
• Pathfinder

FedDev Ontario’s investment focus

Key areas of focus:

• Growth companies: projects that accelerate business development and growth.
• Technology: projects in cutting-edge sectors.
• Industrial transition: projects that support change in traditional sectors to adopt new technologies and other innovations to improve their competitiveness and build new opportunities.
• Broad-based economic growth and regional coverage.

The Agency is also prioritizing the following sectors:

• Housing manufacturing innovation: To build more homes, faster.
• Artificial intelligence: To help firms commercialize AI products and drive AI adoption across key economic sectors.
• Automotive: To strategically position the region’s auto suppliers for the industry’s future, including its transition towards cleaner and zero-emission vehicles.

FedDev Ontario’s investments will help SMEs:

• Grow and scale operations
• Pursue new export market opportunities
• Unlock productivity through technology adoption and digitization
• Accelerate commercialization of new products
• Green their operations

More broadly, the Agency’s investments help the southern Ontario economy through:

• Job creation
• Anchoring companies in communities
• Community diversification
• Broad-based economic participation

The Agency also supports not-for-profits in southern Ontario’s innovation ecosystem through investments in business support organizations, clusters and community organizations.

Convening partners and championing the region to drive growth

FedDev Ontario collaborates closely across the federal family, with the province and with many non-governmental organizations.

With Innovation, Science and Economic Development Canada (ISED) and other federal departments on project cross-referrals, and on key government economic priorities.

With other RDAs on the development and delivery of national programs and on policy research in areas of shared interest (e.g., rural innovation).

With the Government of Ontario through information sharing, co-investment and referrals, and working together in areas of common priority.

Delivering programming that falls into three categories

Regional programs

National programs

Flexible and responsive ongoing regional programs

Regionally tailored programs that promote short- and long-term job creation and economic development in southern Ontario

Three ongoing funding streams in the form of repayable contributions to businesses and non-repayable to not-for-profits:

National programs delivered by all RDAs

Supporting diverse, inclusive broad-based economic growth and responding to time-sensitive opportunities and challenges

Ongoing national programs

Time-limited national programs

Delivering strong results for southern Ontario

Since 2015, FedDev Ontario has invested over $2.9 billion in more than 3,680 projects in southern Ontario, that align with economic priorities and regional opportunities.

Supporting the economic priorities of the region

FedDev Ontario is well-positioned to deliver on the Government’s economic priorities in the region: