IT school blames weak economy for U.S. pullout

One of Canada’s largest private IT educators announced Tuesday that it is retreating from the U.S. market, citing unfavourable economic conditions.

Halifax-based ITI Education Corp. went public with its decision on the same day it announced its quarterly earnings. Its three U.S. schools, which were all losing money, will gradually cease operations according to company officials. ITI said the move would allow it to re-focus on its Canadian operations.

Students currently enrolled will be allowed to complete their studies, with the exception of those scheduled to begin in August. ITI has offered to move them to U.S. schools free or charge and to pay their room and board.

Gerry Kluwak, executive vice-president of ITI in Toronto, said time would have solved the U.S. school problem, but that it wasn’t something investors were inclined to grant. “We’re losing money in the United States … and now everyone is saying, ‘we want value and profit’. So we said ‘we’re going to give you value and profit.”

Kluwak would not rule out returning to the United States, but only if “the right strategic partner” can be found. That list of potential partners could possibly include another IT school or even a financial backer, he added.

Enrollment at ITI’s Canadian schools in June numbered 1,320, only five less than during the same month last year. But Kluwak said declining enrollment “was a factor” in the poor performance of ITI’s U.S. schools.

Students are becoming wary of entering the IT field under the impression that most jobs are located with the same major technology vendors that are busy shedding employees – a wrong assumption, he added. “They don’t understand that … they go to old economy (companies) as well,” said Kluwak.

He said ITI’s Canadian schools remain strong, both financially and in terms of placements. Revenue from those schools accounted for 69 per cent of ITI’s total, or $9.3 million. Tuition revenue for the second quarter of fiscal 2001 jumped 17 per cent to $13.5 million.

Founded in Canada in 1984, ITI expanded into the United States in 1999, opening a U.S. headquarters and its first American school in Denver. The company also opened schools in Portland, Ore. and Bellevue, Wash. ITI operates seven other schools across Canada from Halifax to Vancouver.