BC Business
B.C. mining | BCBusinessThe province has mining to thank for its ongoing recovery.
Exports buoy resource sectors, while retail awaits signs of recovery.(Return to B.C.'s Top 100 of 2012.) Predominantly through accidents of geography and settlement patterns, B.C. has always found itself at the end of one thing and the start of another. The westernmost province in Canada is a gateway for trade with the Pacific Rim, and with its calling card once again presented to the world during the 2010 Winter Olympics, many wondered what 2011 would bring.
Predominantly through accidents of geography and settlement patterns, B.C. has always found itself at the end of one thing and the start of another. The westernmost province in Canada is a gateway for trade with the Pacific Rim, and with its calling card once again presented to the world during the 2010 Winter Olympics, many wondered what 2011 would bring.
The recovery that gained steam in 2010 yielded an estimated 2.4 per cent growth for B.C.’s GDP in 2011, which is reflected on this year’s Top 100 list, as the aggregate revenues of the province’s biggest companies rose eight per cent to $139.6 billion.
While the gain could be attributed to the strength of export markets and overseas activities, B.C.’s economy seems to be in a waiting period. RBC Economics calls for 2.6 per cent growth in the province’s economy this year, the equivalent of a “slow ahead” call for the captains of industry.
Mixed fortunes – a growing economy on par with the national average, but the slowest in Western Canada – are evident in the list itself. Teck Resources Ltd., for example, became the province’s biggest company. Telus Corp., which had topped the list since 2002, slipped to second place. Meanwhile, electronics retailer Best Buy Canada and banker HSBC Canada each slipped a place in this year’s rankings in contrast to the resilience of many companies in the resource sector.
The forestry and forest products businesses continued to struggle, with exceptions such as Western Forest Products Inc. and International Forest Products Ltd. Catalyst Paper Corp. went so far as to seek protection from creditors, a counterpoint to the major deals struck for local mining companies that opened up spots for newcomers to the main list, such as Aurizon Mines Ltd., Uranium One Inc. and Westport Innovations Inc. (long one of the province’s top 100 public companies, but absent from the overall Top 100 list in recent years).
These newcomers underscore the fact that B.C.’s brightest and most active sector is mining and associated services, notwithstanding claims by job creationists of opportunities in sectors from high tech to health care. “B.C. is still very resource-oriented in terms of its export makeup,” says Ken Peacock, chief economist with the Business Council of B.C. “There’s the B.C. mining industry and stuff that’s on the ground, and then there’s the whole service sector that’s oriented [to it]. A large proportion of B.C. services – legal, financial and engineering – are linked to the resource industry.”
While lawyers and accountants get no glory on the list, financiers such as Canaccord Financial Inc. and Raymond James Ltd. figure into the mix alongside Pan American Silver Corp., Capstone Mining Corp. and China Gold International Resources Corp. Ltd.
But with many of the province’s biggest companies doing business overseas, the good times abroad don’t always translate into good times at home. Modest growth posted by B.C.-based retailers is indicative, with Best Buy Canada slipping down a notch with less than one per cent growth. Simultaneously, B.C. Liquor Distribution Branch rose a notch, falling just short of $30 million in revenue, while Sterling Shoes Inc. made moves to seek protection from creditors.
“The B.C. retail climate has not been especially strong over the past year,” Peacock notes. “Over the past year it’s been rather lacklustre – two to three per cent in year-over-year growth in retail sales, much softer than in Alberta or Saskatchewan.” Peacock identifies the twin culprits as soft job growth – just 0.8 per cent last year, with unemployment averaging 7.5 per cent province-wide – and high debt loads. Workers in the province may be keeping busy, but they’re not spending their earnings.
Or, as a report from the Certified General Accountants Association of Canada outlined last year, “The recent recession and economic recovery brought only slight improvements to the conventional savings out of income; at the same time, accumulation of savings through wealth has been weakening.” In the case of B.C., the latest figures show residents are “actively dis-saving”; neither socking away cash nor enjoying gains in property values, they have no extra money to spend. Indeed, B.C. has the second-highest mean debt in the country, according to the latest figures from Statistics Canada.
Debt “has got to weigh on consumer sentiment and willingness to go out and make purchases,” Peacock says, noting that cross-border shopping has probably also sapped some dollars from the province’s retail tills.
The good news, however, is that incomes depend on a broader range of economic sectors than 30 years ago, when the fate of the province’s economy hung on forestry, fishing, mining and the public-sector unions. “The economy in B.C. has gotten large enough and diverse enough that there are other elements,” Peacock says, pointing to a small manufacturing cluster in areas such as aerospace and food processing. Avcorp Industries Inc., Seaspan Marine Corp. and Sunrise Farm Ltd. represent the broader run of companies, while shipping and distribution companies reflect the province’s prominence as a Pacific Rim gateway.
Teekay Corp. and Westshore Terminals Investment Corp., as well as list contenders Port Metro Vancouver and truckers Vedder Transportation Group and Arrow Transportation Systems Inc., highlight the breadth of activity that underpins the province’s resilience. And as Peacock suggests, the province has China to thank, in no small measure, for the ever-expanding diversity of its economy.