Arik Hesseldahl

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Cisco to Spend $4 Billion to Create 1,700 Jobs in Canada

The love affair between Cisco Systems and the nation of Canada got a little more serious today: They’re now going steady.

The networking giant announced plans to spend $4 billion over 10 years to boost the company’s operations in the Province of Ontario to 5,000 people by 2024, which would amount to an increase of about 1,700 jobs from current levels.

Cisco CEO John Chambers has been wooing Canada for about a year now. Last year, Chambers couldn’t stop gushing about how Canadian policymakers have made the region “the easiest place in the world to do business,” and that the U.S. could learn a thing or two from them.

It’s all part and parcel of Chambers’s long argument with the U.S. over the corporate tax rate. Cisco had about $48.2 billion in cash and short-term investments on its balance sheet as of the quarter ended Oct. 26. Chambers has long been a vocal critic of a U.S. policy that taxes corporate profits at 35 percent. Fiduciary responsibilities dictate that corporate CEOs keep the cash they generate overseas outside of U.S. jurisdiction.

The result is that they never bring that cash home, but instead buy non-U.S. companies, like Israel’s NDS, for which Cisco paid more than $5 billion last year. Or they staff up in places outside the U.S. where it makes sense to do so.

Indeed, there’s a lot to like about Canada. Corporate profits are taxed at 15 percent. The education system is solid. Everyone speaks English. And with its onetime technology star BlackBerry having slashed jobs in recent months, governments there were likely eager to roll out the red carpet for Cisco.

Adding 1,700 in Canada is probably not going to go over so well back home, though. In August, Cisco said that it would eliminate 4,000 jobs in what it called a “workforce rebalancing.” In March, it whacked 500 in what it called a “realignment.” In July of 2012, it cut 1,300, as part of what was described as a “fluid restructuring plan.” And in 2011, it kicked off a massive restructuring, pledging to cull 6,500, plus an additional 5,000 who were transferred to Foxconn as part of the sale of a set-top-box manufacturing unit.

Here’s the original announcement:

Cisco and the Province of Ontario Collaborate to Plan One of the Tech Sector’s Largest Job Creation Initiatives

TORONTO, ON — (Marketwired – Dec 13, 2013) — Cisco (NASDAQ: CSCO) — Premier Kathleen Wynne and Cisco Canada President Nitin Kawale announced today an agreement that aims to significantly accelerate Ontario’s status as a leader in technology innovation and key player in the global research and development landscape.

Cisco and the Province of Ontario have signed a 10-year agreement. Under the terms of the agreement, Cisco is focusing on adding up to 1,700 high tech jobs with a focus on R&D within the first six years. The agreement also includes a framework with the potential to grow Cisco’s total Ontario employee footprint up to 5,000 by 2024, reflecting a potential total investment of up to $4 billion, including $2.2 billion in salaries alone. The Province of Ontario will provide up to $220 million in support of the total initiative.

This new initiative builds upon Cisco’s growing presence in Ontario, including investments in university chairs, planning for a new and expanded Toronto headquarters, the Pan Am Games technology infrastructure sponsorship, and Smart + Connected™ community initiatives. With this partnership, Cisco looks to harness Ontario’s skilled workforce, renowned educational institutions and competitive business climate.

The agreement with Cisco supports the Province of Ontario’s focus on economic development and job creation. By partnering with Cisco, the province demonstrates a strong commitment to fostering innovation and, through research and development, bringing new technology to market.

Ontario and Cisco fully intend to continue focusing on initiatives to help Ontario realize a transformational vision, increase productivity, and drive world-class innovation and sustainable economic development.

Supporting quotes:

Kathleen Wynne, Premier of Ontario:
“Our plan to create jobs and grow the economy is focused on smart, forward-looking investments that build on Ontario’s strengths. Today’s announcement is about supporting our talented technology workers. Together, we’re going to show the world what Ontario can do.”

Dr. Eric Hoskins, Minister of Economic Development, Trade and Employment:
“Cisco’s investment positions Ontario as an undisputed leader in the global tech industry. We’re sending a message to the world that Ontario is the best place anywhere for business to innovate, grow and create jobs. Today’s investment and the jobs it will create are part of our plan to create opportunity today and for the long-term.”

Rob Lloyd, President, Development and Sales, Cisco:
“Canada continues to be one of Cisco’s best success stories globally. Cisco has invested in retaining and growing our employee footprint here in Ontario, particularly in R&D jobs. Today’s announcement with Premier Wynne is another milestone in driving our business in Canada and a testimony to our very positive relationship with the Province of Ontario.”

Nitin Kawale, President, Cisco Canada:
“Today marks a significant milestone for Cisco Canada and Province of Ontario. This announcement builds on our existing partnership and our mutual commitment to drive productivity and create new economic opportunities through innovation. Together with the Province we will create, high value jobs that will stimulate the economy. This initiative will also ensure that Ontario continues to be a leader in the information and communications technology industry, with a vast talent pool representing the country’s next generation of innovation.”

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