FedDev Ontario 101, May 2025

A region comprising 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, including some communities’ reliance on a single or a few industries (e.g. a number of workers were recently furloughed or laid off in L’Orignal following U.S. tariffs on Canadian steel).

Indigenous communities – First Nations, Inuit and Métis people make up a population of nearly 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 regional 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 75,000 new jobs added since 2020
• Sectors such as ICT and life sciences collectively employed approximately 403K people in Ontario (2024)

Population and labour market overview

• Southern Ontario population (2024): 15.2M
• Share of Canada’s population: 36.8%
• Southern Ontario employment (Mar. 2025): 7.8M
• Share of Canada’s employment: 37.5%
• Southern Ontario unemployment rate (Jan. 2025): 7.7%
• Canada unemployment rate: 6.9%

Top five sectors by share of GDP (2023)

• Real estate: 13%
• Manufacturing: 11%
• Finance and insurance: 10%
• Professional, scientific and technical services: 9%
• Public Administration: 7%

The region is a key driver of Canada’s growth

• 38% of Canada’s GDP (~1.2T in 2024)
• 35% of Canada’s goods exports in 2024 ($252.3B)
• Centre of Canada’s Venture Capital landscape with over 32% of VC dollars going to Ontario-based firms in 2024
• Attracts over 43% of all newcomers to Canada (~30% to the Greater Toronto Area [GTA] alone)
• 35 Post-secondary Institutions in southern Ontario and some 70,000 annual science, technology, engineering and mathematics (STEM) graduates
• Nearly 45% of Canada’s manufacturing output and 47% of its exports
• More than 130 business accelerators, incubators and innovation hubs
• More than 480K firms in southern Ontario, home to 29 of 50 top growing companies in the country (2024)
• 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

Ontario-U.S. economic relationship

Deep economic ties

Canada and the U.S. share one of the world’s closest economic relationships, with several manufacturing sectors in southern Ontario sharing deeply integrated supply chains across borders.

Trade

Ontario-U.S. trade totals ~$450B annually, with Ontario being the top Canadian exporter to over 30 states. Half of all Ontario-U.S. trade is with Michigan, Texas, New York, Ohio, and Illinois.

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. Southern 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.

Sectoral impacts of U.S. tariff measures

While the U.S. tariffs on Canadian goods have impacted many industries integral to the southern Ontario economy, the two industries that have been hardest hit include:

• Automotive manufacturing (25% tariff on the non-U.S. content part of vehicles): The auto manufacturing sector (100K workers) is Ontario’s largest export sector and has deeply integrated supply chains with the U.S. Autos and parts exports to the U.S. totalled $62B in 2024, which represents 96% of all of Ontario’s auto exports. Some auto plants in the region have temporarily halted production and laid off unionized workers.
  • Smaller parts suppliers are particularly vulnerable to tariff impacts. Over 95% of southern Ontario’s parts suppliers employ less than 500 workers and represent more than 61% of the region’s automotive workforce.
• Steel and aluminium (25% on aluminum and steel imports): Southern Ontario is home to two of Canada’s three largest steel producers. This industry is concentrated in high value products and feeds several industries such as automotive and machinery. Ontario steel and aluminum exports to the U.S. totalled $10B in 2024, which represents 96% of Ontario’s total steel and aluminum exports. The industry has already seen job losses and project cancellations.

Broader impacts:

• Potential impact on direct business investment
• Uncertainty with respect to foreign direct investment (FDI)
• Need for increased competitiveness and trade diversification for SMEs

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

• Invest: Strategically investing in businesses, communities and other organisations to support and expand the regional economy
• Connect: Engaging and convening with businesses, communities and partners across the region and all levels of government
• Inform: Gathering, analysing and sharing intelligence about our region’s industries and communities

FedDev Ontario’s investment focus

Key areas of focus have been:

• 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 has prioritized 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 have helped 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 have helped 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.

Connecting to partners in the region to drive growth

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

Regional programs

• Regional Economic Growth through Innovation
  • Business Scale-Up And Productivity
  • Regional Innovation Ecosystems
• Southern Ontario Prosperity Program
  • Community Economic Development and Diversification

National programs

• Ongoing national programs
  • Community Futures Program
  • Economic Development Initiative
• Temporary national programs
  • Regional Artificial Intelligence Initiative
  • Regional Homebuilding Innovation Initiative
  • Tourism Growth Program
  • Regional Quantum Initiative
  • Black Entrepreneurship Program

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